The Unitary Patent system on the home straight

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Over the past months, the European Unitary Patent system has been taking shape, and it is expected that the system will become operational in late 2022 or early 2023. It’s time to prepare.

The Unitary Patent system will comprise a new European patent with unitary effect in all participating EU member states (currently all EU member states except for Spain, Poland, and Croatia), and a new Unified Patent Court (UPC) to rule on these Unitary Patents, but ultimately also on all (conventional) European bundle patents granted by the European Patent Office. The system will provide, for the first time in history, a quasi-EU wide patent right.

For many years, the Unitary Patent system has progressed two steps forward, one step back. But after many setbacks, it now appears much more likely than not that the system will become operational in the near future. Despite Brexit, the political determination to move ahead with the project remained strong, and the preparations took up speed after the German constitutional court dismissed two constitutional complaints against the project in June 2021. In January 2022, Austria became the 13th member state to participate in the provisional application of the UPC Agreement, which triggered the entry clause of the Provisional Application Period. During the Provisional Application Period, the Court is being set up, including the IT system and the sophisticated electronic Case Management System. In parallel, interviews are taking place for the selection of the judges.

As soon as the Administrative Committee has signaled that the Court is operational, Germany will deposit its instrument of ratification with the Council of the European Union. This step will mark the start of the so-called “sunrise period”. During this period, patent owners will already be able to opt-out their existing patents from the Court, to avoid being trapped in the new system by commencing litigation. The Court will then start operating three to four months later, possibly in the first quarter of 2023.

The European Patent Office (EPO) has meanwhile implemented some transitional measures with a view to supporting users in an early uptake of the Unitary Patent. During the “sunrise period”, users will already be able to file their request for unitary protection for all patent applications for which the EPO has issued a communication regarding the intention to grant, and the EPO will inform applicants filing requests about formal deficiencies in their requests at an early stage. Moreover, during the “sunrise period”, the patent applicants will be given the opportunity to request a delay in issuing the decision to grant for all European patent applications for which an intention to grant communication has already been dispatched but not yet approved by the applicant. This will make a European patent eligible for Unitary Patent protection that would otherwise have been granted before the start of the new system.

Should you request unitary protection for your newly granted patents? Should you opt out your existing patents? It’s a tough decision that depends on many factors. Find here an overview of the new system and of the preparations that you should make already now to get your patent portfolio ready for the UPC!

In case of any questions relating to the Unitary Patent System or the preparations that you may want to make, please contact our UPC-Team.

CJEU on preliminary injunctions in Germany – change in court practice required?

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Upon submission of the Munich Regional Court (see our June 2021 article), the Court of Justice of the European Union (CJEU) has ruled on German court practice regarding preliminary injunctions in cases of patent infringement where the validity of the patent in question has not already been confirmed in opposition or nullity proceedings. While the CJEU ruling seems to favor patent proprietors, it remains to be seen whether the ruling in fact leads to a change in practice by the German courts.

The CJEU, in its judgment of April 28, 2022 (Case C-44/21), has ruled that a court practice denying in principle interim measures for infringement of patents in case the validity of the patent in question has not (yet) been confirmed in first instance opposition or nullity proceedings is incompatible with European law. Furthermore, national case law that is incompatible with this ruling must not be applied by the competent courts.

The Munich Regional Court was prompted to submit the matter to the CJEU upon the Munich Higher Regional Court adopting a practice already applied by other German courts handling the majority of patent infringement cases in Germany. According to this practice, preliminary injunctions in patent infringement proceedings are regularly refused by the courts if the validity of the patent in conflict has not already been challenged without success at least in first instance proceedings. This practice has led to criticism, as patent proprietors saw themselves unable to attain a preliminary injunction against an infringing party when the validity of their patent had not previously been attacked – a factor outside the proprietor’s direct control.

It is to be noted, however, that both the development and the current practice in this regard vary between different courts.

Düsseldorf Jurisdiction

According to the case law of the Düsseldorf courts, a preliminary injunction in patent cases can only be issued if both the question of patent infringement and the validity of the right to injunctive relief can be answered clearly in favor of the proprietor.

According to this case law, a sufficiently certain legal existence of the right to injunctive relief can generally only be assumed if it has already survived opposition or nullity proceedings in the first instance (Düsseldorf Higher Regional Court, judgment of May 29, 2008 – 2 W 47/07; Düsseldorf Higher Regional Court, judgment of April 29, 2010 – 2 U 126/09).

Therefore, in order for a preliminary injunction to be issued on the basis of a patent, a positive decision on the validity of the patent must already exist. However, this requirement may be waived in exceptional cases. Such an exceptional case exists, for example, if the party accused of infringing the patent has already participated in the granting procedure with their own objections, so that the granting of the patent is factually equivalent to the decision in a two-sided opposition procedure. Another example is the case where the patent relied upon is generally recognized as eligible for protection, e.g. due to the existence of well-known licensees. If objections to the legal validity of the patent prove to be groundless even on summary examination, or if there are exceptional circumstances which make it unreasonable for the owner of the patent to wait for the outcome of the opposition or nullity proceedings, this is also considered an exceptional case (Düsseldorf Higher Regional Court, judgment of April 29, 2010 – 2 U 126/09).

Karlsruhe Jurisdiction

The Higher Regional Court in Karlsruhe agrees with the Higher Regional Court of Düsseldorf regarding this issue, applying the same standards (cf. e.g. Karlsruhe Higher Regional Court, judgment of September 23,2015 – 6 U 52/15).

Munich Jurisdiction

The case law of the Higher Regional Court of Munich regarding this issue has recently changed.

According to the previous practice of this court, it was not necessary for the patent to have survived first instance opposition or nullity proceedings for the issuance of a preliminary injunction in patent matters. A high probability, i.e. sufficient certainty, of legal validity of the patent was considered sufficient for granting an injunction (Munich Higher Regional Court, judgment of July 26, 2012 – 6 U 1260; Munich Higher Regional Court, judgment of May 18, 2017 – 6 U 3039/16). The court based this practice on the fact that interim legal protection arising from a granted patent would otherwise be factually excluded for a certain period of time.

