CASRIP Newsletter - Spring 2009, Volume 16, Issue 2
The implementation of Articles 6 and 7 (2004/48/EG) through Section 140c of the German Patent Act
by Sebastian Glatzel[*] and Nikolas Smirra[**]
On September 1, 2008 Section 140c of the German Patent Act (“PatG”) came into effect. This provision is part of a series of amendments to German intellectual property-related regulations enacted as a result of the implementation of the IPR Enforcement Directive (2004/48/EG) (the “Directive”) under the European internal market provisions. The Directive concerns measures, procedures, and remedies necessary to ensure the enforcement of intellectual property.
Before the implementation of Sec. 140c PatG, claims regarding evidence were based on Sec. 809 et seq. of the German Civil Code. However, those provisions were not sufficient to fulfill the requirements of Art. 6 of the Directive. Prior to the implementation of Sec. 140c, there were considerable difficulties that a rightholder may encounter to prove infringement or to determine damages. To address this issue, Sec.140c PatG deals with the implementation of Arts. 6 and 7, concerning “evidence” and “measures for preserving evidence,” themselves necessary for compliance with Art. 43 (1) and Art. 50 (1)(b) of TRIPS.
The new provision to PatG grants the rightholder a claim of examination of alleged infringing objects or processes and guarantees access to relevant documents. Moreover, the obligor's duty to present documents or to tolerate the inspection of an object can be ordered by an interlocutory injunction, according to the provisions of the German Code of Civil Procedure (“ZPO”). Section 140c PatG can be regarded as an addition to Sec. 140b PatG, which grants rightholders a demand for disclosure of relevant information about the origin and the channel of distribution of infringing products.
At first glance the German provision bears significant resemblance to the Anton-Pillar-Order (or Search-Order) and the French “saisie contrefacon.” However, due to peculiarities of the German law – especially the law of practice – Sec.140c PatG is far from being without controversy.
II. Translation of Sec.140c PatG
|§ 140c Patentgesetz|
Section 140c Patent Act
(1) Wer mit hinreichender Wahrscheinlichkeit entgegen den §§ 9 bis 13 eine patentierte Erfindung benutzt, kann von dem Rechtsinhaber oder einem anderen Berechtigten auf Vorlage einer Urkunde oder Besichtigung einer Sache, die sich in seiner Verf�gungsgewalt befindet, oder eines Verfahrens, das Gegenstand des Patents ist, in Anspruch genommen werden, wenn dies zur Begr�ndung von dessen Anspr�chen erforderlich ist. Besteht die hinreichende Wahrscheinlichkeit einer in gewerblichem Ausma� begangenen Rechtsverletzung, erstreckt sich der Anspruch auch auf die Vorlage von Bank-, Finanz- oder Handelsunterlagen. Soweit der vermeintliche Verletzer geltend macht, dass es sich um vertrauliche Informationen handelt, trifft das Gericht die erforderlichen Ma�nahmen, um den im Einzelfall gebotenen Schutz zu gew�hrleisten.
(2) Der Anspruch nach Absatz 1 ist ausgeschlossen, wenn die Inanspruchnahme im Einzelfall unverh�ltnism��ig ist.
(3) Die Verpflichtung zur Vorlage einer Urkunde oder zur Duldung der Besichtigung einer Sache kann im Wege der einstweiligen Verf�gung nach den §§ 935 bis 945 der Zivilprozessordnung angeordnet werden. Das Gericht trifft die erforderlichen Ma�nahmen, um den Schutz vertraulicher Informationen zu gew�hrleisten. Dies gilt insbesondere in den F�llen, in denen die einstweilige Verf�gung ohne vorherige Anh�rung des Gegners erlassen wird.
(4) § 811 des B�rgerlichen Gesetzbuchs sowie § 140b Abs. 8 gelten entsprechend.
(5) Wenn keine Verletzung vorlag oder drohte, kann der vermeintliche Verletzer von demjenigen, der die Vorlage oder Besichtigung nach Absatz 1 begehrt hat, den Ersatz des ihm durch das Begehren entstandenen Schadens verlangen.
