Reform should prevent abusive proceedings and halts in production – Court rulings now decisive
The German Bundestag passed the patent law reform during the night from Thursday to Friday.
The amendment aims to prevent the current abuse of patent law by “patent trolls.” These companies, primarily in the field of information and communication technology (ICT), have been using whole groups of patents in proceedings against automotive companies – along with excessive license demands and the threat of halting the entire domestic production of the targeted manufacturer.
Hildegard Müller, President of the German Association of the Automotive Industry (VDA), sees the reform as an important step in stamping out such patent abuse: “Patent law abuse has increased greatly in recent years, and some spectacular injunction cases have been brought against the industry. This has resulted in high costs that burden the companies unnecessarily. For this reason, the VDA has supported the introduction of a proportionality check. The patent law reform now enables the courts to take the economic effects of wide-scale halts in production into consideration in their deliberations. The reform is therefore good news for Germany as a location for industry.”
The automotive industry – both manufacturers and suppliers – is among the leading owners of patents in the EU and in Germany. It is therefore important to have strict patent protection. Until now, however, the plaintiffs seeking injunctions under patent-law could prevent entire production runs from being delivered (for example of a car), even if the allegedly infringed patent protected only one subcomponent of little value. In these proceedings, the validity of the patent was not verified in depth, and this approach made it easier to extract exorbitant license fees. In Germany, the responsible courts have so far not examined whether the claims asserted were in fact proportionate in view of the serious and expensive production standstills.
The new proportionality test is now expected to become an established part of patent law proceedings. “Now it will be up to the responsible courts to implement this swiftly in their rulings,” Müller declared.