In this previous practice, prospects of success of an appeal against the patent were included in the required weighing of interests. In this context, remaining doubts about the legal status of the patent usually led to the rejection of the request for an injunction. Thus, the interest of the alleged infringer in not being sued on the basis of an IP right without a certain validity in summary proceedings, which limit the possibilities for knowledge and defense, were preserved. An assessment was to be made of the prospects of success of legal validity proceedings in the specific case in dispute. (Munich Higher Regional Court, judgment of, July 26, 2012 – 6 U 1260/12)

However, this view was overturned by the higher regional court of Munich in its decision of December 12, 2019 (6 U 4009/19). In this decision, the court, in a deviation from its previous practice and following the Higher Regional Courts of Düsseldorf and Karlsruhe, assumed that the issuance of a preliminary injunction based on a patent or a utility model can only be considered if both the question of patent infringement and the validity of the right to injunctive relief can be clearly affirmed in favor of the applicant.

If there are no exceptional circumstances which sufficiently prove the validity of the injunction right (patent or utility model), it would be reasonable for the applicant to assert his claims in main proceedings and for the defendant, on the other hand, not to be exposed to the risk that the validity is assessed incorrectly by the infringement courts in infringement proceedings. The patent proprietor’s interest in enforcing his property right was found to be sufficiently satisfied by the possibility of raising injunctive claims in main proceedings. This is considered to be justified by the fact that it is not the task of the infringement court to anticipate the outcome of proceedings on the validity of rights by way of a summary decision made in proceedings for interim legal protection. In this regard, it is noted that proceedings for interim relief are not geared towards a decision on the validity and proceedings on the validity usually conclude at a considerably later time.

Perspective

In view of the exceptions explained above that were already applied by the courts to the general rule of “no interim measures without previous confirmation of the patent in opposition or nullity proceedings”, some courts have already hinted that they saw no need to adapt current practice, since interim measures were not denied “in principle”.

In his comment (GRUR 2021, 466) on the order for reference of the Munich Regional Court (21 O 16782/20), Dr. Thomas Kühnen, Presiding Judge at the Düsseldorf Higher Regional Court, states that in his view the principles developed by the case law of the higher courts represent a balanced approach that takes into account the interests of both sides. According to such assessment, the risk of an unjustified injunction was only accepted where necessary in view of the legal interest of the patent proprietor because his legal action could not be postponed, but the risk was avoided where no immediate intervention was required or the potential damages were so serious that they could not be reasonably accepted in an overall assessment.

It therefore remains to be seen whether the CJEU judgement will in fact lead to a change in court practice.

New consumer protection regulation for digital products

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With the Digital Content and Digital Services Directive (EU Directive 2019/770), the EU is further expanding the European Digital Single Market, facilitating the consumer access to digital products. The outspoken goal of the EU was to ensure a balance between a high level of consumer protection while promoting the competitiveness of businesses. Nevertheless, the contractual design of the provision of digital content must be adapted in some fundamental points due to the new legal framework that has been in force in Germany since 01 January 2022.

1. Relevant provisions and scope of application

The new legal framework for the provision of digital products in Germany came with several amendments to the German Civil Code (BGB). Nevertheless the following overview will focus on the new regulations in Sections 327 et seq. BGB, which have an essential impact on the design of Terms & Conditions in B2C-relations.

Those regulations apply to all consumer contracts on the provision of digital content or digital services (digital products) in payment of a price. A major change is that the new legal regulations shall also apply if the consumer provides personal data as payment, unless the personal data is exclusively processed for the purpose of supplying the digital content or digital service or for complying with legal requirements. As free digital content is often provided with the specific goal to harness the collected personal data of users beyond the extent which is necessary for supplying the digital product itself, this expansion of the scope of application means many use cases like free Consumer Apps, etc., which have been previously rather unregulated are now subject to a stricter consumer protection regulation in Germany.

2. Obligation to provide the digital product

If the Sections 327 et seq. BGB apply, the trader is under a contractual obligation to provide the digital product. If the trader fails to provide the product, the consumer can terminate the contract, claim damages or claim reimbursement of futile expenses. In the event of a lack of conformity or defective performance, the consumer shall be entitled to have the digital content or digital service brought into conformity, to receive a proportionate reduction in the price, or to terminate the contract. The consumer may further demand damages or reimbursement of futile expenses. In particular for digital products offered “free of charge” and for which the consumer only “pays” with personal data, this means a paradigm change compared to the former regulations, which left the trader greater leeway to change or withdraw the product and which also offered a more lenient regulation in case of product defects.

3. Obligation to update the digital product

Another controversial topic has been regulated in Section 327f BGB, stipulating that the trader must ensure that the consumer is provided with updates necessary for the digital product to remain in conformity with the contractual conditions and that the consumer is informed about these updates accordingly. These mandatory updates explicitly include security updates. The obligation to update the digital product applies as long as the digital product is made available and can therefore even go beyond the general warranty obligations. The trader is even liable for product defects if he has provided an update but the consumer has not installed it, either because the trader has not sufficiently informed the consumer about the availability of the update and the consequences of failing to install it, or because the failure to install was due to defective installation instructions.

4. Modification of the digital product

A particularly challenging provision can be found in the new Section 327r BGB, which implements Article 19 of the Digital Content Directive. Where the contract provides that the digital content is to be supplied to the consumer over a period of time, the trader may modify the digital content beyond what is necessary to maintain the digital content in conformity, only if

  • (1) the contract allows, and provides a valid reason for, such a modification,
  • (2) such a modification is made without additional cost to the consumer and
  • (3) the consumer is informed in a clear and comprehensible manner of the modification.

If these requirements 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 modified digital content is no longer in conformity with the subjective and the objective requirements for conformity, the consumer shall also be able to demand cure, to reduce the price as well as to demand damages or reimbursement of futile expenses.

Pursuant to Recital No. 75 of the Digital Content Directive valid reasons to modify the digital product could encompass cases where the modification is necessary to adapt the digital content to a new technical environment or to an increased number of users or for other important operational reasons.

In particular with free apps, it is not uncommon to change the catalogue of features during the runtime of the app, sometimes maybe expanding the features, but often also removing features which prove to be impractical or not economically viable. However, according to the examples given in Recital No. 75 of the Digital Content Directive, neither the practicality nor the economic viability should be valid reasons to remove features from the app. If the removal of such features proves to be a defect, the user could theoretically demand the app to be restored to the previous version.

5. Consequences for contract design

The new regulations significantly tighten the legal obligations for the provision of digital products, especially in those cases, where the product is provided free of charge and access is only paid by the consumers data. The former legal framework did not explicitly recognize personal data as a valid mean of payment and therefore did not oblige the trader who received the data to perform for it in return. With the new regulatory framework, the trader’s performance obligations are now very similar to those of a normal purchase or rental contract. Since the legal requirements can hardly be altered by contract according to Section 327s BGB, the new regulations require a redesign of most existing contracts. Even more than in the past, it will be important to define the scope of performance carefully in order not to expose oneself to supplementary performance obligations and to reserve the right to make changes at a later date. Also, the trader is imposed with additional information requirements which need to be complied with in order to avoid cease and desist letters from competitors.

