Not a single patent injunction has been denied or tailored by German courts based on two-year-old 'reform' statute, but plaintiffs need to adjust to new reality of preliminary invalidity opinions

A certain June 11, 2021 press release by industry body ip2innovate didn't age well:

"'German patent law has finally arrived in the 21st century. We welcome the fact that the Bundestag has passed a balanced reform' said Ludwig von Reiche, chair of the German group within European trade group, IP2Innovate.

"The reforms adopted during an overnight session of the Bundestag this morning will for the first time enable courts to apply the principle of proportionality in cases where injunctive relief would represent a disproportionate hardship to the alleged infringer or third parties as well as to substitute compensatory payments for injunctive relief, instead of courts automatically handing out injunctions.

"'After consulting widely with science, industry and the judiciary, a change in the law is now being implemented that for the first time takes into account the complexity of modern products in the digital age,' says Mr von Reiche."

Mr. von Reiche and his allies may have to await another century before actual change kicks in. The supposedly game-changing injunction statute has been in force and effect for more than two years without having made an impact in a single defendant's favor.

The press release I just quoted from was issued right after the German parliament's vote. Subsequently, the Federal Council (which has co-legislative powers but would have needed a supermajority to influence the outcome of this process) decided not to object; the Federal President signed the bill into law; and on August 17, 2021 the modified patent statute was published in the Federal Law Gazette (click on an image to enlarge):

I have consistently explained why the statutory language was not going to make a difference. It turns out that I was right and some others were wrong. They were too optimistic and they way overestimated their abilities.

Out of an abundance of caution, I asked many people about a week ago whether anyone was aware of a single German patent case in which the new Art. 139 language made a difference. Silence.

Incredibly, that June 2021 press release by ip2innovate even argued that other EU member states should follow suit:

"Unfortunately, like Germany so far, many other EU countries also fail to respect the proportionality principle.

"IP2Innovate and its members will keep a close eye on the implementation of the reforms and will continue to push for a modern and balanced patent system across Europe which respects the proportionality requirement."

If IP Europe has indeed "[kept] a close eye on the implementation" of that statute, then no one can come up with any excuses anymore. Not after two years. To people who know how things work, including Germany's best patent litigators, it was already clear two years ago. And not long after the new law entered into force, judges explained at different conferences that nothing was going to change in the end.

By now, all eyes are obviously on the Unified Patent Court. But patent holders still have access to German national courts as the UPC continues to be optional on a patent-by-patent basis.

While the lobbying failure of the anti-injunction movement is beyond reasonable doubt, a different aspect of the reform bill actually has moved the needle in defendants' favor, and it appears to me that patent holders seeking to enforce their rights in Germany have yet to adjust to that new reality. The Federal Patent Court is not absolutely required to hand down its non-binding preliminary opinions within six months of the filing of a nullity suit, and it could meet that target simply by outlining the issues in the case without giving a thumbs up or thumbs down. But what happens now in most cases is that a negative preliminary opinion is provided, which massively complicates enforcement.

German patent injunctions are every bit as near-automatic as they always used to be, and those who thought otherwise should be ashamed of their incompetence--but their second priority was to close the injunction gap (i.e., enforcement of an injunction prior to an actual validity determination), and the situation has indeed changed in that regard.

The validity-related statutory change took effect in May 2022, and after more than a year, it's clear that plaintiffs trying to get leverage in Germany must act more forcefully or they're not going to get their way.

Conventional wisdom would say that a license deal is preferable over litigation; that short-lived disputes are preferable over protracted ones; and that it's better to prevail on only a small selection of patents than to come across as very aggressive by asserting, say, 10 or more patents at the same time.

That conventional wisdom no longer applies in a situation in which the Federal Patent Court declares patent after patent invalid on a preliminary basis. In the past, suing over 3 or 4 patents was normally enough. For instance, when Microsoft and Motorola were suing each other in Germany over a decade ago, they started with just a few patents each. Same with Apple-Motorola. Samsung initially sued Apple over three standard-essential patents (and lost all three cases).

