Professors Hofmann and Raue: Taking proportionality seriously in the Unified Patent Court

Two German law professors, Dr Franz Hofmann and Dr Benjamin Raue have pooled forces to publish a joint paper this week on the delicate issue of injunctions and damages for the infringement of patents.

The paper, entitled ‘Injunctions and Damages for the Infringement of Patents under the UPCA; an Analysis in the Light of the Principle of Proportionality’ calls for a more nuanced approach to patent infringement cases, and it urges judges of the recently launched UPC to consider damages instead of automatic injunctions as a remedy in their rulings.

This should especially be considered in cases involving a patent asserting entity, or cases concerning complex high-tech products containing hundreds or even thousands of patented inventions.

“A freedom to operate analysis, for example, cannot always be adequately performed for certain products given the vast number of patents that are potentially relevant,” prof. Hofmann said. “The fact that in a car or mobile phone thousands of patents are hidden, consequently draws special attention to the degree of fault. The lower the degree of fault the more likely an injunction can be denied.”

Patent asserting entities, also known as non-practising entities or more colloquially patent trolls, usually have no intention of building anything with the patented idea. They are just in the business of monetising the patents they have acquired. This puts them on the wrong side of the innovation process, prof. Hofmann said.

“Exploiting a patent means applying the invention,” he said. “If a patented technology is not used this aim is frustrated. Generating license revenues is not an end in itself. A patent must be practised.”

Prof. Raue believes that damages rather than injunctions would be a more appropriate tool to use to address a patent infringement case brought by a PAE. “If money is the key interest of a non-practicing entity in a case of patent infringement then damages can remedy that interest quite well,” he said.

The professors argue that the UPC should use its power to award interim damages in lieu of an injunction in suitable cases – and then only resort to an injunction if the infringer fails to comply with the interim damages.

“Injunctions remain an important weapon with which to defend a patent. Patent holders need a good sword. But in some cases it is not appropriate to use it,” prof. Hofmann said.

Meanwhile, proportionality is a key principle within the European law of remedies, he said. “It is enshrined in fundamental rights.”

“There is a broad consensus that remedies need to be proportionate. The degree of flexibility, however, is highly controversial. We argue it is best to steer a middle way,” prof. Hofmann said.

Injunctions will be awarded in normal cases, but defendants should have the opportunity to convince the judge that the particularities of the case demand an exception, he added.

Patent reforms in Europe’s largest market, Germany, are likely to be copied by other national patent regimes and the UPC too, prof. Hofmann said.

“Germany’s patent system now explicitly states that “automatic” injunctive relief is no longer appropriate in the modern patent world,” said prof. Hofmann.  While Germany’s patent regime has no direct effect for the UPCA, he added that “we are sure that the German rules might serve as a persuasive authority.”

The move away from automatic injunctions in the 2021German reforms has resulted in a sharp increase in the number of times defendants have used a proportionality defence. Since the reform there have been at least 17 court cases where proportionality was pleaded by the defendant during a 15-month period, compared to only two cases over the preceding six-year period, recorded in Darts-ip database.

However, until now judges in Germany have not swerved from the automatic injunctions path in their rulings. This has provoked some frustration. However, the professors are optimistic that judges in Germany and elsewhere will start to take the fundamental principle of proportionality into account. “It takes time for judges to adapt,” prof. Raue said.   

Both professors have dabbled in legal practise but they remain academics at heart.  They were both inspired to pursue intellectual property law by their “academic fathers”. Prof Hofmann cites Professor Ansgar Ohly from the University of Munich as his guiding light.

Prof. Raue points to the supervisor of his PhD, professor Haimo Schack from Kiel University as his guiding light.  “We love the ivory tower,” prof. Raue says laughing, “but we still have our feet on the ground”.