Should you have any questions regarding the new regulatory framework, we will be happy to offer our support.

GDPR – New Standard Contractual Clauses

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Since the CJEU annulled the EU-US Privacy Shield in July 2020, the European Commission’s Standard Contractual Clauses have in practice formed the most relevant basis for cooperation with service providers and partners outside the EU. The Standard Contractual Clauses have now been fundamentally reformed and the new clauses must be implemented since 27 September 2021. We summarise the most important changes and the resulting need for action.

Background

The GDPR protects personal data of EU citizens also outside the EU. Personal data may only be transferred to countries outside the European Union (so-called third-countries) if an adequate level of data protection comparable to the GDPR is guaranteed in these third-countries. For a number of countries, such as most recently the United Kingdom, the adequate level of data protection has been positively established by an adequacy decision of the Commission. For most countries, however, no such adequacy decision exists. This also applies to the USA since the CJEU declared the EU-US Privacy Shield, which has been in force since 2016, null and void in 2020 (judgment of 16.07.2020 – C311/18 – Schrems II). As an alternative, the focus shifted to the possibility of ensuring an adequate level of data protection on a contractual basis by executing the European Commission’s Standard Contractual Clauses.

These Standard Contractual Clauses have now been thoroughly revised by the European Commission and adopted in their latest edition on 4 June 2021 (Implementing Decision (EU) 2021/914). The new Standard Contractual Clauses are to be applied to all new agreements as of 27 September 2021. For legal relationships established by then, the old Standard Contractual Clauses will remain applicable for another 15 months. However, by 27 December 2022 at the latest, all data transfers to third-countries must be adopted to the new Standard Contractual Clauses or an alternative instrument to ensure an adequate level of data protection.

Modular construction principle for different constellations

To cover the different scenarios of international data transfers, the new Standard Contractual Clauses rely on a modular building block principle instead of the previous separate sets of documents for each scenario. On the one hand, this leads to increased flexibility, especially since data transfers between processors and (sub)processors and between processors and controllers are now also covered. On the other hand, the application of the Standard Contractual Clauses thus gains in complexity, especially since the principle remains that the clauses are only considered a suitable guarantee for ensuring an adequate level of data protection if they are used essentially unchanged.

Model order processing agreement included

In addition to guaranteeing an adequate level of data protection, the new Standard Contractual Clauses also explicitly serve to fulfil the obligations under Article 28 (3) and (4) of the GDPR to conclude a data processing agreement. They are thus at the same time a model data processing agreement. For this purpose, the European Commission also adopted separate model data processing clauses, which can be used in domestic processing scenarios (Implementing Decision (EU) 2021/915). Since the use of these clauses is not mandatory, it remains to be seen whether they will prevail in practice compared to the numerous freely available templates for data processing agreements.

New testing and documentation requirements for the implementation of Schrems II

The new Standard Contractual Clauses are in parts obviously designed as a response to the risks identified by the CJEU in Schrems II in the context of third-country transfers, in particular regarding excessive access to personal data by public authorities. However, they do not solve the practical problems arising for implementing companies. For example, the CJEU explicitly requires implementers of the Standard Contractual Clauses to assess the legal provisions applicable in the recipient’s country to see whether the statutory framework even allows the data recipient to comply with the provisions of the Standard Contractual Clauses. If, as in the USA, the legal regulations permit access by public authorities that the CJEU considers incompatible with European standards, the parties must take additional organisational and technical measures to effectively counter these risks.

The new Standard Contractual Clauses manifest this obligation by requiring the contracting parties to conduct a prior impact assessment, the outcome of which must be documented. As a result, both parties must explicitly confirm that there are no concerns about the ability to comply with European data protection standards. The clauses also contain obligations for the data recipient to notify the sending entity about requests from public authorities and to exhaust legal remedies where such remedies are prohibited.

Outlook and recommendation for action

The new Standard Contractual Clauses undoubtedly fit better into the regulatory system of the GDPR and offer practical advantages, such as an increased flexibility and the implementation of the CJEU’s requirements from Schrems II. The mandatory transfer impact assessment on the first view appears to be an intensification of the legal obligations, but ultimately merely implements the situation that applies since Schrem II. Furthermore, the explicit implementation of this requirement in the Standard Contractual Clauses could increase the practical willingness of third-country service providers to participate in a transfer impact assessment as well as the remediation of identified risks through technical and organisational measures.

If no real alternative to the conclusion of the Standard Contractual Clauses is established at the political level, which currently is not foreseeable, there is no way of avoiding the new Standard Contractual Clauses for a cooperation with service providers in third-countries, such as the USA. The current relevance of the topic is also shown by recent measures of the German data protection authorities, which in July 2021 sent questionnaires to companies throughout Germany in a coordinated focus audit regarding the handling of third-country transfers in accordance with Schrems II. Corresponding audits are to be expected in particular in connection with the changeover deadlines for the use of the new Standard Contractual Clauses on 27 December 2022.

Against this background, all EU-based companies should be prepared, whereby the following measures seem advisable for a practicable implementation of the legal requirements:

  • Conducting an internal screening for processes that involve the transfer of data to third-countries, such as the USA (e.g., in the context of website tracking, software tools, etc.).
  • Evaluating the possibility of suitable alternative providers based within the European Union.
  • Preparing different sets of the Standard Contractual Clauses according to own needs.
  • Preparing a standardised impact assessment process for third-country transfers and a catalogue of appropriate, technical and organisational measures to reduce identified risks.
  • Ongoing documentation and review of the measures taken, as evidence for submission to the data protection supervisory authority in case of an audit.

If you have any questions about the new Standard Contractual Clauses or about third-country transfers in general, please do not hesitate to contact us.

Health Claims Regulation: The use of trademarks containing health claims finally banned

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As of 20 January 2022, the use of trademarks containing health claims will be definitively prohibited.

Many products are advertised by the food industry as having health benefits. Margarine were “low in cholesterol” and dried fruits would “promote digestion.” Even in the case of sweets, the vitamin content is emphasised. By doing so, it is intended to provide incentives to buy. Many consumers are willing to spend more money on “healthy” foods.

Increased consumer protection through the Health Claims Regulation

Due to the risk of misleading consumers about alleged health effects, the European legislator passed the Health Claims Regulation (Regulation (EC) 1924/2006) in 2006. It regulates the requirements for nutrition and health claims on foods. The Regulation has a wide scope of application. The term “claim” includes any labelling or advertising of the product that declares or even implies that a food has positive nutritional characteristics or that establishes a link between the food and health.