There are two things that plaintiffs must do differently or their German enforcement campaign are going to fail for lack of critical mass:

1. Assert more patents. If you have a reasonably large portfolio, I don't think it makes sense to assert fewer than 7 or 8, and I would recommend 10-12 patents-in-suit at the start. You just have to factor in that the Federal Patent Court will render negative opinions on the vast majority of them. If you only sue over a few patents, there's a high risk of none of those cases giving you near-term leverage. Legal fees for a quick and successful campaign over 10 patents will be less than for a protracted one over a smaller number. And in the latter case you'll get license fees while in the former your effort may just be a waste.

2. Harden your portfolio. Engage in patent Darwinism. Nokia has lost quite a number of patents in recent years, but they've also managed to identify a few killer patents that they can assert against defendant after defendant after defendant until they expire. It can be frustrating to have to litigate against a party over the course of more than two years (such as Nokia v. Daimler, and now also Nokia v. OPPO). But if you assert many patents, even some of those patents that the Federal Patent Court prematurely deems potentially invalid may survive, even if in a modified form. You then have some proven winners in your portfolio that you can leverage again and again--and that will, in fact, help you get more license deals because potential defendants will know what's going to happen if patent A is asserted in Munich or patent B in Mannheim.

Fortune favors the brave. And the bold.

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Stakeholder reactions to draft EU SEP regulation: both licensors and licensees identify issues that counsel against premature proposal

The leaked draft of an EU regulation on standard-essential patents (SEPs) has drawn various reactions. This blog may have written about it more often than any other website, which should be no surprise given its FRAND focus (initial reaction, table of contents and synopsis, downside for implementers, access-to-justice issues, conflicts with fundamental rights and international obligations, industrial policy implications, flawed or missing definitions and antitrust issues). But I'm not a SEP licensor or licensee. This post is a round-up of what those who license SEPs (outbound or inbound) have said, mostly through trade associations.

1. Net licensees are generally in favor, but partly (and rightly) unconvinced of bottom-line benefit

2. Perspective of major patent holder who is also a large-scale implementer: Huawei

3. Net licensors don't want unnecessary costs, delays, and uncertainty

1. Net licensees are generally in favor, but partly (and rightly) unconvinced of bottom-line benefit

Three different organizations representing net licensees (ip2innovate, Fair Standards Alliance, ACT | The App(le) Association) have issued statements. The first thing to keep in mind here is that it's part of the modus operandi of the deep-pocketed net licensee camp's lobbying efforts to have such lobbying fronts spring up like mushrooms, though at a closer look there are important overlaps between their memberships.

I've produced the following table that shows the extent of duplicative membership just based on four U.S. companies (Apple, Google, Intel, Cisco) (click on the image to enlarge):

Automotive companies now also tend to be members of multiple such organizations.

The other problem with net licensees' lobbying efforts is astroturfing, the most deceptive of all lobbying practices. I'll get to that in a moment, and for now just want to say is that the European Commission risks coming across as naive (or, worse, as purposely buying anything that appears to support DG GROW's agenda) by taking at face value the input it receives from self-declared small and medium-sized enterprises (SMEs) about their alleged difficulties relating to SEPs. The draft impact assessment, which has also leaked, quoted all sorts of unsubstantiated and unverifiable claims by unidentified SMEs, which I consider a highly questionable approach because I'm sure that a number of those stories would not withstand scrutiny (a year ago I debunked an SME-SEP lie that was told in an interview sponsored by large implementers).

The Fair Standards Alliance (FSA) itself--other than some of its members--cannot be accused of astroturfing. It only issued a brief statement on LinkedIn:

"The Fair Standards Alliance acknowledges the work of the European Commission in the draft proposal for a regulation on standard essential patents (SEPs). The FSA applauds the Commission’s effort to increase transparency and predictability for all stakeholders in the innovation ecosystem. We are pleased to see that the proposal aims to support a more fair and balanced licensing environment for SEPs. We are assessing the draft proposal in further detail and look forward to sharing more detailed feedback soon."

My takeaway from the final sentence is that they like the idea of complicating SEP enforcement, but at least some of the FSA's members are sophisticated enough to know that the devil is in the details. It looks like they can't easily reach a common position, but we'll see.

