Spotlight: patent enforcement and invalidity procedures in Germany

All questions

Types of patent

Currently, two types of patents are available in Germany: national patents pursuant to the German Patent Act (GPA) and German parts of European patents according to the European Patent Convention (EPC). With the introduction of the Unified Patent Court (UPC) system, it will also be possible to request European patents with a unitary effect, resulting in a Unitary Patent that is valid within UPC member states, including Germany. German law also affords protection in the form of utility models and supplementary protection certificates (SPC).

i Patents

National patents are granted for inventions in all fields of technology. The invention must be new, involve an inventive step and be industrially applicable (Section 1, Paragraph 1 of the GPA). The GPA provides for the typical exclusions from patent protection (e.g., violations of public order, inventions relating to the human body, procedures for cloning, and modifying the genetic identity of human beings, plant and animal varieties). Discoveries, scientific theories, mathematical methods or business models are not considered inventions.

The German Patent and Trademark Office (GPTO) grants national patents. The term of a German patent is 20 years, beginning with the filing date. Following the grant of a patent, anyone can challenge the validity of the patent by filing an opposition within nine months of the publication of the grant. Thereafter, a patent can only be challenged by filing a nullity action before the German Federal Patent Court (FPC). German opposition proceedings largely correspond to proceedings before the European Patent Office (EPO), as described in the European Patent Office chapter of this book.

Germany is a member of the EPC and the Patent Cooperation Treaty (PCT). Applicants can designate Germany in an EPC or PCT application. Once a European Patent has been granted, its German part is handled like a granted national patent.

ii Utility models

Protection for inventions is also available in the form of utility models. The maximum protection term of a utility model is 10 years from the application date. The requirements to be protectable and the rights afforded by a utility model are, in principle, like those of a patent. Method claims are, however, excluded from utility model protection.²

Novelty requirements are less strict than for patents (e.g., oral disclosures are not relevant prior art). Public prior use is only considered prior art if the use is domestic. Utility models benefit from a six-month grace period for publications attributable to the applicant. This allows utility model protection to be secured when patent protection would not be available.

The GPTO will scrutinise some formal requirements before registering a utility model. It will, however, not review the substantive requirements for utility model protection. As an unexamined right, a utility model can be registered within several weeks.

In the absence of a presumption of validity, it is more difficult to enforce a utility model than a patent in the German bifurcated system. Unlike for patents, the defendant can raise lack of validity of a utility model as a direct defence against an infringement claim, in addition to filing a cancellation request with the GPTO. The infringement court must be convinced that the utility model is valid before finding in favour of the holder.

The applicant can rely on granted foreign patents with the same scope to derive a presumption of validity. In those circumstances, the utility model can be an attractive and flexible enforcement option. Applicants can file a utility model on the basis of a pending (national or European) patent application to quickly obtain an unexamined but enforceable right before the grant of the parent patent. A utility model can be enforced in a scope more limited than the scope of the registered claims without the need to register a separate more limited utility model.³ This allows 'tailoring' an infringement claim to the accused embodiment to reduce validity concerns.

iii Supplementary protection certificates

The term of protection for patents covering pharmaceutical or plant protection products that require a marketing authorisation can be extended for up to five years with the grant of an SPC. An SPC aims to compensate for the regulatory delay for the approval and comes into force after the basic patent has expired. Regulation (EC) No. 469/2009 of 6 May 2009 applies to SPC protection in Germany, in addition to Section 16a of the GPA.

Substantive law

i Infringement

The patent claims determine the scope of protection. Under German law, patent claims must be interpreted in line with the understanding of the average skilled person in the relevant field of the art. The description and drawings must be considered in the interpretation. German courts put little to no relevance on the prosecution history of a patent when interpreting its scope.

ii Patent infringing acts

Pursuant to Section 9 of the GPA, the following acts directly infringe a patent:

1. manufacturing, offering, putting on the market or using a patented product, or importing or possessing the product for the aforementioned purposes;
2. using the patented method or offering the method for use in Germany, if the offering party knows or it is obvious from the circumstances that the use of the method is prohibited without the patentee's consent; and
3. offering, putting on the market or using a product immediately manufactured with a patented method, or importing or possessing the product for the aforementioned purposes.

Only an act in Germany can infringe a German patent. The courts are rather generous with finding domestic infringements. An offer that is directed to the German market is a domestic act regardless of where it originates. A product is put on the market in Germany if it is sent from Germany to a destination abroad or from a source abroad to a destination in Germany.

