Litigation in Germany

The long shadow of Colin Birss

Still no other market in Europe is as active as Germany. But although German law firms are doing excellent business, lawyers in Düsseldorf, Mannheim and Munich are less optimistic for the future. The uncertain start of the Unified Patent Court has raised doubts, and some fear the Unwired Planet judgment by British High Court judge Colin Birss will attract mobile telecom cases to London at the expense of the German patent courts.

5 December 2018 by Mathieu Klos

Colin Birss, High Court, FRAND The Unwired Planet judgment by British High Court judge Colin Birss could impact the German courts

It is December and the first Christmas markets are open. Germany’s inner cities are full of candlelight and the scent of mulled wine. All is right with the world, even in the German patent community. If you ask litigation firms in Düsseldorf, Mannheim or Munich, they say business is better than ever. As ever, the primary concern of German patent lawyers is how to find young talent.

But while young litigators are thin on the ground, there are more than enough cases to go around at the three most important German patent courts. According to a survey conducted by JUVE Patent in 2017, a total of 884 new lawsuits concerning technical property rights were filed. This is by far the highest number in Europe.

Among the most prominent is Qualcomm, currently embroiled in a bitter licencing dispute against Apple. With the help of Quinn Emanuel Urquhart & Sullivan, the company is hoping for a ruling from the Mannheim and Munich courts concerning six patents.

In the autumn various members of the MPEG LA video patent pool fought with Huawei and ZTE over the AVC/H.264 coding standard in 13 proceedings before Düsseldorf Regional Court. The litigation specialists from Krieger Mes Graf von der Groeben and the patent attorneys from Cohausz & Florack are leading these proceedings.

“German patent firms have been blessed
with huge amounts of work for NPEs”

German patent firms have been blessed with huge amounts of work, not least because NPEs have the whole mobile phone industry in their sights. The current highlight is an extensive suit by Conversant against LG, Huawei and ZTE at Munich and Düsseldorf regional courts, with large teams of lawyers deployed on both sides. Small litigation teams from EIP and Ampersand are preparing the suits for Conversant. Both firms are still advising Unwired Planet in the German proceedings.

Another big NPE case is the Intellectual Ventures suit conducted by Bardehle Pagenberg against the three major network operators Deutsche Telekom, Vodafone, and O2/Telefonica in Mannheim and Düsseldorf.

Disputes over pharmaceutical and biosimilar patents, as well as mechanic and electronic patents, are day-to-day business for German patent firms. As a result, the German patent litigation market is attractive for US and UK law firms, but more and more national patent attorney firms are also hankering after a slice of the litigation business.

Partner moves rise 

The rising complexity of patent litigation means that specialist knowledge of technical and legal peculiarities has become the key factor for both 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. Many lawyers believe the launch of the UPC will only fuel this development.

This unfinished court project is attracting US firms to Germany – ironically, where a recent challenge to Germany’s participation in the UPC at the Constitutional Court is still threatening to derail, or at least postpone, the start of the UPC’s work. US outfits are currently looking to enter the German market to improve their prospects for when the new court finally opens its doors, and to compensate for the uncertainty in their domestic market.

But so far only Quinn Emanuel with star litigator Marcus Grosch, as well as Jones Day, and McDermott Will & Emery, have seen any success. Other important IP firms from the US have not managed to break into the German litigation market.

On the other hand, the recruitment market has been unusually lively over the past 12 months. Many national and UK firms have changed their strategies and are thus stepping up efforts to entice young but experienced lawyers away from competitors, mostly by offering prospects of partnership.

For instance, Vossius & Partner, this year’s JUVE Law Firm of the Year, grew its Düsseldorf office with three experienced lawyers from Arnold Ruess. Bardehle Pagenberg brought in well-known senior partner Peter Chrocziel 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 getting into position for their major case for Conversant. Allen & Overy also made an impression in the market by bringing in Jan Ebersohl, a junior partner experienced in mobile communications from Quinn Emanuel. Previously, the German team focused mainly on pharma disputes but now has the chance to play a bigger role in tech cases.

Cross-border is the future

Thomas Lynker, Taliens

In Taliens, Thomas Lynker succeeded in establishing one of the most interesting law firms of the year

It is also noteworthy that the Munich Olswang partner Thomas Lynker, together with a Paris partner, set up their own international IP litigation firm in April 2017 after their firm merged with CMS Cameron McKenna in the UK.

The formation of the boutique Taliens is in many respects the most significant event in the European market over the past year. It shows that the future of firms in this segment will partly be determined by their cross-border structure. The important work is nearly all pan-European, be it in mobile phones, medicine or consumer goods.