The FSA's sibling is the equally Brussels-based ip2innovate (IP2I) group. It's been only slightly less than two years since this press release, which makes that organization look bad not just with the benefit of 20/20 hindsight but because I predicted the outcome even earlier (and it's worth nothing that non-IP2I member Volkswagen issued a far more realistic statement at the time): Patent law reform strengthens Germany as a location for innovation; Europe needs to follow suit to enhance its competitiveness

In that press release, IP2I members said "German patent law has finally arrived in the 21st century" and predicted that German courts would now "apply the principle of proportionality to patent disputes." The word "proportionality" appeared in that press release nine times. But there has not been a single case--roughly 20 months since the new injunction statute entered into force--in which the alleged disproportionality of a patent injunction even became a serious topic of discussion in a German patent infringement action.

The fact that they have previously claimed victory because they don't understand how patent litigation really works is important to bear in mind. Interestingly, IP2I's reaction to the draft regulation is a little more cautious. They don't want to get burned again. So while they say the proposal is generally "to be welcomed" and "a big step in the right direction," they also "look forward to working with the Commission and other stakeholders on any necessary changes." That doesn't sound like they are totally sold on the draft proposal.

To my great surprise, the statement from the net-licensee side that offers more depth than the others happens to come from ACT | The App Association. To be clear, it's not an App Association--it even works against app developers where it benefits Apple, the company that largely funds--and according to sources cited by a Bloomberg article--effectively controls ACT. Presumably that statement was dictated by Apple or ACT was at least briefed by Apple on the key talking points.

I disagree with the rhetoric, but would like to highlight the following issues that ACT (i.e., Apple) has identified:

• "It would be extremely helpful for the Commission to confirm a number of self-evident truths that are unfortunately still disputed by some. They include the fact that a FRAND commitment always follows a SEP in the event of a transfer, and that SEP holders cannot refuse to license to any party who is willing to agree to FRAND terms and conditions."

  Philosophically, the draft suggests all of that. However, Apple has been advocating chipset-level licensing for a long time, and the proposal now falls short of its expectations because it merely envisions that the EUIPO would "raise awareness" for the licensing level, which is not binding on any court.

• "We hope the Commission will acknowledge that injunctions on FRAND-committed SEPs should only be available in limited circumstances, as a last resort."

  Again, philosophically the draft proposal is an anti-injunction proposal in the sense of imposing preconditions for "enforcement"--a term that it fails to define, which is a major problem because it could mean all sorts of things--and to delay the process. But the proposal does not attempt to move the goal posts wih respect to the reasons for which the infringement courts grant or deny injunctions. What ACT (Apple) appears concerned about is that even after that nine-month FRAND determination process, certain courts might simply enjoin implementers over behavioral issues (Sisvel v. Haier). I discussed that possibility in a recent post on why implementers should be careful what they wish for.

• "Certain SEP holders persistently require SMEs to, in a SEP licensing negotiation, either license SEPs that are invalid or unenforceable, or patents that are not even essential to the standard. We hope the Commission will introduce measures to address such abuses."

  The SME story is just astroturfing, but let's talk about the issues they raise. Given their stated concern about the need to license non-essential patents belonging to SEP owners, the draft regulation is counterproductive for their purposes. First, the draft regulation defines the term SEP in a way that includes non-essential patent claims. As a rseult, even non-essential patent claims would have to be considered in the envisioned FRAND determinations. Second, net licensors would have to place greater emphasis in litigation and in licensing negotiations on their non-SEPs.

• "Further, it would be helpful for the Commission to clarify that reasonable FRAND rates for SEPs are based on the value of the actual patented invention, which does not include the patent’s inclusion in the standard, hypothetical downstream uses at the end of a value chain, or other arbitrary factors.

  “Finally, we believe it would be important for the regulation to find a means for ensuring that conciliator panels reflect the balance of experience and viewpoints needed to produce fair and appropriate outcomes."

  Those two paragraphs show that ACT | The Apple Association is far from convinced that those FRAND rates will really bring down licensing costs (which is obviously any net licensee's ultimate objective). I've already explained that the conciliators (arbitrators) will actually have an incentive to set high royalty rates. Many (if not most or almost all) of those who are eligible for that role are readers of FOSS Patents, by the way. ACT (Apple) appears concerned now that there could also be a problem with the selection process resulting in a bias favoring high royalty rates.