The case law is stricter for method patents: infringement either requires all process steps to be performed domestically, or the steps performed abroad must be attributable to the domestic steps. This attribution is not possible if the results of the method are commercialised in Germany, but the final process step takes place outside Germany.¹³

The liability for immediate products of patented methods extends beyond the territorial scope of method patents. Marketing immediate products of a patented process in Germany infringes the German patent, regardless of where the protected manufacturing method was carried out. The FCJ has, however, found that the presentation of a diagnostic result derived from a patented diagnostic process is not an immediate product of this process because it merely represents information.¹⁴

The person that is committing the infringement is liable as infringer. Liability for infringement extends to third parties whose negligent behaviour enabled the infringement or who aided and abetted in the infringement of another person. The FCJ confirmed the liability for infringement in Germany of a foreign manufacturer who delivered the infringing product to a third party abroad but knew or had reason to know that the third party would later import the product to Germany.¹⁵

Such knowledge can result, for example, from a warning letter or entitlement enquiry sent to the defendant. This triggers an obligation of the supplier to investigate whether its products are shipped to Germany. It, however, remains undecided which steps a supplier must take to prevent such shipments and avoid liability.¹⁶

In addition to the company on behalf of which the infringement occurred, the management can be liable for infringement. This applies to the management personnel in whose area of responsibility the infringement occurred and to any management that knew of the infringement (or reasonably should have known) but failed to prevent it.

Mere preparatory steps do not constitute infringement. Patentees can, however, seek individual remedies for infringement even before the first infringement has occurred if there is a sufficiently high risk that an infringement will take place. Showcasing an infringing embodiment (medical device) that is not yet marketable because a required certification has not (yet) been granted does not meet the threshold that triggers liability.¹⁷ Obtaining a marketing authorisation that allows the individual to market a pharmaceutical product does not result in liability for intended marketing of the product, at least if the allegedly infringed patent will lapse before the authorisation becomes invalid for non-use.¹⁸

If the marketed product does not fulfil all elements of the relevant patent claim, but may do so in a subsequent manufacturing step, a third party may be liable for indirect infringement under Section 10 of the GPA. This applies if a third party supplies or offers to supply (in Germany) an unauthorised person with means relating to an essential element of the invention for implementation in Germany if the third party knows, or it is obvious from the circumstances, that the means are suitable and intended to be used for implementation of the invention.

iii Doctrine of equivalents

If an embodiment or method does not fall within the literal scope of a patent claim (considering also the understanding of a skilled person), it may nevertheless infringe the patent under the doctrine of equivalents. Infringement under this doctrine is subject to the following requirements:

1. the embodiment solves the problem underlying the invention with modified means that have objectively the same effect;
2. a person skilled in the art must have been able to come up with the modified means as having the same effect without any inventive effort; and
3. the required considerations must be based on the meaning of the technical teaching such that a skilled person considers the modification as an equivalent solution.

Additionally, the accused embodiment, including the modified means, must have been new and inventive over the prior art at the priority date of the patent. This Formstein defence is an exception to the rule that validity considerations cannot be raised as defence in an infringement case.

iv Invalidity and other defences

Outside a claim based on the doctrine of equivalents, the German bifurcation system excludes challenges of a patent's validity as a direct defence against an infringement allegation. A defendant can only request to stay the infringement proceedings pending the outcome of a separate opposition or nullity action.

The defendant can, however, raise other substantive defences, the most important being as follows.

Permitted use

Section 11 of the GPA exempts a number of activities from patent infringement, namely private, non-commercial use, experimental use (provided that the experiment relates to the subject matter of the invention), the Roche-Bolar exemption (permits studies and trials required to obtain a pharmaceutical marketing authorisation in the European Union or third countries), individual preparation of drugs in pharmacies based on a physician's prescription and use of the patent in vessels or vehicles that only temporarily enter the German territory.

Right of prior use

If a defendant had already begun to use the invention in Germany or had made the necessary arrangements for doing so at the date of the patent application or the relevant priority date, it is entitled to continue using the invention for the needs of its own business (Section 12 of the GPA). The right of prior use is specific to the respective business.

In 2019, the FCJ found that a supplier of components of a patented product (who would qualify only as an indirect infringer) can later rely on its prior use for directly manufacturing the product itself if the only sensible use of the components had been to assemble them into the patented product. The supplier must, however, not use the patent in a different form than under the prior use. Embodiments according to dependent claims that have additional advantages are outside the right of prior use, while switching between alternatives that the patent considers fully equivalent is still covered.¹⁹

Licence

The patentee is precluded from enforcing its patent against a party that has a valid licence in the patent.

Exhaustion

If the patented product is placed on the market in the European Union or the European Economic Area by the patentee or with the consent of the patentee, the patentee's rights of exclusivity with respect to that product are exhausted. German law currently shows no tendency that would support a worldwide concept of exhaustion. The most prevalent exhaustion cases relate to whether the replacement of parts of a device that is already on the market qualifies as (exhausted) intended use or as (non-exhausted) re-manufacture of the device.²⁰

Statute of limitations

The general statute of limitations also applies to patent infringement. The remedies for infringement become time barred after three years of the end of the year in which the claim arose and the claimant became aware (or grossly negligently did not become aware) of the identity of the defendant and the grounds giving rise to the claim. Irrespective of any knowledge about the claim, claims for patent infringement become time barred 10 years after the claim arose.

In practice, the effect of the statute of limitations is limited. If an infringement continues, each new infringement serves as recurring basis for the injunctive claim. Contrarily, damages can only be claimed for infringements that occurred within the limitation period. After the damages claim has lapsed, the patentee is still entitled to claim the unjust enrichment of the infringer as part of a 'residual damages claim', which itself does not become time barred for 10 years from the infringement. This practically extends the damages claim for an overall period of 10 years.

