5.7 Civil remedies
5.7.1 Permanent injunction
By far the most important remedy available under German patent law is the permanent injunction, by which the defendant is ordered to completely refrain from engaging in acts that have been found to infringe upon the patent. Moreover, all such acts that fall within the scope of the judgment for the same reasons, relying exclusively on the considerations of that judgment, are prohibited. Thus, minor modifications of the attacked embodiment, if it still fulfills the features of the patent claim as construed in the reasoning of the decision, will not suffice to avoid infringement (“core theory”).
As this is true for direct infringement, in cases of indirect infringement, the court will only grant an unlimited injunction if the means contributing to the infringement can only be reasonably used under infringing circumstances. If this is not the case, the court may not grant an unlimited injunction but may order the defendant to warn its customers that use of the invention is prohibited without the prior consent of the patentee and to put respective warning notices on the products. Alternatively, the court may oblige the infringer to conclude a cease and desist agreement, including a penalty clause, with its customers.
So far – except for extraordinary circumstances of the case – a permanent injunction is automatically granted if infringement is found, without weighing the interests of the parties or affected third parties. An injunction is, therefore, not dependent on the claimant being a practicing entity, so nonpracticing entities are, in principle, also entitled to injunctive relief. Since August 2021 the German legislator introduced wording into Section 139 of the Patent Act so as to exclude the right to an injunction where such a remedy appears to be disproportionate for the defendant or a third party, taking into account the circumstances of the case as well as the principle of good faith. Where a permanent injunction is excluded for these reasons, the infringed party is entitled to reasonable monetary compensation. However, the new law is not expected to change current court practice significantly because the principle of proportionality is already taken into consideration for exceptional cases, in which a use-by period may be granted.161
A central question next to that of whether infringement (direct, indirect or equivalent) is found is whether there is a risk of a first-time infringement or whether the defendant has already infringed upon the patent in the past and is therefore deemed to commit future infringement as well. This must be shown by the claimant. In almost all cases handled by the courts, an alleged infringement has already occurred in the past, whereas future infringement may sometimes play a role in preliminary proceedings to stop an alleged infringer from entering the market with its products. The courts will find in the affirmative even where the defendant has already desisted from selling the infringing products, as long as it did not sign a cease and desist declaration promising to pay damages owed under this declaration in case of an ongoing breach. Important to remark is that finding fault – be it negligence or willful misconduct – on the side of the infringer is not a prerequisite for a permanent injunction. An injunction is only available as long as the patent is in force.
5.7.2 Recall, removal and destruction of patent-infringing products
Accompanying a claimant’s right to an injunction, the infringement court will grant an order to have infringing products recalled, removed from the distribution channels and destroyed pursuant to Section 140a of the Patent Act. These claims will only be allowed where direct infringement occurred but not in cases of indirect infringement.162 As a consequence of the territoriality of the German patent or the German part of a European patent, it is a prerequisite that the defendant owns or possesses infringing goods in Germany. The claim for destruction is available even when the patent has meanwhile expired because the infringer must not benefit from infringing acts committed in the past. The court will not order the products or – where a process is protected by the patent – the direct products manufactured by making use of that process, to be destroyed when such destruction seems disproportionate. However, this is rarely found to be the case. Destruction in the sense of the law does not necessarily mean physical destruction of the whole product but rather that the protected feature must not be used any longer. Thus, the duty to destroy may also be fulfilled by design-arounds to avoid use of the patent. If physical destruction is the only alternative, the defendant may do so itself or hand the attacked embodiments over to a bailiff for destruction at the defendant’s cost.
Supporting the right to have infringing products destroyed, the claimant may also be granted a right to remove all infringing goods from distribution channels by a recall (e.g., in a situation where the goods have not yet arrived at their final destination). Consequently, the infringer must approach its customers to return affected goods, which may cause negative publicity and be harmful for customer relations.
