1. “Use-by-periods and proportionality in German law” Injunctions and Flexibility in Patent Law – Civil Law and Common Law Perspectives Ludwig Maximilian University Munich, 4 April by Dr Klaus Grabinski Federal Court of Justice (Bundesgerichtshof), Germany

2. Use-by-periods and proportionality in German law
Patent exclusivity
Section 9 German Patent Act
Prohibition of direct infringement
“The patent shall have the effect that the proprietor of the patent alone shall be entitled to use the patented invention within the scope of the law in force.
In the absence of the consent of the proprietor of the patent, any third party shall be prohibited from
producing, offering, putting on the market or using a product which is the subject-matter of the patent, or …
using a process which is the subject-matter of the patent, or …
offering, placing on the market or using a product which is produced directly by a process which is the subject-matter of the patent, or …
Section 10 German Patent Act
Prohibition of indirect infringement
Use-by-periods and proportionality in German law

3. Use-by-periods and proportionality in German law
Reason for patent exclusivity
The inventor makes an invention and discloses it to the public.
In return, the patent confers on the inventor (patent proprietor) the right to exclude others from making use of the invention for a limited time.
Use-by-periods and proportionality in German law

4. Use-by-periods and proportionality in German law
Limitations of patent exclusivity
Exceptions from patentability, section 2 qq. Patent Act
commercial exploitation contrary to ordre public,
plant and animal varieties,
human body, treatment of the human or animal body by surgery or therapy,
computer program as such, …
Limitations of the effect of a patent, section 11 Patent Act
non-commercial acts,
Research and Bolar exemption,
extemporaneous preparation by a pharmacy, etc.
Use-by-periods and proportionality in German law

5. Use-by-periods and proportionality in German law
Limitations of remedies / Defences
Compulsory Licence, sec. 24 Patent Act
unsuccessful attempt to obtain a licence from the patent proprietor on reasonable terms
public interest has to call for the grant of a compulsory licence
yes, in the medical field when a medicament for treating a serious illness
features therapeutic properties which other medicaments available on the market do not have or
avoids undesirable side effects which appear with other medicaments available on the market (BGH – Raltegravir)
may also be taken into consideration when the national infrastructure would be a risk.
Use-by-periods and proportionality in German law

6. Use-by-periods and proportionality in German law
Limitations of remedies / Defences
Standard Essential Patents
The exercise of an exclusive IP right cannot in itself constitute an abuse of a dominant market position.
However, the exercise of an IP right may, in exceptional circumstances [overlap with dominant market position due to the standard essentiality], involve abusive conduct for the purposes of Art. 102 TFEU.
The holder of an SEP who has give an irrevocable FRAND undertaking does not abuse its dominant market position by seeking injunctive relief for infringement of the SEP as long as it observes the HUAWEI requirements (CJEU – Huawei/ZTE).
Use-by-periods and proportionality in German law

7. Use-by-periods and proportionality in German law
Limitations of remedies / Defences
Second medical use patents / indirect infringement
In case of a known compound that can be used off-patent for a first indication (e.g. as a pain killer) and patent-infringing for a second indication (e.g. as a blood thinner) injunctive relief has to be limited to the patent-infringing use and should have no effect on the off-patent use of the compound provided the off-patent use is of some significance.
Use-by-periods and proportionality in German law

8. Use-by-periods and proportionality in German law
Limitations of remedies / Defences
Disproportionality defence, sec. 140a (4) Patent Act
is of concern (only) with regard to corrective measures (recall/definitive removal from the channels of commerce and destruction of infringing goods), not permanent injunctions
implements Art. 10 (3) Enforcement Directive 2004/48/EC:
“In considering a request for corrective measures, the need for proportionality between the seriousness of the infringement and the remedies ordered as well as the interests of third parties shall be taken into account.”
Abuse of right …
Use-by-periods and proportionality in German law

