Exceptional times call for exceptional measures. There is no doubt that the current times are indeed exceptional. The novel coronavirus (COVID-19) crisis holds the world firmly in its grip and infects all areas of our daily lives. The world of intellectual property is not immune to that.
This article analyses the IP-related measures taken by the German government to mitigate the impact of the pandemic as well as how the German courts are coping.
The most notable measure taken by the German government with regard to IP rights and regulatory issues is a recent amendment to the existing law dealing with infectious diseases. The Infection Protection Act (Infektionsschutzgesetz - IfSG) was amended on March 27, 2020 by the "Act on the Protection of the Population in the Event of an Epidemic Situation of National Importance" (Gesetz zum Schutz der Bevölkerung bei einer epidemischen Lage von nationaler Tragweite). The amendments entered into force on March 28, 2020.
Section 5 (1) of the IfSG now stipulates that the German Federal Parliament can declare an epidemic situation of national importance. When such a declaration is made, the German Federal Ministry of Health is authorized with certain powers to mitigate and combat the epidemic situation, as laid down in s. 5 (2) nos. 1 - 8 IfSG; two of those provisions particularly address IP and regulatory issues.
The ministry’s powers (explained below) will remain in force until March 31, 2021, but the German Federal Parliament can decide at any time to lift the declaration of an epidemic situation of national importance.
Patents are by nature exclusionary. While this is vital in order to encourage and reward research, exclusionary rights are not granted without limitation. As property rights, patents can entail obligations and their use shall serve the public good (see article 14 (2) of the German Basic Law).
The German Patent Act (Patent Act) already allows the German government to temporarily suspend the legal effects of a patent for its use in the interest of public welfare or federal security (see s. 13 (1) of the Patent Act). The provision has been of miniscule importance and was discussed only once in the history of the German Federal Republic in a case dating back to 1949 (Higher Regional Court Frankfurt, PMZ 1949, 330).
The new section 5 (2) no. 5 IfSG now makes reference to section 13 (1) of the Patent Act. It confers upon the Federal Ministry of Health or any subordinate authority the power to impose in the interest of public welfare or federal security such use orders pursuant to s. 13 (1) of the Patent Act. The power to impose use orders pursuant to the IfSG is limited to patents covering a specific list of products laid down in s. 5 (2) no. 4 IfSG:
Under s. 13 (1), the "interest of public welfare" requirement generally covers all situations where public assistance is needed, in particular during an epidemic. Section 5 (2) no. 5 IfSG will have to be construed in the same way. Given that s. 5 (1) IfSG already declares an epidemic of national importance, the threshold to issue use orders based on the current IfSG seems low.
The effect of a use order is that the patentee could not (temporarily) prohibit the use of the affected invention in the interest of public welfare or federal security. The patent, however, remains in force. A use order does not revoke the patent.
Once issued, a use order does make the invention free to use for the public. However, the "use" of the invention is limited to the government or any third party acting on behalf of the government. Any non-authorized use thus still constitutes patent infringement.
The patentee has a claim for adequate remuneration against the government (s. 13 (3) of the Patent Act). What is "adequate” can be determined, for example, by way of license analogy or assessment of lost profits. However, s. 13 (3) does not confer a claim for damages, meaning that the remuneration may be lower than the actual damages that occurred because of a use order.
Any use order must be communicated to the patentee prior to making use of the invention (s. 13 (3) of the Patent Act). The patentee can challenge the issuance of a use order before the administrative courts. Like all administrative acts, the time limit to challenge the use order is one month from the date of receipt (section 74 of the Administrative Court Procedure Code). Challenging the use order does not have suspensive effect (s. 5 (2) no. 4 IfSG), which means that the use order remains in place pending the outcome of the proceedings. In contrast, the question of "adequacy" of remuneration would be heard by the civil courts (s. 13 (3) sub-s. 2 of the Patent Act).
The amended IfSG (see s. 5 (2) no. 4) empowers the Federal Ministry of Health to impose by way of legal decree a plethora of measures in order to ensure the supply of the medical products mentioned above.
Some of them are aimed at simplifying the production of and expediting access to medical products; for example, by granting the ministry the power to order exemptions from the Medicinal Products Act, German Pharmacy Act and the Act on Medical Devices (lit. a) or the power to amend the rules on dispensing pharmaceuticals and related pricing statutes (lit. f).
Other measures are far-reaching, with significant curtailment of fundamental rights; they include restrictions on the freedom to sell (lit. e); seizures (lit. d); and measures to maintain, convert, open or close the production sites of companies manufacturing the above-mentioned products (lit. g).
