1. Tongji University, March 2010 www.rokh-ip.com
EU – CHINA Training on Patent Litigation Practice in Europe and Germany Overview of EU Patent System and German Patent System Prof. Dr. Christian Osterrieth, attorney at law, Düsseldorf
Tongji University, March 2010

2. Overview The system of patent litigation in Germany
Jurisdiction in Germany – Patent infringing actions
III. Duration and costs of litigation
Potential Remedies
Excursus: Gaining Evidence 2

3. I. The system of patent litigation
1) The relevant Courts
Infringement
12 specialized Regional Courts
No technical judges
more than 60% of all German cases decided in Düsseldorf, further relevant courts: Mannheim, Frankfurt, Munich, Hamburg
Higher Regional Courts (Appeal Court)
Federal Supreme Court
Validity
GPTO / EPO
Federal Patent Court (3 technical + 2 legally trained judges)
Federal Supreme Court (no technical judges)

4. I. The system of patent litigation
2) Separation principle:
Civil Courts deal exclusively with infringement
Federal Patent Court deals exclusively with validity in first instance
Federal Supreme Court = third instance in infringement and second instance in nullity proceedings

5. I. The system of patent litigation
2) Separation principle: (c’td):
Consequences on litigation:
Patent-owner friendly system
Infringement court can only stay proceedings if likelihood of invalidation of patent is high (~ 10 % of all cases)
Enforceable decisions can be obtained within short time without substantial discussion on validity
60-70% (600 cases/year) of patent cases filed in Europe are handled in Germany, most in Düsseldorf

6. I. The system of patent litigation
3) Claim construction
Basis: Sec. 69 EPC + Prot., Sec.14 Patent Act
Claims, description & figures, cited prior art, general knowledge of skilled person
File history in principle not relevant (no file wrapper estoppel) except bona fide limitation between same parties
“each patent constitutes its own dictionary” (Federal Supreme Court “Tension Screw”)
Broad functional approach to literal infringement

7. I. The system of patent litigation
3) Claim construction
Broad functional approach to literal infringement
Protection scope of a patent claim is defined by interpreting the features and terms of a patent claim in light of the patent spec. and drawings and thus determining the technical function as intended by the disclosed invention 7

8. I. The system of patent litigation
3) Claim construction
Basic principles under German law:
Understanding of a person skilled in the art is decisive.
Person skilled in the art attaches value to the technical function of each feature.
Person skilled in the art does not consider features separately but within the context of the entire claim 8

9. I. The system of patent litigation
3) Claim construction
Infringement under the Doctrine of Equivalents:
The scope of the patent can extend beyond the wording of the claim:
Not only literal use of the technical teaching presents a patent infringement but also the use of an equivalent.
Three conditions:
Means is equally effective
Means is detectable on the basis of the claims
Means is of equal value 9

10. II. Jurisdiction in Germany
Patent infringing actions (Sec. 9 German Patent Act):
Generally it is prohibited to:
Manufacture
Offer
Put on the market
Use a product which is the subject matter of a patent
Import or possess such product for the above purposes

11. II. Jurisdiction in Germany
Particularly relevant: Offer
independent infringing act which is to be understood in an economic sense – substantially wider than offer under contract law
Covers any act facilitating or fostering the accomplishment of a deal on a product (includes offers via telephone, in writing, by exhibition etc.)
Irrelevant whether it is directed to a time after lapse of patent protection (Federal Supreme Court decision of Simvastatin)

12. II. Jurisdiction in Germany
Offer (cont’d):
Offering on the Internet:
Use of English domain does not necessarily make a difference as English language is considered as the “language of the internet” by German Courts
There must not be a “national relation”
Disclaimer “not available for sale in Germany” can prevent

13. II. Jurisdiction in Germany
Offer (cont’d):
Disclaimer may not prevent if an infringing product is displayed on a trade fair on German territory
Also the offer in Germany to deliver a product infringing a German patent from a patent-free foreign country to another patent-free foreign country can be regarded patent infringement

14. III. Duration and Costs 1) Duration of proceedings (Regional Court)
Regular track
Enforceable decision (against bond) within 12 months (as a general rule) from filing suit depending on regional court and on technical area concerned
Whereas in invalidity proceedings: months
Mainly based on written arguments
1 hearing on the merits (1h-3h oral pleadings)
~90% of cases go to trial
Fast track (preliminary injunction)
Injunction within several hours (trade fair) ex parte and a few weeks with other side being heard (in writing)
But: special requirements (see next slide)

15. III. Duration and Costs 1) Duration (cont’d)
Requirements for preliminary injunction (“balance of interests”)
Clear infringement
Strong validity arguments
Urgency: request filed within short period of time after knowledge of all facts establishing infringement (typically 4 weeks)

16. III. Duration and Costs 2) Costs of proceedings (Regional Court)
“Costs” include
Infringement and nullity/opposition proceedings
Attorney and patent attorney fees
Translations
Court fees
However, there is no discovery resp. no related costs
Average costs for first instance proceedings range from
From EUR for simple mechanical matters
To EUR for complex electronic or pharmaceutical matters
Cost reimbursement
In principle, loosing party has to reimburse the winner’s costs
Based on statutory fee calculation (estimated “value in dispute”)
Works for values in dispute above EUR 5/20 million

