Extension of TRIPS waiver to Covid-19 therapeutics and diagnostics.

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The Ministerial Conference of the World Trade Organization (WTO) decided in June that all “developing countries” can waive the protection of intellectual property necessary for the production and distribution of Covid 19 vaccines, including all processes, technologies and ingredients required for this (“TRIPS Waiver”). The term “developing country” is so broad in this context that it even includes the People’s Republic of China.

What is the TRIPS Agreement? The WTO states on its website: “The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is the most comprehensive multilateral agreement on intellectual property (IP). It plays a central role in facilitating trade in knowledge and creativity, resolving trade disputes over IP, and ensuring that WTO Members have the leeway to achieve their domestic policy objectives. It frames the intellectual property system in terms of innovation, technology transfer, and public welfare. The agreement is a legal recognition of the importance of the links between intellectual property and trade and the need for a balanced intellectual property regime. https://www.wto.org/english/tratop_e/trips_e/trips_e.htm.

The coronavirus pandemic reignited the global debate over whether the multilateral trade regime protecting intellectual property rights (IPR) was restricting access to important medical products. The AIDS crisis in Africa was admittedly a negative example, where pharmaceutical companies (exploited) their monopoly and stood in the way of access to affordable AIDS medicines in Africa. Today, we are faced with unequal distribution of vaccines and medicines around the world. Patents have a “bad name” in this context. That is why, despite the flexibilities already enshrined in the WTO Agreement on Trade-Related Intellectual Property Rights (TRIPS), India and South Africa, along with a large number of developing countries, submitted a proposal in October 2020 for a temporary waiver in response to Covid-19, which has now been adopted by the Ministerial Conference. However, the reasons for the unequal distribution of Covid vaccines and medicines are not unique to patents. In fact, they are manifold, ranging from poor health structures to inadequate information campaigns to insufficient logistics on the ground. Poorer countries lack production expertise and capacity, and the ability to maintain the necessary refrigeration until the vaccine reaches the patient. There is also the injustice of unequal distribution, as richer countries have secured vaccines early through procurement contracts. It is not about patents. This is also why the TRIPS Waiver will not help at all to provide access to vaccines and medicines.

The pharmaceutical and biotech industries have been surprisingly silent on this issue, at least in terms of public discussion. Can the industry sit back because “only” Covid-19 vaccines are affected, or because the TRIPS Waiver falls short of the original requirements? No, because no matter how the TRIPS Waiver was specifically designed, it sends the wrong signal to the public. The TRIPS Waiver seems to confirm the narrative that patents stand in the way of equitable access to medicines, only maximize the profits of pharmaceutical giants, and cause millions of people to die. After all, if this were not so, why would the WTO, including the U.S., Europe and Germany, decide to abandon patents?

We should not sit back, because the same forces are now seeking an extension of the TRIPS waiver to all therapeutics and diagnostics that are helpful to Covid-19 patients. This applies to therapeutics that are effective against SARS-CoV-2, but also against other viruses, and likewise to therapeutics that can generally reduce mortality in covid patients, but are by no means specific to covid. This would include drugs for sepsis or pulmonary edema, but also immunosuppressive or anti-inflammatory drugs, IL-6-Ras, etc. There is a very good chance that the TRIPS waiver will be extended accordingly.

Cui bono? Certainly not the patients in developing countries, because the lack of access to medicines is due to unfair distribution, not patents.

Qui nocet? Certainly it hurts the system that provided the life-saving vaccines in such a short time. It will affect funding for smaller, innovative biotech companies. It may also affect other technical areas. If the message is that patents must be abandoned when humanity relies on a particular technology, what about technologies related to climate change mitigation and alternative energy, for example?

Public discussions lead to public perception and thus to political decisions. If we don’t like political decisions, we have to leave our “IP bubble” and participate in public discussions.

ECJ on Interim Measures in Germany – Reactions in Case Law and Literature

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After the Munich District Court asked for clarification, the European Court of Justice (ECJ) has commented on German court practice regarding preliminary injunctions in patent infringement cases where the validity of the patent in question has not already been confirmed in opposition or nullity proceedings. While the ECJ ruling seems to favor patent owners, it remains to be seen whether the ruling will actually lead to a change in the practice of the German courts.

