Patent litigation in Germany —an introduction (Ⅱ)

2013/5/30By Prof. Dr. Heinz Goddar, Senior Partner, Boehmert & Boehmert, Munich, and Honorary Professor for Intellectual Property Law,,[Patent]

IV. Nullity proceedings
Nullity proceedings may be initiated independently of pending infringement actions. The target may be a German national patent or the German part of a European patent. The patent may be attacked in parts, as in selected claims, or as a whole. Further, nullity proceedings may be filed and continued even after the expiration of a patent.
 
However, nullity proceedings are only admissible after the end of the opposition term and finalization of opposition proceedings, and this “blocking effect” applies for both national and European Patent Office (EPO) opposition proceedings. Both nullity and opposition proceedings may be filed in the name of a “straw man” or even by a patent attorney or lawyer without naming a client, i.e. out of his/her own interest. “Legal interest” is always considered as being guaranteed, because an opponent as well as a plaintiff in an invalidation procedure is considered as assisting the public interest. This is because the removal of junk/frivolous patents which should not exist because of lack of validity is in the interest of free competition in the market place.
 
Plaintiff and reason to sue
The plaintiff is often a company being attacked based on the patent in dispute. This could be anyone, ranging from a trustee to a company anticipating an attack. As already stated above, attacks from ‘straw men’ are also allowed; i.e., a party acting in behalf of a third party in its own name. The trustee or straw man cannot be forced to disclose the party behind him, but the defendant may discover the identity of the real party who is behind the straw man. In this case, the defendant would be able to assert all possible defences—e.g., assignor estoppels or agreements not to proceed with validity attacks—against the real party in interest. Unsolicited nullity actions are also possible, unless there is an abuse of rights, such as an unsolicited attack on a large number of patents owned by the same patentee.
 
Writ of claims
The writ first delineates the parties proceeding, the patent in dispute, and an introduction to the invention, the underlying technology, and any relevant prior art, followed by a claim analysis. There is an introduction of new documents, if any are available.
 
 Then, arguments against novelty are made, followed by arguments against inventiveness and a conclusion.
 
 Course of proceedings
A nullity suit is filed with the Federal Patent Court in Munich. After the suit is filed, written proceedings in the form of two or more writs by each party are typically exchanged in preparation for the oral hearing. In addition, parties may submit reports on experiments or expert opinions in these writs. Prior to the oral hearing, a written opinion on validity of patent in consideration of the submitted writs is provided to parties by the court. Typically, the duration of the proceedings is 18 to 24 months, and pending infringement proceedings do not influence the course or duration of nullity proceedings.
 
 Oral Proceedings for Nullity Actions
To commence, the presiding judge introduces the case and the court’s opinion. There is a step by step approach in the oral proceedings; first, a discussion on novelty is initiated, followed by a discussion on inventiveness. The Court’s opinion resulting from these discussions is conveyed to the parties, with a possible ensuing discussion on auxiliary requests. Following this discussion, the Court will decide to either summon witnesses or expert opinion to clarify on a point, which is less common, or the court will arrive at a judgment on the proceedings. For a judgment in nullity proceedings, the patent can either be maintained, completely invalidated (if it is a European patent only designated for right exclusion in Germany), or partially invalidated and maintained in the scope of restricted main or of an auxiliary claim. This possibility of a partial invalidation is the main reason for having a patent litigator or having an attorney of law responsible for parallel infringement proceedings to attend oral hearings in a nullity suit. If there is a partial invalidation, the patent litigator must be there to make certain that the patent maintains useful claims for the continuation of infringement action. In addition, on the side of a party which is being attacked on the basis of the patent in dispute, the patent litigator must be there to verify that the patent is not maintained with a claim which is hazardous for the infringement case.
 
 In the first oral hearing, usually no witnesses or experts are summoned.
 
Time schedule for FPC judgment
The decision of the Federal Patent Court is always rendered at the end of oral proceedings. However, this decision is only presented as a rough outline of the court’s reasoning as verbally explained to the parties. The written judgment without grounds is typically issued within a few weeks after oral proceedings, with the full judgment with grounds issued within three to five month after the oral proceedings.
 
Appeal in nullity proceedings
The court of appeal in nullity proceedings, contrary to infringement proceedings, is the Federal Court of Justice. The term of appeal is one month after the receipt of full judgment with grounds, at a maximum of 6 months after the day the Court renders the judgment. Representation is not required from a Federal Court of Justice attorney, as an appeal may be represented before the Federal Court of Justice by any patent attorney.
 
Appeal proceedings before FSC
The appeal proceeding begins in the form of a written proceedings comprising a duration of 18 to 24 months. The court may order expert opinions or scientific tests, even prior to the oral hearing, which will add additional writs to the four to six writs typically exchanged between the parties.
 
 Contrary to third instance appeal cases in infringement proceedings, which provide only a legal review, a nullity appeal before the Federal Court of Justice is a full—both factual and legal— review of the case.
 
 Oral proceedings before the Federal Court of Justice are held in Karlsruhe, with proceedings typically lasting one day. Judgment is rendered at the end of the oral hearing and sent for registry in the patent register if the judgment has amended or invalidated the contested patent claim. This judgment is final and effective immediately. There are three possible outcomes: the patent is maintained, maintained with amended and limited claims, or declared invalid (in the case of European patents, as far as covered by the German designation of the European patent). Written grounds are delivered two to three months following the judgment.
 
