No major changes in second draft of new German patent legislation

When it comes to German patent law, the automatic injunction in infringement suits is the most hotly discussed topic in Germany. This is especially true after Mannheim Regional Court recently ruled that Daimler infringed one of Nokia’s standard-essential patents, but required a security deposit of €7 billion for enforcement.

Christine Lambrecht ©BMJV/Thomas Koehler

Yesterday the Minister of Justice, Christine Lambrecht, presented a second draft for the modernisation of the German patent law. There are only a few changes in the draft. The key points remain the same as in the first, which the Ministry of Justice presented in January 2020 to give lawyers, judges, industry and other stakeholders the opportunity to comment.

The ministry wants to do the following:

• Synchronise infringement and nullity proceedings. To this end, the ministry wants to set tighter deadlines for the Federal Patent Court, so that after only six months the infringement courts receive an indication as to whether a patent-in-suit is likely to be maintained or not.
• Improve the protection of confidential information in infringement proceedings by incorporating the provisions of the Trade Secrets Act into patent law.
• Clarify exceptional rules in the event of an injunction, which in German law is automatically issued against a patent infringer.

The current regulation on the automatic injunction set out in paragraph 139 of the German Patent Act has been the subject of fierce controversy. In particular, the German car and telecom industries have advocated a weakening of the regulation. Judges and lawyers, on the other hand, have spoken out against a change, as have numerous other industry representatives.

Automatic injunction yes, but…

The new draft, which will now be submitted to the federal cabinet, also maintains the following: an automatic injunction remains the rule. There will only be exceptions in a few individual cases, for example if the consequences for the infringer are unreasonably severe. In the explanatory memorandum to the draft, the ministry once again emphasised that it wants to clarify the current regulation and to specify possible exceptions.

However, the ministry also makes it clear that consideration of the principle of proportionality, which has constitutional status in Germany, “must not lead to a devaluation of patent law”.

More clearly than in the first draft, the ministry is taking greater account of the interests of third parties, for example when healthcare or critical infrastructures are affected by a cease and desist order. Mobile network operators such as Deutsche Telekom have been especially in favour of this.

In addition, the latest draft provides for utility models. This was still missing in the first draft.

The ministry has only slightly changed the wording of the provisions in paragraph 139 part 1. The new draft says:

“The claim shall be excluded if its fulfilment would lead to disproportionate disadvantages for the infringer or third parties due to the special circumstances of the individual case, which are not justified by the exclusive right. In this case, the infringed party may demand compensation in money, as far as this seems reasonable. This shall not affect the claim for damages under part 2.”

In the first draft, the paragraph read as follows:

“The right to injunctive relief shall be excluded if its enforcement is disproportionate because, due to special circumstances, taking into account the interests of the patentee vis-à-vis the infringer and the requirements of good faith, it constitutes a hardship not justified by the exclusive right.”

Not the last word

The ministry wants to encourage the patent judges at the regional courts to examine exceptions to the automatic injunction more often. At the same time, the ministry emphasised that the German patent judges already have a lot of discretion to mitigate disproportionately harsh injunctions.

For example, the Mannheim patent judges recently set a €7 billion security deposit in the recent infringement judgment against Daimler. The injunction has the potential to paralyse large parts of Daimler’s car production. Even a company like Nokia would not easily be able to raise such a sum to enforce the judgement.

Same contents, new packaging

In initial reactions, some lawyers and in-house counsel commented that the changes were merely superficial.

“The automatic injunction remains the rule,” said one Düsseldorf lawyer, adding, “an exception may only be granted in very rare cases.” The case law will not change significantly as a result, claimed another lawyer.

The car industry in particular, which calls for a weakening of the automatic injunction, will not be completely satisfied with the second draft.

But this is not the final word on the automatic injunction. Before the law goes to parliament, it must pass through the cabinet.

Proponents of a weaker automatic injunction have recently focused on trying to convince Members of Parliament. What the majority of parliamentarians think is unclear. Usually, however, the German Bundestag tends to listen the German car industry, especially in times of crisis like corona.

The German Bundestag will be newly elected in autumn 2021.