The decision of the ECJ

In its judgment of April 28, 2022 (Case C-44/21), the ECJ ruled that a court practice that in principle rejects interim injunctions in patent infringement cases where the validity of the patent in question has not (yet) been confirmed in first instance opposition or revocation proceedings is incompatible with European law. Furthermore, national case law that is incompatible with this judgment may not be applied by the competent courts.

The reason for the Munich Regional Court to ask the ECJ for a decision was the adoption by the Munich Higher Regional Court of a practice already applied by other courts in a high number of patent cases. According to this practice, preliminary injunctions in patent infringement proceedings are regularly rejected by the courts if the validity of the granted patent has not already been unsuccessfully challenged at least in the first instance proceedings. This has led to criticism, as patent owners have found themselves unable to obtain a preliminary injunction against an infringer if the validity of their patent had not previously been challenged – a circumstance over which the patent owner has no direct influence. Both the development and the current practice in this regard vary from court to court.

Reactions to the ECJ decision

The ECJ decision has caused quite a stir and has been widely criticized.
For example, in his opinion (GRUR 2021, 466) on the order for reference of the Munich Regional Court (21 O 16782/20), the presiding judge at the Düsseldorf Higher Regional Court, Dr. Thomas Kühnen, criticized the fact that the case law in question had not been accurately reproduced by the Munich I Regional Court in the order for reference. The exceptions developed by this case law, in which a temporary injunction can be issued despite unexamined legal status, were incorrectly presented as conclusive, and the reasons which led in the case law in question to not issue a temporary injunction in patent matters simply for the sake of the granted patent were not discussed. It was also disregarded that only one out of three patents survives an attack on the validity of the patent. The technically often very complex subjects of invention are frequently not reliably verifiable for an infringement court staffed only with legal experts as to whether they are new and inventive compared to the prior art. The principle of proportionality must also be observed in Directive 2004/48/EC (Enforcement Directive), so that the interests of the alleged infringer must also be taken into account when deciding whether to issue a preliminary injunction. The approach of the LG München I, he argues, takes the grant of the patent and its technically amateurish review by the infringement court as the basis for whether or not the patent is provisionally enforced, and therefore does not make any assessment of the circumstances of the individual case.

Pichlmaier, presiding judge at LG München I (GRUR 2021, 557), responds to this comment and rejects the criticism of the incorrect presentation of the facts. The order for reference was merely based on the case law of the Munich Higher Regional Court, which had been correctly reproduced and which, for example, unlike the Düsseldorf Higher Regional Court, ¬ assumed conclusive exceptions. Moreover, the subject of the submission was the practiced principle of the OLG case law and not an individual question. The error rate of the patent offices cited by Kühnen, which often leads to a destruction of the patents in retrospect, was not mentioned in the OLG case law and thus was not taken into account in the submission. The argument of technical complexity cited by Kühnen could only apply to individual cases, but could not be used for the principle developed in the case law in question. This argument had also not been mentioned in the case law of the Munich Higher Regional Court.

The presiding judge at the BGH Deichfuß also notes (GRUR 2022, 800) that the ECJ in its decision had proceeded from a factual situation incorrectly reproduced by the LG München I in its order for reference. According to this decision, the issuance of a preliminary injunction for patent infringement “regularly” requires that the patent for the injunction has already survived opposition or nullity proceedings in the first instance; existing exceptions are not applied. This paints a false picture of German case law practice. However, it follows from the recitals and provisions of the Enforcement Directive that a schematic approach is prohibited, which results in the requirement for legislation and national courts to duly consider all objective circumstances of the individual case. Since the case law to date is completely different from that reproduced in the order for reference of the Munich Regional Court I, the decision of the ECJ does not give any reason to deviate from the previous case law practice; this is factually convincing and should be retained.

