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The German Federal Court of Justice granted the country’s first compulsory licence in a significant year for patent jurisprudence, as Jochen Bühling of Krieger Mes & Graf v der Groeben explains.
The fair, reasonable, and non-discriminatory terms (FRAND) discussion has again picked up in Germany after several decisions were issued by the courts in Düsseldorf and Mannheim following the CJEU decision in Huawei v ZTE. Currently, one of the cases decided by the Court of Appeal of Düsseldorf (Sisvel v Haier) is pending before the Federal Court of Justice (FCJ) (docket no. KZR 36/17), which will now have the opportunity to revisit its findings in the earlier Orange Book judgment of 2009.
In another important patent matter the FCJ, for the first time, allowed a compulsory licence for a pharmaceutical active ingredient under a patent (BGH decision of July 11, 2017, docket no X ZB 2/17 - Raltegravir). In this case, the US group Merck & Co, which supplies its medicament Isentress (raltegravir) in a number of countries, including Germany, for the treatment of certain patient groups for HIV infections, filed a motion with the German Federal Patent Court against the Japanese company Shionogi, owner of European patent 1422218 concerning an antiviral agent.
After Shionogi had raised claims against Merck for patent infringement, the parties negotiated a licence agreement but did not succeed in concluding it. Parallel to an infringement action before the District Court of Düsseldorf launched by Shionogi, Merck requested a compulsory licence under Section 24 of the German Patent Act by way of an action on the merits and also by way of a preliminary ruling of the Federal Patent Court.
Having considered the specific circumstances of the case, the court granted a provisional compulsory licence which allowed Merck to continue marketing Isentress in the four forms which were on the market at the time for the treatment of HIV-infected patients and patients suffering from AIDS.
Upon appeal the FCJ confirmed this decision and upheld the limited provisional licence. The court balanced the interest of the public in a further supply of the medicament at stake against the interest of the patentee in enforcing rights under the granted patent and concluded that the interest of the public prevailed. This was underlined by the fact that the compulsory licence was not granted without limitations as originally requested by Merck, but was limited to the existing forms of the medicament which were already available on the German market.
The FCJ had previously rejected all applications for compulsory licences, but it now held the rather strict requirements of section 24 of the Patent Act fulfilled. First, the petitioners had sufficiently and seriously tried to obtain a licence from the patentee on a voluntary basis. In this context, the FCJ also allowed the petitioners to take the potential invalidity of the patent into consideration when making an offer for reasonable royalties.
A compulsory licence is not to be assessed differently from a voluntary licence. The risk of having the patent invalidated must be reflected in the royalty rate. It may therefore be lower in cases where the licensee undertakes not to file an invalidation action so that the royalties remain principally the same for the remainder of the patent term. It has to be noted that in this case the final determination of the licence fees and of the details of the accounting to be rendered by the licensee were left to the case on the merits. The court only ordered that the petitioner was provisionally allowed to use the patent for the specific medicaments listed in the order.
With regard to the public interest, the FCJ held it sufficient that only a relatively small group of patients was concerned. Under the specific circumstances these patients would be left without a proper treatment if the medicament had to be taken off the market. At the same time, the court did not go beyond the limits of allowing the medicament only in the available forms. It did not order further limits, such as limiting treatment to specific patient groups.
In the meantime the European Patent Office has revoked the patent in its entirety in opposition proceedings following Merck’s appeal. This means that the basis and the need for a compulsory licence in this specific case are gone. There will be no further decision on the merits with regard to the compulsory licence by the Federal Patent Court or the FCJ. Nevertheless, this decision remains a landmark one which will undoubtedly have a great impact on the future patent landscape. n
Jochen Bühling is a partner at Krieger Mes & Graf v der Groeben. He can be contacted at: firstname.lastname@example.org
Germany, patent jurisprudence, Krieger Mes & Graf v der Groeben, FRAND, WIPR Leaders, European Patent Office, licence, German Federal Court of Justice,