Disproportionality in Pharma-Cases: A Follow-up

Last summer, the Dusseldorf District Court refused a defendant’s disproportionality defence based on Sec. 139 (1) 3rd sentence German Patent Act (GPA) (we reported on that case). The provision had been added to the GPA to codify the ruling of the Federal Court of Justice (FCJ) in the so called “heat exchanger” case (BGH X ZR 114/13). The provision offers the alleged infringer a disproportionality defence in that a claim for injunctive relief is barred if it would result in disproportionate and unjustified hardship for the infringer or a third party.

Facts of the case

In the case decided by the Dusseldorf Court (4c O 18/21) on products containing the active ingredient sofosbuvir for the treatment of HCV, defendants unsuccessfully raised the disproportionality defence. After the complaint was filed in April, 2021, the parties (unsuccessfully) engaged in license negotiations. A year later, in April, 2022, defendant filed a request for a compulsory license with the Federal Patent Court, but did not request an additional provisional compulsory license, which would have resulted in expedited proceedings. It is understood that Plaintiff does not market a product within the scope of protection of the asserted patent.

Ruling of the Dusseldorf Court

The Dusseldorf Court, referring to the FCJ’s “heat exchanger” decision, clarified that the disproportionality defence requires that in a specific case an injunction is so detrimental to the patent infringer or third parties due to special circumstances beyond the normal impact of an injunction that an injunction appears unreasonable.

Disproportionality defence subsidiary to compulsory licensing procedure

Sec. 139 (1) 3rd sentence GPA merely clarifies the previous case law. Correspondingly strict requirements are to be placed on the consideration of third-party interests, which can only be fulfilled in exceptional cases, e.g. to ensure the supply of patients with vital medicines. Nevertheless, third party interests could only be considered in extreme individual cases and, at most, subsidiarily after carrying out a compulsory licensing procedure before the Federal Patent Court. The disproportionality defence should not undermine the special statutory regulation of compulsory licensing proceedings with its specific requirements and the jurisdiction of the Federal Patent Court. Without successfully conducting compulsory licensing proceedings - the mere filing of a respective lawsuit thus being insufficient - the defendant cannot rely on the disproportionality defence.

Sufficient licensing efforts required even without assumption of subsidiarity

The Court goes even further and explains why the disproportionality defence would be equally inapplicable if one did not assume its subsidiarity to the compulsory licensing procedure. The protection of third-party interests alone is not decisive, but can only be considered if the defendant's conduct expresses a serious intention to defend the interests of patients, e.g. by seriously requesting a license. In order to assess whether the defendant had made sufficient efforts to obtain a license, the corresponding requirements for the compulsory license were to be used for comparison. The defendant did not make sufficient efforts to obtain a license, in particular, it did not initiate provisional compulsory license proceedings under Sec. 85 GPA.

TW Comments

The courts seem to make no distinction whether the disproportionality defence is raised in pharmaceutical cases, cases on standard essential patents (Munich I District Court, decision of 25 May 2022, docket no. 7 O 14091/19), or by suppliers of sunroofs (Düsseldorf District Court, decision of 30 June 2022, docket no. 4b O 7/22). So far, the disproportionality defence has always been rejected. The disproportionality defence is limited to absolute singular cases where the impact of an injunction would be exceptionally burdensome. What criteria have to be met remains to be clarified by the courts. However, raising the disproportionality defence without making serious efforts to obtain a license seems futile.