This ruling is also viewed critically in the literature. Although the decision is considered to be consistent (Keßler/Palzer in EuZW 2022, 562), it is noted, similarly to Kühnen, that German case law is significantly more differentiated than assumed by the ECJ decision. The ECJ answered a reference question that in fact did not arise in this form, which is why it is doubtful whether the court practice will change. In any case, there was no compulsion under EU law to adapt, since the Enforcement Directive did not require enforcement of intellectual property rights at any price, because all measures made possible by it were subject to proportionality. This is due to the fact that the enforcement of intellectual property rights regularly leads to collisions of conflicting fundamental rights. Doubts as to the existence of rights must therefore be taken into account in the context of the balancing of interests required by this reservation. In addition, the threat of liability under Section 945 of the German Code of Civil Procedure would sufficiently inhibit the patent proprietor’s frivolous application for preliminary injunctions.

It is further noted (Schmitz/Zilliox in GRUR-Prax 2022, 314) that although the ECJ rightly points out that a presumption of validity applies to patents as of the publication of their grant, the case law developed by the higher regional courts in practice leads to the refusal of interim relief for granted patents because the courts generally reject the urgency due to the lack of a validity procedure. With the present ruling, it is to be expected that the number of applications for injunctions based on patents without a completed validity procedure will increase. Whether the courts will be more generous in issuing preliminary injunctions in the future as a result of the ruling seems questionable, since the national judges had understandable
reasons for setting high requirements for the legal validity of the patent for invalidity. Moreover, the securities in favor of the defendant mentioned by the ECJ would practically rarely provide sufficient protection against the economic consequences of an unjustified injunction. All in all, one of the main hurdles for applicants seems to have been removed and there is now at least the possibility of obtaining a rapid injunction in preliminary injunction proceedings, even if the legal validity is uncertain.

Outlook

Overall, it therefore remains to be seen whether the ECJ ruling will actually lead to a change in case law.

New consumer protection law for digital goods

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With the Digital Content Directive (Directive (EU) 2019/770), the EU is further expanding the European digital single market and making it easier for consumers to access digital products. The EU’s stated goal was to ensure a balance between a high level of consumer protection and promoting the competitiveness of companies. Nevertheless, the drafting of contracts that have as their object the provision of digital content will have to be adapted in some fundamental respects as a result of the new legal framework, which has been in force in Germany since January 01, 2022.

Legal regulations and scope of application

The new legal framework for the provision of digital content was created in Germany by several amendments to the German Civil Code. The following overview focuses on the new regulations in sections 327 et seq. BGB, which have a significant impact on the design of general terms and conditions in the B2C sector.

These regulations apply to all consumer contracts that have as their object the provision of digital content or digital services (digital products) by an entrepreneur in return for payment of a price. A significant change is that the new legal regulations also apply if the consumer provides personal data as a means of payment, unless this data is processed solely to fulfill the contractual obligation to perform or legal requirements. Since free digital content is often provided with the aim of using users’ collected personal data beyond what is necessary to provide the digital product itself, this expansion of the scope means that many previously unregulated use cases, such as free apps, will now be subject to stricter consumer protection law requirements.

Obligation to provide the digital product

Within the scope of application of §§ 327 et seq. BGB, the entrepreneur is obligated to provide the digital product that is the subject of the contract. If the entrepreneur breaches this contractual obligation, the consumer may terminate the contract and claim damages or compensation for futile expenses. If the digital product is defective, the consumer may also demand subsequent performance or a price reduction. Particularly for digital products that are offered “free of charge” and for which the consumer only “pays” with personal data, this represents a paradigm shift compared to the previous regulations, which gave the entrepreneur greater leeway to amend or withdraw from the contract and also provided for milder legal consequences in the event of defects.

Obligation to update the digital product

Another controversial issue was regulated in Section 327f of the German Civil Code (BGB), which now requires the entrepreneur to provide the consumer with updates that are necessary for the digital product to remain in conformity with the contract and to inform the consumer of these updates accordingly. These mandatory updates explicitly include security updates. The obligation to update the digital product applies for as long as the digital product is provided and may therefore even go beyond the general warranty obligations. The trader is even liable for product defects if it has provided an update but the consumer has not installed it because the trader has not sufficiently informed the consumer about the availability of the update and the consequences of not installing it, or because the failure to install is due to faulty installation instructions.

