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Compulsory Licensing in Germany

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Compulsory Licensing

Part of the book series: MPI Studies on Intellectual Property and Competition Law ((MSIP,volume 22))

Abstract

In the last 20 years, German courts have developed a sophisticated approach to compulsory licensing of patents. Compulsory licences under competition law are of particularly high relevance. In short, German competition law obliges the holder of a patent, which is essential in a standard to grant a licence on terms that are fair, reasonable, and non-discriminatory (FRAND). Users of such patents can also raise a so-called competition law defence against imminent injunction orders. The German courts’ approaches to this defence have become more and more sophisticated over the last years, trying to close a number of structural gaps in the Federal Supreme Court ruling Orange Book Standard. However, it remains unclear if or to what extent the defence complies with European law.

The resonance of the German debate in international scholarly literature has remained relatively low, probably because of the language barrier. Most works merely scratch the surface of the particularly complex issues. This chapter provides an in-depth analysis of the German legal background and the consequences in practice. It suggests a streamlined, simplified approach to competition-law-based defences.

P. Maume, Ph.D. (Augsburg), S.J.D. (La Trobe), is Assistant Professor.

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Notes

  1. 1.

    Patentgesetz (PatG).

  2. 2.

    A survey conducted by the Council of the European Union in 2007 suggests that German patent courts are dealing with more patent lawsuits (600–700 matters p.a.) than the two next ‘biggest’ forums, France (450 matters p.a.) and England (150 matters p.a.) combined; see Council of the European Union, Working Document 11622/07 (12 July 2007), at 23–31.

  3. 3.

    Ann (2009), p. 205.

  4. 4.

    In this chapter, reference will be given to publications in English whenever possible. However, a lot of relevant sources, in particular on competition law defences, are only available in German.

  5. 5.

    PatG, Sec. 24(6).

  6. 6.

    PatG, Sec 24(1).

  7. 7.

    PatG, Sec 24(4).

  8. 8.

    PatG, Sec 24(2). See discussion in the chapter “The Requirements for Compulsory Dependency Licences: Learning from the Transformative Use Doctrine in Copyright Law” by Matthias Leistner, in this volume.

  9. 9.

    Kraßer (2009), para. 34 IV(b).

  10. 10.

    For an overview, see Benkard (2006), Sec. 24, note 4.

  11. 11.

    Scheffler (2003), at p. 100.

  12. 12.

    Kraßer (2009).

  13. 13.

    Federal Court of Justice, Polyferon, File Number X ZR 26/92, 5 December 1995, reported in BGHZ 131, 247. The decision is sometimes also referred to as Interferon/Gamma.

  14. 14.

    Federal Patent Court, 7 June 1991, reported in BPatGE 32, 184.

  15. 15.

    Federal Court of Justice, supra note 13, at 257 et seq.

  16. 16.

    Ibid.

  17. 17.

    Gesetz gegen Wettbewerbsbeschränkungen (GWB).

  18. 18.

    For convenience, the rule will be henceforth referred to as ‘sec 20’.

  19. 19.

    See Loewenheim et al. (2009), Sec. 19 GWB, note 91–106.

  20. 20.

    European Court of Justice, RTE and ITP v Commission (C-241/91 P and C-242/91 P) [1995] ECR I-743.

  21. 21.

    European Court of Justice, IMS Health v NDC Health (C-418/01) [2004] ECR I-5039.

  22. 22.

    For discussion, see the chapter “Refusal to License as an Abuse of Market Dominance: From Commercial Solvents to Microsoft” by Matthias Lamping, in this volume.

  23. 23.

    For a detailed discussion, see Maume (2010), at pp. 6–13.

  24. 24.

    Ibid.

  25. 25.

    The Federal Court of Justice, Standard Spundfass, File Number KZR 40/02, 13 July 2004, reported in BGHZ 160, 67. For convenience, reference will be made to the English translation available at 36 IIC 741 (2005).

  26. 26.

    Ibid, at 744.

  27. 27.

    Ibid.

  28. 28.

    Ibid, at 746.

  29. 29.

    Ibid.

  30. 30.

    Ibid.

  31. 31.

    Ibid, at 747.

  32. 32.

    Ibid.

  33. 33.

    European Court of Justice, IMS Health v NDC Health (C-418/01) [2004] ECR I-5039, paras. 37–38. See also Leistner (2005), p. 750.

  34. 34.

    Subsequent court decisions are clear about the fact that the obligation to grant a licence and potential competition law defences apply to de facto and contractual market standards in the same manner; see, e.g., Court of Appeal Düsseldorf, UMTS Mobilstation, File Number 4b O 273/10, 24 March 2011, available at http://www.duesseldorfer-archiv.de/?q=node/4426.

  35. 35.

    Fine (2002), p. 457; Liu (2008), p. 757.

  36. 36.

    For example, Herr (2009), p. 10; Treacy and Lawrance (2008), p. 22; Zhang (2010), at p. 401; Tapia (2010), at p. 16.

  37. 37.