Nutrition claims are only permitted if they are truthful. The Health Claims Regulation lists over 200 common claims such as “sugar-free” or “low-fat” and sets limits for the product name. For example, if a product contains less than 0.5 g of sugar per 100 g, it may be advertised as “sugar-free”.

Health claims are generally prohibited under the Regulation. Products may not simply be associated with a specific health effect (“helps strengthen the immune system”). However, there is the option of going through an approval procedure at the German Federal Office of Consumer Protection and Food Safety (BVL). In 2012, the EU additionally adopted another regulation (Regulation (EU) No. 432/2012), which contains a list of permitted health claims for foods. According to this Regulation, a product with a specified minimum calcium content, for example, may refer to its positive influence on bone preservation.

Need for action by trademark owners

Word and figurative marks are also to be understood as identification of the product. Therefore, they may not readily contain nutrition or health claims such as “low carb” (Hamburg Court of Appeals, 24.04.2014 – 3 W 27/14 ). Terms such as “vital”, “fit” or “healthy” are also affected. A well-known German drugstore chain found themselves forced to rename its own brand “Das gesunde Plus” to “Mivolis” due to the Health Claim Regulation.

To protect trademark owners, the Health Claims Regulation contains a transitional provision. According to Art. 27(2), products with trademark protection existing before 1 January 2005 (also by virtue of reputation or renown) may be marketed until 19 January 2022. Only from 20 January 2022, the requirements of the Regulation will also be applying to these trademarks. Trademark owners who nevertheless use trade names that are prohibited under the Health Claims Regulation after 19 January 2022 face the risk of warnings and official measures.

In this context, trademark owners from the food industry should conduct a review of their older trademarks.

Authors: Dr. Andreas Dustmann, Attorney at Law, and Tim Stripling, Research Assistant

 

Protection of the Swiss Army Knife

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With judgement rendered on 15 June 2021 in the case 33 O 7646/20, the Regional Court of Munich ruled on the use of various indications of geographical origin with reference to Switzerland. Specifically, the ruling concerned the famous Swiss Army Knife of the traditional Swiss company Victorinox. The court clarified that the indications “SWITZERLAND”, “SWISS” as well as the national flag of Switzerland enjoy a high reputation as indications of geographical origin in relation to pocket knives and multifunctional tools.

Background

In the underlying case, the traditional Swiss company Victorinox objected the offer and sale of pocket knives and multifunctional tools bearing the indications “SWITZERLAND” and the national flag of Switzerland. In the proceedings Victorinox has alleged that the defendant was appropriating the reputation of these indications of geographical origin for its own products. While Victorinox manufactures the Swiss Army Knife and multifunctional tools in Switzerland, the defendant’s products are produced in China and belong to the low-price segment. Nevertheless, these products were labelled with the words “SWITZERLAND” and the national flag of Switzerland. Only a small sticker on the back of the packaging of the defendant’s pocket knives and multifunctional tools suggested that the products originate from China.

Decision of the court

The Regional Court of Munich granted the action and specifically ordered the defendant to cease and desist from further offering and selling the pocket knives and multifunctional tools at issue. The indications of geographical origin “SWITZERLAND”, “SWISS” and the Swiss national flag are associated with special values in relation to pocket knives and multifunctional tools and therefore enjoy a high reputation. In the court’s opinion, this is even obvious in the legal sense and hence does not require proof in the proceedings. Consumers would expect a high quality from products from Switzerland; this is also true for the Swiss Army Knives sold by Victorinox. Accordingly, such products are associated with special quality and enjoy a high degree of recognition. By transferring this special reputation to the products manufactured in China by means of “Switzerland-related” labelling, the defendant exploits this reputation. The public would inevitably make an association with the quality and tradition of Swiss pocket knives, with the result that the target public would associate the defendant’s products with similar ideas of quality and value. For these reasons, it was irrelevant whether or not the indications on the defendant’s products misled customers as to the geographical origin of the products. Delocalising references on the products, such as a reference to their origin from China, were irrelevant.

Conclusion

The Regional Court of Munich has confirmed that the indications of geographical origin “SWITZERLAND”, “SWISS” as well as the national flag of Switzerland enjoy a special reputation with respect to pocket knives and multifunctional tools. Accordingly, there is an extended scope of protection with regard to these and similar indications. Whether or not an indication referring to Switzerland in connection with pocket knives and multifunctional tools may actually mislead the public, is of no relevance. Insofar as the products are not from Switzerland, the use of such indications is per se unlawful.

From Artworks and Copy­rights, NFTs make their way into Inventions and Patents

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While the world’s creativity and digital artwork sector have been reaping the benefits of NFT based transactions, more recently inventions and patents have also joined the trend.

The last few months have seen a tremendous increase in activities surrounding Non-Fungible Tokens (NFT). It started when Mike Winkelmann a.k.a. Beeple sold his digital art named “EVERYDAYS: THE FIRST 5000 DAYS” for 69 million dollars. Following that there were other successful sales as well, including the Canadian musician Grimes, who sold her digital artworks in an auction for $6 million.

In fact, IBM Corp and a start up, IPWe, had recently announced their plans of representing their patents as NFTs on a blockchain based network. Telling more, in 2019, Nike had secured a patent for a blockchain based system known as “CrpytoKicks” wherein ownership and transfer of ownership of trainers will be recorded. On purchase of a physical pair, the purchaser will get a corresponding NFT which verifies the authenticity of the shoe, along with some other perks. This is one of the unique ways in which NFTs are helpful in fighting counterfeiting.

What are NFTs?

NFTs, based on blockchain technology, certify digital assets as unique and non-fungible. What this means is that unlike fungible crypto currencies, NFTs cannot be broken down or exchanged for another NFT of an equal amount. Each NFT is unique in itself and has a different characteristic of its own. Once minted and tokenized, they are stored on a blockchain as a representation of an asset, such as a digital art. Once entered on the blockchain, the data is immutable and this is one of the main reasons why NFTs and blockchain technology are popular.

Background of NFTs

The basic concept of NFTs is not new. The concept of NFTs came into existence in December 2012, with the “Coloured Coins”. These coins were initially issued on Bitcoin blockchain, as a representation of real-world assets and a proof of ownership. This is where the idea of collectability was associated with the NFTs. The idea behind coloured coins was to use the blockchain for assets such as digital collectibles, coupons, property, etc.