Changes to the digital product

Another important provision is found in the new Section 327r of the German Civil Code, which implements Article 19 of the Digital Content Directive. If the contract provides that the digital product will be made available to the consumer on a permanent basis, the trader may only make changes to the digital product that go beyond what is necessary to maintain conformity with the contract if

  • the contract provides for this possibility and contains a valid reason for it,
  • the consumer does not incur any additional costs as a result of the change, and
  • the consumer is informed about the change in a clear and comprehensible manner.

If these conditions are not met, the consumer has the right to terminate the contract. However, Recital No. 77 of the Digital Content Directive explicitly states that if the changed digital content no longer meets the subjective and objective contractual requirements, the consumer should also be able to demand subsequent performance, reduce the price, and claim damages or reimbursement of futile expenses.

According to Recital No. 75 of the Digital Content Directive, valid reasons for modifying the digital product may include cases where the modification is necessary to adapt the digital content to a new technical environment or to a larger number of users, or for other important operational reasons.

Especially in the case of free apps, it is not uncommon to change the feature catalog during the lifetime of the app, sometimes perhaps with an expansion of features, but often with the removal of features that prove to be impractical or not economically viable. However, according to the examples given in recital 75 of the Digital Content Directive, neither the practicality nor the economic viability of a function should be a valid reason for its removal from the app. If the removal of such features proves to be a defect, the user could theoretically demand that the app be restored to its previous version.

Consequences for contract design

The new regulations significantly tighten legal obligations when providing digital products, especially in cases where the product is provided free of charge and access is paid for only through the consumer’s data. The previous legal framework did not explicitly recognize personal data as a valid means of payment and therefore did not oblige the entrepreneur who received the data to provide any consideration. With the new legal framework, the entrepreneur’s performance obligations are now structured similarly to a normal purchase or rental contract. Since the legal requirements under Section 327s of the German Civil Code (BGB) can hardly be modified by contract, the new regulations will require a redrafting of most existing contracts. Even more than in the past, it will be important to define the scope of performance carefully so as not to expose oneself to subsequent performance obligations and to reserve the right to make changes at a later date. Additional information obligations will also be imposed on the entrepreneur, which he must fulfill in order to avoid warnings from competitors. If you have any questions about the new legal framework, we will be happy to advise you.

From the land of the “Beetle smile” or on the protection of the famous shape in Germany

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The Porsche 911 decision of the Federal Court of Justice (I ZR 222/20) and Ur-Käfer decision of the Higher Regional Court of Braunschweig (2 U 47/19)

The Volkswagen Beetle and the Porsche 911 are indisputably among the great classics of automotive engineering. On March 10, the Higher Regional Court of Braunschweig ruled on the claims of the heiress after a body designer of the then Porsche Konstruktionen GmbH to the appearance of the original VW Beetle, from which she derived participation claims in the sales success of the VW New Beetle, which had been produced by VW in the years 1997 to 2010. Shortly afterwards, on April 7, the Federal Court of Justice pronounced its verdict in a dispute in which the same heiress had asserted similar claims relating to the Porsche 991 series of the Porsche 911 type from a comparable set of facts. The testator had died in 1966, so that the copyright protection period in both disputes would still run until 2036, if copyright protection existed for the respective designs. The Higher Regional Court of Braunschweig dismissed the action outright, while the Federal Court of Justice referred the case pending there back to the Court of Appeal for a new hearing.

Both cases involved a whole series of important copyright issues that may well also arise in the case of other iconic designs that have been perpetuated in constantly changing form, but still as part of a line of development over decades. From the abundance of legal problems that were dealt with here, three legal questions and one factual one are to be highlighted.

Is fame of the design sufficient for copyright protection?

In the case of famous and particularly long-lived designs from the field of applied art, factors come into play that otherwise play no role in copyright disputes. The fact that a shape becomes iconically famous at some point does not mean that it was particularly original at the time of its creation.

