Ex Parte Proceedings Without Defendant Involvement Violate German Constitutional Law
In two recent decisions, the German Federal Constitutional Court declared preliminary injunctions (PIs) unconstitutional if they are granted without hearing or advance notice to the defendant. Case Nos. 1 BvR 1783/17, 1 BvR 2421/17 (Sept. 30, 2018).
Because of the particular urgency of injunctive relief or counterstatement claims against allegedly false statements in the media, German courts historically have often granted ex parte PIs. However, many courts will now need to adopt new procedures in order to avoid violating a defendant’s constitutional right to be heard and to have procedural equality. These two Federal Constitutional Court decisions also will likely have an impact on the broader enforcement of intellectual property rights, such as patent rights.
The first of the two cases (1 BvR 2421/17) resulted from a constitutional complaint filed by a large German publishing house against an ex parte PI granted by the Hamburg Appeal Court (Oberlandesgericht). In a May 2017 printed publication, a publisher reported on a TV moderator’s tax-saving strategies. The moderator subsequently requested that the publisher release a counterstatement. After the publisher rejected this request, the moderator asserted a counterstatement claim before the Hamburg District Court (Landgericht). After three rejections of his claim by that court, additional correspondence and a telephone call occurred between a judge and the lawyers representing the moderator. As a consequence, on October 5, 2017, the Hamburg Appeal Court issued a PI ordering that the publisher release a counterstatement. Prior to the issuance of this PI order, the publisher had not been informed about any of the procedural steps that led to the PI grant, which transpired over a four-month period. In response to the order, the publisher filed a constitutional complaint.
In the second case (1 BvR 1783/17), a German editorial research network faced a similar situation. On June 7, 2017, the network published an article on its website addressing minutes from a supervisory board meeting on corruption allegations against a company. The company applied for an ex parte PI before the Cologne District Court, seeking an order that the network cease publishing the minutes. No prior warning notice was sent to the network, and the Cologne District Court granted the PI without hearing from the network. After the network filed an unsuccessful appeal against the PI grant, it proceeded to file a constitutional complaint.
The Federal Constitutional Court ruled in favor of both of these complainants—in favor of the media, under the facts of these cases. However, the lesson to be taken from these cases is more far reaching: the principle of “equality of arms,” based on Articles 3(1), 20(3) of the German Constitution, requires that a court accord each party to a trial an equal opportunity to be heard prior to any court decision. In PI proceedings, courts also must grant the defendant the right to be heard before issuing any decision against it, even in cases of extreme urgency.
While German courts remain empowered to not conduct oral hearings in cases of extreme urgency, they are not entitled to generally exclude the defendant from the proceedings prior to the issuance of a decision. As an alternative to conducting a hearing, a court can consider arguments provided by the defendant in pre-litigation communication with the PI applicant, for example. This requires the PI applicant to send a warning letter to the (putative) defendant before applying for an ex parte PI, and to give the putative defendant reasonable time to respond. Any such response must then be disclosed to the court. If the PI applicant has not sent any warning letter or otherwise allowed the defendant to respond to the relevant allegations, an oral hearing must take place.
A further aspect of these Federal Constitutional Court decisions is that German courts must now provide to the defendant whatever communication they have with or from a PI applicant. This includes meaningful minutes of telephone calls. The concept of equality of arms requires that both parties have the same level of information regarding any court proceedings.
Practice Note: These Federal Constitutional Court decisions should alter the way German courts deal with PI applications, not only in media cases but also in IP matters. In general, the following should be considered when contemplating initiation of ex parte PI proceedings: before filing an application for an ex parte PI, a warning letter or letter of entitlement should be sent to the alleged infringer. Any response from the infringer should be provided to the court, or if the infringer did not respond within a reasonably set time for response, the particulars should be explained to the court. On the other hand, when receiving a warning letter or entitlement request, the recipient may and should respond to it, providing written defense arguments and expressly requesting that these arguments be provided to any court before which legal proceedings might be initiated. The recipient of a warning letter also may consider filing, on an electronic register, a protective writ. A protective writ is a safeguard against a later-filed application for an ex parte PI. As such, it should explain the relevant defenses and expressly request that the court share any communication it has with the applicant in the event the expected PI proceeding is initiated.
Sebastian Klein contributed to this post.