The German legislature (Bundestag and Bundesrat) has passed a bill that will change German patent law. The bill will enter into force soon. Under the new law, injunctions in patent infringement cases will be restricted by proportionality considerations in individual cases. Further, stronger procedural safeguards will become available for the disclosure of confidential information during patent infringement proceedings.
Permanent Injunctions in Patent Infringement Cases
Unlike in many other jurisdictions, German courts have always granted permanent injunctions as a de facto automatic remedy if a patent was found to be infringed. While courts could restrict injunctions in patent cases by equitable considerations in individual cases, this corrective has rarely been applied. The new law will limit injunctions through a formal proportionality test whereby a claim for injunctive relief might be considered disproportionate if it would cause an extreme hardship for the infringer or for third parties. In explaining the reason for requiring the test, the lawmakers gave the example of a complex product, where the enforcement of a patent covering only a minor component may keep the entire product off the market, causing extreme hardship.
While balancing the interests of all stakeholders involved, courts are required to consider the principles of good faith. The lawmakers explained that this might mean that courts should take into account whether the infringer itself has acted in good faith, i.e., by taking reasonable precautions to avoid patent infringement, e.g., by means of a freedom-to-operate analysis.
Interplay between Infringement and Invalidity Proceedings
The new law sets out a change of procedural rules. One of the peculiarities of the German patent system is that infringement and nullity proceedings are tried in different courts. Decisions on infringement and validity might therefore not necessarily be rendered at the same time, which might lead to an “injunction gap” where an injunction is granted before the validity of the patent is determined. In order to better align infringement and invalidity proceedings, the new law stipulates that “indicative assessments” (“Qualifizierte Hinweise”) issued by the invalidity courts about their view of the factual and legal considerations could also be provided to the infringement courts ex officio. Currently, such qualified indications are only provided to the parties to the nullity proceedings.
Procedural Safeguards for Confidential Information
Lastly, in order to strengthen the protection of trade secrets, the new law provides for the application of certain portions of the German Trade Secrets Act in patent infringement proceedings. For example, courts may now order everyone involved in a proceeding, including lawyers, witnesses, and experts, to treat certain information as confidential. Court-ordered confidentiality obligations continue to apply after the proceedings have ended, and their breach can be subject to fines of up to EUR100,000 or detention. Under the previous law, extensive procedural safeguards for trade secrets were only available in cases of trade secret misappropriation.
Possible Implications on Current Practice
The impact that the new law might have on current court practice remains to be seen. Since the new language introduced into the injunction section was essentially derived from existing case law (in particular, the German Federal Court of Justice’s “Wärmetauscher” decision, Case X ZR 114/13), the new law will likely not revolutionize the existing practice of granting injunctions. In particular, the law makers expressed a clear intention that a patent owner’s right to an injunction shall only be limited in rare individual cases.