5.7.3 Information and rendering accounts
Where the claimant is aware of past use, it may request information on such use and force the defendant to render accounts. With such information, the claimant is able to identify third parties involved in the infringement (e.g., within a supply chain) and bring proceedings against them. Moreover, this information puts the claimant in a position to calculate the damages that result from the infringement. In most cases, this alone is enough to enable settlement between the parties after the duty has been enforced. The defendant – in accordance with the judgment –will normally need to furnish particulars on:
- manufacturing quantities and times regarding affected products;
- deliveries (quantity, time of delivery, prices, type designations, and addresses and names of customers);
- individual offers; and
- production costs (including individual cost factors and profits).
Where particular details being given to the claimant would affect the defendant‘s right to keep such information of private customers confidential, such information may only be shared with an accountant, being bound by confidentiality, upon request of the defendant and if they pay for such an accountant.
If there is sufficient reason to believe that the defendant has not provided the information correctly and with the requisite care, the claimant may force the infringer to declare for the record, in lieu of an oath, that they have indicated the earnings as completely as they are able to (Section 259(2) of the Civil Code).
5.7.4 Award of damages
For negligent or intentional infringement, the patentee or its exclusive licensee is entitled to damages. Nonexclusive licensees may only claim damages from the patent owner or exclusive licensee if such an entitlement has been assigned. The German courts take a strict approach such that anyone engaging in commercial activities is expected to be aware of all relevant patents and patent applications in their business sector and must seek professional legal advice when in doubt. This strict liability is also true for directors, who have an influence upon the infringing activity.
It is a particularity of German proceedings that, initially, the determination of the amount of damages is not part of the infringement proceedings. Rather, the courts find that the claimant is entitled to damages on the merits and leaves the details to be determined in follow-up proceedings, which rarely occur in practice because most parties – after infringement has been found and the claimant has enforced its judgment and forced the defendant to open its books – find a way to settle this dispute without the support of the courts.
The amount of damages may be calculated in three different ways. The claimant has a free choice between all three methods until a specific damage claim has been brought or a final and binding court decision has been rendered:
- The claimant may request the profits of the infringer that directly resulted from the infringement and are causally linked to it (infringer’s profits).
- The claimant is entitled to ask for compensation for its lost profits (lost profits).
- The claimant may calculate the damages on the basis of a license fee that would have been paid by a reasonable licensee (license analogy).
In most cases, damages are calculated by way of a license analogy. This method is the easiest for collecting damages because the claimant is usually in a position to establish the amount of a reasonable license fee by making reference to other license contracts with third parties or established license rates in the industry sector, which are deemed to be paid by a hypothetical licensee.
In contrast, enforcing a judgment granting damages calculated via one of the other two methods against an unwilling counterpart can be a cumbersome procedure. Using the infringer’s profits method, it may be difficult to determine the causal share of the infringement on the profits, the core question being how significant the patented technology was for the customer’s decision to buy the infringing products or pay for the use of the respective procedure. Furthermore, where the patented feature only forms part of a larger system being sold, the calculation will need to take this into due account by making a corresponding deduction. As part of the damages, side-by-side sales will need to be taken into account (e.g., where such products are not patented themselves but are sold with the patented product or subsequent to the sale of the patented product as a replacement part). The infringer may then deduct only the overheads that can clearly be attributed to the manufacture and distribution of the attacked embodiment infringing upon the patent. Thus, the true general costs of production and distribution may not be taken into account.163
Where the claimant seeks to enforce the amount of lost profits as damages, it is difficult to provide evidence for the actual damage incurred (such as a specific lost order that would have been placed with the claimant instead of the defendant). If no such specific transaction was lost, the claimant will need to argue on an abstract basis and convince the court that certain transactions and sales would have taken place in the course of its usual business.
It is important to note that exemplary or punitive damages are not available under German law of torts.
5.7.5 Publication of court decision
According to Section 140e of the Patent Act, the prevailing party may be furnished with the right to publish the decision at the defendant’s cost where it has a legitimate interest to do so. This section was introduced to transpose the EU Enforcement Directive into German law. However, only a few court decisions have granted such a request for reasons of proportionality. In recent years, fewer and fewer parties have applied for it.