(1) Whoever uses a patented invention with reasonable probability contrary to Sec. 9-13 of the Patent Act, may be subject to claims by the rightholder or any other beneficiary to present documents or tolerate the inspection of an object in his control, or a process that is subject to a patent, if it is necessary in order to establish claims. If there is reasonable probability of infringement on a commercial scale, the claim extends to the presentation of banking, financial and commercial documents. The court takes necessary measures to warrant protection in a particular case, if the alleged infringer claims confidentiality of the documents.
(2) The claim according to subsection 1 is excluded, if the utilization is disproportionate in the particular case.
(3) The duty to present documents or to tolerate the inspection of an object may be ordered by interlocutory injunction according to Sec. 935-945 of the German Code of Civil Procedure. The court takes necessary measures to warrant the protection of confidential information. This applies in particular to cases where the preliminary injunction is issued without prior hearing of the opponent.
(4) Sec. 811 of the Civil Code and Sec.140b (VIII) Patent Act apply mutatis mutandis.
(5) Where it is found that there has been no infringement or threat of infringement, the alleged infringer may demand compensation for the damage caused by the demand from the applicant from the presentation or inspection according to paragraph 1.
III. Analysis of Sec. 140c PatG
The following requirements have to be met in order to grant the rightsholder or any other beneficiary the claim of inspection or the access to relevant documents:
(1) A patented invention has to be used with a reasonable probability contrary to Secs. 9-13 of the Patent Act, which determine all acts preserved to the owner of a patent. This is due to Art. 6 of the Enforcement Directive, according to which the provision's objective is to secure evidence – even before the actual facts of the case are clear. To respect the other party's interests it is obvious that more than a slight indication of need can suffice to justify a claim. According to the statement of a German legislator when the Patent Act was amended, the requirement of a reasonable probability was added in order to codify the principles developed by the German Federal Court of Justice in the so called “Faxkarte – Case.” , The court decided that a general inspection claim according to Sec. 809 Civil Code is substantiated, if a “certain degree of probability” of an infringement is given.
(2) Second, the presentation of documents or the examination of an object must be necessary. Again this is an abstract legal term, which has to be interpreted. The requirement of “necessity” was included in Sec. 140c PatG in order to prevent an abuse of the provision as an instrument for industrial espionage. Moreover, this precondition allows the courts the consideration of the obligor's interest in non-disclosure in relation to the probability of an infringement or its significance. The “necessity” will be denied by the courts, if at the time of the claim any other, simpler, reasonable and at least equitable possibility to obtain evidence is apparent. In practice, this might be the case if an infringement could be substantiated such as by inquiries on the internet or by a simple review of sales literature or instruction manuals. Even though such a requirement is not obligated by Arts. 6 or 7, Sec. 140c PatG can still be considered as being compliant with the Directive in respect to Art. 3.
(3) Additionally subsection (II) excludes claims according to subsection (I) if its utilization is disproportionate in the particular case. By this subsection, the principle of proportionality is expressed in Sec. 140c PatG. In an exceptional case, the court could reject an extensive claim if the alleged infringement is insignificant.
(4) Concerning the attainment of banking, financial, and commercial documents, Sec.140c PatG demands for a “second-step-probability-test.” The already “reasonably probable” patent infringement has again to be “reasonably probable” on a commercial scale. However, according to the Directive, any act carried out for direct or indirect economic or commercial advantage can be regarded as on a commercial scale.
In reality, it is not apparent why Sec. 140c(I)(2) PatG demands the probable use on a commercial scale, since according to Sec. 11 PatG, most non-commercial acts are excluded from patent protection and regarded as “non-infringing actions.” Section 140c(I)(1) PatG explicitly refers to the use of a patented invention contrary to Secs. 9-13 PatG. Therefore, in practice this requirement will only, if at all, prevent the disclosure of the mentioned documents in a negligible amount of cases. Therefore, almost any use contrary to Secs. 9-13 PatG will be on a commercial scale.
