Friday, May 26, 2017

Stays Pending Design-Around in Germany, Part 2

A couple of months ago I blogged on the May 2016 German Federal Supreme Court decision in Wärmetauscher, in which the court denied a request for an Aufbrauchfrist--a transition period, or stay of an injunction pending a design-around.  (I had only recently come across Jochen Buehling's discussion of this case on the Kluwer IP Blog, and then read the relevant portions of the judgment itself.)  According to the court, the legal commentary on the subject suggested that a court should engage in a case-by-case analysis, taking into account all of the participants' interests; the infringer's good or bad faith; whether the patented invention formed just a small but functionally necessary component of a complex product; and whether an unpatented or licensed product could be substituted within a reasonable time.  Applying those considerations here, the court denied the stay.

Anyway, more recently as I was going through some back issues of some German law journals I came across a copy of the judgment in the October 2016 issue of GRUR (p.1031), along with a brief commentary by Dr. Anette Gärtner (pp. 1037-38).  As Dr. Gärtner notes, in the Wärmetauscher case itself the accused heat element was just one component of a complex product (a convertible), but (unlike, say, a component installed in a mobile phone) it was not essential and only was included in special models; moreover, the court wasn't persuaded by the fact that the lower courts had both ruled (erroneously, as it turns out) in favor of the defendant on the question of infringement.  Dr. Gärtner concludes by noting that the court didn't decided whether an infringer would have to pay damages in a case in which it received the benefit of a stay.  (In the U.S., when a court stays an injunction pending design around it requires the defendant to pay an interim or "sunset" royalty, and some might view this procedure as a reasonable halfway measure in between granting an injunction and denying one outright.)  Dr. Gärtner nonetheless is of the view that, in Germany, such a question would be of an academic nature only, since in her view it is scarcely conceivable that a showing of disproportionality sufficiently strong to merit such a stay would ever be forthcoming.

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