While the IfSG does not stipulate any specific requirements for these measures, any measure by the ministry – like all governmental acts – is subject to the principle of proportionality. Therefore, for example, an order to convert production lines will be the exception. Measures such as export restrictions might have a lower threshold to overcome. In any case, all measures resulting in the curtailment of fundamental property rights give rise to a claim for adequate compensation.
Section 245 of the German Code of Civil Procedure (ZPO) talks about the concept of "suspension of the administration of justice" (Stillstand der Rechtspflege) leading to a suspension of proceedings for as long as the courts are unable to operate.
However, while the coronavirus pandemic is grave, it has not led to a shutdown of the court system. German courts are still working and have merely limited operational activities involving public attendance.
As there is no suspension of the administration of justice, statutory deadlines in IP litigation before German courts run as usual. This is also true for statutory deadlines relevant in proceedings before the German Patent and Trademark Office (GPTO). However, the GPTO has extended all GPTO-granted deadlines to May 4, 2020. IP holders should thus take the necessary precautions to observe those deadlines in spite of the current circumstances.
The handling of non-statutory deadlines set by the GPTO and German courts may differ. Court practices with regard to deadlines granted by judges differ from court to court; for example, the Regional Court Hannover suspended many non-statutory deadlines for the period between March 25 and April 17. Other courts decide on a case-by-case basis. We observe, however, that courts tend to deal generously with deadline extension requests.
Oral hearings are public and often involve a number of people, but the German courts are practicing social distancing. The courts generally only conduct essential oral hearings. While the definition of "essential" is not universal, for IP this means that most oral hearings except for urgent matters such as preliminary injunction hearings are currently postponed.
It remains to be seen whether – despite the limits set by the recent rulings of the Federal Constitutional Court – the current situation will lead to a more liberal practice of granting preliminary injunctions ex parte.
All in all, the situation will likely lead to some delay with regard to IP enforcement. Many judges will already have a hectic schedule for the year, so a certain backlog will be inevitable. However, we experience that judges in the IP realm try to find flexible solutions in order to mitigate any delays.
One of these mitigating attempts is the application of s. 128a of the ZPO. Introduced in 2002, s. 128a allows for the conduct of oral hearings via audio and video transmission. Theoretically, parties could have requested for this and courts, even ex officio, could have allowed parties to attend via videoconference. Until now, however, this was only rarely used and many courts did not seem to have the necessary technical equipment up and running when the coronavirus crisis hit.
Hearings conducted under s. 128a still have to be public (see section 169 of the Courts Constitution Act), i.e. the public must have access to the courtroom the judges sit in (while parties may be connected via video only).
Rules of social distancing might thus nevertheless have kept back some courts from making use of videoconferencing. Nevertheless, it seems that publicity can be accounted for by ensuring sufficient distance between attendees and should not lead court to discard the possibility of s. 128a altogether.
Also, the German system generally does not require too many people for a hearing, particularly in non-technical IP cases. A Regional Court chamber typically consists of three judges (there is no jury) and the chamber can even decide via the presiding judge only if parties agree and/or the case is urgent.
Some courts indeed are catching up now; for example, on March 31, the Regional Court Düsseldorf issued a press release promoting the possibility of oral hearings conducted via videoconference. Such initiatives are welcome and can help to ensure effective access to justice even during this pandemic.
The recent amendments to the IfSG provide a broad toolset to ensure access to essential medical products during the coronavirus pandemic. While most of the provisions will likely not be used, unless the situation dramatically deteriorates, manufacturers of pharmaceutical and other medical products should still familiarize themselves with the new provisions.
Patent holders should be aware that the patent use order is on the agenda. While the past has shown that the use order is an exceptional phenomenon, it seems generally conceivable in the current scenario.
Other stakeholders should be aware of the broad catalogue of measures that could restrict the sale of essential products such as protective equipment. Companies with flexible production lines can look out for potential opportunities in case of exemptions to regulatory laws, but should ensure freedom to operate beforehand.
Non-urgent oral hearings are often rescheduled, but urgent matters such as preliminary injunctions will be processed as usual. While the postponement of oral hearings will likely lead to some delay in ongoing litigation, new actions should see less of an impact provided the situation keeps improving. Some courts even make welcome attempts at avoiding postponements of oral hearings by way of videoconferencing. The German courts remain operational.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, any other of its practitioners, its clients, or any of its or their respective affiliates. This article is for general information purposes only and is not intended to be and should not be taken as legal advice. Please contact the author(s) if you have any questions about this article.
Peter Ruess (Partner)
Tim Smentkowski (Associate)