[Conference report] Whither will bifurcation go? A critical discussion on Germany's bifurcated patent proceedings

The AmeriKat enjoying the slower paced
validity track...

Ahhh, the German injunction gap.  A topic of interest in the UK courts at the moment (see the various applications to expedite trials because of it here).  But turns out the German patent litigators are also talking about it.  From September 15 to September 17 2021, the annual meeting of the German Association for Intellectual Property (GRUR) took place in Bonn. Part of the program was an analysis of Germany's bifurcated patent procedure and ways to better synchronize nullity and infringement proceedings. Katfriend Anselm Gripp provides the following write-up of the session.  

Over to Anslem:

"Diverging paths – Infringement of invalid patents

"Two roads diverged in a yellow wood"… but the critical road for implementers in German patent proceedings is long and windy.

This is the situation the implementer faces in the system of bifurcation. Although validity objections are often of paramount importance to the implementer in infringement proceedings, such objections will generally not be considered. Not only is the choice limited but the open road is also much slower than the infringement one.

First instance judgements in validity proceedings take much longer than judgments in infringement proceedings (>24 months as compared to 9-15 months). As the infringer can await a decision much earlier in infringement proceedings than the implementor in validity proceedings, he is on the faster road. It seems to be clear that the patent holder is better off.

The question is therefore how these two proceedings can be synchronized, either in terms of duration or in terms of outcome. That is precisely the question that occupied the panel.

One possibility for synchronization is already provided by the law: the infringement court could stay proceedings while awaiting a decision by the BPatG. However, as the discussion again highlighted, only a small percentage of the proceedings are stayed. This is true, although in most cases these patents - if challenged before the BPatG for validity reasons during infringement proceedings - are in the end partially or fully declared invalid by the BPatG. This leads to a considerable number of judgments for infringement although the patent is later declared invalid.

Another option would be to come to a quicker decision on validity. In this regard, Sec. 83 of the German Patents Act (GPA) is of particular interest. According to this provision, the BPatG informs the parties about the aspects which will presumably be of particular significance in respect of its decision. However, as to now this provision has rarely been applied, because in most cases the indication was made after an infringement judgement had already been rendered. As a reaction the Second Patent Modernization Act (2. PatMoG) has modified Sec. 83 GPA so that the indication "shall" (not must) occur within six months after initiation of the nullity proceedings. In addition, not only the parties but also the infringement court must be notified. This provision amendment will enter into force on 1 May 2022.

Part 1: potential problems

The first speaker was Léon Dijkman, who is no stranger to this debate. Dijkman sought to emphasize that there is no fair trial if there is no equality of arms, a principle going back to the Middle Ages.

In his presentation, Dijkman outlined the scope of principle of equality of arms as substantial part of the right of fair trial set forth under Article 47 of the EU Charter of Fundamental Rights and interpreted by the European Court of Justice (ECJ). This article applies also to the Enforcement Directive and consequently to patent injunctions. According to Dijkman, the ECJ's case law on Article 47 Charter suggests that patent procedure that allows for an "injunction gap" might constitute a violation of the equality of arms principle.

As a potential solution Dijkman proposed to lower the threshold for a stay under Sec. 148 GCPC by denying a stay only if the validity is more probable than the invalidity of the patent. When assessing the probabilities, the infringement courts should also consider decisions by foreign opposition divisions and decisions by the TBA or BPatG.

The second speaker was Dr. Stephan Altmeyer. Providing an industry perspective, he illustrated the need for (further) harmonisation from a practical perspective. He emphasized the risk of irreparable damages due to insolvency of the patent holder: if the implementer is sued on the basis of an invalid patent, the damages suffered in the time between the judgment in infringement and validity proceedings cannot be claimed back. He also called for courts to consider the risk of a later invalidation when determining whether the patent holder’s license offer was FRAND.

As a solution to the injunction gap, he proposed to cut back the competence of the BPatG, limiting it to the control of decisions by the patent offices while infringement courts should also be competent for the ruling on the validity of the patent in suit. For this he proposed to extend the tribunal with expert judges that have a specific technical background. The decision on validity by the infringement courts would then however have inter-partes effect.

Part 2: potential solutions

The second part of the discussion shed light on the advantages of bifurcation and on the means to eliminate the weaknesses of bifurcation from the perspective of the courts. The injunction gap also results from the efficiency of infringement proceedings which serves the interest of legal certainty and makes infringement proceedings relatively cheap.

The third speaker was Judge Peter Tochtermann, presiding judge of the 7th Chamber of the Mannheim Regional Court. For Tochtermann, the central problem of bifurcation is that infringement courts need to forecast the outcome of validity proceedings. This is a particularly difficult task in first instance proceedings, when the judges cannot rely on information from previous validity proceedings. They must therefore predict how the BGH would eventually decide upon this question.

As a possible solution he proposed to promote information transfer by exchanges of judges between the bifurcated systems, technical training and file sharing.

The fourth speaker was Beate Schmidt, former president of the BPatG. She outlined the reasons for the current length of proceedings before the BPatG: while new responsibilities have been conferred to the BPatG, the number of judges is stagnating or even decreasing. This also revealed a major obstacle to a possible exchange of personnel: limited staff and financial resources. While the BPatG recently had reduced the number of outstanding cases, the Corona pandemic has led to a new backlog with the consequence that long proceedings are to be expected in the next few years if staffing levels remain unchanged.

The fifth and final speaker was Dr. Regina Hock, the current president of the BPatG. She focused on the qualified indication according to Sec. 83 GPA. She pointed out that qualified indications under Sec 83 GPA are not meant to replace validity proceedings. In order to meet the deadline of six months, sacrifices must be made in the right to be heard. The possibility of a full hearing with rebuttals lead to extensions of the time limit and thus to delays. Therefore, as Hock pointed out, it is important to understand Sec. 83 GPA as a mean of support to the infringement court when deciding whether to stay the proceedings for concerns of validity.

After all the speakers presented and discussed their views with the audience, a participant that is well aware of the potential problems of the injunction gap made a stand for the German system of bifurcation. While recognizing the shortcomings, this system leads to fast and qualified decisions and keeps the court costs so low that even small and medium-sized companies do not shy away from court proceedings. He concluded that there are many good models, but the German model is still not that bad. We should give the new modifications a chance and first see what the effects will be before we change the model.

To put it in Frost's words:

Two roads diverged in a wood, and I—

I took the one less traveled by,

And that has made all the difference."