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11 June 2021PatentsRory O'Neill

Implementers praise German patent reforms

Implementers have welcomed reforms to Germany’s laws which weaken patent owners’ right to an injunction if successful in litigation, but their impact on case law remains to be seen.

The reforms, passed this morning, June 11 by the Bundestag, allow judges to apply the principle of proportionality when weighing up requests for patent injunctions.

“This principle is a basic tenet of German legal philosophy, meaning any sanction must be proportionate to the offence committed. But patent law was essentially exempt from that,” Ludwig von Reiche, managing director of Nvidia ARC, told WIPR. “We expect courts to have to consider it if it is pleaded. It will most likely be pleaded in many cases and case law needs to be established,” added von Reiche, who also acts as chair of IP2Innovate’s German group.

The parliament’s justification for the law (which doesn’t form part of the legal text) also suggested that patent assertion entities with no interest in implementing the technology covered by a patent should receive lower compensation in infringement cases.

Implementers in the auto industry have been among the strongest proponents of weakening the right to an automatic injunction, arguing it unfairly imbalances the system in favour of patent owners. Uwe Wiesner, head of IP at Volkswagen, had previously criticised the German law on that basis.

It remains to be seen what practical effect the reforms will have in case law, and how often infringers will be able to escape injunctive relief granted to the plaintiff.

A source at a technology patent owner said the company didn’t expect “big changes” in practice. “The user/implementer side often talks about ‘automatic injunctions’ which do not exist, and is misleading. However, injunctions were and will remain the standard remedy for patent infringement, both to incentify R&D and to avoid hold out,” they said.

The source also said the law was unlikely to impact litigation concerning standard-essential patents (SEPs), which is governed by the Court of Justice of the European Union’s 2015 judgment in Huawei v ZTE: “If the requirements set there are met, then there is no room for an additional proportionality check.”

But a spokesperson for IP Europe, which includes major telecoms patent owners such as Nokia, Ericsson, and Orange, criticised the reforms, which have “the potential to increase the cost of litigation and could jeopardise the incentives for continued innovation,” they said.

They noted, however, that under the new law, patent owners will still have an unconditional right to compensation where an injunction is deemed to be disproportionate.

The IP2Innovate coalition, which represents implementers including Intel, BMW and Daimler, was quick to welcome the legislation, describing it as an “important step towards creating a better balance between patent protection and innovation protection”.

Reinhold Diener, head of IP at BMW, said the law would offer implementers the “opportunity to reduce a considerable locational disadvantage. The proportionality test in patent infringement proceedings is particularly important in this context”.

Christin Eisenschmid, managing director of Intel Germany, also praised the new law, remarking that the company had seen “first-hand how unconditional injunctive relief under patent law can hinder the market implementation of new technologies, slow down innovation and harm our customers and consumers”.

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25 June 2021   Earlier this month, the German Bundestag approved reforms to the country’s patent laws which abolished patent owners’ right to a so-called ‘automatic injunction’ in infringement cases.
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25 November 2021   Trade group IP2Innovate has warned that courts across Europe are failing to consider proportionality in patent cases, while urging the European Commission to promote similar reforms to those recently enacted in Germany.