The VW Beetle in particular is a good example of this, and the richly illustrated Braunschweig decision shows a whole wealth of amazingly similar vehicles from the time when the “Volkswagen” was created, to which the later global corporation owes its name – and which no one knows today. Of all these vehicles, only the “Beetle” survives in the consciousness of the global public. It had already become a kind of “living fossil” long before the last production decades of the original model series, when it was only produced in Central and South America, the last survivor of a way of building cars that had long since become obsolete.

Therefore, the legal assessment must be made on the basis of the set of forms known at the time of creation, even though this may have later fallen into oblivion. The Higher Regional Court of Braunschweig correctly recognized this in its decision. In the Porsche decision, there is only a brief reference in the same sense (para. 31).

“Cultic”, at any rate, must be concluded from the decision of the OLG Braunschweig, is not a copyright category, just as little as “famous” or “groundbreaking in art history”. Other courts are not so stringent in this respect, as is shown by the very generous case law on the protection of tubular steel furniture from the Bauhaus period, in which copyrightability seems to be inferred from art historical significance.

Which standard of protection is decisive?

Separate from the question of the set of forms to be used for comparison is the question of which of the legal standards that have changed again and again in the decades since famous designs such as the Beetle or the Porsche 365 or 911 were created is to be used as the standard for the examination. Which standard of protection is to be applied to an ancient design – especially in the field of applied art?

  • The standard of protection at the time it was created?
  • The standard of protection before the Seilzirkus and Geburtstagszug decisions of the BGH (GRUR 2014, 175 – Geburtstagszug)?
  • The standard of protection before the ECJ’s Cofemel and Brompton decisions (C-683/17 – Cofemel; C-833/18 Brompton)?

The BGH clearly measures against the latest standard harmonized by the ECJ. The OLG expresses itself misleadingly in this respect, but would apply today’s standards to the actual situation at the time of creation and deny protection to an object which, according to today’s standards, was not protectable on the basis of the facts at that time (in particular in view of the then known set of forms).

Questions of copyright law

Both the BGH and the OLG Braunschweig apply the current rules of copyright contract law also to an author who, like the plaintiff’s father as an employee of the defendant’s legal predecessor, is subject to Section 43 UrhG (authors in employment and service relationships). Both decisions consider the fairness compensation of Section 32a UrhG to be applicable without further ado even in such cases. However, this only concerns new cases that arose after the new regulation came into force at the end of March 2002.

Visualization aids for the court

Time and again, it becomes apparent that two worlds collide in copyright law: That of the creators and that of the lawyers who have to deal with the creators’ output. In a legal dispute over a piece of music, how does one convey the essence of the dispute if the court is not musically trained? In the field of applied art, how can one make it clear what is at stake? The designers usually have a well-developed spatial imagination, which the discerning judges, on the other hand, do not necessarily have.
That is why many a trial in this field has been won (or lost) because the two samples, “original” and “alleged imitation” were physically expedited into the courtroom – this may involve a not inconsiderable effort in the case of bulky objects.
But what can be done when the object in question does not fit into the courtroom or – as in the Braunschweig case concerning the authorship of the VW “Beetle” – the supposed original only exists as a design drawing? One of the questions at issue was whether the formative shapes of the later “Beetle” were already present in the subsequent drawings.

From the decision discussed in ZUM-RD 2022, 342, 366

 

Here, the defendant party broke new ground with a visualization aid for the court in the form of a virtual model that could be displayed three-dimensionally in all conceivable views and juxtaposed with the subsequently executed vehicle.

 

From the decision discussed in ZUM-RD 2022, 342, 367

Thus, even the layman could see that the design of the plaintiff’s side was by no means “smiling”, contrary to the plaintiff’s claim, because the hood in the alleged original was completely straight. The view from diagonally behind also shows that the executed Beetle followed a completely different design concept than the alleged original, recognizable from the protruding fenders, the running board and the rear section, which also ends in a bulge, in the executed vehicle. The OLG Braunschweig correctly subsumed on this basis.

Such visualization aids can be produced with current CAD technology with manageable effort, even if under certain circumstances not always in such high quality as shown here.

Conclusion

The great willingness (one could almost say relief) with which the recognizing court made use of this assistance shows how important it can be, especially in the field of applied art, to argue as much visually as linguistically.