Still Alive: The German "Automatic Injunction" in Patent Infringement Cases Under the New Patent Act
In Short
The Situation: German courts have traditionally granted injunctions in patent cases more readily than other jurisdictions, with injunctions granted almost automatically where infringement is likely to be established and there is no overwhelming probability that the patent would be declared invalid.
The Development: In August 2021, the German Parliament approved a change to Section 139 of the German Patent Act ("PatG"). The new wording codifies pertinent case law that proportionality and the interest of both parties must be considered when granting an injunction. Consequently, almost all cases in which courts find infringement will lead to injunctions without any restrictions. Even in extreme cases where the balance of interests required in Section 139 is in favor of the infringer, at most only a limited grace period to sell off existing stock will be granted.
Looking Ahead: Despite the change to Section 139, Germany remains a very patentee-friendly jurisdiction where courts are open to grant injunctive relief as a remedy for patent infringement without restrictions.
The new PatG provides an exception to the general rule that injunctions result as a direct consequence of infringement for cases in which an immediate injunction would result in disproportionate hardship when weighing the interests of the patent holder and the infringer. Although this might appear to represent a considerable change in the patentee-friendly German litigation system, patentees can expect to readily obtain injunctions in appropriate future cases. This is due to a number of reasons.
First, the wording of the revised German Patent Act only codifies what the German Federal Supreme Court ("BGH") has already ruled. In 2016, it decided a case in which a car manufacturer argued that a patent infringement on a minor component should not impede the sale of the entire car (BGH X ZR 114/13 – Wärmetauscher "Heat Exchanger"). While the BGH confirmed the injunction in the case, it stated in its decision that as a matter of principle, proportionality and the interest of both parties must be considered to some degree when granting an injunction. Thus, even in a case where the defendant car manufacturer argued extreme undue hardship because its factory would have to close while the infringing item is a small part in a car, the court issued (unrestricted) injunctive relief.
Secondly, the scope of application of the exception in the PatG's new Section 139 is narrow. Section 139 of the new PatG refers to the "requirements of good faith." This general legal concept needs to be illustrated by reference to exemplary case law. However, for many cases, the hardship exception does not apply in the first place, as they already engage special regulations that forego the new Section 139 of the PatG. For example, for compulsory licenses in pharma patents, Section 24 of the PatG contains special provisions. Another group of cases that likely does not fall within the realm of the hardship exception are FRAND (fair, reasonable and nondiscriminatory conditions) defenses against injunctions based on a standard essential patent, or SEP, where a separate regime under antitrust law applies.
As a result, this leaves a very small group of cases in which disproportionality could be successfully argued in order to limit an injunction. Essentially, the only conceivable group of cases seems to be complex products, where only a small component infringes a patent. This is comparable to the situation of the "Heat Exchanger" decision.
Thirdly, even if a court would consider a case to fall under the new wording of Section 139 of the PatG, it is much more likely that it would order a limited grace period during which the infringer should transition to noninfringing products, and for which the patentee would be financially compensated, rather than rejecting an injunction altogether. In light of the explanatory memorandum to the new law, which shows that the new PatG is intended to clarify rather than overhaul the current situation, a permanent exclusion of the right to injunctive relief is not a realistic outcome.
Two Key Takeaways
- With the amended PatG in force for only a few months and little case law available, defendants may try to leverage the new Section 139 PatG in their favor. However, in practice, the recent amendments in the PatG will not lead to a different stance toward injunctions.
- Automatic injunction may even have an influence on the Unified Patent Court ("UPC") when the UPC takes effect in Q4 2022/Q1 2023. German judges who take office at the UPC may give it an injunction-friendly touch.