5.7.6 Declaration of non-infringement
Under German law, there is no special remedy as part of the substantive law that entitles a declaration of non-infringement. Rather, a party that is substantially confronted with an alleged infringement may ask the court to find in a procedural declaration that there is no infringement (declaratory judgment of non-infringement). The alleged infringer will need to provide a detailed description of a specific embodiment of a product or process to put the court in a position to determine that a respective infringement claim by the patent’s proprietor would not prevail.
As the relevant procedural provision in the Code of Civil Procedure (Section 256) only allows such a procedure where the claimant has a legitimate interest that non-infringement be declared, the claimant will need to assert that it not only has an abstract interest in such a court declaration but that it has been approached by its opponent in such manner that it has a legitimate interest to defend against the respective allegation. This normally will not be the case where the opponent has only asked the claimant to explain why it feels entitled to make free use of the patented process or sell its goods in the light of the patent and has sought to start an exchange of ideas and arguments. Rather, before an application in court for a declaration of non-infringement will be allowed, such a substantive attack will only be found where the patent owner has furnished the claimant with a warning or cease and desist letter by which it maintains having a claim against its opponent. However, it is not necessary that the patent owner asserts having an enforceable claim against the opponent,164 though the mere announcement that it will review potential claims is not sufficient165 nor is the mere initiation of inspection proceedings, except for specific circumstances.166
There is no remedy to a declaration of invalidity or unenforceability that may be brought before the civil infringement courts. In this case, a nullity action must be filed with the FPC. The arguments on invalidity may only be taken into account by the infringement court in its decision on whether to stay its proceedings and wait for the outcome of the nullity action.
In Germany, the court costs for infringement proceedings as well as for invalidity proceedings are determined according to the value in dispute.
188.8.131.52 Determination of the value in dispute
The determination of the value in dispute in Germany is at the equitable discretion of the court, Section 3 Code of Civil Procedure, res. Section 51 (1) Court Costs Act (Gerichtskostengesetz, GKG). The amount in dispute shall at first be determined provisionally without hearing the parties and then finally after the conclusion of the proceedings and hearing of the parties. For this reason the statement of claim is to provide information on the value of the subject matter of the litigation wherever such subject matter does not consist of a specific amount of money (Section 253 (3) No. 2 Code of Civil Procedure). This is the case in patent infringement cases where the claimant typically seeks injunctive relief, rendering of accounts, recall/destruction and declaratory entitlement to damages. Where the claimant files these requests, the value of each request has to be determined separately in case separate enforcement of these requests is intended. The request for injunctive relief usually makes up for 80 % of the total sum in dispute and moreover serves as a point of reference to set the value of the other requests. In setting the value for permanent injunctive relief, the court has to make a reasonable prognosis by which the future value of the patent right for the claimant as well as the risk that the monetary realization of such value is endangered by the allegedly infringing act is to be assessed.167 Elements to be taken into account are the importance of the protected invention, the remaining time of protection, the future risk put at the realization of the monetary value of the invention by the allegedly infringing acts, which may best be assessed on the basis of the unjustified past use, the economic force of claimant and defendant, like existing streams of distribution and manufacturing possibilities, as well as the degree of fault (intent or (gross) negligence) on the side of the defendant.168 The market value of the patent is of particular importance in determining the amount in dispute. A valuation method for determining the market value is, in particular, the exploitation interest, which can be determined by the possible license fees. To determine potential license rates, there are, for example, catalogues of license fees typical for certain industries. In most cases, the courts will – for lack of better sources of information and knowledge – adopt the sum in dispute as indicated in the statement of claim as long there is mutual consent between the parties that this value adequately reflects the true value of the dispute, except where such sum obviously is set too low. As a rule of thumb the value of small patent infringement cases regularly is set to EUR 250,000–500,000, to EUR 1,000,000–5,000,000, in medium and to more than EUR 10,000,000 in large cases (with a statutory ceiling set at EUR 30,000,000).