(5) If the above-mentioned requirements are met, the obligor has to tolerate the inspection of the alleged infringing object or process and has to present relevant banking, financial, and commercial documents. The term inspection as stated by Sec. 140c PatG is open to interpretation. Because Sec. 140c PatG is part of the implementation of 2004/48/EG the meaning and extent of the term inspection also has to be interpreted in accordance with the Directive's purpose. Although inspection is not expressly defined in Sec. 140c PatG, this term is used in Sec. 809 of the Civil Code and in that context an interpretation has been developed.
Due to the fact that an effective enforcement of intellectual property is intended, inspection has to be understood in a broad sense. It encompasses not only reckoning of the object, but a comprehensive inspection as well. This includes, for example, activating machines and allowing intrusion into the object to some extent, such as the removal of covers. The inspection of an object includes all measures that, in relation to the specifics of the object and in relation to the facts needed, can provide certainty about the claim. Even though only through such a broad interpretation can the aim of the Enforcement Directive be achieved, it has been criticized that the legislator did not expressly articulate this range or substantiateit by other terms, such as examination.
In addition, the effectiveness of the measures granted by Sec. 140c PatG require that the obligor's business premises can be accessed to inspect a relevant object or process. The claim for searching those premises to investigate if there is any infringement cannot be covered by the new provision, however. In so far as the amendment of the Patent Act does not have any effect on the German Federal Courts’ legal practice developed in its “Kontrollbesuch-Case.”
(6) Subsection (III) of Sec. 140c PatG states, that the claim can be enforced by an interlocutory injunction. But only in the case that a claimant can introduce prima facie evidence that the claim for damage is substantiated, as stated in Sec. 935 et seq. German Code of Civil Procedure. Even though this requirement constitutes an additional barrier for the rightsholder, Sec. 140c(III) PatG is compliant with the Directive regarding Art.9(III). This states that in the case of an interlocutory injunction, the judicial authorities have the authority to require production of any reasonably available evidence in order to satisfy themselves with a sufficient degree of certainty that the applicant's right is being infringed, or that such infringement is imminent.
By referring to Sec. 811 German Civil Code, subsection (IV) regulates some modalities of the inspection and the presentation of documents. Furthermore, Sec. 140b(VIII) PatG constitutes an exclusion of the obtained evidence for potential subsequent criminal proceedings regarding the same actual situation.
(7) Subsection (V) grants the alleged infringer a demand to compensation against the applicant of the presentation according to subsection (I) in the case that neither any infringement could be proven, nor any threat of infringement is apparent. In practice the damage could be a loss in production or the opponent's legal costs.
IV. Points of criticism
(1) The implementation of Arts. 6 and 7 of the Directive combines both articles with their particular rules into only one section of the German Patent Act. Provisions for taking evidence are blended with those for preserving evidence. This leads to difficulties with the interpretation as well as the application of Sec. 140c PatG.
Article 6 of the Directive does not require the Member States to provide measures of interlocutory injunctions to guarantee the enforcement of the claim. This aspect is covered in Art. 7, which provides measures to protect evidence until a decision about a claim according to Art. 6 is reached. Evidence may be confiscated through preliminary measures, but it may not be made available to the rightsholder for examination at that point. By combining both articles of the Directive in one section, the German legislator has, however, granted the possibility of an interlocutory injunction for the taking of evidence and not only for the preservation of evidence. This means, that unlike the Directive, a Sec. 140c PatG claim would grant the applicant examination of evidence through a preliminary injunction.
However, the summary procedure of preliminary disposition according to German law is not fit to provide an adequate examination of proportionality with respect to trade secrets and confidential information. Two principles of German law are thereby at stake. One is the prohibition of the anticipation of the main action by a preliminary action. The second is the principle that the defendant does not need to participate in the taking of evidence. His basic constitutional rights to informational self-determination and to due process of law are at risk.
(2) Safeguards for confidential information
Safeguards for confidential information of the obligor are not set by Sec. 140c PatG, but are put under the courts’ discretion. It is, however, the obligation of the legislator to provide, within the statute, measures to balance the interests of the involved parties proportionately. It does not suffice to delegate this decision to the courts.
