VJP Germany Newsletter
Issue 3/2021

I. Financial Times: “Europe’s Leading Patent Law Firms 2021”

The Financial Times have once again named VJP Germany one of Europe’s Leading Patent Law Firms, in particular recognizing VJP Germany’s Electrical Engineering practice. This prestigious recognition is based on a survey, by the Financial Times and its partner Statista, involving more than 3,200 parties (e.g. Clients and Associates in the industry).

We thank all our Clients and Associates for their feedback and participation in the survey.

II. SEP Litigation in Europe/Germany: Component Level Licensing

In the realm of car-related patent wars, the referral of the Regional Court Düsseldorf, of November 26, 2020, 4c O 17/19, in Nokia vs. Daimler, made – from a dogmatic/development of law perspective – hope for a guiding decision of the Court of Justice of the European Union (“CJEU”) on the heavily and controversially discussed question regarding component level licensing* in one of the highest stake car-related cases in Europe.

Now, Nokia and Daimler seemed to have settled this case by way of Daimler finally taking a license from Nokia. Thus, the CJEU would not answer the questions raised by the Düsseldorf Regional Court regarding component level licensing in that case. The concerned industry, in particular involving the suppliers, will remain shrouded in uncertainty for the time being.

At least some of Daimler’s suppliers have made known their intention to continue pushing the issue of component level licensing, either through court actions or through anti-trust complaints to the European Commission. The potential outcome of these efforts remains to be seen, in particular whether the European Commission will step up to the occasion. For now, it is task of SEP patent holders to address yet-unlicensed car manufacturers. With Daimler taking a license (word on the street being that it does not cover its suppliers), the negotiation strength of other potential licensees may be weakened.

*(we reported this decision in our 3/2020 newsletter)

III. Patent Law Reform in Germany

On June 10, 2021, the German Parliament (“Bundestag”) adopted the suggested Bill to amend the German Patent Law. With decision of June 25, 2021, the Bill also passed the Federal Counsel (“Bundesrat”).

While the public namely discussed the amendment of Section 139 para (1) (allowing courts to apply a proportionality test when considering grant of an injunction) – an amendment that in the legal field, following the reasoning of the lawmaker of this amendment, is widely considered to make little difference in practice, i.e. not granting an injunction remains an exception in line with a previous decision “Wärmetauscher”/”Heat exchanger” of the Federal Court of Justice – the following amendments are also note-worthy:

In order to better synchronize infringement and nullity proceedings in the bifurcated German patent system (whereas, typically, the nullity court takes a much longer duration to arrive at a decision than the infringement court, leading to what is commonly referred to as an “injunction gap”), Art. 83 has been amended to push the Federal Patent Court (exclusively responsible for first instance nullity proceedings) to deliver an interim opinion on the validity of a patent in suit within six months from filing the nullity suit. These interim opinions may form an important basis for the infringement court to decide whether to stay infringement proceedings (or not) in light of parallel pending nullity proceedings.

Further, the mechanism of staying proceedings in light of parallel pending nullity proceedings known and practiced before the civil infringement courts is codified as well for criminal proceedings in Section 142. In the past, there may be a legitimate concern by defendants that criminal courts may arrive at a finding of “deliberate patent infringement” (e.g. an infringer continuing with infringement even after receipt of a warning letter) based solely by referring to the question of infringement without considering the question of nullity of a patent. Defendants in the past often also faced hurdles convincing state attorneys and criminal courts that they must also take the latter question into consideration when deciding whether any deliberate infringement constitutes an offense under criminal law. 

Finally, an important amendment, poised to resolve many practical issues, is the newly introduced Section 145a. Section 145a allows the application of Section 16 through 20 of the Act on the Protection of Business Secrets (introduced in 2019) in patent infringement proceedings. In the past, there were limited avenues for an infringement court to protect any business/trade secrets revealed during the course of infringement proceedings (e.g. revealed for the sake of defending or asserting a right). Now, the infringement court has to power to, for example, order any involved party to keep confidential a business/trade secret and has the power to order a fine of up to 100,000 Euros in case of any breach of confidentiality in this aspect. Thus, in such cases, the right to inspect court files would become limited. It has also been clarified that confidentiality generally needs to be maintained even after termination of infringement proceedings. Further, upon a request made by an involving-party, access to confidential information may be limited to a specific or limited number of “reliable” individuals.

The Bill of amendment has to be signed by the Federal President and published in the Federal Gazette before it comes into force. It is expected that these formalities will be met soon.

