An International Guide to
Patent Case Management for Judges

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5.11 Selected topics

5.11.1 Action for the grant of a compulsory license Grounds for applying for a compulsory license

A compulsory license is the nonexclusive right to commercially use a granted patent. This license is not granted voluntarily by the patent proprietor but by the FPC upon request of the license seeker. The prerequisites for granting a compulsory license by a court are set out in the German Patent Act and require, first of all, that the license seeker has, within a reasonable period of time, unsuccessfully attempted to obtain the patent proprietor’s permission to use the invention on reasonable terms and conditions. The primacy of the unsuccessful licensing attempts is the consequence of granting a compulsory license being an ultima ratio: the patent proprietor must only be forced to grant a license if they have refused to grant a license – at all or on reasonable conditions – even though a license would be required to satisfy superior interests. The superior interests that constitute grounds for granting a compulsory license are set out in Section 24 of the Patent Act.

The most important ground is the public interest calling for the grant of a compulsory license (cf. Section 24(1) of the Patent Act) – in particular, public health and public security are considered to be relevant public interests. A special form of the public interest is codified in Section 24(5) of the Patent Act, according to which a compulsory license may be granted to ensure an adequate supply of the patented product on the German market if the patented invention is not (predominantly) used in Germany. The mere existence of a public interest per se does not, however, justify the grant of a compulsory license. Rather, it is necessary to consider the particular circumstances of a specific case and to balance the interests at issue. Only if this results in the public interest overruling the patent proprietor’s interest in maintaining their monopoly position may a compulsory license be granted. Pursuant to established FCJ case law, a public interest in the granting of a compulsory license is to be affirmed if a medicament for the treatment of a serious disease has therapeutic properties that medicaments available on the market do not have or do not need to the same extent, or if its use avoids undesirable side effects that would need to be accepted if other medicaments were administered.198

According to Section 24(2) of the Patent Act, a compulsory license may also be granted for a patent that hinders the holder of a patent with a later filing or priority date to exploit their invention because making use of said patent infringes the older patent (i.e., the patent with an earlier filing or priority date). In this situation, it is further required that the invention protected by the younger patent demonstrates an important technological advance of substantial economic significance compared to the invention claimed by the older patent. In situations covered by Section 24(2) of the Patent Act, the patent proprietor may, in return, request the grant of a cross-license for the use of the invention protected by the younger patent.

The provision of Section 24(2) of the Patent Act also applies to cases where a plant breeder cannot obtain or exploit a patented variety without infringing an older patent. Granting a compulsory license for a patent claiming an invention in the field of semiconductor technology is only possible when the license is necessary to eliminate the anticompetitive practices pursued by the patent proprietor that have been established in court or administrative proceedings (cf. Section 24(4) of the Patent Act). Scope of a compulsory license

By means of a compulsory license, the license seeker is given a nonexclusive right (not duty) to commercially use an invention protected by a granted patent. The right is limited to the purpose for which it has been granted and may also be subject to further conditions and limitations. For example, it may be required that a notice concerning the patent covered by the compulsory license be attached to the product, or the compulsory license may only be granted for certain claims of the patent, be limited to certain activities (e.g., dosage forms of a medicament)199 or contain timewise or geographic constraints. Further, the grant of a compulsory license may be made dependent on a security bond to be provided by the license seeker.

Since the grant of a compulsory license does not establish an ordinary license agreement, the parties do not need to act like normal parties to a license agreement. The patent proprietor only must tolerate the use of their patent; they are not precluded from exploiting the patent as they like and are not obliged to maintain or defend the patent. Moreover, they do not need to warrant that the invention is feasible or suitable for the intended purpose, and they also do not need to provide know-how required for the use of the invention. Obviously, the license seeker must pay license fees for their right to use the invention in an amount determined by the court considering the circumstances of the specific case, which include, inter alia, the economic value of the right to use the invention. The license seeker is allowed to challenge the patent’s validity by filing a revocation action or an opposition. Contrary to a normal nonexclusive license, a compulsory license could also be granted for a patent for which an exclusive license has already been granted.

A compulsory license is bound to the business that makes use of the invention for which the compulsory license was granted and can only be assigned in combination with said business; assigning only the compulsory license is not possible.

The duration of the compulsory license may be set by the FPC either directly or by means of a resolutive condition. If no duration has been set, the patent proprietor can request that the FPC withdraws the compulsory license if the prerequisites for its grant are no longer met. The compulsory license ends ipso iure when the patent expires. Procedural aspects Proceedings on the merits

The proceedings on the merits concerning a compulsory license follow the same rules and are handled by the same courts as set out above with regard to the revocation proceedings (cf. Section The subject matter of the action can be the grant, the adaptation or the withdrawal of a compulsory license; the parties to the proceedings are the patent proprietor as licensor and the license seeker.

When filing a complaint for the grant of a compulsory license, the license seeker does not need to specify the conditions of the requested compulsory license. If, at the time of filing the action for the grant of a compulsory license, the license seeker has not yet sufficiently attempted to obtain a license on reasonable conditions, they can continue their efforts during the proceedings. If their attempts were successful, and a license agreement is concluded after the action for the grant of a compulsory license has been filed, the action may be withdrawn or, alternatively, the plaintiff or both parties may submit a declaration that there is no need to adjudicate (“einseitige oder übereinstimmende Erledigungserklärung”).

A judgment granting a compulsory license does not oblige the patent proprietor to enter into a license agreement but directly establishes the license seeker’s right (yet not their duty) to use the patented invention and their obligation to comply with the conditions set out in the judgment (in particular, paying license fees).Like in revocation proceedings, the costs will usually be imposed on the losing party or, in a case where both parties declared that there was no need to adjudicate (“übereinstimmende Erledigungserklärung”), the party that would have lost, unless equity requires otherwise: Section 81(1) and 84(2) of the Patent Act and the applicable rules of the Code of Civil Procedure. Summary proceedings

If an action for the grant of a compulsory license is pending, the license seeker may additionally initiate preliminary injunction proceedings directed at the grant of a compulsory license; it is, however, not possible to request a preliminary injunction if no proceedings on the merits are pending. The request for a preliminary injunction must be filed with the FPC, which must schedule an oral hearing that is prepared by written statements of the parties and after which a judgment will be rendered. The judgment will have the same effect as the judgment in the proceedings on the merits (cf. Section

A preliminary injunction is granted if the license seeker substantiates (not proves) that the material requirements for the grant of a compulsory license are met and that there is an urgent need in the public interest for the immediate grant of the compulsory license. The threshold for the latter requirement is rather high and only met if an immediate decision is required to avert severe disadvantages from the public were the outcome of the proceedings on the merits to be awaited. In recent times, a preliminary injunction has been issued only once in a compulsory license case.200 The preliminary injunction is dependent on the proceedings on the merits. Thus, if the complaint is withdrawn or dismissed, the effect of the preliminary injunction ceases.

The grant of a compulsory license by way of a preliminary injunction may be dependent on a security bond to be provided by the license seeker in order to cover potential damages of the patent proprietor. Another security bond may need to be provided by the license seeker for the enforcement of the nonfinal judgment granting the compulsory license. This must be considered carefully: if preliminary injunction proceedings are initiated, and a nonfinal judgment is enforced because the grant of a compulsory license by way of a preliminary injunction proves unjustified from the outset, or if the judgment is lifted later on, the license seeker must compensate the patent proprietor for any damages arising therefrom. Appeal

Against the judgment – both in proceedings on the merits and in preliminary injunction proceedings – an appeal with the FCJ can be filed. The appeal proceedings are very similar and basically follow the rules set out above for the appeal in revocation proceedings.