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UNITARY PATENT

In 2012 Member States and the European Parliament agreed on the "patent package" - a legislative initiative consisting of two...

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Claim Construction in Germany's Bifurcated Patent Litigation System - Setting Things Right

Every national system for patent litigation throughout Europe has its quirks, despite the extensive harmonisation that has taken place over the past decades. Not least Germany, with its distinct separation between infringement and validity proceedings in which specialised District Courts deal with infringement of a patent and the Federal Patent Court (Bundespatentgericht - BPatG) addresses validity.

Recent decisions bring together these two strands, requiring the same claim interpretation for infringement and validity proceedings.

Primarily the popularity of the German courts for patent disputes can be put down to the combination of effectiveness and economy. Decisions rendered by the German courts are relatively quick and often persuasive to courts in other European jurisdictions whilst the costs remain comparatively low. Specialised judges in terms of experience and technical qualification are employed to handle respective patent infringement and validity matters. In the case of infringement cases, about two-thirds are decided by the first instance (District) court within a year, whilst the average duration of patent validity cases is just under two years.

Due to the differing jurisdictions of the courts, one particular characteristic of this dual track system has been the risk of a discrepancy between claim constructions applied in the different courts. In this respect, infringement courts generally consider claim constructions of the validity courts as persuasive authority. Therefore, although a defendant may not, as such, plead invalidity as a defence in infringement proceedings, if parallel opposition or invalidity proceedings are pending, then a stay of proceedings may be applied for and granted if the parallel proceedings have a strong likelihood of being successful. On average, in roughly three quarters of invalidity cases a patent is at least narrowed, if not completely revoked.

In cases where the District Courts hold the invalidation of the patent to be unlikely, they have tended to refrain from staying proceedings and have decided on the infringement in the absence of a conclusive invalidity decision.

The losing party in infringement proceedings may appeal to the second instance (Upper District/Appeal) court. The losing party in invalidity proceedings may appeal to the Federal Supreme Court (Bundesgerichtshof - BGH). The BGH is also responsible for dealing with requests to revise the second instance decision in infringement proceedings. The BGH is thus very accustomed to dealing with problems arising from the separation of infringement and validity proceedings in particular cases.

A limited interpretation must be applied in both cases
In recent cases, for example Maschinensatz (Xa ZR 70/08) and Crimpwerkzeug III (X ZR 193/03), the BGH has gone some way to resolving situations where a discrepancy in claim construction exists between parallel infringement and invalidity proceedings.

In the first case, it was decided that if a patent being defended in pending invalidity proceedings based on a limited set of claims is asserted in infringement proceedings, the limited version of claims must be considered by the infringement court, even if a final decision has yet to be reached by the BPatG.

In this case, after the first instance court decided against infringement, the BPatG upheld the patent in a limited form. An appeal against the lack of infringement was filed based on the limited set of claims and, although the first instance decision was upheld by the Appeal Court, a subsequent revision by the BGH overturned this decision and returned the case to the Appeal Court to decide again based on all of the relevant facts i.e. examining the limited set of claims.

In the second case, it was decided that a valid ground for an appeal for revision of a second instance infringement decision with the BGH exists if a relevant difference in claim construction occurs between that applied by the BGH in the parallel invalidity appeal proceedings and the interpretation implemented by the Appeal Court in infringement proceedings.

In this case, the first instance court decided in favour of infringement whilst invalidity appeal proceedings were still pending at the BGH. This decision was affirmed by the Appeal Court which denied revision by the BGH, holding that an alleged wrong interpretation of claims did not form an admissible basis for appeal. The decision to not allow revision was (extraordinarily) appealed at the BGH which stayed its decision until the invalidity appeal proceedings had concluded. In the invalidity proceedings, the BGH upheld the patent based on a construction which, if it had been applied by the Appeal Court, would have rendered the product in question non-infringing. The BGH subsequently decided in the extraordinary appeal that under particular conditions, a revision of an appealed infringement decision may be admissible, if in the public interest. This was so in the case in question, because a "wrong" claim interpretation led to a "wrong" infringement decision. An exceptional reinstatement of rights of the deadline for submitting additional grounds for such revision was permitted.

Comment
The German bifurcated patent litigation system is overall very patent-friendly and can be advantageous for obtaining a speedy and comprehensive infringement decision, but patent owners can no longer play fast and loose with interpretation of patent claims between infringement and validity proceedings. The new possibility to challenge second instance infringement decisions by reinstatement calls for more careful planning of a unified patent litigation strategy.

Care needs to be taken to determine which scope of claims is likely to succeed in any infringement proceedings, whilst withstanding parallel invalidity proceedings. Claims limited in scope may be asserted at the beginning or a later stage in the infringement proceedings if necessary to avoid a stay of proceedings.

Forum shoppers will need to look at the specific facts of a case to determine whether the German system is right for particular patent litigation in Europe.

Despite its differences with other renowned jurisdictions, Germany remains an extremely popular jurisdiction with over half of all European patent litigation cases being heard before German courts.