Bye-bye, automatic injunction? German Ministry of Justice publishes second draft of Patent Act reform

The "automatic" injunction, i.e. the fact that German courts will issue an injunction upon a finding of patent infringement – irrespective of discretionary considerations – is an established principle of German patent law and a strong asset for Germany as a country protecting innovation.

However, there has recently been controversy about the need to introduce an element of discretion in granting an injunction into the law. The German Ministry of Justice, following consultation of lawyers, judges, industry representatives and other stakeholders on its first draft has on 1 September published its second draft of a reform of the German Patent Act.

The wording of Sec. 139 para 1 of the Patent Act governing the "automatic injunction" currently in force reads as follows:

Any person who uses a patented invention contrary to sections 9 to 13 may, in the event of the risk of recurrent infringement, be sued by the aggrieved party for cessation and desistance. This right may also be asserted in the event of the risk of a first-time infringement.

The recently published draft reform suggests to add the following sentence:

The claim shall be excluded if its fulfilment would, due to specific circumstances of the individual case, lead to disproportionate disadvantages for the infringer or third parties that are not justified by the exclusive right. In this case, the infringed party may demand monetary compensation, so far as this seems reasonable. This shall not affect the claim for damages under paragraph 2.

According to the amended version, the issuance of an injunction will still be the standard case. The burden of proof for the existence of an exception is on the defendant. In the reasoning for the changed law, the ministry argues that the amendments merely "clarify" the claim for cessation and desistance in case of an infringement of a patent or a utility model. Indeed, it is further argued that the change set out above is "in line with current case law of the highest courts" and just serves to ensure that the possibilities already available under the current law to observe aspects of proportionality of an injunction are taken into account in practice.

Will this materially change the situation in German patent law?

Already under the current law, the "automatic injunction" is balanced in cases of disproportionality of its enforcement by e.g. the possibility of a provisional stay of enforcement (Sec. 707, 719 German Code of Civil Procedure) [1], by ordering of a (very) high security as prerequisite of enforcement [2] or by granting of a grace period [3].

While it remains to be seen how the courts would apply the amended law, the impact in practice seems to be limited, specifically given that the reasons for the draft law state that practice should follow the current case law of the highest courts.

Importantly, the formulation that the claim to an injunction can only be excluded where it would lead to “disproportionate disadvantages… not justified by the exclusive right” should limit this exception to very specific cases. It is at the heart of patent protection that the innovator obtains exclusivity for his invention and thus enjoys an incentive to innovate. Accordingly, it is widely recognized that the injunction should practically remain "automatic" for example in the field of pharmaceutical and biotechnological patents. Exceptions for reasons of proportionality might become relevant only in cases where the "purpose" of the protective right is to generate license revenues, only, and where for example the patentee has an obligation to grant (FRAND) licenses, anyway, for reasons of antitrust law.

Finally, the question remains whether this amendment to the German Patent Act will pass the German parliament or whether there are further amendments made – in one direction or the other.