Siemens IP chief on German reforms, 5G, and patent pools
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.
The new law came on the back of extensive debate over the balance of interests in one of the world’s most important patent jurisdictions. Patent owners had defended the automatic injunction as a key deterrent against infringement. But some implementers, particularly in the auto industry, had criticised the system as being overly weighted towards patent owners.
Speaking to WIPR, Beat Weibel, chief IP counsel at Siemens, says the reforms have shifted the balance of Germany’s patent laws in favour of implementers, and could have ramifications for the attractiveness of Germany as a patent jurisdiction.
“The basic drawback of the German legal system is that patent infringement is not discouraged,” Weibel says, adding: “One of the balancing factors we had to disincentivise infringement was the automatic injunction. The balance of the new law favours implementers and licensees.”
The reforms approved this month introduce the “principle of proportionality” into the realm of patent litigation. Effectively, this allows judges to weigh up whether an injunction would be proportionate to the harm caused by the infringer, rather than granting one automatically after a finding of infringement. This could have the knock-on effect of making patent litigation more complicated (and more expensive), Weibel predicts.
“One of the problems I see is that the proportionality defence is a very strong one. Defending lawyers, if they take their job seriously, will have to plead it in almost every case. So lawsuits are likely to become even more complex,” he says. The hope for patent owners is that case law and courts’ interpretation will act as a check on the potential of the new law to drag out litigation. “The signals I got [from the courts] are that it shouldn’t be a big change. But if proceedings take longer and are more complex, there may be a shift to other jurisdictions,” Weibel says.
The reforms are not necessarily a total defeat for patent owners. Crucially, lawmakers have included an unconditional right to compensation for patent owners where their IP has found to be infringed. This could help balance out the loss of the automatic injunction. Weibel hopes other elements of the law could help the system function better and streamline proceedings, especially when it comes to Germany’s “bifurcated” system of invalidity and infringement claims. In Germany, these types of claims are dealt with separately by different courts. This creates the risk of an “injunction gap”, where parties can be held liable for infringement even where the Patents Court has held a patent to be invalid. “The new law does allow for better coordination between the courts,” Weibel says, explaining: “A new clause in the law requires the Patents Court to issue an opinion on the validity of a patent within six months.”
Germany in the 5G era
All of these factors, and how they are interpreted by the courts, will determine whether Germany retains its status as one of the most important global venues for patent litigation. This will be especially significant in the era of 5G, which will see new sectors grapple with the technicalities of standard-essential patent (SEP) licensing. Germany has, historically, been the site of some major SEP infringement cases. Both patent owners and implementers, as well as the EU Commission, have expressed hope that 5G technology will not be drowned in extensive litigation. One of the key problems is that 5G tech is expected to be far more ubiquitous than previous generations of telecommunications standards, meaning lots of new entrants into the field with little prior experience of SEP licensing.
Weibel says lawmakers must intervene to ensure widespread access to the technology, and learn from the failures of 3G and 4G: “In 5G, it’s really vital for tech distribution that we have well-functioning patent pools. I emphasise well-functioning—in 3G and 4G we don’t have those, because we lack participation from patent owners and implementers.”
“The politicians should build a framework that favours 5G pools and avoids the obstacles associated with 3G and 4G. We could incentivise participation in 5G pools, for example by tax benefits, so you can deduct your payments to the pool from your tax burden. Patent owners could also have a better tax rate for their income from 5G pools. A 5G patent war is not beneficial for anybody.”
Another front in the 5G licensing debate is the supposed rise of ‘patent trolls’ in Europe. Carmakers such as Volkswagen and BMW have called on the EU to ensure that non-practising entities (NPEs) can’t exploit imbalances in the EU’s IP system to extract excessive licensing fees from implementers. Major SEP owners, meanwhile, respond that many so-called NPEs are legitimate companies which have invested extensively in research and development. This tension is likely to become more acute where whole new sectors of the economy will need to seek licences for 5G tech.
Weibel, similar to many leading patent owners, argues that the “patent troll phenomenon is still mainly a US one”. There has been criticism, including from SEP-owner group IP Europe, that implementers are effectively trying to import the debate from the US in order to weaken patent protection in the EU. “[Trolls] are a nuisance, but they are part of a strong patent system,” Weibel says. “In the same way there are malicious landlords, there are a few bad faith patent owners. But you can’t throw all NPEs in the troll basket. Those that have been the technology leaders but don’t necessarily practice the tech anymore, like Nokia and Ericsson, still deserve a return on their investment.”
Did you enjoy reading this story? Sign up to our free daily newsletters and get stories sent like this straight to your inbox