    See, for example, Cl 6.1 ETSI IPR-Policy, available at http://www.etsi.org/images/etsi_ipr-policy.pdf.

  38. 38.

    Alternatively, the defence is referred to as ‘antitrust defence’ or ‘antitrust objection’. It seems that an English translation has not yet been established.

  39. 39.

    Kühnen (2003), at p. 523.

  40. 40.

    Under German patent law, the patentee can choose from three different methods for calculating damages: (1) the profits lost due to the infringement, (2) licence analogy, meaning an amount of compensation equivalent to adequate royalties under a licence agreement, and (3) disgorgement of profits. For discussion, see Benkard (2006), paras. 61–75a.

  41. 41.

    Wirtz and Holzhäuser (2004), at pp. 693 et seq.

  42. 42.

    This should not be confused with the abuse of a dominant market position under competition law, which is the legal basis for the obligation to grant a licence (see above).

  43. 43.

    Federal Court of Justice, Weichvorrichtung II, File Number X ZR 73/95, 5 June 1997.

  44. 44.

    Kühnen (2003); Wirtz and Holzhäuser (2004); Heinemann (2005), at p. 199.

  45. 45.

    Maume (2010), at p. 64.

  46. 46.

    Jaecks and Dörmer (2006), p. 97.

  47. 47.

    Von Merveldt (2004), p. 19; Rombach (2008), at p. 321.

  48. 48.

    Rombach (2008).

  49. 49.

    For a detailed discussion of all arguments, see Maume (2010), at pp. 69–110.

  50. 50.

    Ibid, at 106–110.

  51. 51.

    Ibid, at 134–139.

  52. 52.

    Ibid, at 129–134.

  53. 53.

    Licence conditions (in particular, royalties) are usually protected as know-how.

  54. 54.

    The Court of Appeal Karlsruhe, for example, required the prospective licensee to make an offer that aligns to the best conditions the patentee could ask without abusing his market power. In other words, the licensee would have to match these hypothetical conditions without having knowledge about other licences granted by the patentee. This was practically impossible, and the competition law defence would have been useless in practice: see The Court of Appeal Karlsruhe, Orange Book Standard, File Number 6 U 174/02, 13 December 2006, available at http://openjur.de/u/209900.html.

  55. 55.

    Federal Court of Justice, Orange Book Standard, File Number KZR 39/06, 6 May 2009, reported in BGHZ 180, 312. For convenience, reference will be made to the English translation available at 41 IIC 369 (2010).

  56. 56.

    District Court Mannheim, File Number 7 O 94/08, 27 February 2009, available at http://openjur.de/u/341036.html, and File Number 7 O 115/05, 9 November 2007, available at http://openjur.de/u/356346.html.

  57. 57.

    The Court of Appeal Karlsruhe, supra note 54.

  58. 58.

    District Court Düsseldorf, MPEG2-Standard, File Number 4b O 346/05, 30 November 2006, reported in InstGE 7, 70.

  59. 59.

    The Federal Court of Justice, supra note 55, para. 29.

  60. 60.

    Ibid, para. 40.

  61. 61.

    Ibid, para. 36.

  62. 62.

    Nägele and Jacobs (2009), p. 1062; Busche (2009), p. 104; Heinemann (2009), p. 286659; Jestaedt (2009), p. 801; Gärtner and Vormann (2009), p. 440. Some commentators, however, criticised the Court’s narrow understanding of competition law (Ullrich 2010a, p. 337) and a misapplication of European law principles, in particular the effet utile (de Bronett 2009, p. 899).

  63. 63.

    The District Court Mannheim, UMTS-Mobiltelefon II, File Number 7 O 100/10, 18 February 2011, available at http://lrbw.juris.de/cgi-bin/laender_rechtsprechung/document.py?Gericht=bw&nr=14011; Court of Appeal Düsseldorf, UMTS Mobilstation, File Number 4b O 273/10, 24 March 2011, available at http://www.duesseldorfer-archiv.de/?q=node/4426.

  64. 64.

    Körber (2013), p. 87; Ullrich (2010b), at pp. 52–63.

  65. 65.

    For an economic analysis, see Ullrich (2010b), at pp. 76–80; Merges and Kuhn, at pp. 7 et seqq.

  66. 66.

    See, for example, Cl 6.1 ETSI IPR-Policy, available at http://www.etsi.org/images/etsi_ipr-policy.pdf.

  67. 67.

    Körber (2013), at p. 88; Ullrich (2010b), at pp. 90–93; Maume (2012b), at pp. 245–261.

  68. 68.

    The District Court Mannheim repeatedly held that FRAND declarations are not legally binding because they lack finality of terms and intention to enter into the contract. As a result, the fact that a patentee has given a FRAND declaration cannot be used as a defence; see, for example, District Court Mannheim, FRAND-Erklärung, File Number 7 O 94/08, 27 February 2009, available at http://openjur.de/u/341036.html. The decision was confirmed by the Court of Appeals Karlsruhe, FRAND-Grundsätze, File Number 6 U 66/09, 23 March 2011.