For nullity proceedings, a higher amount in dispute is assessed than for infringement proceedings concerning the same patent in dispute. When determining the amount in dispute in nullity proceedings, the FCJ adds a surcharge of 25% to the amount in dispute in the patent infringement proceeding. This is justified by the fact that the infringement action does not yet include the patent owner’s interest in using the patent for its own purposes for the remaining lifetime of the patent.169
184.108.40.206 Calculation of statutory court fees
The Court Costs Act and the corresponding schedule of costs included in an Annex are the relevant law to determine the concrete court fees, which have to be paid in advance to have the claim served on the opponent (Section 12 (1) Court Costs Act). A table of fees determines the amount of the single court fee (1.0) for certain values in dispute. The fee only increases if there is a jump in value. For amounts in dispute of EUR 500,000 or more, these jumps in value occur each time the amount in dispute is increased by EUR 50,000.
Depending on the type of proceedings or the instance, the multiplication factor for the calculation of the fee amount varies. Thus, for infringement proceedings in the first instance a 3-fold fee must be paid, in the second instance a 4-fold fee. For a nullity action, the court fees amount to a 4.5-fold fee in the first instance and a 6.0-fold fee in the second instance.
The court costs are to be paid by the plaintiff in advance and are fully refundable, if the plaintiff is successful.
220.127.116.11 Reimbursable lawyer’s and patent lawyer’s fees
The reimbursable lawyer’s fees are the statutory minimum fees for a party’s own counsel, which at the same time correspond to what has to be reimbursed to the other side in case of loss. They as well depend on the value in dispute. Higher legal fees that have been agreed upon between client and lawyer that were actually incurred are not recoverable. Most specialized patent lawyers charge more than the statutory minimum fee, so that even the prevailing party has a certain non-refundable cost burden.
The German Lawyers’ Fees Act (Rechtsanwaltsvergütungsgesetz, RVG) applies to the calculation of recoverable lawyers’ fees in Germany. This is completed by the schedule of fees to the RVG. The simple lawyer’s fee (1.0) is determined in exactly the same way as the court fee, on the basis of a table of amounts in dispute. Also in this respect, the fees are leveled in steps of 50,000 (starting at EUR 500,000). The Act stipulates that a fee of 1.3 (or 1.6 in the second instance) can be charged for legal services in a case, and if court hearings take place in the case, an additional fee of 1.2 can be charged.
The German Lawyers’ Fees Act is not only applicable to determine the attorney’s fees, but also to the patent attorney’s fees. Due to the close cooperation of attorneys-at-law and patent attorneys in infringement actions and nullity actions, both attorney’s fees and patent attorney’s fees are recoverable in each type of proceedings (see Section 143 (3) Patent Act). The only requirement is that the cooperation was indicated in each case. However, the Court of Justice of the European Union (CJEU) recently held in a trademark case that the fees of a patent attorney only have to be reimbursed where these costs incurred by the successful party are reasonable and proportionate, which has to be decided in taking the specific characteristics of the case into due account.170 Whereas in trademark cases there may be circumstances where a patent lawyer’s involvement is not necessary in this sense, the patent lawyer’s technical expertise will be unavoidable and therefore refundable in most patent cases. Conversely, it is established case law that the involvement of a lawyer in nullity proceedings is necessary, if there is a simultaneously pending infringement proceeding concerning the patent-in-suit between the identical parties.
18.104.22.168 Cost Example
For a typical patent infringement case where the sum in dispute is set to EUR 1,000,000 and where there is one party on each side the costs according to the above mentioned cost regulations (without costs of taking evidence, translation costs, costs for travel arrangements etc.) are as follows:
|Regional Court||Higher Regional Court||Federal Court of Justice|
|Patent Att. Cl.||15,461.08||17,313.55||23,488.46|
|Patent Att. Def.||15,461.08||17,313.55||23,488.46|
The respective costs for nullity proceedings before the German Patent Court and the FCJ, which are initiated by most defendants in response to an infringement action, will have to be added.