17. IV. Potential Remedies Injunction – Sect. 139 Patent Act
Accounts on profits – Sect. 140b Patent Act
Damages – Sect. 139 Patent Act
Destruction – Sect. 140a Patent Act
Border Seizure – Sect. 142b Patent Act
Criminal offense – Sect. 142 Patent Act
Further potential remedies after implementation of “Enforcement Directive” (2004/48/EG) into German law, effective as of 1 September 2008:
Claim for inspection/presentation - Sect.140c para. 1 Patent Act
Claim for removal from distribution channels - Sect.140a para. 3 Patent Act
Possibility to publish judicial decisions - Sec.140e Patent Act

18. IV. Potential Remedies Damages
No punitive damages (hence no discovery on willfulness required)
Patentee’s choice of:
“reasonable royalty”
infringer’s profits or
patentee’s loss of profits

19. IV. Potential Remedies Damages - Reasonable royalty
Market-usual royalty rates applied
Range of damages in practice: 3-8% of turnover
Relevance of interests, e.g.:
Interest advantage of infringer
Economic relevance of patent
Lack of non-infringing alternatives
Monopoly of patent owner
Infringer friendly but in general easy to practice 19

20. IV. Potential Remedies Damages – Infringer’s profits
Importance considerably increased since decision of Federal Supreme Court 2 Nov “Gemeinkostenanteil” (“Overhead Expenses”)
Calculated without deduction of overhead costs
Limited to profits caused by infringement as such

21. IV. Potential Remedies Damages – Patentee’s loss of profits
Most difficult method to determine damages
Disadvantage: Patentee is required to show the extent loss of profits leading to an exposure of the profit calculation and thus of business internals to its competitors 21

22. IV. Potential Remedies Criminal offense – Sect. 142 Patent Act
Patent infringement is considered a criminal offense
Possibility for patent owner to initiate criminal prosecution
But: patent infringement must be intentional
Likelihood of patent infringement may serve as legal ground for seizing goods on trade fair

23. IV. Potential Remedies Border Seizure
European Law (EG) No. 1383/2001 applies for goods imported from Non-EU states
Sec. 142a German Patent Act applies for goods moved between EU-states
Request of right holder with custom authorities to seize goods
Can be applied on trade fair if goods still are subject to custom´s jurisdiction

24. IV. Potential Remedies Border Seizure
For seizure under (EG) No. 1383/2001 suspicion of a protection right infringement is sufficient
For seizure under Sec. 142a German Patent Act infringement of protection right must be obvious
Possible remedy: Opposition within two weeks after service of notice of seizure

25. V. Excursus: Gaining Evidence
Public Sources, i.e.:
Commercial register, Internet, Google, Websites of alleged infringers
Credit information companies or investigation companies,
Test buying: Buying presumed infringing object and analyzing it
Trade fairs
Product catalogue, professional journals, press releases
By Order of the Court
Sec. 140c para. 1 Patent Act/Sec. 809 German Civil Code (GCC): Inspection
Sec. 485 et. seq. of the German Code of Civil Procedure (GCCP): Independent proceeding for the preservation of evidence
According to the wording of new Sec. 140c, the procedure provided therein should also be possible prior to starting litigation 25

26. V. Excursus: Gaining Evidence
Particularly relevant: Inspection acc. to Sec. 140c Patent Act/Sec. 809 GCC
Sec. 809 GCC provides for inspection of products or devices if:
There is sufficient likelihood that another person uses the patented invention (Sec. 140c para. 1 Patent Act)
Someone has a claim in consideration of a subject against the holder or wants to obtain certainty if he has such claim
Request for inspection can be filed in various ways:
In proceedings on the merits (in parallel to injunction/damages, but time consuming)
In preliminary injunction proceedings (Sec. 140c para. 3 Patent Act) 26

27. V. Excursus: Gaining Evidence
Current practice of District Court of Düsseldorf:
Court orders:
To obtain expert opinion on the question whether the attacked embodiment makes use of certain features of the patent
Expert refrains from any direct contact with the Claimant and corresponds with the Claimant via the court only if confidentiality is an issue
Expert shall inspect the embodiment without prior hearing of Defendant if matter is urgent
Claimant's counsels may be present at the inspection, but must keep all information confidential also vis-à-vis Claimant itself 27

28. V. Excursus: Gaining Evidence
Current practice (cont´d):
Court orders upon Claimant's request Defendants duty to tolerate:
Defendant to refrain from any alterations of the product; in case of non-compliance fine or imprisonment can be ordered
The expert may inspect the product and, if necessary, put it into operation
Defendant may comment on confidentiality issues after inspection; court will then decide if expert opinion is made available to Claimant
Defendant bears the costs of proceedings for preliminary injunction 28

29. Christian.Osterieth@rokh-ip.com Gisbert.Steinacker@rokh-ip.com
Steinstraße 20 Tel. +49 (0)
40212 Düsseldorf Fax +49 (0)