  69. 69.

    The District Court Mannheim, GPRS-Zwangslizenz, File Number 7 O 122/11, 9 December 2011, available at http://openjur.de/u/357699.html.

  70. 70.

    Ibid.

  71. 71.

    The Court of Appeal Karlsruhe, GPRS-Zwangslizenz III, File Number 6 U 136/11, 13 June 2012, available at http://openjur.de/u/357979.html.

  72. 72.

    It might, for example, turn out that the patent has been declared essential by the patentee without being an essential part of the standard in truth.

  73. 73.

    The District Court Düsseldorf, Videosignalcodierung III, File Number 4b O 78/07, 11 September 2008, available at http://openjur.de/u/131857.html.

  74. 74.

    The Court of Appeal Düsseldorf, Interframe Dropping, File Number 2 U 131/08, 28 January 2010, available at http://openjur.de/u/143070.html.

  75. 75.

    The District Court Mannheim, File Number 7 O 65/10, 27 May 2011 (not available online).

  76. 76.

    Maume (2012a), at pp. 225–227; Körber (2013), at pp. 91–93; Reimann and Hahn (2010), at p. 382; Kühnen (2011), para. 1293. Against that Jestaedt (2009), at p. 804; Hötte (2011), at p. 189.

  77. 77.

    The Federal Court of Justice, supra note 55, para. 40.

  78. 78.

    Reimann and Hahn (2010), at p. 392.

  79. 79.

    Wirtz (2011), at p. 1401; Maume and Tapia (2010), at p. 925.

  80. 80.

    Ullrich (2010a), at p. 337.

  81. 81.

    The Court of The Hague expressly dismissed the approach taken by the German Federal Supreme Court in a comparative case; see Court of The Hague, Philips Electronics v SK Kassetten, File Number 316522/HA ZA 08-2522, 17 March 2010, paras. 6.19–6.25, available at http://www.eplawpatentblog.com/eplaw/2010/03/nl-philips-v-sk-kasetten-frand.html. For good overviews of different approaches taken by courts, see Laakkonen (2011), Lundie-Smith and Moss (2013), p. 400.

  82. 82.

    See, for example, Teubner (1998), p. 11.

  83. 83.

    Maume (2012a), at p. 230; Jestaedt (2009), at p. 803; Höppner (2010), at p. 420.

  84. 84.

    Maume and Tapia (2010), at p. 926.

  85. 85.

    Benkard (2006), Sec 139, note 114.

  86. 86.

    The Federal Court of Justice, supra note 55, para. 39.

  87. 87.

    The Federal Court of Justice, supra note 55, para. 39.

  88. 88.

    For example, District Court Düsseldorf, supra note 34; District Court Mannheim, supra note 69.

  89. 89.

    Under German civil procedure, a litigant prevailing in first instance can enforce his claim even before it has finally been established by the court of second instance if he deposits a security of 110 % (or sometimes 120 %) of the claim he wishes to enforce, sections 709 and 711 of the Civil Procedure Act (Zivilprozessordnung). Using the patent under the Orange Book Standard principles is comparable with such a preliminary enforcement so that the 110 % rule should be applied here; see Maume (2010), at p. 138.

  90. 90.

    Hötte (2011), at pp. 231–235; Ullrich (2010a), at p. 350.

  91. 91.

    The District Court Düsseldorf, LTE-Standard, File Number 4b O 104/12, 21 March 2013, reported in 2013 GRUR-RR 196.

  92. 92.

    De Bronett (2009).

  93. 93.

    The District Court Düsseldorf, supra note 91, at 200.

  94. 94.

    Ibid.

  95. 95.

    European Commission (2012).

  96. 96.

    European Commission (2011), paras. 268, 283.

  97. 97.

    Ibid, at para. 263.

  98. 98.

    European Commission (2012).

  99. 99.

    See The District Court Mannheim, supra note 68.

  100. 100.

    The District Court Düsseldorf also asked the question if the same conditions would apply to other rights granted by the patent, for example compensation and account for profit.

  101. 101.

    Art 102 TFEU can be applied if the undertaking is dominant within an essential part of the internal market. As a standard usually applies to all countries in Europe, and the respective product market usually transcends national borders, the exercise of patent rights will regularly be subject to Art 102; see Maume and Tapia (2010), at p. 929. The German patent courts are also applying the Orange Book Standard principles under European law; see Court of Appeal Karlsruhe, supra note 71; Court of Appeal Düsseldorf, supra note 34.

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  1. TUM School of Management, Technische Universität München, Munich, Germany

    Philipp Maume

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  1. Max Planck Institute for Innovation and Competition, Munich, Germany

    Reto M. Hilty

  2. Institutum Iurisprudentiae Academia Sinica, Taipei, Taiwan

    Kung-Chung Liu

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Maume, P. (2015). Compulsory Licensing in Germany. In: Hilty, R., Liu, KC. (eds) Compulsory Licensing. MPI Studies on Intellectual Property and Competition Law, vol 22. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-54704-1_6

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