How a top German court delivered a milestone ruling
On November 14, 2023, the German Federal Court of Justice (the FCJ) issued a landmark decision with regard to the scope of the claims for the rendering of accounts, information and damages in a patent dispute between Ranpak Corporation and Storopack Hans Reichenecker.
The case concerned profits made after the expiration of the patent at issue based on infringing activities committed during the lifetime of the patent and respective convoyed paper sales.
1. Facts of the case
In 2014, Ranpak sued Storopack for infringement of EP 0 776 760 (filing date: July 21, 1995) before the Regional Court of Mannheim in Germany.
Storopack manufactures and distributes papier cushioning machines, and also leases and rents the machines to customers and/or distributors in Germany. In addition, Storopack distributes paper which can be used with these machines to produce paper cushioning products.
The Regional Court of Mannheim found that two of Storopack’s machines infringe the patent. Therefore, the Court ordered, inter alia, that Storopack is liable for damages and must render accounts and provide information with regard to its business made with (a) these two machines and (b) respective paper sales, without limiting these claims in time—although the patent expired during the first instance proceedings on July 21, 2015.
Accordingly, Storopack was ordered to render accounts and provide information regarding profits made after the expiration of the patent.
Storopack lodged an appeal with the Karlsruhe Courts of Appeal, arguing in particular that the claims for rendering of accounts and for providing information must be limited in time and could not cover profits made after the expiration of the patent.
Storopack’s appeal was rejected after the patent was re-instated by the FCJ in parallel nullity proceedings (court docket: X ZR 46/17)
Subsequently, Storopack lodged an appeal against the denial to leave for a legal appeal. The FCJ admitted the legal appeal (which is unusual in German practice).
Ultimately, after further briefing and an oral hearing, the FCJ rejected Storopack’s legal appeal (this is another exception because legal appeals admitted by the FCJ are usually successful).
2. Why is the case so important?
It is legally important because a pair of hitherto open legal questions have now been finally answered by the FCJ. The case is also economically important because parallel damages (quantum) proceedings are pending in which Ranpak claims about €122 million ($132 million) in damages where a large portion relates to profits made by Storopack after the expiration of the patent.
First, the FCJ found that the claims for damages, rendering of accounts and for providing information are not limited to profits made with infringing products. In addition, convoyed profits are encompassed as well if they are causally related to the infringement of the patent.
Essentially, profits made with the paper used in the machines do likewise count. This was already established by the Düsseldorf Court of Appeals in a previous case between the parties (court docket: I-2 U 82/02) but not yet confirmed by the FCJ.
Now the FCJ specified that profits with convoyed sales must be taken into account even if the convoyed sales themselves do not constitute an act of use within the meaning of Section 9 0r 10 German Patent Act.
A causal connection
A causal connection is good enough according to the FCJ and can be assumed if the profits made with convoyed sales are associated with the patent infringing products (by using the patent technology as a ‘springboard’ for additional business).
In the present case the paper sales were triggered by infringing the patent through marketing the infringing machines. Without those machines, the paper would not have been sold to the machine customers, at least not to the same extent.
Second, and even more important, the claims for damages, rendering of accounts and for providing information are not limited to profits made with infringing products and convoyed sales during the lifetime of the patent.
Rather, profits are also covered which are incurred after the lifetime of the patent based on infringing acts which occurred during the lifetime of the patent. The respective liability routes from the economic fact that the infringer illegally uses concrete market opportunities reserved to the rights owner and impairs the right owner’s business/market share attributed to him based on patent protection.
The objective of the acknowledged methods for calculating damages is to determine the amount that is necessary and appropriate to compensate for this damage, and to determine the economic value of the property right and the market opportunity enshrined in it. It is worth mentioning that these legal principles apply to all three methods according to which damages can be claimed under the German system, namely (a) lost own profit, (b) infringer’s profit and (c) reasonable royalties.
Impact and outlook
The decision further clarifies the German law on damages for patent infringement and harmonises it with similar case law stemming from France and the UK where the so-called ‘springboard doctrine’ was developed. It therefore strengthens the position of patent owners and adds value to patent protection. It may well be influential for the future practice of the newly established European Unified Patent Court.
Tilman Müller-Stoy is a partner at Bardehle Pagenberg
Sebastian Horlemann is counsel at Bardehle Pagenberg
