5.9 Appellate review
5.9.1 Limited de novo appeal
There is an appeal as of right against any final decision of a regional court to be filed with the competent higher regional court as the appellate court (Section 511(1)). Generally, preliminary rulings are not subject to appeal and cannot be “certified” for appeal unless the statute provides for it.182
The appellate court is also a “court of record,” so it is not strictly bound by the factual and evidentiary record of the “trial court.” Thus, the appellate court’s competence is not limited to genuine issues of law (Section 513(1)), but it can and must look de novo into the facts and can take new evidence if needed (Sections 529(1) and 538(1)).183 In 2002, this concept was modified as part of a comprehensive civil procedure law reform:184 the appellant can now only rely on new facts and evidence if there is a good reason for not having introduced those before the regional court (Section 531). Uncontested facts can, however, never be rejected as late-filed. In light of this reform, it is important to ensure that facts and evidence are submitted at the entry-level court, even if they possibly might not be relevant for the decision at that point (e.g., in light of a certain approach in claim construction).
5.9.1.1 Requirements of the appeal and particulars of appeal
The appeal must be filed within one month following the service of the regional court’s fully worded ruling on the losing party or appellant (Section 517). This is a statutory term that cannot be extended. The appeal is lodged by way of filing a notice of appeal with the appellate court (Section 519(1)). The appellant185 must provide “particulars of the appeal” (substantiating the basis for the appeal), which need to be filed within two months following the service of the decision (Section 520(2)). Without the appellee’s consent, that term can be extended by the presiding judge by up to one month.186 The extent to which the judgment is being contested must be set forth in the particulars, as well as a specific petition (request) as to how the judgment is to be modified. If the appellant has only lost in part, the judgment can only be contested to the extent the appellant’s requests were dismissed by the lower court. In such a scenario, both parties can appeal the decision.
5.9.1.2 Cross-appeal
If only one party files an appeal in time, the other party – that is, the appellee (“defendant in the appeal”) – can file a cross-appeal (Section 524). Such a cross-appeal must be filed within the appellee’s term for filing a response to the appeal (“statement of defense in the appeal”; cf. Section 524(2)). This term is important for the plaintiff that won before the regional court and wants to extend the claims on appeal (“modification of the suit filed” on appeal; cf. Section 533) because this is only possible by way of cross-appeal as this requires modifying the requests that were affirmed by the lower court. Such scenarios can, for example, arise if a further patent is to be added to the previous patent-in-suit. Such a claim extension through the introduction of a further patent-in-suit (and corresponding further requests) is also possible on appeal, even in the absence of the defendant’s consent, if it serves judicial economy. Indeed, it can even be required for a plaintiff under Section 145 of the Patent Act to add a related patent if there is a significant overlap in the features of the claims and the pertinent characteristics of the accused device relevant for infringement.187 A cross-appeal can only be directed against the appellant and not against a third party. Thus, it is not possible to add another defendant to the action even though this is possible under the general doctrine of claim modification (Sections 263 and 533).
5.9.1.3 Appeal process
The structure of the proceedings before the appellate court is similar to that of the proceedings before the lower court (Section 525). Thus, there is typically a further reply and rejoinder brief and only one final hearing unless the taking of evidence becomes necessary. With regard to the taking of evidence, the appellate courts are generally more prone than the lower courts to take expert evidence in complex matters. The structure of the hearing is also similar. Different from the practice of the regional courts, the appellate courts typically rule on the day of the hearing. While a remand to the lower court is possible, this is the exception and limited to certain cases in which the lower court only ruled on admissibility or in which the proceedings before the court of first instance were subject to a material irregularity (Section 538(2)). The general rule is that the appellate court decides “on the matter as such,” – that is, it makes a full decision on the merits of the case (Section 538(1)). This decision can be a judgment dismissing the appeal or affirming the appeal in modifying the judgment based on the appellant’s specific petitions (requests). It can also partially dismiss or affirm the appeal in that manner. The decision, however, does not need to be a judgment. It can also be an order for evidence or an order to stay the proceedings pending a nullity action. The appellate court generally exercises its discretion to stay the proceedings pending the nullity action or opposition against the patent in the same way as the court of first instance.
If, however, the plaintiff prevailed before the regional court – so that the plaintiff is the defendant in the appeal and therefore disposes of an enforceable injunctive relief – the appellate court ought to lower the standards for staying the case.188 The difference in this approach becomes clear when focusing on the consequences of enforcing an injunction that is subsequently reversed. If a first-instance decision granting permanent injunctive relief is reversed by an appellate judgment, the plaintiff is liable for damages the defendant suffered by the judgment being enforced (Section 717(2)). This is not the case for the enforcement of any relief granted or affirmed by an appellate judgment. The obligation of the plaintiff to reimburse the defendant in these cases is only determined by the rules of unjust enrichment, not damages (Section 717(3)).