In 2017, Cryptopunks was launched as the world’s first marketplace for rare digital, based on an Ethereum blockchain. Over 10,000 different cartoon characters were available to be claimed for free, by anyone who had an Ethereum wallet. The concept behind cryptopunks was that no two characters were the same and were limited in number, adding to their uniqueness.

The biggest leap in the popularity of NFTs took place with the arrival of CryptoKitties in 2017. The virtual cat with the ability to breed, with each carrying its own genome with DNA and distinct traits was the marker of NFTs coming out into the mainstream. This process of buying, breeding and trading cryptokitties had exploded to a volume of 5,000 ETH. The popularity was so huge that it led to an increase in pending transactions on Ethereum, along with taking up over 10 per cent of the traffic on Ethereum and causing a threat to other applications via crowding.

Following this explosion, market places like OpenSea and RareBits cropped up to further this phenomenon. In order to highlight the use of NFTs as artistic collectibles on blockchain, Germany’s ZKM Center for Art and Media Karlsruhe Museum had also featured CryptoKitties.

From digital art, NFT has expanded to popular culture and the commercial world as well. Nike’s CryptoKicks and Taco Bell’s taco art are examples for that. In pop music, artists such as Grimes, King of Leon, Stever Aoki have hopped on the trend with creating their own NFTs.

In the academia as well, NFTs have made their way, providing yet another use of their collectability. An example was seen with UC Berkely’s auction of an NFT that represented patent disclosure and research documents related to research concerning the CRISPR-Cas9 gene editing. While there was no transfer of patent rights in the transaction, the idea behind it was to provide bragging rights something magnificent.

How are NFTs helpful in the Patent world?

From providing a platform for transactions related to digital collectibles, NFTs are now moving into the Patent transactions by providing a way to exchange authorship or licensing of patents and research. In a collaboration with University of Kentucky, IPwe has launched an Advisory Committee for University Technology transfer, in order to explore methods and avenues through which universities can monetize and manage their patent portfolios. The collaboration between IBM and IPwe to create an NFT based marketplace for patent transactions is another example.

NFTs rely on distributed ledgers, or blockchain and this provides the biggest advantage of authenticity and verifiability. Complexities and execution time of transactions are reduced as the transactions are stored on the ledger for everyone to see and verify for themselves. This transparency is what makes NFTs particularly attractive.

Patent attorneys may spend hours searching different IP databases and reviewing assignments and transaction contracts in order to ascertain the true owner of a patent. NFTs have the potential to ease the process by providing a clear and assorted database of each transaction, making further transactions simpler and more cost-effective. For a company such as IBM, with large patent portfolios, a blockchain based marketplace can be beneficial. The distributed network verification system provided by blockchain brings certainty to transaction, which is an invaluable feature. When it comes to patent licensing and sales, the system provides confidence with having a clear current title and history of transactions. This provides a remarkable tool for standardization of the fragmented patent marketplace.

It is also important to highlight the difference between NFTs that represent digital art and the ones based on the model of IPwe and IBM. The former deals with collectability and ownership over an original artwork. The related artwork being traded is unique and cannot be reproduced. The latter concerns itself with ensuring transparency and efficiency in transactions, whereas ownership of the patent may or not be included.

Potential Risks

Along with the various benefits pointed above, it is also important to be aware and mindful of the risks that accompany transactions taking place on a distributed blockchain ledger. At the outset, the potential of NFTs to avoid counterfeiting has been lauded time and again, however, there are challenges too. NFTs are not a grand saviour of the issue. There is scope of withholding any information, or putting in erroneous information as there are no checks to ensure that correct data by authorised individuals are being entered. Once the information is entered on a blockchain, it is immutable, and this is where the major problem arises in cases where the information put up is itself false or wrong. The blockchain will keep perpetrating the wrong information. While some platforms are working towards solving this issue, it is advisable to be careful until completely fool proof systems are installed.

As pointed out above, unlike copyrights where NFTs deal with collectability and ownership, in terms of patents, the only use of NFTs is to ensure transparency by creating a database. However, some have voiced their concerns that this development is nothing but duplication of something that already exists. For one, the patent office holds an extensive database of patents and assignmentsalong with other important information. There are also other services providingpatent databases, such as patentinspiration.com and patents.google.com. Further, it is also doubtful as to how many companies will be ready to put their patents record as NFTs onto a public ledger.

While NFTs present a new opportunity to explore a new territory and find a new marketplace, the risks cannot be ignored. For patent transactions, NFTs and blockchain can help with easing the cumbersome search process and sifting through numerous patent databases. However, the biggest hurdle in the process is convincing the playersto adopt the a system based on blockchain. There is a famous quote by Mark Cuban on Blockchain, that says, “It’s like the early days of the internet’- brand new, no one really knows what it’s going to be. when ‘a lot of people thought we were crazy’”. Whether Blockchain technology and NFT turns out to be as big as the internet is something only time can tell. However, NFT has provided a solution to various issues that form a part of digital transactions, such as transparency and improved security.  NFTs hold immense potential to revolutionize the way transactions take place in future.

Guest author: Sonal Sinha, Blogger “The IP Press”

Recent German Court Decisions and Legislation shape the future of Euro­pean Patent Litigation

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The German Federal Constitutional Court has recently rejected two urgent applications directed against the creation of the European Unified Patent Court. If political support for the project continues and no further unexpected hurdles arise, the unitary patent could thus be – finally! – on the home straight and, according to optimistic estimates, could enter into force within the next 9 to 12 months. At the same time, legislation is overhauling the rules of national German patent litigation. The revised German Patent Act provides for a new and controversially discussed proportionality exception for injunctive relief as well as measures to accelerate patent nullity proceedings and to better align them with patent infringement proceedings.

The unitary patent on the home straight?

The European patent system so far only provides for a centralized grant procedure, resulting in a bundle of national patents. This may be about to change, and in the future the European Patent Office might also grant a genuine European patent with unitary effect in all participating member states (currently all EU members with the exception of Spain, Poland and Croatia). These patents shall in future be enforceable against patent infringers before a Unified Patent Court (UPC) with effect for all participating member states.

The first ideas for such a unitary patent already existed when the European Patent Office was established in the 1970s. Efforts have intensified over the past fifteen years, and since 2013 the relevant agreements to implement this idea have been in place and have already been ratified by numerous EU member states. However, the German ratification of the agreement on the UPC, which is essential for its entry into force, was held up twice by constitutional complaints, first in 2017 and then again in 2020. These complaints allege violations of the rule of law, of the fundamental right to effective judicial protection, as well as violations of EU law. The plaintiffs complained, in particular, that the judges at the Unified Patent Court are only appointed for a limited time period, so that judicial independence is not sufficiently guaranteed.

