Now a consortium of German blue-chip companies and foreign multinationals, including major U.S. tech companies, is pushing legislation that would reduce the country’s appeal to those who want their property prove intellectual.
The main German patent courts, in Munich, Mannheim and Düsseldorf, routinely order a ban, or temporary sale ban, for products that are subject to a patent suit. That makes them attractive legal institutions for patent holders.
The main targets of the legislation are non-entities, or NPEs, which collect records of patents that they allow instead of being used in their own products. Critics call them patent trolls.
The proposed rules aim to make it more difficult for a complaint to gain a warrant. The campaign has divided Germany’s mainstream business community, pitting some of the country’s largest patent users against the largest patent holders.
Volkswagen AG
, SAP SE,
Deutsche Telekom AG
others support the bill. Bayer AG
, Siemens AG
and BASF SE has opposed it.
Foreign companies have joined the crowd. Apple, Samsung, Nvidia Corp.
and Microsoft Corp.
, among others, has joined a European lobbying group pushing the measure. On the other hand there are companies like 3M Co.
, Panasonic Corp.
, Ericsson AB and Nokia Corp.
, which over the years has amassed large libraries of patents.
Multinational firms often direct cases to preferential legal institutions around the world using the most remote subsidiaries. Patent lawyers say the ability to obtain a ban can be important for patent holders in choosing jurisdiction for a suit.
“In the German legal tradition, if you’re doing something you shouldn’t be doing, then you have to stop,” said Florian Mueller, an independent intellectual property analyst. “Healing is an afterthought.”
Such attacks are more difficult to file in the U.S., following legal changes and a series of High Court decisions. This is especially true when the plaintiff is an NPE. Other friendly legal institutions for patent holders have emerged outside the U.S., including China, Turkey, and Russia, which have established frameworks for intellectual property protection.
Germany’s near-automatic ban, its large consumer market and the fast pace at which its patent courts operate compared to other European countries have made it a place of choice for some of the largest patent battles. in the West.
“
There is no doubt that Germany has become a paradise for patent trolls. ‘
”
In December 2018, the court in Munich ordered Apple to stop selling several iPhone models after chipmaker Qualcomm Inc.
has filed a suit, alleging that the other California-based company was infringing on Qualcomm’s patents on iPhones modem chips. The ban prompted Apple to import phones to Germany for a short time. Both companies subsequently settled.
The year before, Broadcom chip chip Inc.
sued Volkswagen and a subsidiary of Audi, alleging that the car maker patented Broadcom in navigation and entertainment systems. Instead of risking a halt to production, Volkswagen settled nearly 500 million euros, equivalent to about $ 598 million, according to people familiar with the matter. Volkswagen declined to consider the settlement. Broadcom did not respond to a request for comment.
Proponents of the proposed legislation say German patent law, rooted in the 19th century, is out of date. When Carl Benz obtained the patent for his car in 1886, “it was a single patent for a single product,” said Ludwig von Reiche, Nvidia ‘s managing director in Germany. He chairs the German arm of IP2Innovate, a European lobby group pushing the bill.
Everything from internet connections, sensors and algorithms to individual microchip circuits could have more than 100,000 patents, he said.
Supporters of the bill say the current system is pressuring companies to opt for costly arrangements. They also say the changes will come back in NPEs, which they complain about taking over companies in German courts to encourage licensing fees from sometimes large patent fees.
“There is no doubt that Germany has become a paradise for patent trolls,” said Stephan Altmeyer, vice president of patent strategy at Deutsche Telekom.
EU switches were tripled by NPEs between 2011 and 2017 – the latest year for which figures are available – according to Clarivate,
a data provider that oversees an intellectual property lawsuit. In Germany, a fifth of patent cases were filed by NPEs in that period, compared to 4% to 6% in other European countries.
The bill, which is now making its way through the German parliament, was drafted by Chancellor Angela Merkel ‘s government last year but has gone through amendments following pressure from lobbyists on both sides. Supporters of the reform hope the legislation can be passed before a general election in September. Failure to do so could lead the next government to restart the project from scratch.
The legislation would require judges to carry out a proportionality check before making a restraining order, to ensure that the cost to the accused bankrupt is not significantly higher than the lost income that the suing party. It would also allow courts to consider the impact of a ban on third parties – customers who would stop their phone service, for example, or patients who may be refusing a life-saving drug.
He also promises to address the uniqueness of the German legal system. Patent infringement cases are handled in regional courts which can make decisions in less than a year. But a patent invalidity courtship – which tests whether the patent the patent claims is valid and their preferred defense for companies accused of interfering – has to go to court. German special patent, which takes up to three times longer to make decisions.
NPEs say the proposed changes are frightening. They ban sales by court. A ban can “bring big companies to the settlement board,” said Pio Suh, managing director of IPCom GmbH, a German NPE with Fortress Investment Group LLC, a New York-based investment management company.
The warning is harsh in the pharmaceutical industry, where investments to develop new drugs can run into the billions of euros and patent infringement can wipe out income on a particular drug within months , according to industry officials, creates a strong incentive against innovation.
Critics of the bill also argue that as damage in Germany is lower than in the US, and there is no punitive damage, the removal of the automatic warranty would leave the lopsided system and eliminates most barriers to breakage.
“Getting a fare is like getting a ticket price,” said Beat Weibel, Siemens’ chief advisor for intellectual property. “We need heavy results like the automated warranty to balance the system. ”
Write to Bertrand Benoit at [email protected]
Copyright © 2020 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8