5.9.1.4 Motions for a provisional termination of the enforcement of injunctive relief pending appeal
Motions for a provisional termination of the enforcement of injunctive relief have become practically very important in patent infringement matters. Injunctive relief is a relief as of right, so the court of first instance (even under the recently amended law), once infringement has been ascertained, does not have a general discretion with regard to ordering injunctive relief. Thus, injunctive relief is still the rule. However, the defendant can, upon filing the notice of appeal, turn to the appellate court requesting that the enforcement of the injunction be provisionally stayed (pending appeal; cf. Section 719(1)). This remedy has been frequently used by defendants in patent infringement matters. While originally such provisional terminations were absolutely exceptional, over the last decade, the appellate courts have been more prone to step in. This requires a determination that, based on a prima facie analysis, there are sufficient prospects for the appeal.189 Furthermore, it requires balancing the equities of the matter in terms of weighing the plaintiff’s interests in enjoining the defendant against the potentially irreversible harm inflicted on the defendant when enforcing the injunction. Thus, genuine equitable considerations that are typically considered in the Anglo-American system when making the decision whether to grant the injunction can be accommodated in the German system in connection with such a stay motion filed with the appellate court. However, one must bear in mind that notwithstanding the appellate courts’ increased awareness and sensitivity in this regard, such provisional terminations are still the clear exception. The plaintiff’s interest in enforcing the injunction generally outweighs that of the defendant, and the defendant is protected by way of the security bond that the plaintiff had to post to make the judgment enforceable pending appeal.
5.9.2 Further appeal on points of law (cassation)
A further appeal on points of law (“Revision”) may be filed against a judgment delivered by the appellate court on fact and law in proceedings on the merits. In preliminary proceedings, a further appeal on points of law is not admissible.
A request for a further appeal on points of law may be filed with the FCJ, which has its seat in Karlsruhe. The FCJ is Germany’s highest court with regard to civil and criminal jurisdiction, including patent infringement matters. The function of the FCJ as a cassation court is to ensure uniform application of the law, clarify fundamental points of the law and develop the law.
In proceedings on a further appeal on points of law, including those in patent infringement matters, no fact-finding will be undertaken. Rather, the FCJ will confine itself to reviewing the legal assessment of a case by the lower courts. The facts established by these courts are binding on the FCJ unless such findings are affected by a procedural error at the lower court indicated in the statement of grounds for the appeal.
In light of the double-track system in German patent litigation as explained above, it must be noted that, even though the FCJ is also Germany’s highest court in patent nullification proceedings, its role in these particular proceedings is exceptionally not that of a cassation court but rather that of an appellate court. Accordingly, from a judgment of the FPC, an appeal (“Berufung”) can be filed with the FCJ, not a further appeal on points of law (“Revision”). And, in the appeal proceedings, different from cassation proceedings, fact-finding can be undertaken to a limited extent (limited de novo appeal), as explained more in detail below.
5.9.2.1 Admission and grounds for admission for a further appeal on points of law
The request for a further appeal on points of law requires admission. A further appeal on points of law may be admitted by the appellate court; or on a complaint against the refusal of the appellate court to grant leave to such an appeal, by the FCJ. Admission or leave may only be granted if a ground for admission is to be affirmed. Grounds for admission are that
- 1. the legal matter is of fundamental significance; or
- 2. the further development of the law or the interests in ensuring uniform adjudication require a decision to be handed down by the court hearing the appeal on points of law.190
A legal matter is of fundamental significance when it can be expected to arise in a number of cases and therefore concerns the abstract interest in uniform application of the law. According to the case law of the Federal Constitutional Court, infringements of a fundamental procedural right – in particular, infringements of the right to be heard (Article 103(1) of the Basic Law) – even if they are in issue only in a single case, are considered to be of fundamental significance and, thus, a ground for admission.191
The further development of law is of concern when, in view of general (e.g., technical) developments, there is reason to provide guiding principles for the interpretation of the law. The interests in ensuring uniform adjudication require a decision from the FCJ when appellate courts disagree in the interpretation of the law or when an appellate court deviates from the interpretation of the law as decided by the FCJ in a symptomatic way.192
To harmonize irreconcilable interpretations of patent claims in parallel infringement and nullification proceedings, the FCJ decided in 2010 that a ground for admission is also given when the FCJ has based its decision in nullification appeal proceedings on an interpretation of the patent claim that deviated, in a point relevant to the decision in parallel patent infringement proceedings, from the interpretation on which the appellate court had based its judgment and which was challenged in a complaint against denial of leave to a further appeal on points of law.193
5.9.2.2 Complaint against the refusal of the appellate court to grant leave
The appellate court must always decide whether leave to an appeal on points of law is to be granted. If the decision is negative, the party adversely affected by the decision may file a complaint, provided the value of the adverse effect amounts to more than EUR 20,000 (Section 544(2)), which is regularly the case in patent infringement litigation. The opposite party will be given the opportunity to be heard in writing. The complaint suspends the judgment from becoming final and binding. The FCJ will decide on the complaint by order. In most cases, reasons are not given. If the complaint is rejected, the judgment becomes final and binding. If the complaint is successful, the proceeding will be continued as appellate proceedings on points of law. The complaint may also be partially successful and partially rejected.