The Constitutional Court dismissed these complaints in June 2021. In the opinion of the Court, the plaintiffs were not able to prove that the organizational structure of the Unified Patent Court violated the rule of law, and to what extent this impaired the principle of democracy. After a four-year interval, the unitary patent has thus cleared a decisive hurdle. In August 2021, the German President already signed the German ratification bill into law.

However, some further obstacles on the way to realization remain. As a consequence of Brexit, the United Kingdom already withdrew from the UPC project last year. This poses organizational and legal challenges, because London is explicitly designated in the agreements as one of the three seats of the Unified Patent Court (alongside Paris and Munich). Germany has proposed a division of jurisdiction between Paris and Munich. In the Explanatory Memorandum, the German Federal Government argued that the withdrawal of the United Kingdom would not prevent the implementation of the Unitary Patent. The provisions of the agreements were to be interpreted in such a way that the withdrawal of a member state, which could not be foreseen by anyone, did not prevent the entry into force for the remaining participants. In addition, the agreements were to be interpreted in such a way that, in the event of the London seat ceasing to exist, its responsibilities could be taken over by Paris and Munich, at least on a transitional basis. France, on the other hand, would prefer to consolidate in Paris. Several other countries have also signaled their interest in taking over the London seat. Italy, for example, has brought Milan into play and has pushed for a corresponding revision of the agreements. Even though the political will to move ahead apparently remains strong, we might still see some heated discussions on the details of the implementation.

Moreover, preparations for the establishment of the Unified Patent Court and the selection of judges have come to a standstill due to Brexit and the German constitutional complaints. This work now needs to resume as soon as possible, but might still take several months, according to estimates published by the Preparatory Committee.

Germany has deliberately postponed the deposition of the ratification bill with the Council of the European Union, to delay the start of the UPC system until the preparations are complete. Despite the remaining obstacles, optimistic voices believe that the unitary patent could become a reality within the next 9 to 12 months – a manageable timeframe given the 50 years of preparations.

If the unitary patent system finally comes into existence sometime in 2022 or 2023, patent owners will face tough decisions if and how to use it.

After the system will have started to operate, unitary protection can be requested within one month after grant of a European patent, without an extra fee. But you should be aware that the UPC system not only affects newly granted European patents, but all existing European (bundle) patents in countries that have ratified the UPC Agreement. By default, they will all be subject to the jurisdiction of the UPC. There will be a transitional period of at least seven years (possibly extended by another seven years) during which patent owners can opt out of the new system, but this requires an active filing of an opt-out request. Patent owners will be able to file their opt-out requests in a “sunrise period” even before the UPC Agreement comes into force, to avoid being trapped in the new system by commencing litigation.

Should you request unitary protection? Should you opt out your existing patents? It’s a tough decision that depends on many factors, including the costs of validating and maintaining the unitary patent (moderate) and the costs of litigating patents before the UPC (probably also moderate), but also your faith in a completely new court system without any case law to rely on. Many big filers have vowed to make use of the new system, but may decide to opt out their crown jewel patents, at least for the start.

Hardship exceptions for injunctive relief and faster nullity proceedings – the reform of the German Patent Act enters into force

While Europe is preparing for the unitary patent, Germany is currently overhauling its national patent litigation system, in an attempt to cure some perceived imbalances.

Injunctive relief is the sharpest sword in German patent infringement proceedings. If an infringement court has found a patent infringement, it not only orders the patent infringer to pay damages for past infringing acts, but also rules that the infringing product must be removed from the market and that the infringing process may no longer be carried out.

This mandatory or quasi-automatic injunctive relief has come under increased criticism by parts of the industry. In particular, the telecommunications industry and the automotive industry with their suppliers see a risk of abuse when the patent-infringing product is only a small and subordinate component of a complex overall product, for example a mobile phone chip installed in a car, but the injunctive relief ultimately affects the overall product. In these constellations, the threat of injunctive relief means that the patent infinger often has to grudgingly accept excessively high license fees in order to avoid a production stoppage and the associated enormous costs.

The revised Patent Act now explicitly provides for a proportionality test for injunctive relief in Sec. 139 (1):

“The claim for injunctive relief is excluded to the extent that the claim would lead to disproportionate hardship for the infringer or third parties not justified by the exclusive right, due to the special circumstances of the individual case and in accordance with the principle of good faith. In this case, the infringed party shall be granted appropriate compensation in money. The claim for damages pursuant to paragraph 2 shall remain unaffected. “

The Utility Model Act was amended correspondingly. For the first time, the amendment expressly provides for the possibility of an exclusion of the injunctive relief if this would lead to unjustified hardship for the infringer himself, or for third parties. In such a case, the infringer could, for example, be granted a conversion period or sell-off period by the court, which would allow him to continue to market the patent-infringing product, at least temporarily. In extreme cases, the injunctive relief could even be permanently excluded.

Most commentators, however, expect the infringement courts to use the new rule with extreme restraint and to limit it to special cases of hardship. Voices from the judiciary also point out that the new rule merely explicitly codifies in the Patent Act what they were already able to rule anyway by applying the case law of the Federal Court of Justice. In its “Wärmetauscher” (“heat exchanger”) decision (case ref BGH X ZR 114/13), the Federal Court of Justice already held in May 2016 that the patent infringer may be granted a grace period in exceptional cases. The Federal Government’s explanatory memorandum also emphasizes the exceptional nature of the hardship provision. In this respect, the decision-making practice of the infringement courts may not change much at all. However, the exception will presumably be invoked by the defendants more frequently in the future than in the past.

How the additional monetary compensation provided for in the amendment to Sec. 139 (1) will be structured remains to be seen in practice. In particular, it is still unclear, and a topic of heated debate, whether this compensation is higher than the claim for damages to which the patent proprietor is entitled anyway.

Another significant and much less controversial reform concerns the streamlining of the patent nullity proceedings in order to better align them with the patent infringement proceedings.

In German patent infringement proceedings, the alleged infringer can only defend himself by claiming that he does not infringe the patent, for example, because his product differs from the patented solution or because he is entitled to use the invention. However, if he wants to claim that the patent was wrongly granted, for example that it is not novel or obvious in view of the prior art, he must attack the patent in separate nullity proceedings before the Federal Patent Court. This is usually called bifurcation or separation.

