Market Development – Patents Germany 2019

Market Development – Germany 2019

A domestic boom

National patent systems are experiencing a renaissance. One reason is the declining trust in patents granted by the European Patent Office (EPO). A number of experts, above all patent attorneys, complain that the quality of European patents is not what it used to be. Several international corporates confirmed to JUVE Patent that they now file more patents at national offices than the EPO. Nevertheless, the number of new patents filed at the EPO still rose to a record 174,000, representing a 4.6% increase. At the same time, the number of new lawsuits filed at Germany’s four most important regional courts for infringement cases sank by 17%.

The ailing German patent system

Mobile phone companies and the auto industry are critical of Germany’s automatic injunction. There are calls for it to be softened. The problem remains that nullity and infringement cases are heard separately in the German system. Many months pass between the infringement ruling, which may lead to an automatic injunction, and the nullity ruling. Critics claim that, unless there is a proportionality check, non-practising entities could paralyse entire production lines with just one successful suit over a comparatively inconsequential component. The Ministry of Justice has already mooted a possible amendment to the law, but so far with no concrete results.

Other industries, including some lawyers and judges, are resistant. They say it would mean a fundamental change to the current legal system. The injunction is a highly effective weapon, and if it were weakened, patent infringements would suddenly become attractive, as there is a very limited claim to damages in Germany.

Many experts believe the slow rulings in nullity suits at the Federal Patent Court to be the fundamental ill of the German system. The court frequently issues the first instance nullity judgment after the second-instance judgment in infringement proceedings. For this reason, patent owners and lawyers are calling on the government to bolster the court’s ranks and to introduce reliable, interim judgments on a patent’s validity in time for the first-instance infringement ruling. Then, where there is doubt over validity, the civil courts could suspend infringement proceedings pending the outcome regarding validity.

UPC in limbo

In other European countries validity and infringement cases are heard together. The new European patent system (consisting of the unitary patent and the Unified Patent Court, or UPC) offers an alternative to the patchwork of national patent laws and courts. At present, however, this is still in limbo. The German Constitutional Court has yet to rule on a constitutional complaint from a Düsseldorf lawyer against German ratification. It is also unclear whether the UK will be able to take part given its impending exit from the EU at the end of October. This will only be possible if a withdrawal agreement contains corresponding provisions. While many policy makers and business representatives continue to hope for the launch of the UPC with UK participation, the project has lost much support.

Irrespective of the problems with the UPC and low filings of infringement suits, German litigation firms report that a wide variety of litigation projects are currently being prepared, but are sometimes never submitted to court due to early licensing agreements. Instead, more and more patent disputes are being conducted throughout Europe. This is changing the business of law firms, which is leading to shifts in the market (and thus ranking) amongst patent litigators. A cross-border set-up of litigation teams or international cooperation between national litigation practices or patent law firms is becoming increasingly important. The strategies of the law firms differ depending on whether they are a nationally independent IP law firm or an international law firm.

Biosimilars drive up lawsuits

Representative of this trend towards more international litigation is the number of pharmaceutical lawsuits. In this sector, disputes about biotechnological inventions and genetically modified organisms, so-called biologics, are increasingly supplementing and replacing disputes about classical drugs. They raise new legal questions. Competitors in the pharmaceutical industry always conduct their litigation internationally and in Europe at least in Germany, France, the Netherlands and the UK. It is striking that it is above all the litigation teams in major international law firms such as Hogan Lovells, Freshfields Bruckhaus Deringer, Bird & Bird and Simmons & Simmons that work on such cross-border cases, with the teams in London often playing a coordinating role. It is German patent practices which hope to win this business after Brexit.

Boom in connected cars litigation

The influx of NPEs with mobile phone suits before German patent courts continues unabated in 2018/19. The preliminary highlight was an extensive lawsuit filed by Conversant in 2018 against LG, Huawei and ZTE. They instructed the small litigation teams ofEIP and Ampersand. In addition, the Conversant and Unwired Planet cases will also be heard by the courts in London. Both NPEs rely on UK law firm EIP for Europe-wide coordination. The dispute between Unwired Planet and Huawei even reached the Supreme Court in the UK. The case has thus finally become the European lead case for the interpretation of the CJEU’s FRAND requirements.

The owners of mobile phone patents have long since had other industries in their sights. At the end of 2018, Broadcom and the VW Group settled the first major lawsuit against the automotive industry for connectivity. A few months later, the chip manufacturer once again fought BMW and Daimler with Grünecker. BMW is represented byBardehle Pagenberg, while Daimler instructedQuinn Emanuel Urquhart & Sullivan for the first time. The latter is also on the side of the Stuttgart-based car maker in lawsuits filed by Nokia with Arnold Ruess and Sharp with Wildanger Kehrwald Graf v. Schwerin & Partner. Both sued Daimler in 2019 against the background of faltering negotiations for an Avanci pool licence. These cases have produced a boom for patent attorneys and lawyers, provided that they combine mobile communications know-how with good connections in the automotive industry.

In addition, there is the requirement to be able to set up large teams on a case-by-case basis, which may also include patent and legal know-how from a single source. The most impressive event of the past year was the merger of the two patent attorneys Karl-Ulrich Braun-Dullaeus (previously in his own firm) and Friedrich Emmerling (formerly Prüfer & Partner) in late 2018. With Huawei and Deutsche Telekom, the newBraun-Dullaeus Pannen Emmerling advises two of the companies most frequently sued in Germany by NPEs. In contrast to other patent firms, Braun-Dullaeus Pannen Emmerling has placed a clear focus on litigation.

The opening of the office of the British patent law firm Mathys & Squire in Munich also caused a stir. It brought in a team from Herzog Fiesser & Partner. As a result, the rest of the firm split into Herzog IP and Altmann Stößel Dick. The market entry of Mathys & Squire was not the first of a British law firm which, in anticipation of Brexit, is seeking access to the continental European market in order to remain a force in the European patent system. Other British law firms are expected to open offices in Munich soon. They are becoming more and more attractive to patent attorneys from traditional German law firms who are not satisfied with old-fashioned management structures.

The patent rankings depict law firms that advise on technical protection rights (patents and registered designs) and increasingly know-how protection. Both patent attorneys and lawyers are active in this field.