Indirect infringement of domestic patents abroad
In a recent decision, German’s Federal Court of Justice (Bundesgerichtshof) confirmed a judgment of the Karlsruhe Appeal Court that said a foreign (Chinese) supplier was liable for indirect patent infringement in Germany through its actions in China.
In previous decisions, the Federal Court of Justice held that foreign suppliers delivering products from one foreign country to another may be liable for direct patent infringement in Germany (section 9, German Patent Act) if they knew about the patent and Germany as final destination for the goods (Funkuhr I). However, this case does not directly apply to indirect infringements, due to different prerequisites.
According to section 10(1), German Patent Act, which deals with indirect infringements:
“A patent shall have the further effect that any third party not having the consent of the patentee shall be prohibited from offering or supplying within the territory to which this act applies to any other persons, other than such persons authorised to use the patented invention, means relating to an essential element of said invention for use of the invention within the territory to which this act applies, if said third party knows or it is obvious from the circumstances that such means are suitable and intended for use of the invention.”
Unlike with direct infringements, section 10 requires a “double domestic context”: the offering for sale or the supplying of the means, and the intended use of the means, both have to take place within Germany.
In this regard, the Federal Court of Justice, in its Funkuhr II decision held that indirect infringement also arises when means essential for a protected invention are supplied from Germany to foreign countries if the goods contribute to the manufacture of an invention intended for Germany. However, so far, it has not been decided by the Federal Court of Justice whether indirect infringement may also arise where the delivery of the means takes place between foreign countries.
"Although the defendant sold the devices and disposed control in China, the court found indirect infringement of the German part of the European patent at stake."
In fact, this was the situation in the case at hand. The defendant was a Chinese original equipment manufacturer. It produced and distributed MP2 devices that were said to relate to essential elements for the patented process concerning transmitting digitised block-coded audio signals using scale factors. The Chinese company sold and delivered the devices within China to a German and a Chinese customer, which both shipped the products to Germany. The plaintiff was, however, unable to prove that the defendant had directly delivered the products to Germany.
The District Court of Mannheim denied indirect infringement based on the “double domestic context”, because there was no loss of control over the devices in Germany—only abroad. The Karlsruhe Appeal Court set aside the district court’s decision, holding that the principles laid down in the Funkuhr I decision should also apply to indirect patent infringements.
It reasoned that the “double domestic context” does not require loss of control in Germany, as long as the defendant knew that the means relating to the essential element for the patented process was destined for the German market.
The Federal Court of Justice confirmed these findings. It held that the defendant was aware of the fact that the German and the Chinese customer were both delivering the devices to Germany. It highlighted that the German company, which was itself a customer of the Chinese company, was explicitly mentioned on the defendant’s internet site as a distributor for the European market. Therefore, although the defendant sold the devices and disposed control in China, the court found indirect infringement of the German part of the European patent at stake.
This ruling may be seen as complementing the previous Funkuhr decisions and extending the liability of foreign companies in cases of indirect patent infringement.
The decision is also interesting as it deals in detail with the requirements for means relating to an essential element of the invention in cases where the means is not already part of the patent claim but rather a pre-condition for making use of the invention.
Andreas Kramer is an attorney-at-law at Krieger Mes & Graf v. der Groeben. He can be contacted at: andreas.kramer@krieger-mes.de