V. The interplay between infringement and nullity
Theoretically, both infringement and nullity cases require approximately 52 months. As the Federal Court of Justice is the court of last resort for both types of proceedings, there is an ideal hypothetical of the Federal Court of Justice hearing both nullity and infringement proceedings on the same day. In this scenario, the Federal Court of Justice could consequently either issue a unitary judgment comprising issues of both validity and infringement, or rule on validity first and then hear the infringement case, with the resulting judgment on infringement based on prior claim interpretation from the preceding nullity case.
 
The real interplay between infringement and nullity proceedings is, in fact, quite dissimilar to this hypothetical scenario. In actuality, infringement and nullity proceedings do not transpire over equal durations of time, as nullity actions are typically filed and assessed several months after the infringement cases and first instance nullity proceedings before the Federal Patent Court have a longer duration compared to first instance infringement proceedings. Accordingly, a realistic timeline of the first instance would factor in a maximum of 14 months for the infringement proceeding and 24 months for the concurrent nullity proceeding. The first instance judgment in an infringement case would most likely be passed several months before a ruling on validity is made by the Federal Patent Court. In the first instance infringement proceedings, the court may delay judgment, which is highly unlikely, stay infringement proceedings, or render a judgment assuming validity. However, courts are typically not predisposed to staying infringement proceedings in the first instance unless there is a clear cut case of prior art which was not evaluated by the examination and which anticipates the invention. If there is no such reason to stay the proceedings, court will render a judgment assuming validity.
 
 Once the court has rendered a judgment in accord with the patent holder, the case will be granted and patent holder may in principle enforce the judgment against the defendant, even if the patent may later be invalidated in nullity proceedings. In reality, there is rarely enforcement of judgments subject to a pending appeal or concurrent nullity proceeding because the plaintiff will be held financially liable for any damages suffered by a defendant due to the initial enforcement in the case that the judgment of the court of first instance is overturned by the court of appeal. Moreover, a substantial security deposit or bank guarantee by the plaintiff, which is set by the court and derived from the litigation value, is necessary in the case of enforcement of a non-final decision.
 
 Therefore, a plaintiff will most likely decide to wait for the nullity judgment before enforcing his patent if the validity of the patent is doubtful. In all cases, enforcement is possible at anytime as long as the security is provided, and interest accumulates on outstanding judgments. The defendant may decide to appeal the decision of the court—however, the appeal of an infringement case will most likely be stayed if there is a pending concurrent nullity action.
 
 A standard case is as follows: first, the patent proprietor files an infringement action. The defendant follows by filing a nullity suit. Typically, there is a first instance judgment in the infringement case before the judgement in the nullity proceedings, with no staying of the infringement case. If there is infringement found and the case is granted, the defendant will usually file an appeal which is stayed until the judgement on nullity. If the patent is not invalidated, the defendant could file another appeal on the nullity proceedings to the Federal Court of Justice, which is also the court of last resort for the infringement proceedings. In this case, the Federal Court of Justice would first render its judgement on validity, as the infringement proceedings would have been stayed due to pending nullity proceedings.
 
 Following this judgement, the previously stayed infringement case could be continued upon the request of one party. If the Federal Court of Justice invalidated the patent, the plaintiff would have to withdraw his infringement case, or risk court dismissal of the infringement action. If the first instance infringement judgement was enforced, the plaintiff would owe damage compensation to the defendant. However, if the Federal Court of Justice maintained the complete patent or an amended set of claims and there is a case of undisputable infringement, the defendant will often withdraw his appeal and the first instance judgement becomes final. Otherwise, the infringement appeal would continue to judgement, perhaps with a new set of claims which are allegedly infringed. Finally, a further appeal on infringement proceedings can be made to the Federal Court of Justice.
 
 VI. Conclusion
In conclusion, there are several guidelines for patent owners which can be gleaned from sufficient information about the Germany patent litigation system. The first is that time is of the essence—in order to capitalize on the speed and efficiency of the German court system, the plaintiff should try to obtain a first instance judgement in infringement proceedings without delay.
 
 In addition, it would be strategically wise not to give the defendant a chance to file an early nullity suit. This means no prior warning letter or extended pretrial negotiations—a delay of nullity proceedings along with an acceleration of the infringement case would be beneficial to the plaintiff. The plaintiff should also both encourage the infringement court to trust in the validity of the patent in order to prevent a stay of infringement proceedings and also consider the possibility of preliminary enforcement of first instance judgement if the patent will most likely be validated completely or at least in partiality by the nullity action. However, once the first instance judgement has been rendered in the infringement case, the plaintiff should focus on nullity proceedings in order to secure a favourable probability of defending the patent.
 
 Likewise, defendants in a German patent litigation suit should capitalize on efficiency as well, and not wait to be sued after having been threatened by an infringement action. After the initial warning, a defendant should file a nullity suit as early as possible, along with actions to accelerate the nullity case and delay the infringement proceedings.
 
 The defendant should further consider the use of most promising nonvalidity arguments and evidence later in the nullity case and shortly before judgement in the infringement case in order for the arguments to leave the most lasting impression on the infringement court, as well as depriving the plaintiff of a chance to extensively argue against the non-validity argument.
 
 Finally, a defendant should vigorously defend again any infringement claims as well as simultaneously making efforts to convince the infringement court to stay infringement proceedings in view of any pending nullity rulings by the Federal Patent Court.
 
 (Please refer to Issue 53 for Patent Litigation in Germany-An Introduction (I).)
 
 

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