Successful practices require excellent international knowledge-sharing, focusing on cases and decisions at all of the important European patent courts.

This has long been the case at larger full-service firms, but the decision by boutiques to merge across borders was the logical answer, thus the emergence of outfits such as Taliens and Hoyng ROKH Monegier two years before.

The biggest international IP boutique took another major step this year and merged with Veron & Associes to strengthen its Paris team. Both Taliens and Hoyng ROKH Monegier still have their sights set on the UPC, but are planning on exploiting the rising number of international proceedings.

More and more patent disputes are being fought on a pan-European stage, making cross-border practice groups in litigation teams, and international cooperation between national litigation outfits, increasingly important. This could change the litigation landscape just as significantly.

One clear 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, with two more in Germany. Worldwide, the opponents are also wrangling in the US and Japan. In the European proceedings, both sides are mobilising huge litigation teams led by Hogan Lovells and Freshfields for Nikon, and Hoyng ROKH Monegier on the side of ASML/Carl Zeiss.

Start your engines

Experts expected the first wave of lawsuits involving connected cars in Europe for some time. That time came in September 2017. Chip manufacturer Broadcom/Avago sued VW and Audi before Mannheim and Munich Regional Courts, with Grünecker and Klaka at the helm. Later, Porsche was challenged as well. The three 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, which traditionally boasts excellent ties to auto manufacturers. Legions of lawyers were busy defending claims on the side of the co-litigating auto suppliers and chip manufacturers. In November both sides settled their massive dispute to the surprise of the market, shortly after Mannheim Regional Court rendered two judgments in favour of the car manufactures.

But, for most patent lawyers, it seems clear – the rising connectivity permeating all areas of life, but especially in transport, is likely to result in huge amounts of 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.

“German patent courts expect
more cases on connected cars”

“A large number of lawsuits are currently being prepared. But as long as the patent holders are still negotiating with the car manufacturers and their suppliers, they will remain in the lawyers’ desk drawers for the time being,” says one Munich litigator.

Sources in the market claim 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. And the first NPEs are also waiting in their 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.

Increase in FRAND judgments

 To the surprise of many litigators, last autumn also brought an increasing number of SEP rulings. For example, Düsseldorf Regional Court ruled against Huawei and ZTE that the licence offer from the patent pool MPEG LA complied with FRAND rules. According to Mannheim Regional Court, the Japanese patent pool IP Bridge did not act in accordance with FRAND. Although the court ruled in October that HTC infringed one of IP Bridge’s LTE patents, it did not grant any injunctive relief.

But the dominance of the German courts in SEP lawsuits could soon be changed by a single ruling from London. In October, the London Court of Appeal largely confirmed the high profile ruling given by the well-known High Court judge Colin Birss in the dispute between the NPE Unwired Planet and Huawei.

Birss’ 2017 verdict was a bombshell. The High Court judge had dared to grant the NPE the right to a global licence on the basis of a national patent, thus putting the Chinese mobile phone provider in a serious predicament.

“The ruling brings the British courts closer to the German position,” says Axel Verhauwen, partner at Düsseldorf IP law firm Krieger Mes, shortly after the Court of Appeal confirmed the decision.

However, there is a small but subtle difference between German and British jurisdiction. Birss was the first judge in the world to set a corresponding FRAND rate and therefore to insert a huge stake in the hotly contested landscape of SEPs. The London Court of Appeal also considers this to be legally applicable in general, but in contrast to Birss is of the opinion that there can be more than one licence fee which corresponds to the FRAND regulations.

Most British patent lawyers are secretly celebrating the ruling as good for business and hope that US NPEs will take their SEP suits to London instead of Germany. Many a German patent lawyer sees this in a similar light, but describes it as a deliberate policy by the British courts of promoting London as a location. One Munich litigator told JUVE, not without some envy, “They have always been very good at this.”

Marcus Grosch, Quinn Emanuel

German courts are well able to compete with the UK, says Marcus Grosch, partner at Quinn Emanuel.

Quinn Emanuel star Grosch thinks it is too early to ascertain what the consequences of the Birss judgment will be on the development of European SEP business.

“German courts are well able to compete with the UK. There was some uncertainty at the beginning about the Huawei-ZTE CJEU decision, but the lower courts have now developed a clearer view, which for SEP-holders gives them much more reliability. If the UK High Court really wants to be internationally competitive, it will have to accelerate the speed of their proceedings.”

But even if some questions are still open, with the two judgments the London courts indicate they are a real alternative to German courts. But speed is not only where the UK courts have a disadvantage, as Grosch points out. Birss and his colleagues will also have to match the cheaper costs of German courts to be truly competitive.

See the current Patent Rankings Germany 2018 here