Germany: German Patent Disputes Newly Spiced

In recent years there has been a substantial increase in patent lawsuits before the German Courts. Many of these have been instigated by plaintiffs from the US, the UK and other European countries, and it is not unusual for the defendant party to also be non-German. In fact the German patent courts in general, and the patent-specialized District Court of Düsseldorf in particular, are Europe's most frequented patent venue, with some 500-600 cases being tried in Düsseldorf every year. The time factor: First instance cases can be expected to take less than one year until a decision is rendered. Preliminary injunctions may be granted within days and without a hearing, if infringement and validity of the patent are demonstrably clear and the case is urgent.

A fundamental distinction of the German system rests with the formal division of opposition and nullity proceedings on the one hand – these are conducted before the EPO's judicial boards and the German Federal Patent Court (both in Munich) – and separate infringement proceedings, which are heard by patent-specialized District Courts, on the other.

An infringement court can stay infringement proceedings at the request of the defendant in view of pending parallel opposition or nullity proceedings, but will do so only if a nullification or revocation of the patent by the Federal Patent Court is highly probable. This may constitute an advantage for the plaintiff, since infringement litigation is usually faster than litigation on validity (challenging the validity of patents being a common tactic of the defense).

In addition to this, a number of new trends have emerged in the German patents courts which seem likely to further strengthen their position as the courts of choice for European patent disputes.

Most recently, a new law, in force only since the beginning of July, is updating the regulation of lawyer's minimum statutory fees and the reimbursement of costs after a court decision. This has made trial costs on the whole even more calculable, with the value in litigation as determined by the court having a newly set upper limit of E30m (£20m) for each individual matter, leading, for example, to a maximum cost reimbursement exposure of roughly E450,000 (£300,000) for an unsuccessful patentee to a winning defendant for the entire first instance infringement suit. This facilitates responsible risk and cost analysis which is a standard element of contemporary international patent litigation.

Following a decision of the German Federal Supreme Court in 2001, conditions for enforcing a claim to the payment of compensation for damages have changed to the better: Now overhead costs can no longer be deducted by the patent infringing company from the sum it has to pay to the winning party. The new case law is expected to increase damage awards, in particular if the profit the loosing party has actually made from the sales of the infringing product is claimed.

The German courts tend to be particularly liberal on the application of questions of territoriality, including acts of patent infringement committed via the internet. A company may therefore be held liable, under certain circumstances, if it offers a product protected by a German patent on an internet site that can be retrieved by potential customers from a PC in Germany. If the manufacturer or importer of infringing goods operates from outside Germany, established case law will effectively block common escape routes such as the hiding behind externally owned distribution networks or third party importers.

Cases are mostly decided on the basis of undisputed facts or mutual presentations without taking formal evidence and without cross examination of witnesses. There is no general discovery, as in the US. However, a 2002 reform of the German Civil Procedural Code has opened a certain possibility for limited discovery proceedings in patent infringement cases. Before the reform, the burden of proof rested exclusively with the plaintiff, who often was in the difficult position of having to procure evidence of patent infringement from the defendant's camp. The case of Faxkarte [2002] has set a precedent, giving the plaintiff the opportunity to lodge a claim for discovery proceedings that are limited to documents and objects relating to the infringing act or product.