JUVE Patent

Market Development – Patents Germany 2018

Concern over the European patent system

The launch of the new European patent system, consisting of the unitary patent and a central patent court (Unified Patent Court, or UPC) is still a rollercoaster ride. On the one hand, the UK finally ratified the UPC Agreement in 2018, underscoring its intention to take part, even after leaving the EU. On the other hand, a constitutional complaint is still blocking German ratification. Even now, whether the UPC will actually launch is less clear than ever. In his complaint, a solo practitioner from Düsseldorf criticises what he claims was an incorrect voting procedure in the German Bundestag (lower house) and the fact that the UPC Agreement is not compatible with European law. A sufficient number of EU states have since ratified the Agreement, only Germany is left. When and how the Federal Constitutional Court (Bundesverfassungsgericht) will rule was not known at the time of going to press. As a result of this standstill, a sense of pessimism is seeping into the European patent community as it becomes increasingly clear that the UPC is running out of time. If the UPC Agreement does not come into force before Brexit on March 29, 2019, the new court in its current form could be doomed. The only option remaining would be for the EU states to make a new attempt without the UK, but this would also mean foregoing the latter’s experienced patent judges and attorneys. This solution, however, would need to be politically renegotiated.

If the Federal Constitutional Court dismisses the complaint as unfounded by the end of 2018, the UPC could begin its work around eight months later. Once in force, the new court would, according to experts, quickly be supplied with cases and become a success. Chemicals, consumer goods and pharmaceuticals corporations, as well as NPEs, are all potential supporters of the system, mainly because of the possibility of Europe-wide injunctive relief.

UPC becoming a side issue in Germany

Aside from all the agitation surrounding the uncertain UPC launch, German patent courts are currently seeing four trends that could change the litigation landscape just as significantly:

Trend 1: More and more patent conflicts are being fought on a pan-European stage, making cross-border setups in litigation teams or international cooperation between national litigation outfits increasingly important. One demonstrative example is the series of proceedings involving exposure apparatus for semiconductors between Nikon and AMSL/Carl Zeiss SML. Twelve infringement proceedings are pending in the Netherlands alone and two more in Germany. Worldwide, the opponents are also wrangling in the US and Japan. In the European proceedings, both sides are mobilizing huge litigation teams led by Hogan Lovells and Freshfields Bruckhaus Deringer for Nikon and Hoyng ROKH Monegier on the side of ASML/Carl Zeiss.

Trend 2: Mobile communications suits brought by NPEs before the German patent courts continue to rise unabated. The current highlight is an extensive suit by Conversant against LG, Huawei and ZTE at Munich and Düsseldorf Regional Courts (Landgericht). Here too, large teams of lawyers are deployed on both sides. Small litigation teams positioned on the side of NPEs are preparing the suits for Conversant in the shape of EIP and Ampersand. In addition, the suits involving Intellectual Ventures, Fipa and Unwired Planet are still keeping courts and firms busy.

Start your engines: First major suit involving connected cars

Trend 3: Experts had been expecting the first wave of lawsuits involving connected cars in Europe for some time. In September 2017 that time had come. Chip manufacturer Broadcom/Avago sued VW and Audi before Mannheim and Munich Regional Courts, with Grünecker and Klaka at the helm. Grünecker had already worked for Broadcom previously, while Klaka positions itself through its experience with mobile communications proceedings. The two auto manufacturers took on a dozen of suppliers as co-litigants. The leading role in the VW and Audi suits is played by Kather Augenstein, who traditionally boasts excellent ties to auto manufacturers. Legions of lawyers are busy defending claims on the side of the co-litigating auto suppliers and chip manufacturers.

The rising connectivity permeating all areas of life, but above all transport, is likely to result in considerable litigation for lawyers and patent attorneys. The industry expects further lawsuits against the auto industry in the near future, especially by companies that consistently capitalise on their patents. It is public knowledge, for example, that three owners of large mobile communications portfolios, Nokia, Ericsson and the Avanci patent pool, are currently demanding licences from all major European auto manufacturers. There is no doubt that the suits are already lying around in drawers fully prepared in case licensing agreements cannot be reached. The first NPEs are also waiting in the starting blocks.

Once the automotive industry is licenced, the owners of such mobile communications portfolios will set their sights on the consumer goods, medical technology and pharmaceuticals industries.

Trend 4: Conditions in the pharmaceuticals industry are also changing, not only because of increasing connectivity, but also because new biologics are replacing traditional pharmaceuticals. These are bringing the manufacturers of biosimilars into the arena. Traditional lawsuits between originators and generics manufacturers are increasingly being replaced by those between manufacturers of biologics and similarly biotechnologically produced active ingredients. It is not always the traditional representatives of the pharmaceuticals industry who are established here, but rather firms with strong biotech know-how such as df-mp Dörries Frank-Molnia & Pohlman and Vossius & Partner.

Partner moves on the rise again

These four trends show one thing above all: the rising complexity of patent litigation. Specialist knowledge of the technical and legal peculiarities of the areas in question has become the key factor for both professions – patent attorneys and lawyers – when it comes to hiring firms. On top of this, firms need to be able to assemble large teams on a case-by-case basis, which can offer patent and legal know-how from a single source. This development would intensify further if the UPC were to open its doors, because the German bifurcation system is unlikely to play a role before the new court, or so the majority of European patents teams believes. But with the merging of nullity suits and infringement proceedings, the boundaries between patent attorneys and lawyers are blurring.

Even though many strategic preparations for the UPC are currently on hold, the German market is unusually lively for patents firms. This is because firms are struggling to find enough qualified junior staff to meet the rising demands placed on advisors. They are thus stepping up efforts to entice young but experienced lawyers away from competitors, for example by offering partnership prospects.

Vossius & Partner, for instance, grew its Düsseldorf office with three experienced lawyers from Arnold Ruess. Allen & Overy made an impression in the market by bringing in a junior partner experienced in mobile communications from Quinn Emanuel Urquhart & Sullivan, thus continuing the expansion of its European patents team in Germany. Bardehle Pagenberg brought in a well-known senior partner from Freshfields Bruckhaus Deringer in Munich and so caught up with the market-leading litigation practices. Preu Bohlig & Partner, EIP and Ampersand welcomed reinforcements at partner level; the latter two thus getting into position for their major suit for Conversant.

Unbroken trend towards mixed litigation teams

Perhaps the most interesting development in the long term was that seen by Hogan Lovells, whose litigation team welcomed a patent attorney experienced in mobile communications from Prüfer & Partner. He is not the first and probably not the last patent attorney who the practice intends to deploy in litigation. The fact that two international market leaders, Hogan Lovells and Bird & Bird, are now practicing a mixed litigation approach shows that the trend towards mixed litigation teams offering their clients a one-stop service is unstoppable. More and more firms in France, the UK and the Netherlands are positioning themselves in this way too. Few experts still believe that many cases will be separated into infringement proceedings and nullity suits before the UPC.

But as long as the UPC is not ready for launch, German firms, which handle the most cases throughout Europe (>European champion Düsseldorf), are only cautiously adjusting their European strategy.