9. Use-by-periods and proportionality in German law
Limitations of enforcement
Injunctive order is only enforceable after plaintiff has posted security (section 709 Code of Civil Procedure)
Allowance to avert enforcement of a judgement (section 712 Code of Civil Procedure)
Provision requires that enforcement of the judgement will cause irreparable harm to the creditor (infringer) which goes significantly beyond the regular effects of an enforcement of the judgement on the creditor.
e.g. economic existence of the creditor would be at risk; loss of jobs is generally not sufficient.
Use-by-periods and proportionality in German law

10. Use-by-periods and proportionality in German law
General
Established case law of the BGH, in particular in the field of unfair competition law (e.g. BGH, GRUR 1960, 563 – Alterswerbung; GRUR 1974, 735 – Pharmamedan)
Limitation of the claim for cease and desist based on the principle of proportionality as part of the principle of good faith.
Weighing of legitimate interests of the creditor and the debtor
Points of consideration:
degree of fault
extraordinary harm for the debtor in case of an immediate enforcement of the injunction
time factor
Use-by-periods and proportionality in German law

11. Use-by-periods and proportionality in German law
Facts of the “Heat Exchanger” case
The patent protects a system for heating the air streaming around neck and shoulders of a person sitting in a convertible car (“air scarf”).
Proprietor brought an action for infringement of its patent.
Defendant requested the action to be dismissed because of non-infringement or, as an auxiliary request, to grant a use- by-period and dismiss at least the claim to cease and desist from using the patent.
The action had no success in both lower instances.
However, on review the BGH found the patent to be infringed by equivalent means.
Use-by-periods and proportionality in German law

12. Use-by-periods and proportionality in German law
Use-by-period in patent infringement cases
“Heat exchanger” is the first and up to now only case in which the BGH addressed the issue.
The court found that use-by-period may come into consideration also in patent infringement cases but only under strict conditions.
The normal economic harm caused by the enforcement of an injunction for patent infringement on the infringer does not justify the grant of a use-by-period.
Only economic consequences of an immediate enforcement of the injunction on the infringer that go beyond this normal harm may give reason to limit the effects of the patent by granting a use-by-period.
Use-by-periods and proportionality in German law

13. Use-by-periods and proportionality in German law
The BGH held that this approach is in line with Art. 30 TRIPS Agreement:
Art. 30 TRIPS Members may provide limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not reasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties.”
Use-by-periods and proportionality in German law

14. Use-by-periods and proportionality in German law
The BGH also explained that its approach is no conflict with Art. 3 (1) and (2) Enforcement Directive 2004/48/EC:
There is no provision like Art. 10 (3) Dir. 2004/48/EC (see also recital 24) that requires the judge to take into account proportionality between the seriousness of the infringement and the remedies ordered as well as the interests of third parties with regard to injunction under Art. 11 Dir. 2004/48/EC.
Art. 3 (1) (2) Enforcement Directive
Measures, procedures and remedies …
shall be fair and equitable and shall not be unnecessarily complicated or costly, or entail unreasonable time-limits or unwarranted delays,
shall also be effective, proportionate and dissuasive and shall be applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse.
Use-by-periods and proportionality in German law

15. Use-by-periods and proportionality in German law
The BGH referred to English case law according to which:
injunctive orders are to be unconditionally pronounced as long as they are not oppressive which can only be assumed when the effect of the injunctive order is grossly disproportionate to the advantage of the protected right (HC, Pumfrey J [2005] EWHC 282 (ch) – Navitaire v Easy Jet; CA, Jacobs LJ [2009] EWCA Civ 1513 – Virgin Atlantic v Premium; HC Arnold J [2013] EWHC 3778 – HTC v Nokia].
Use-by-periods and proportionality in German law

16. Use-by-periods and proportionality in German law
In the “Heat exchanger” case a use-by-period was not granted based on the following considerations:
The patented heating system (“air scarf”) was not important for the general operation of the convertible car and could, therefore, not be considered to be a functionally substantial part of it.
Defendant did not show willingness to take a licence from the proprietor on reasonable terms.
There was no indication that not granting the use-by-period would cause serious economic harm to the defendant’s business.
Since the remaining duration of the patent was about 6 months after delivery of the BGH judgement defendant had to bridge only that rather short time.
Use-by-periods and proportionality in German law

17. Thank you for your attention!
End
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