German parliament adopts patent law reform
On 14.01.2020, the Federal Ministry of Justice and Consumer Protection published a draft of a Second Law on the Simplification and Modernisation of Patent Law. The highlights of the draft encompass amendments with respect to
- the claim for injunctive relief (Sec. 139 Patent Act),
- the improved synchronization of nullity proceedings and infringement proceedings (Sec. 83 Patent Act) and
- the protection of confidential information (Sec. 145a Patent Act).
The draft received a considerable number of statements from companies and organizations, specifically with regard to the revision of the claim for injunctive relief.
Beyond this aspect, the modernization aims at an improving synchronization of patent infringement and nullity proceedings, in particular with a preliminary opinion to be rendered by the Federal Patent Court earlier than is currently the case. Furthermore, the protection of trade secrets and other confidential data shall be improved by the respective application of certain provisions of the Act on the Protection of Trade Secrets in patent litigation.
Most important amendments
Section 139 Patent Act
Core revisions include specification concerning the so-called automatic injunction:
The amendment provides that the right to injunctive relief may be limited by way of exception due to special circumstances of the individual case, insofar as the claim would lead to a disproportionate hardship for the defendant or a third party that shall no longer be justified by the exclusive right of the patent owner.
Whether such a proportionality test must be carried out has been one of the most contentious issues in patent law recently. Actually, this is nothing really new to patent litigation cases. It was already possible to raise such an objection. However, the application of such a proportionality test has hardly been carried out by the courts of instance. If the court decided that an attacked embodiment infringes a patent, there was usually no further debate about the proportionality of injunctive relief. The amendment now clarifies that the injunctive relief does not (automatically) exist insofar as its enforcement is disproportionate.
Section 83 Patent Act
In order to accelerate proceedings, the amendment provides for procedural changes to facilitate better synchronisation of nullity proceedings and infringement proceedings before the District Courts and before the Federal Patent Court.
Sec. 83 Patent Act introduces a procedural provision according to which the Federal Patent Court should provide its preliminary opinion within six months after filing of the nullity action. Therefore, the Federal Patent Court proceedings between the service of the action and the preliminary opinion should be streamlined.
By supplementing the provisions on the preliminary opinion, the amendment addresses another aspect of the German patent system that has been criticised - bifurcation and the injunction gap:
While patent infringement proceedings before the District Courts can regularly lead to a (provisionally) enforceable injunction within a relatively short time (often within a year or a year and a half), the separate nullity proceedings before the Federal Patent Court often take substantially longer. The amendment intends to attenuate the injunction gap and reduce legal uncertainty.
However, due to the numerous invalidity proceedings still pending before the Federal Patent Court (which are to be reduced within the next six years), it appears questionable whether the planned preliminary opinion will actually become standard procedure after six months.
Section 145a Patent Act
For improved protection of confidential information, the amendment also provides for the application of certain provisions of the Act on the Protection of Trade Secrets in infringement proceedings.
Sec. 16 to 20 of the Act on the Protection of Trade Secrets provide that the court may, at the request of a party, classify certain information in dispute as confidential. That information must then be treated as confidential by all parties during and after the conclusion of the proceedings. Moreover, the court may even limit the access to trade secrets to a certain number of reliable persons.
Sec. 145a Patent Act addresses another perennial issue in recent patent law discussion. The debate was particularly prevalent in the context of FRAND proceedings after the CJEU’s “Huawei/ZTE” decision. Such cases may require the plaintiff to submit license agreements concluded with third parties in order to prove that proposed licence terms do not discriminate against the defendant compared to other licensees. The defendants may also have to submit confidential data in order to properly defend themselves. However, the measures provided by the German Code of Civil Procedure for the protection of confidential information are less stringent compared to other jurisdictions. In this respect, the amendment recognizes the need for increased procedural protection of trade secrets in patent litigation.
While the amendments on the protection of trade secrets and the streamlining of nullity proceedings are to be generally welcomed from the point of view of the involved parties, one will have to see whether (and when) this “wish” for an early preliminary opinion will actually close the injunction gap.
The arguably most important amendment of the reform leaves key questions unresolved: Due to the chosen wording (broad legal terms subject to interpretation), it remains unclear whether the amendment really leads to an actual amendment of a court’s approach on the question of proportionality - or whether the result is merely an increased obligation on the parties to argue why or why not the new exception from enforcement of injunctive relief is to be applied and does not really change anything in practice. Time will tell when the first decisions following the reform are published.