Laches/estoppel

The defence of laches/estoppel applies in Germany if the claimant has remained inactive for a longer period and thereby created the impression that it will no longer assert the claim. The requirements for this defence are high. In practice it rarely applies, given the rather long limitation periods, among other reasons.

Antitrust defence

Patents are meant to create a monopoly, which leads to a conflict between patent and antitrust law. In recent years, most disputes in the context of the antitrust defence have revolved around determining whether a patentee claiming injunctive relief based on a standard-essential patent (SEP) abuses its rights. Having a dominant market position, which, however, does not automatically follow from holding an SEP, may require the patentee to offer a licence to the infringer on FRAND terms. Failure to offer a licence on those terms precludes remedies with injunctive character.

ECJ in Huawei v. ZTE

The leading European case on antitrust-related defences against SEP enforcement remains the ECJ's Huawei v. ZTE decision from 2015,²¹ which was based on a referral from the Regional Court of Düsseldorf. The process that the ECJ requires for enforcing SEPs comprises a notification of infringement by the patentee, the implementer's request of a licence showing its willingness to licence and a licence offer by the patentee, potentially followed by a counter-offer from the implementer.

First ECJ decisions in Germany

In 2020, the FCJ issued its first FRAND ruling since Huawei v. ZTE.²² The decision provides guidance on at least some FRAND issues; however, it leaves various points undecided. The FCJ ultimately ruled in favour of the patentee because it found the defendant not to be a 'willing licensee'. The court applied a strict standard to the defendant's obligations in reaction to the notification of infringement. The implementer must clearly and unambiguously declare its willingness to take a licence on FRAND terms, whatever those terms are ultimately determined to be.

In the case at hand, the FCJ found that the defendant had only reacted reluctantly to the patentee's licence offer (e.g., by answering to the patentee's licence offer too late or by making only half-hearted offers). Because the patentee does not need to make a FRAND offer to an unwilling licensee, the FCJ did not provide conclusive answers on highly relevant substantive questions for FRAND licences in Germany; itonly hinted at the fact that it considers portfolio licences to be FRAND, provided that they only include SEPs.

The FCJ indicated that reasonable grounds can justify different treatment of licensees and that those differences do not necessarily make an offer discriminatory. Significant questions, however, remain about how this position will play out in practice.

In a further decision in late 2020, the FCJ confirmed and further specified this ruling.²³

Further developments from the appeal courts

At the appeal court stage, the requirements for a willing licensee were also a key topic.

In a 2022 decision, the Higher Regional Court of Düsseldorf further developed the approach and seemingly applied a more differentiated position than the FCJ.²⁴ The Düsseldorf court drew a distinction between an infringer's general willingness to take a FRAND licence and the infringer's specific willingness to agree to certain conditions of the licence. If an infringer is already lacking a general willingness to license, the court can issue an injunction without assessing the FRAND compliance of the infringer's offer. Contrarily, specific willingness only comes into play if an infringer is generally willing to take a licence, and – importantly – the patentee's licence offer complies with FRAND principles. If the patentee makes a non-FRAND-compliant offer, no injunction may be issued, even if the infringer is lacking the (specific) willingness to license the patent. In the case to be decided, the court found the infringer to be generally unwilling to license a product, so the court issued an injunction without further assessing whether the patentee's licence offer was FRAND-compliant.

In contrast, the Higher Regional Court of Karlsruhe is more closely aligned with the FCJ. In a further 2022 decision, the court found the infringer to be an unwilling licensee by strictly applying the FCJ's guidelines.²⁵ In particular, the court held that the willingness to license is a dynamic concept, not a static determination. The infringer must remain willing to take a FRAND licence throughout the discussion and litigation. Moreover, the infringer must voice objections to the FRAND compatibility of the licence offer in a timely manner if the patentee has made such an offer. The court further specified that the patentee's infringement notice must explicitly mention the patent that is later asserted and must not use an unspecific generic term for a group of patents.

These decisions show that even for aspects for which the FCJ seemingly gave a conclusive answer, further alignment of case law is needed. In other aspects similar uncertainty remains, namely on the question whether a FRAND declaration is binding upon the successor in title in cases of an assignment of the patent. A respective case is pending before the FCJ.²⁶ Similarly, the major topic of whether the patentee can choose to which entity in the value chain to grant a licence or whether the infringer can point to the willingness to license of its suppliers to defend against an injunctive claims, remains unresolved. The referral of this question to the ECJ has become moot following the settlement of the underlying case, and it is unclear whether there will be a second referral.²⁷

Apart from litigation on patents declared standard-essential together with FRAND commitments, there is increasing attention on patents on de facto standards. The FCJ's Orange Book decision,²⁸ which governed the antitrust defence before Huawei v. ZTE and imposed much stricter requirements on the implementer, still is good law in this context, as well as in other contexts: the FCJ held in its recent FRAND decision that if a patentee acts abusively under the Orange Book rules, this will also limit the enforcement of the patent under the Huawei v. ZTE framework.