IV. The Unified Patent Court (“UPC”) System
(German Federal Constitutional Court, Order of June 23, 2021,  2 BvR 2216/20 and 2 BvR 2217/2020)

With order of June 23, 2021 (published on July 9, 2021), the German Federal Constitutional Court dismissed the requests for a preliminary order, brought forward in conjunction with two constitutional complaints, against the German ratification bill concerning the UPC. While this order did not decide about said constitutional complaints on the merits, it can be expected that the German Federal Constitutional Court will also soon dismiss the constitutional complaints on the merits in light of the reasoning provided in the present court order. Against this background, it appears highly likely that Germany will soon take necessary measures to deposit its ratification bill and, thus, will put its parliamentary consent to the UPC system into force. As a result, it appears that the "German" hurdle for commencing the UPC has now been cleared.

However, this does not mean that the UPC will start working right after said deposit of the German ratification bill. Rather, in order to move forward, another two signatory states must agree to be bound by the Protocol on Provisional Application, and any effects of the UK not participating in the UPC system must be dealt with.

V. BREXIT Effect: Procedural Security Deposit
(German Federal Court of Justice, Judgment of March 1, 2021, X ZR 54/19)

Under the German provisions of the Code of Civil Proceedings, Section 110, generally speaking, in civil proceedings, upon request by a defendant, a court order may be issued requesting that a plaintiff (a plaintiff that is not residing in a member state of the European Union or the European Economic Area) provides a bond or a security deposit (e.g. cash or bank guarantee authorizing conduct of business in Europe/Germany) covering potential costs of such proceedings. If the plaintiff does not comply, the case might be dismissed. Amounts of such bonds or security deposits are typically high, generally covering not only court fees but also the defendant’s attorney fees which may be deemed reimbursable, typically for two instances (up to about 1.5 million Euros, depending on the value in litigation).

However, this obligation, among others, does not apply

• where due to international treaties, no such security deposit may be demanded;
• where the plaintiff possesses real estate assets or claims secured in rem (in Germany, this may suffice to cover the costs of the proceedings);
• with respect to countercharges.

In the decision of March 1, 2021, X ZR 54/19, the German Federal Court of Justice (“FCJ”) confirmed that the United Kingdom and Northern Ireland cannot be considered as member states in the above scenario, by an expiration of a transition period on December 31, 2020. Thus, plaintiffs in the UK and Northern Ireland may be requested to provide the security deposit under Section 110 German Code of Civil Proceedings; none of the above exemptions would apply, and no international treaty or bilateral agreement would exempt those plaintiffs of the UK and Northern Ireland.

While the above mechanism is certainly relevant to plaintiffs residing in the UK and Northern Ireland, it may also apply to plaintiffs residing in other countries, e.g. China and the United States of America.

VI. Amendment of German Anti-Trust Law: E-commerce
(Regional Court Berlin, 16 O 73/21 Kart)

In January 2021, the German Act against Restraints of Competition (“AARC”) was amended to include an “Anti-Tipping-Provision” in Section 20 para. 3a. With the term “tipping”, a situation is supposed to be designated in which due to network effects only one provider survives on the market – typically, a platform provider who then dominates the market. Section 20 para 3a AARC, in essence, now provides that a company with superior market power on a market is prohibited from impeding any competitors from achieving their own network effects if there is a serious risk that competition would be restricted in a significant manner. Accordingly, as an example, this provision may prohibit an internet platform from impeding its competitors from achieving their own network effects.

While this amendment did not receive the public spotlight before, being considered even by some as a “toothless tiger”, the Regional Court Berlin has now – to the extent known – for the first time shut down critics of the amendment by prohibiting a leading internet real estate sales platform in Germany from providing discounts to their customers (typically, commercial real estate agents) if these customers first place their real estate offers (almost exclusively) for 7 days on their internet platform before publishing the real estate offers on other platforms. In light of the Section 20 para 3a AARC provision, the court (and the plaintiff) did not have to establish the often difficult-to-prove question of whether performance competition has actually been restricted; instead, a finding of a mere risk sufficed.

There may still remain unanswered questions in the field of e-commerce and anti-trust law. Nevertheless, the latest amendment of the AARC and its application by the court is a step forward towards a modern anti-trust legal system for managing potential legal challenges which may arise in the modern e-economy.
 

This news is circulated for your information only.  It should not be taken as a statement of law and should not be used without legal advice.  For further information, please contact our German Litigation Department [lit@vjp.de] or:
 

Jörg Wahl
jwahl@vjp.de

Dr. Uli Foerstl
ufoerstl@vjp.de

Eric-Michael Dokter
edokter@vjp.de

Adam Bogsch
abogsch@vjp.com.sg