Last year, we have taken a short look on updates new on preliminary injunction proceedings in pharma and biotech cases in Germany (read the article here). We will now take a closer look on the issue again as a change is currently emerging in German case law regarding the handling of the legal validity standard in preliminary injunction proceedings. This update sheds light on the current landscape in Germany and explores the implications of the European Court of Justice's (ECJ) recent ruling. Additionally, we delve into how the Unified Patent Court (UPC) is navigating these questions.
German Jurisdiction: Shifting Burden of Proof?
In Germany, obtaining a preliminary injunction to halt patent infringement hinges on substantiating infringement, risk of repetition, and urgent need (Sec. 953, 940, 936, 920 (2), 294 German Code of Civil Procedure). The latter requires that the sufficiently probable legal validity of the patent is demonstrated. But how is this achieved?
Traditionally, the German Higher Regional Courts uniformly demanded, as a rule, recognition of patentability in adversarial proceedings by at least one first instance decision for issuing preliminary injunctions (OLG Düsseldorf, Urt. vom 29.5.2008, 2 W 47/07, GRUR-RR 2008, 329 – Olanzapin; Urt. vom 29.4.2010, 2 U 126/09, GRUR-RS 2010, 15862 – Harnkatheterset; Urt. vom 17.1.2013, I-2 U 87/12, GRUR-RR 2013, 236 – Flurpirtin-Maleat; OLG Karlsruhe, Urt. vom 23.9.2015, 6 U 52/15, GRUR-RR 2015, 509 – Ausrüstungssatz; OLG München, Urt. vom 12.12.2019, 6 U 4009/19, GRUR 2020, 385 – Elektrische Anschlussklemme; Beschl. vom 26.11.2020, 6 W 1146/20, (Tz. 25), GRUR-RS 2020, 39651 – Fassungsanordnung; OLG Düsseldorf, Urt. vom 23.2.2023, 2 U 116/22, GRUR-RS 2023, 5166 – Fumarsäureester.). However, there were several exceptions from this rule, for example,
- if the patent grant proceedings have already been conducted as contradictory proceedings due to significant objections by third parties,
- if the patent is generally recognized as eligible for protection,
- if the objections to the legal validity of the patent in suit prove to be unfounded even during the summary examination inherent in preliminary legal protection proceedings or
- if there are exceptional circumstances that make it unreasonable for the applicant to wait for the outcome of the opposition or nullity proceedings (OLG Düsseldorf, Urt. vom 29.4.2010, 2 U 126/09, GRUR-RS 2010, 15862 – Harnkatheterset.).
However, the ECJ deemed this practice – for European patents – a violation of Art. 9 I of Directive 2004/48/EC (28.04.2022, C-44/21, Phoenix Contact/HARTING). It asserted that German case law violated the Directive as courts were unable to grant a preliminary injunction, even if convinced of the patent's validity and infringement, due to their adherence to national case law, mandating preliminary legal protection only after surviving first-instance legal validity proceedings (EuGH, Urt. v. 28.4.2022 – C-44/21 (Phoenix Contact/HARTING), GRUR 2022, 811, 812.). The ECJ emphasized the presumption of validity for European patents from the date of their grant publication (Ebd.).
Subsequent to this decision, two rulings were made by German First Instance Courts which nevertheless referred to the ECJ decision (although they did not have to rule on the requirement of adversarial proceedings):
The Düsseldorf Regional Court (22.9.2022 – 4 b O 54/22) raised doubts about whether the ECJ had intended a presumption under Sec. 292 German Code of Civil Procedure (meaning that the defendant would have to prove the opposite, i.e. the most probable invalidity of the patent). In contrast, in its judgment of 29 September 2022 (7 O 4716/22 – Fingolimod), the Regional Court of Munich I embraced the presumption of validity established by the ECJ, placing the burden on defendants to rebut it with substantial evidence and establish an overriding probability that the patent will be declared invalid. According to the court, a negative assessment from a validity proceeding is sufficient for this purpose; in its absence, rebutting the presumption necessitates challenging the patent in an opposition or nullity proceeding by the last oral hearing in the injunction proceedings. Additionally, a comprehensive written presentation of prior art and attacks on legal validity is required for a successful rebuttal.
