German Patent Act Reform Poses Substantive Changes but Not a “Game Changer”
On 10 August 2021, the German Parliament approved the German Patent Act reform, entering into force in part on 22 August 2021, and in part on 1 May 2022. Rather than being the desired game changer, the reform turned out to be a cautious readjustment of established patent law principles.
The key takeaways from the reform can be summarized as follows:
German patent courts will remain injunction friendly.
The German bifurcation between infringement and invalidity proceedings will still yield a strategic advantage for patentees.
The reform’s readjustments come down to two major amendments. The first one concerns the German principle of automatic injunction in the case of infringement. The new law expressly provides a hardship exception, which applies if the injunction would lead to disproportionate hardship for the infringer or third parties, considering the special circumstances of the individual case and good faith. However, this exception is essentially a codification of existing case law, i.e., the judgment of the Federal Court of Justice (of 10 May 2016, case no. X ZR 114/13). Reform critics say that it will not make much difference as courts were already aware of the existing case law. The bar to demonstrate disproportionate hardship will thus remain high, and courts are not expected to make generous use of the newly codified hardship exception. It is important to note that this amendment will not change the German infringement courts’ overall approach of being injunction friendly.
The second major amendment addresses the so-called injunction gap within the bifurcated German patent litigation regime, where infringement is tried before civil court while invalidity is tried before the Federal Patent Court or the respective German or European Patent Office, with infringement proceedings being quicker (which effectively impairs the alleged infringer’s invalidity defense). To address this issue, the old as well as the reformed law provide an option for civil courts to stay infringement proceedings until a validity judgment. However, infringement courts currently only stay their proceedings in roughly 20% of cases, although far more of the validity proceedings result in (full or partial) revocation of a patent. This means that patentees are often granted injunctions and damages based on patents that are later declared invalid.
The reform tackles this issue by introducing a preliminary opinion of the Federal Patent Court which “should” (discretionary “soll” in contrast to the binding “muss“) be issued six months after filing the validity action. Based on that preliminary decision, infringement courts could then make a more informed decision as to whether to stay their proceedings. Nevertheless, because of the Federal Patent Court’s high workload and the new provision’s attenuated wording, the newly introduced preliminary opinion may not lead to a stark increase of stayed infringement proceedings. The provision on the preliminary decision will enter into force on 1 May 2022.
Dominik Rissmann also contributed to this article.