Due to the role of the nullity proceedings, they usually already start with a considerable time delay compared to the infringement proceedings, and then even progress much more slowly. As a result, the alleged infringer often faces the unfortunate situation that the infringement court has already found a patent infringement before the Federal Patent Court decides on the validity of the patent many months later. Even the preliminary opinion of the Federal Patent Court, which the legislator had introduced with a previous reform in 2009, often comes too late to have an impact on the infringement proceedings. In the meantime, under the pressure of the threatened injunctive relief, the patent infringer may already have felt compelled to agree with the patent proprietor on a high royalty payment, even though the patent would ultimately have turned out to be invalid.

In order to remedy this deficiency (sometimes known as the “injunction gap”), in the future the patent proprietor must submit his defense arguments against the nullity action already within two, in exceptional cases at the latest three months after service of the nullity action, and the Federal Patent Court should prepare its preliminary opinion at the latest six months after service of the nullity action. In typical case constellations, these deadlines should result in the infringement court having the preliminary opinion of the Federal Patent Court at hand before its decision on the patent infringement. The infringement court could then suspend its proceedings on the basis of the preliminary opinion, until the final decision in the nullity proceedings.

This approach is promising and could synchronize the patent nullity proceedings with the patent infringement proceedings much better than before. However, its success essentially presupposes that the Federal Patent Court will be in a position to issue its preliminary opinions quickly and in a reliable quality, and that the speed-up at the initial phase of the nullity proceedings will also translate into a shorter time to final judgement. This might become the acid test for the new system.

G 4/19 – Confirmation of the prohibition of double patenting before the EPO

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In its most recent decision G 4/19, the Enlarged Board of Appeal of the European Patent Office deals with the so-called prohibition of double patenting. The Board confirms therein that a European patent application may be refused if it claims the same subject-matter as a European patent, granted to the same applicant, which is not part of the state of the art. This applies irrespective of whether the application to be refused was filed on the same day as the European patent already granted, is a parent or divisional application thereof or claims the same priority as the European patent already granted.

Previous practice

The prohibition of double patenting is based on the assumption that the applicant has no legitimate interest in granting of a second patent for the same subject-matter for which he already owns a patent.

The European Patent Convention (EPC) does not contain any explicit provisions on the prohibition of double patenting. However, such a prohibition was derived from general principles of law (“Ne bis in idem”), for example in an “obiter dictum” in decisions G 1/05 and G 1/06. Under Art. 125 EPC, principles of procedural law generally recognized in the contracting states may be used in EPO decision-making practice, provided that corresponding provisions are not provided by the EPC.

The problem of a possible double patenting may arise for the following three situations:

  • (1) Two applications containing at least one identical claim are filed on the same date.
  • (2) At least one claim of a parent application and a divisional application derived therefrom are identical.
  • (3) At least one claim of a first application and a subsequent application claiming the priority of the first application are identical.

A practical interest of the applicant in double patent protection exists in particular in the third of the mentioned situations. The term of a patent is 20 years. The relevant date for calculating the term is the filing date of the application, but not its priority date. This means that the maximum term of protection of a subsequent application filed one year after a first application and claiming its priority ends 21 years after the filing date of the first application. In other words, an effective extension of the term of protection by one year can be achieved for the subject-matter claimed in the subsequent application.

G 4/19

The question brought before the Enlarged Board of Appeal was whether a European patent application can actually be refused with reference to double patenting and, if so, whether a distinction must then be made between the above three possible situations. In particular, the question was raised whether in the practically very relevant third case (application and its priority application) a legitimate interest of the applicant in double patenting would result from the fact that the filing date and not the priority date is decisive for calculating the term of the patent.

The Enlarged Board of Appeal initially affirms that a European patent application can be refused with reference to double patenting. A prohibition of double patenting could indeed be derived from the legislative history of the EPC and can be applied under Art. 125 EPC.

Nor was it necessary to distinguish between the three situations outlined above. From the “travaux préparatoires”, i.e. the official records of the history of the proceedings of the EPC, it would be clear that the legislator did not want to distinguish between these cases. Therefore, the question of a legitimate interest of the applicant in double patenting could also remain unanswered in the case of an application and its priority application.

Conclusion

The decision follows the established practice of the EPO on the prohibition of double patenting, in particular the decisions G 1/05 and G 1/06. It makes explicitly clear that the prohibition of double patenting can indeed be applied under the EPC and also applies to an application and its priority application. The fact that the Enlarged Board of Appeal leaves the question of a legitimate interest of the applicant in a second patent in such a case unanswered is to a certain extent unsatisfactory. Such an interest would probably not have been easily to deny in the light of the effective extension of the term of the patent.

The decision also leaves open when two claims relate to “the same subject-matter” and therefore fall under the prohibition of double patenting. According to established practice, an application is refused with reference to the prohibition of double patenting only if the scope of protection of the claims is identical. Overlapping scopes of protection of non-identical claims, on the other hand, are generally regarded as uncritical.

Even if this question remains unanswered in the decision, it can probably be assumed, in accordance with established practice, that the prohibition of double patenting is still to be interpreted narrowly and thus remains limited to identical claims. This is also supported by the fact that the reasoning of the decision distinguishes between “double protection” (overlapping claims) and “double patenting”.

Computer-implemented simulations and designs – a comparison of case law at the EPO and in Germany

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Decision G1/19 of the EPO’s Enlarged Board of Appeal has recently caused some turmoil in the field of computer-implemented simulations and beyond. We provide a comparison of how computer-implemented inventions can be protected in Europe and in Germany.

Decision G1/19 of the Enlarged Board of Appeal of the EPO

In 2019, a Board of Appeal of the European Patent Office (EPO) disagreed with the findings of the earlier – and to that date generally accepted – decision T1227/05, which had ruled that a computer-implemented simulation of an electronic circuit subject to 1/f noise does have technical character. In referral decision T0489/14, the Board demanded stricter minimum requirements for affirming the technical character of a simulation (or a design process). In the Board’s view, a technical effect requires, at a minimum, a direct link with physical reality, such as a change in or a measurement of a physical entity, a view which goes significantly beyond the requirements of T1227/05.

In its decision on the referral, the Enlarged Board has now ruled that computer-implemented numerical simulations and designs of a system or process should not be treated any differently from any other computer-implemented invention, thereby rejecting the “extreme position” in referral decision T0489/14. While the Enlarged Board did not reject the earlier decision T1227/05 outright, the Enlarged Board indicated that the findings in T1227/05 would not be generally applicable, due to the specific facts of the case underlying T1227/05, and thereby deprived this earlier decision of its former landmark character.

