With effect from 1 September 2008, the German legislator has – with a delay of two years after the official deadline – finally implemented Directive 2004/48/EC of the European Council and of the Parliament of 29 April 2004 on the enforcement of intellectual property rights ("Enforcement Directive") into German law. The new law substantially strengthens the remedies available in the enforcement of patents, trade marks and copyrights.

Amongst other changes, the legislator has now codified certain inspection rights for copyright owners in the case of a suspected copyright infringement. This amendment to the German Copyright Act is of particular relevance for the software industry, where substantiating infringement typically requires specific knowledge of the allegedly infringing source code, which is not regularly available in the general software market place.

Within the concept of German civil procedural law, which neither has rules of disclosure or pre-trial discovery nor provides an equivalent to the British and French concepts of an "Anton Piller Order" or a "Saisiecontrefaçon", such rights of inspection are to be considered as an exception from the general prohibition of inquisitive investigations in civil proceedings. As a rule, each party to a German civil proceeding must adduce evidence to the court in order to support the facts on which the party relies, while the court will not carry out investigations of the facts on its own motion (ex officio).

The legal preconditions for inspection of material which allegedly infringes copyright (e.g. source code) are:

  • a "sufficient" degree of probability that copyright is infringed; and
  • that the inspection is required in order for the claimant to substantiate a claim for copyright infringement.

The right to inspection can be enforced through a preliminary injunction, which is typically granted ex-parte, i.e. without a prior hearing of the defendant.

When drafting the new legislation, the German legislator has taken into account the principles on the preconditions and scope of a source code inspection set forth in 2002 by the German Federal Supreme Court (BGH) in the leading case "Faxkarte" (cf. BGH GRUR 2002, 1064 et seq.). Therefore, although the details of the future legal practice obviously need to be awaited, the courts are likely to interpret the foregoing requirements and handle the related procedure, in a similar manner to the practice established in the "Faxkarte" case which has become common practice in patent litigation before specific German courts (in particular, the district court of Düsseldorf).

In the "Faxkarte" case, the BGH particularly addressed the conflicting legitimate interests of the parties in the case of a source code inspection, where the claimant's interest to sue for a possible infringement of its rights potentially collides with the alleged infringer's interest to protect its trade and business secrets. In order to bring these interests into an appropriate balance and ensure a fair trial for both parties, the BGH established a so-called "in-camera-procedure", where the results of the source code inspection are not necessarily disclosed to the claimant. Rather, a neutral expert, bound to secrecy, is charged with the inspection of the relevant source code and the submission of a written report on the results of the inspection to the court. Based on such report, the court then assesses the likelihood of an actual copyright infringement and decides which information to provide to the claimant.

With regard to the appropriate scope and time of making available the report of an inspection to the claimant, the existing court practice, which mainly relates to alleged patent infringements, varies considerably. The court shall consider the parties' specific legitimate interests concerned and then decide whether or not and at which point in time to appropriately disclose the report either to the claimant, often with the defendant's specific secret information redacted, or possibly even only to the claimant's secrecy-bound legal representatives.

As mentioned above, the newly codified inspection rights may be enforced through preliminary injunctive proceedings. Alternatively, they can theoretically be made the subject of main proceedings. However, as the success of inspecting an allegedly infringing item typically depends on being fast and surprising the defendant, inspection suits in main proceedings seem unlikely to play an important role in the future. Rather, an increasing number of injunctive inspection orders is to be awaited.

In conclusion, the new legislation is of significant and increasing importance to the software industry in enforcing copyright, be it in the context of excess of licence restrictions as well as unauthorised third party usage.