(3) Searching houses and business premises in order to fulfill the claim of examination may touch on basic constitutional rights as stated in Art. 13 Grundgesetz. Rules of procedure for that case are not provided in Sec.140c PatG or any of the following sections. Section 140c PatG might therefore be too indeterminate to be constitutional. A court order for examination within the business premises of the obligor would in practice have to be combined with a search order.
(4) The requirement of reasonable probability cannot be found in Art. 6 of the Directive. Although the Member States are free to go beyond the purpose of the Directive in their respective implementation, they may not fall behind the protection stated in the Directive. However, any additional requirement for a claim limits the protection for the applicant. Such an additional requirement has to be substantiated and possibly proven in court in order to gain a valid claim according to Sec. 140c(I) PatG.
The Directive requires only that the party “has presented reasonably available evidence to support the claim.” That also means that a claim might be substantiated if no evidence is reasonably available to the rightsholder. Even if this is limited by the boundaries of misuse of the claim, it still goes beyond the German implementation.
V. Sec.140c Patents Act in legal practice
The Landgericht Duesseldorf has, in consistent practice, established a form of court orders that allows balance of the interests of the involved parties in examination claims. This practice took the BGH decisions concerning examination prior to the implementation of the Directive into account and is known as the “Duesseldorf Practice.” It will very likely prevail in matters where the new Sec. 140c PatG is concerned, because it allows courts to take the required reasonable steps to protect trade secrets and confidential information. A typical court order for an Examination according to Sec.140c PatG reads as follows:
I. It is ordered, on application by the applicant of ... , because a law suit has not yet been filed and the applicant has a legal interest that the condition of an object is assessed, that independent proceedings for the taking of evidence according to Secs.485 et seqq. Code of Civil Procedures are carried out.
II. 1. By means of expert witness evidence shall be taken, whether the ... within the business premises of the opponent of type “...” are suited to carry out the process according to claim x of the European Patent ... , which consists of the following....
2. ... is appointed as expert witness.
3. The expert witness is – in order to protect any possible trade secrets of the opponent, that might surface during an examination – ordered to avoid any direct contact with the applicant and to conduct any necessary communication via the court or the designated legal representatives of the applicant. The expert witness is sworn to secrecy against any third party.
4. The examination shall – because of the urgency of the matter – be carried out without prior summoning or hearing of the opponent.
III. By means of interlocutory injunction the following is ordered:
1. In addition to the expert witness, the following legal representatives of the applicant shall be granted presence during the examination.
- attorney at law ...,
- patent attorney ....
2. Patent attorney ... and attorney at law ... are sworn to secrecy about any fact about the business of the opponents that might come to their attention during the examination. Especially against employees of the applicant.
3. The opponent is ordered to refrain from – for the duration of the examination from now on - any changes to the ... to be examined, especially ... .
4. For the case of violation of order 3, an administrative fine of up to 250.000,- Euro – alternatively arrest for contempt of court – or arrest for contempt of court up to six months is ordered. The arrest is enforceable against the CEO of the opponent.
5. The opponent has to tolerate, that the expert witness examines devices and if the expert witness deems necessary to examine it in working condition.
IV. After the written report of the expert witness has been presented to the court, the opponent has the opportunity to claim confidentiality of information. The court will then decide, whether the report is brought to the attention of the applicant.
If Sec.140c PatG is indeed executed like this, most of the aforementioned problems can be resolved. A court order for an examination on business premises will in most cases resolve problems of basic constitutional rights, which might be touched due to improportionality of the measure, since the court will take constitutional rights into account in its decision. Moreover Sec. IV of the order resolves problems of anticipating the main action as it bars the applicant from gaining evidence through a preliminary measure.
A last remaining issue is the requirement of reasonable probability. The fact that the German implementation might by too narrow at this point cannot be resolved through a court order. It is still up to the applicant to produce enough evidence that will suffice the requirement of reasonable probability of infringement.
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