The Enlarged Board considers the “de-facto standard” at the EPO for the assessment of inventions consisting of a mix of technical and non-technical features (the so-called COMVIK approach) to be also suitable for the assessment of computer-implemented simulations. According to the COMVIK approach, the decisive question for the assessment of which features of a simulation of a system or process are technical features, and thus relevant for the assessment of inventive step, is whether the simulation or design process contributes to the solution of a technical problem by producing a technical effect. Therefore, the technical considerations relevant for the assessment of inventive step are only those technical considerations that pertain to the invention, i.e., to the simulation of the device or process, rather than the simulated system or process.

Referring to its earlier decision G3/08, the Enlarged Board acknowledges that a simulation is necessarily based on the principles underlying the simulated system or process, and that technical considerations associated with the system or process to be simulated typically form the basis of the mental act of establishing the model of the technical device or process being used in the simulation. However, the Enlarged Board holds that such a mental act of establishing the model (and equations/algorithms) underlying the simulation is devoid of technical character, because the technical considerations being used in establishing the model do not normally translate into a technical effect in the execution of the simulation. If technical considerations associated with the system or process being simulated were sufficient for the simulation to have technical character, then computer-implemented simulations would be privileged within the wider group of computer-implemented inventions, without any legal basis for such a privilege.

Along the same lines, the Enlarged Board also holds that a direct link with (external) physical reality, as demanded by T0489/14, is not a requirement for the technical character of a simulation or design process, even though such a link would likely be sufficient in most cases. However, it was held that only those technical effects that are at least implied in the claims should be considered in the assessment of inventive step, because if the claimed process results in a set of numerical values, whether a resulting technical effect can lend technical character to the claimed invention will depend on the further use of such numerical values.

Lessons from G1/19

The Enlarged Board’s finding that computer-implemented simulations and design processes are not to be treated differently from any other computer-implemented processes, and the Board’s reliance on the COMVIK approach, are a renewed confirmation and manifestation of the EPO’s established case law on computer-implemented inventions. While the good news for applicants is that the Enlarged Board did not follow the stricter approach of the referral decision T0489/14, the Enlarged Board confirmed the overall high standards of the assessment of computer-implemented inventions, which from now on will also apply to computer-implemented simulations and design processes. As simulation and design processes are often developed to run on conventional computer hardware, it will become even more difficult for applicants to claim and protect the simulation or design process independently of a particular and specific technical input or output or implied use of the results of the simulation or design process, e.g. for controlling a machine or manufacturing a product.

“Logikverifikation” decision of the German Federal Court of Justice

On multiple occasions, decision G1/19 refers to the earlier (December 1999) “Logikverifikation” (“logic verification”) decision of the German Federal Court of Justice. The latter decision relates to the field of production of highly-integrated circuits.

In the invention underlying the “Logikverifikation” decision, a hierarchically structured logic diagram of a chip is designed as a first step. Then, depending on this hierarchically structured logic diagram, a physical layout of the chip is designed. The physical layout of the chip specifies an exposure mask used for the actual chip production. This design process, at the time, was only partially carried out by a machine, i.e. a computer. Therefore, a crucial step in the design process (which lend its name to the decision) is the verification of the correct conversion of the hierarchically structured logic diagram into the corresponding physical layout.

To solve the problem at hand, the invention taught and claimed a method for hierarchical logic verification of highly integrated circuits, in which a hierarchical layout circuit obtained from a physical layout of the respective highly integrated circuit is compared to a hierarchical logic layout circuit determined by a logic layout. When the claimed comparison method yields that the compared layouts are identical to one another, the circuits are considered verified. Based on this verification result, silicon chips can be manufactured which complied with the desired specification. Notably, however, the step of manufacturing a chip was not recited in the claim under review.

The Federal Court of Justice found that there is a connection (not direct but indirect) to the manufacture of highly integrated circuits, because in subsequent stages of the integrated design and manufacturing process the masks, and ultimately the semiconductor integrated circuits, are created from the verified layout data stored in the memory of the data processing apparatus.

On that basis, the Federal Court of Justice ruled that the claimed invention relates to an intermediate step in a process which ends with the manufacture of silicon chips. Thus, the claimed teaching can be used to ensure that the chip to be manufactured consists of verified circuits. Therefore, according to the intended purpose of the claimed teaching, the teaching is part of a recognized field of technology.

Case Law of the German Federal Patent Court

In line with decisions 19 W (pat) 63/03, 19 W (pat) 314/05, 19 W (pat) 5/06, 21 W (pat) 46/07, 19 W (pat) 7/08, and 17 W (pat) 20/14, it appears that simulations in the field of Computerized Numerical Control are generally recognized to have technical character. This can be seen from the fact that in these decisions, the issue of technical character has not been questioned at all.

However, quite remarkably, the German Federal Patent Court considered that a system for traffic simulation did not provide a technical contribution. The Court found that the claimed simulation program would allow insights into the effect of road design measures on traffic flow and allow users to study ways to ease traffic congestion. However, the Court reasoned that the claimed teaching would be merely a planning aid and would have neither an outwardly directed controlling effect nor a monitoring effect (23 W (pat) 8/10).

Further, in 17 W (pat) 26/06 a method for generating a hierarchical netlist for simulating a circuit with a plurality of electronic components was considered not to provide any technical contribution. This reasoning was based on the finding that the actual contribution of the claimed teaching would be to arrange and compare already available information on components and sub-circuits in such a way that, in the netlist of components, sub-circuits could be detected with the aid of rules, and then replaced by substitute components, wherein the process was largely automated by a computer. This was considered mere data processing without a technical contribution.

In summary, the case law of the German Federal Patent Court appears, for the most part, to be consistent with the Logikverifikation decision of the German Federal Court of Justice: if a recognized field of technology is simulated, the claimed simulation can contribute to the technical character of the invention. On the other hand, some diverging decisions have been issued by the German Federal Patent Court as well.

Key Differences between EP practice and German practice

The German Federal Court of Justice generally accepts a technical contribution even if a computer-implemented simulation method only specifies an intermediate step of a process in a recognized technical field. In contrast, the EPO demands that technical effects can only be considered when assessing inventive step if these technical effects are at least implicitly defined in the claimed subject-matter. This difference requires extra effort and careful consideration when drafting claims for computer-implemented inventions in general, and simulations in particular.

In the area of computer-implemented simulations, the jurisprudence of the Federal Court of Justice in Germany has essentially been in agreement in recent years with the previously established case law by the EPO Boards of Appeal, which has provided more room for the patenting of such inventions compared to the standards now defined by G 1/19. Applicants may thus want to consider the filing of applications pertaining to such inventions in Germany in addition to or instead of filing at the EPO.

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