When an action for nullification of the patent that is found to be infringed by the appellate court is still pending before the FPC or, upon appeal, before the FCJ, the FCJ in proceedings on the complaint against the refusal of the appellate court to grant leave may decide to stay proceedings until a final decision in the nullification proceedings has been rendered, provided there is a risk of irreconcilable decisions in the parallel infringement and nullification proceedings.194 This is of relevance in the following two scenarios.
First, the appellate court finds a patent to be infringed and refuses to grant leave. However, later, the FPC or the FCJ nullifies the patent in whole or in the parts relevant for the decision of the appellate court on infringement. If the defendant in the infringement case files a complaint against the refusal of the appellate court to grant leave, and the FCJ stays proceedings, proceedings could be continued after the final decision in the nullification proceeding. If the patent is nullified in the final decision in whole there, the basis for the appellate court (that the patent is infringed) has fallen away, and the plaintiff will normally withdraw the infringement action. If not, proceedings on appeal on a point of law will be continued, the decision of the appellate court will be set aside, and the action for infringement will be dismissed by the FCJ. If the patent has been nullified in the final decision only in part, proceedings will also be continued, and the case will be remitted to the appellate court if further fact-finding is necessary to decide on infringement. But, even if the defendant in the infringement proceedings had not filed a complaint against the refusal of the appellate court to grant leave, they may file an action for retrial (“Restitutionsklage”) pursuant to Section 580(6) within one month after the day on which the defendant became aware of the final judgment by which the patent had been nullified.195
Second, the appellate court finds a patent to be infringed after having given a broad interpretation to the patent and refused to grant leave. Later, the FCJ dismisses the action for declaration of nullification of the patent on the basis of an interpretation of the patent claim that deviates from the understanding of the appellate court in a way relevant for the decision in the infringement litigation (e.g., by interpreting the patent narrowly). If the defendant in the infringement case files a complaint against the refusal of the appellate court to grant leave, and the FCJ stays proceedings, proceedings can be continued after the final decision in the nullification proceeding has been rendered in order to reconcile the claim interpretation in the infringement case with the claim interpretation in the nullification case.196 However, in contrast to the first scenario, filing an action for retrial (“Restitutionsklage”) would not be available where there is a lack of ground for retrial (“Restitutionsgrund”).
5.9.2.3 Requirements for a further appeal on law
Like the appeal, the request for a further appeal on law must be filed within one month following the service of the regional court’s fully worded ruling on the losing party or appellant (Section 548). This is a statutory term that cannot be extended. The appeal is lodged by way of filing a notice of appeal with the FCJ (Section 549(1)). The appellant must provide “particulars of the request” (substantiating the basis for the request), which need to be filed within two months following the service of the decision (Section 551(2)).
The further appeal on points of law may only be based on an erroneous application of the law by the contested decision (Section 545). This is the case when a legal norm has not been applied or has not been applied properly (Section 546). In particular cases enumerated in Section 547 (e.g., the composition of the court was not compliant with the law, or there was a violation of the rules regarding public admission to the oral hearing), it is to be presumed irrefutably that the decision has been based on an erroneous application of the law.
5.9.2.4 Proceedings and decision
The structure of proceedings before the FCJ has many similarities with the proceedings before the lower courts (Section 555). However, there is typically just one round of briefings (reasoning of the appeal and reasoning of defense), since only those party submissions that are apparent from the appellate judgment or the record of the session of the court are subject to assessment by the court. Moreover, with regard to an erroneous application of procedural law, the FCJ will take solely those facts that were put forward into account in order to show these irregularities. As mentioned already, no fact-finding will be undertaken, and the court will only review the legal assessment of the case by the lower courts.
The case is heard by a bench of five judges who have a legal background. Many of them have gained experience in patent litigation as judges in the lower courts. At the beginning of the hearing, the presiding judge summarizes the facts and gives a preliminary assessment of the case based on deliberations the court had prior. This is followed by pleadings of party representatives. The judges may and often will ask questions to the representatives. A typical hearing in a patent infringement case takes between one and two hours. After the hearing, and possibly also other hearings in different cases that were scheduled the same day, the court will deliberate again and will typically rule on the same day but provide reasons later.
The decision depends on the assessment of the further appeal on points of law. The FCJ will dismiss the appeal when the reasoning of the appellate court’s judgment does not contain an error of law or does contain an error of law but is correctly based on other grounds (Section 561). The appellate court’s judgment will be set aside to the extent the appeal on points of law is justified (Section 562), and the matter will be remitted to the appellate court, which, once again, is to hear and decide on it (Section 563(1)) while being bound to the legal assessment of the FCJ to the extent that the reversal of the appellate judgment is based on it (Section 563(2)). The FCJ will decide and not remit the matter if the appellate court’s decision must be set aside because the further appeal on points of law was justified, but the matter is ready for a final decision based on the facts established by the appellate court.