The interpretation of the ECJ's ruling by the Higher Regional Courts is yet to be seen. Critics argue that the submission from the Regional Court of Munich I and subsequent the ECJ decision overlooked German case law by not adequately addressing exceptions. Despite this, there is a push to reverse the rule-exception relationship (Westermeyer, Müller-Stoy, Mitt. 2023, 257.) or incorporate established exceptions in a comprehensive balancing of interests (Heinze, GRUR 2022, 1795, 1798.). However, it is doubtful that the Higher Regional Courts will resolve remaining uncertainties to the defendant's detriment, given that the burden of proof for validity of the patent still lies with the applicant even in preliminary injunction proceedings .
The UPC Approach: Unveiling Practical Insights and Evolving Standards
As the German legal landscape undergoes transformation, questions loom over how the UPC will align itself.
Rule 211.2 of the UPC's Rules of Procedure states that – in case the defendant challenges the patent’s validity and provides evidence for it – the court may require the applicant to provide reasonable evidence to convince the Court with a sufficient degree of certainty that that the patent in question is valid. Also, as per Sec. 62 para. 2 UPCA, a comprehensive balancing of interests is a crucial aspect.
Initial insights into the practical application of these provisions came from the Düsseldorf Local Division's order on June 22, 2023 (CFI 177/2023). It deemed the legal validity of the patent secure, given its unchallenged status in opposition or nullity proceedings since its grant eight years ago. Additionally, the defendant didn't raise objections in its protective letter regarding the legal validity, failing to identify any pertinent prior art.
The Munich Local Division's decision on September 19, 2023 (CFI 2/2023) delved further into the matter. The court emphasized that a "predominantly probable" validity after a summary examination is both required and sufficient. Acknowledging the interim nature of preliminary proceedings and limited information compared to main proceedings, the court advocated for a lowered standard of probability. The decision highlighted Rule 209.2(a) of the UPC's Rules of Procedure, emphasizing the relevance of whether the patent underwent opposition proceedings before the EPO or faced legal challenges in another court. If such proceedings had not yet been conducted, the burden of proof rested with the defendant according to Sec. 54 para. 1 UPCA, invoking the claim that the patent should be declared invalid. However, according to Sec. 62 para. 4 UPCA and Rule 211.2 of the UPC’s Rules of Procedure the court may order the applicant to submit evidence supporting the patent’s validity, especially if this is deemed to be at risk due to the opposing party's submission. This aligns with the ECJ’s precedent in "Phoenix Contact".
Presumption of validity for granted European patents vs. quality?
The elephant in the room is the quality of granted patents. A presumption of validity based on the fact of the patent having been granted after thorough examination by the EPO is certainly arguable. However, there are currently many discussions in the patent community, initiated by the industry, about a deterioration of the quality of the patents being granted by the EPO. In fact, statistics published by the EPO show that in nearly half of the cases appeals are successful in whole or in part (Annual Report BoA 2022, pp. 30 f., available here). Even if this does not necessarily speak to the quality of the patents per se as the main explanation, as conveyed by examiners and other people working in the examination and opposition divisions, for these statistics could also be the massive workload at the EPO, which hinders the staff from focusing on thorough searches and comprehensive examinations (patentblog.kluweriplaw). Though discussions with the EPO are ongoing, it seems questionable whether courts could generally assume that granted European patents are indeed valid per se.
Conclusion and Outlook: Embracing of Case-by-Case-Assessment?
In summary, a shift may be unfolding in German case law on the legal validity standard for preliminary injunctions, triggered by the ECJ's "Phoenix Contact" ruling. However, it should be noted that in the German legal system there is an institutional separation between the assessment of the question of infringement and that of the legal validity of the patent. This could lead to the German Higher Regional Courts continuing to make the examination of the legal validity dependent on a prior decision of the patent courts. The ECJ's focus on the presumption of validity for European patents may, however, lead to an altering in the rule-exception relationship or incorporating of existing exceptions in a comprehensive balancing of interests.
At the UPC, on the other hand, the same panel of judges is responsible for the question of infringement and the validity of the patent, although it is unfortunately not possible to call in qualified judges to assess the validity of the patent in the context of infringement proceedings. Nevertheless, this suggests that the UPC will be emphasizing a nuanced in-depth examination of the individual case, highlighting a comprehensive balancing of interests in which the significance of an unchallenged patent status is a crucial factor. While a complete alignment between the UPC and German courts is therefore not to be expected, the ECJ’s decision might pave the way for a convergence between the two systems.
