Damage compensation Negligent patent Infringement Germany

09 June 2006

Dr Matthias Meyer, Agnes Prechtel

Under German patent law, a Claimant’s remedies for patent infringement will include a “cease and desist” order, financial compensation (claims for damages and for unjust enrichment), an account of profits and destruction of the infringing products. This article considers a recent change in German law in relation to claims in damages.

Claims in damages require “fault” on the part of the Defendant: “fault” includes acts carried out deliberately and negligently. Deliberate infringement is usually difficult to prove so Claimants tend to rely on negligence which is essentially a failure to observe a “duty of reasonable care” in patent matters.

So far, the German Courts have taken a strict approach when considering negligence of commercial undertakings such as producers and/or suppliers of patent infringing products. The Courts expected such undertakings to be aware of all relevant patents and patent applications so that any infringement of such rights was usually determined to be negligent.
There have been a few exceptions to this approach: for example, in the case of a warehouse selling a large variety of products including knitwear which was produced using a patented process. In this case, the Regional Court of Düsseldorf held that the warehouse company had not acted negligently and therefore was not liable for damages since it could rely only on the technical assessment of the German manufacturer from which it purchased the knitwear. Another exception was granted in favour of a supplier selling a minor article outside its usual range of business.

In February 2006, the Higher Regional Court of Düsseldorf made a more generous exception. In this judgment, the Court held that suppliers cannot be required to keep abreast of potential patent infringement if the high costs of doing so would make the marketing of the respective product economically useless. This case concerned mobile phones. Contrary to the case-law, the Defendant in this case was not a warehouse selling thousands of different articles but a large communications company whose core business was the marketing of mobile phones which it purchased from renowned international mobile phone manufacturers. This represents a significant departure from the earlier established case law and is therefore a high watermark for patent law.

The Court considered that it was complex for the Defendant as a supplier to assess the product in all technical respects and with regard to whether its patented components were produced by the respective patentee or by one of its licensees. The Court therefore held that the Defendant was entitled to rely on the assessment of the respective renowned mobile phone manufacturers provided that there was no clear indication of patent infringement.

The Higher Regional Court granted the Claimant leave to appeal so the Federal Supreme Court (Germany’s highest Civil Court) will now have an opportunity to comment on this decision.

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