Germany remains by far the busiest patent litigation forum in Europe. The latest estimates from the Commission show that the German courts alone are handling more patent cases than the other EU Member States' courts combined.
The civil courts in Munich, Mannheim and Düsseldorf deal with the vast majority of patent infringement cases. The Munich-based Federal Patents Court exercises exclusive jurisdiction for the often parallel patent invalidity litigation under the bifurcated German procedure.
With the Community Patent and the European Patent Litigation Agreement (EPLA) still struggling to come out of the political deadlock, the task to ensure a timely, predictable and cost-efficient resolution of patent disputes will remain on the shoulders of the national courts for the foreseeable future. On 15 October 2008, the German Federal Government published draft legislation aimed at a simplification and modernisation of the German patent law and litigation procedure.
The core aim of this draft legislation is to streamline the framework of patent invalidity litigation in Germany. However, it also includes provisions dealing with the procedural implementation into German law of EU legislation on Supplemental Protection Certificates and provisions aimed at streamlining the legal regime relating to employee inventions, along with some minor proposed changes to trade mark law.
If adopted, this proposal will fundamentally reform the way patent invalidity litigation is handled in Germany.
The German courts are among the most attractive forums for dealing with patent matters in Europe. Quality, speed and litigation costs often give them a leading role in international patent disputes.
Under the bifurcated German procedure, the infringement courts are not concerned with questions relating to the validity of the patent(s) before them. These issues fall under the exclusive jurisdiction of the Federal Patents Court ("Bundespatentgericht") which, as a specialised court, has mixed panels of legal and technical judges. Appeals against the decisions of the Bundespatentgericht are heard by the legally staffed Federal Supreme Court ("Bundesgerichtshof").
Patent invalidity appeals are currently in a class of their own in the Supreme Court's docket. When considering them, the Supreme Court is not limited to questions of law – it also acts as a second full fact-finding instance. As a result, in practically all cases, the Supreme Court reverts to expert evidence to determine again questions of novelty, obviousness, etc previously determined by the lower, more technically qualified, court.
Under the current procedural rules, the parties are also generally free to submit new facts and evidence up until the close of the oral appeal hearing. The introduction of "newly discovered" prior art documents, of course, in almost all cases triggers a last minute change to the patentee's pleading, i.e. a (further) restriction of the claims of the defended patent.
The current procedure certainly reflects and ensures the character of the invalidity procedure as a comprehensive judicial review of the administrative patent grant procedure. However, it also tends to complicate and slow down the ultimate decision making. In a way, the invalidity courts are aiming at moving targets at both the first instance and appeal stage. In cases where the first instance infringement court has stayed the infringement procedure pending the outcome of the invalidity challenge, this effect also spills over to the other side of patent litigation in Germany.
The backlog in the Supreme Court's invalidity docket currently runs to over four years. Without reform, it would be set to grow even further.
The reform proposal
The proposed reforms aim to bring invalidity litigation more into line with the rules of civil procedure, as applied on the infringement side of patent litigation. They also aim to drastically reduce the length of the patent invalidity procedure.
Under the proposed amended provisions of the Patent Act, fact-finding and, in particular, the introduction and consideration of evidence, is to be concentrated to the largest possible extent in the first instance hearing before the Federal Patents Court. Appeals before the Supreme Court are to be limited to the legal review of the first instance decision. The appeal procedure would thereby be freed from the current practice of almost automatically calling on a court-appointed expert. This practice in itself accounts for a good part of the length of the current procedure.
The first instance procedure will also be restructured. During the preparatory written phase, the court will now be under an obligation to give, as early as possible, specific directions to the parties as to which aspects of the case it considers to be of primary importance to its decision and the parties are to be directed to concentrate their submissions accordingly (qualified directions / "qualifizierter Hinweis"). More importantly, the court will also have the discretionary power to set a deadline for the parties' concluding responses to these directions and to preclude any facts and evidence, as well as amendments of the patent claims that are not submitted before this deadline. Similar powers to reject late submissions and changes of pleadings are to be accorded to the Supreme Court for the appeal procedure. The discretionary power to be accorded to the courts in this respect will allow for necessary fine-tuning in order to ensure a fair trial for both parties (e.g. in cases where the most relevant piece of prior art could actually and excusably only be found at a later stage during the procedure). As a rule, however, it is hoped these provisions should put an end to the current practice of "strategic submissions" and reduce the length of the procedure before the Supreme Court by half.
Another important aspect of the reforms proposed is the abolition of Section 145 of the Patent Act. Under this so-called "Concentration Requirement" ("Konzentrationsmaxime"), patentees are currently obliged to include all patents they consider to be technically relevant and infringed by a particular embodiment into a single court action. Unless exculpated, failure to do so will result in the striking out of subsequent actions based on such patents, upon the application of the defendant. This requirement was originally introduced into a former version of the Patent Act as it was felt that "piecemeal" enforcement strategies put bigger and financially strong patentees at an unfair advantage over smaller defendants. However, this fear has proven to be unfounded in practice. The consensus is that the obligatory concentration of all possible patent attacks in one action often tends to lead to litigation which has an unnecessarily wide scope. Section 145 has also been increasingly criticised from a constitutional point of view. Its critics argue that it effectively limits the patentee's property rights. Now, it is proposed that the entire provision be abolished.
The proposed reforms have the potential to literally turn patent invalidity litigation in Germany upside down. If adopted by Parliament, this legislation will greatly increase the importance of first instance litigation before the Bundespatentgericht for the ultimate outcome of invalidity disputes. It will also free the Supreme Court up to concentrate on its legal review function. It should also drastically reduce the total length and costs of invalidity litigation before the two courts involved and ensure the attractiveness of the German jurisdiction to future users.
However, at the end of the day, much of the intended benefit will depend on the practical approach taken by the Federal Patents Court: If the opportunity is taken to break the current automatism in relying on the opinion of court-appointed experts in patent invalidity matters – which the technically staffed Bundespatentgericht is ideally placed to do – the proposed reforms will have a massive impact. If the current practice is effectively only shifted one instance down, we might not stand to gain much from it.