ECJ rules on German preliminary injunction proceedings

Background

In German PI proceedings, the Higher Regional Courts are the final courts determining whether a PI can be granted, so uniform case law (which in main proceedings, on the merits, is established by the Federal Supreme Court) is not readily discernible.

However, over the years the Higher Regional Courts in Düsseldorf, Karlsruhe and most recently Munich - the three most important patent infringement appeal courts in Germany - were in rare agreement about PIs:

• They had established case law requiring, in principle, that the patent at issue must generally have passed first instance opposition or nullity proceedings before a PI could be granted. 

• Otherwise, so the reasoning went, because the validity of the patent at issue had not been determined judicially by the time of the PI proceedings, there was not a sufficient basis for granting a PI (despite examination of patent validity at the German or European Patent Office before grant of the patent). 

In considering whether to exercise their discretion in PI proceedings, some courts allowed, inter alia, exceptions to the general rule set out above – essentially requiring either a high danger of an irreparable harm, or rendering the validity of the patent at issue more reliable for other reasons.  Such exceptions were as follows:

• The special situation of new generics for a patent-protected blockbuster drug in circumstances where the patent applicant had incurred high R&D expenditures and there would be irretrievable price erosion from the new generics.
• The patent at issue is soon to expire.
• Prior infringement actions based on the patent at issue were conducted successfully without a challenge of its validity.
• The patent at issue is subject to various licence agreements.
• Validity attacks brought forward by the defendant were obviously unfounded.
• Third party observations during patent examination.

Despite such exceptions, successfully obtaining a PI has remained a significant challenge in Germany. Unless patent validity was not attacked by a third party, or none of the specific exceptions applied, then only main proceedings against infringers could be initiated.

Such difficulties have been particularly acute for patentees holding a recently granted patent, which - for obvious reasons - could not have undergone an opposition or nullity action.  The situation was, therefore, unsatisfactory.

What led to the proceedings before the ECJ?

The Munich Regional Court had to decide a PI request where the patent at issue had been granted shortly before the request was filed. The judges:

• Considered the patent was valid and had been infringed, but regarded themselves restrained from granting the PI due to the established German case law.
• Doubted, however, that the existing German case law complied with European law.  Accordingly, they ordered a stay of the proceedings, and the case was referred to the ECJ.

The referral addressed the question to the ECJ as to whether the established German case law was in line with Article 9 of the Enforcement Directive 2004/48/EC (Directive). Article 9(1)(a) of the Directive obliges member states to ensure that judicial authorities may issue a PI against an alleged infringer to prevent any imminent infringement of an intellectual property right.

What the ECJ decided

In its judgment, the ECJ decided that the German case law at issue contravened Article 9 of the Directive for the following reasons:

• German courts were not able to grant a PI even if they considered that the patent was valid and had been infringed. 
• The German case law prevented effective protection of the patentee, particularly given the irreparable harm that might result from a delay in protection caused by not granting a PI.
• The judges emphasised the assumption of validity of an examined patent. Potential prejudice to the defendant could be mitigated by several protective measures provided for in the Directive, protecting the alleged infringer from abuse of PI proceedings.

What are the implications?

The ECJ judgment will encourage patentees to request more PIs and to test where the new limits for the grant of PIs are.

For highly innovative industries with quick product cycles, PIs are a potent tool, available again, so PIs are likely to be sought in situations where irreparable harm typically occurs: when new products are introduced on the German market or in the context of international trade fairs.

Now with a greater likelihood of becoming a target of requests for PIs, potential defendants will try to reduce the risk of a sales stop or the removal of exhibits on trade fairs, which are very damaging reputationally.

PIs can be granted very quickly, even within hours, on an ex parte basis (without a chance for the defendant to be heard). Though ex parte PIs are reserved for extraordinarily urgent situations, with an imminent threat of irreparable harm, potential defendants may well want to mitigate their risk by filing so-called “protective briefs”:

• These are writs containing non-infringement or invalidity arguments, submitted to a central register for protective briefs in advance, as a precaution in situations where the potential defendant is exposed to a higher risk of allegations of infringement.
• If a request for preliminary injunction is then filed, the court checks whether a protective brief is available, and will consider the counter arguments it sets out.
• The protective brief also ensures that an appointed, specialist attorney will be involved from the very beginning of the litigation, avoiding unnecessary delay.

The ECJ decision has removed an important hurdle against granting PIs in German courts. Patent litigators will be interested to see how the different infringement courts now handle the increased discretion of judges in PI proceedings in the near future, with a view to determining which forum will be the most attractive for plaintiffs.