  Their demand for valuation criteria to be laid out by the regulation would fundamentally complicate things for the Commission. As for the value of "the patent's inclusion in the standard," it's worth nothing that even Justice Mellor's InterDigital v. Lenovo FRAND judgment (which was a much better outcome for the defendant than for the plaintiff) acknowledged in para. 168 that it's neither fair nor feasible: "For my part, I do not see how one can eliminate or distinguish the value of an invention being incorporated into a standard from the invention itself."

2. Perspective of major patent holder who is also a large-scale implementer: Huawei

Earlier this year I described Huawei as an "accidental net licensor" because it's simply an innovator who obtains and implements patents, and does both on a very large scale. That fact makes Huawei's perspective particularly interesting in this policy context: they know both sides because they are on both sides. I can't think of any other company that is so clearly in the middle between net licensees and those who are either just licensing firms or generate a far greater royalty surplus.

In a recent IAM article (paywalled), Huawei's European IP chief Xiaowu (Emil) Zhang was quoted saying that "the regulators are not in the business" (thus don't completely understand how licensing works) and that the envisioned FRAND determinations would be "detrimental to the whole industry."

3. Net licensors don't want unnecessary costs, delays, and uncertainty

Last week, IP Europe--whose members include major net licensors such as Qualcomm, Ericsson, and Nokia--issued a detailed and thoughtful statement. IP Europe's first and foremost concern is that the draft regulation would encourage holdout and complicate efforts to enforce intellectual property rights against unwilling licensees. The statement furthermore raises industrial policy issues (investment in R&D, EU leadership in standard-setting, strategic autonomy).

Looking at all those official stakeholder reactions to the leaked draft and considering the partly structural issues I've identified, it's clear that this here needs a lot more work before it can be reasonably put forward as a legislative proposal. And I haven't even talked much about the draft impact assessment, parts of which are easily debunked as biased and unsubstantiated (in fact, the draft impact assessment even takes an unfounded position on whether a certain patent pool's rate is FRAND, without a scintilla of evidence or any factual argument)...

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Automotive industry falls into political trap, allows patent reform opponents to portray concerns over injunctions as single-industry issue: German parliament hearing

The short version of what happened at yesterday's patent reform hearing in the German Bundestag (Federal Parliament) is that the positions taken by the seven panelists were materially consistent with how I had summed them up in advance, but the overall perception was even worse for the cause of patent injunction reform.

The video recording of the two-hour meeting of the Legal Affairs Committee became available today. If those seeking to preserve the status quo had scripted the hearing, it wouldn't have been less balanced.

The lone voice--among seven "experts" (who in a U.S. Congressional hearing would be sworn in and called "witnesses")--in favor of a proportionality defense to injunction claims was, as expected, the VDA (German automotive industry association). That fact alone supported the anti-reform camp's narrative, but politicians and co-panelists alike capitalized on the situation and reinforced their portrayal of proportionality as the cause of the German automotive industry plus a bunch of foreign infringers.

There actually is a reasonably broadbased coalition of companies who consider the near-automatic injunction regime unsustainable. That movement comprises not only car makers but also telecommunications service providers, Internet service providers, and even adidas. While the ip2innovate group succeeded in bringing a diversity of companies together, it has failed miserably to advocate the cause. It's been amateurish beyond belief, and the state of affairs in the legislative process speaks volumes--as does the fact that ip2innovate wasn't represented on the panel.

The pro-reform camp should have declined to participate in this farce. They should have demanded a more balanced composition of the panel. Failing that, they should have focused on delegitimizing the event. But they've been strategically misguided all along.

The performance of the automotive industry group's representative was uninspiring. He had prepared some talking points, and given that he's not an IP expert, this could have gone worse. Still, the fact that his understanding of the issue lacks breadth and depth became clear on some occasions. For example, when asked by a member of parliament to compare the German patent injunction regime to the situation in other jurisdictions, he just claimed that courts in other countries could order monetary compensation instead of injunctions, but wasn't able to substantiate this in any way. He didn't even explain the difference between common law and civil law jurisdictions.

When I listened to the anti-reform panelists' statements and, even more so, the parliamentarians' questions, it felt like watching something that must have happened in a parallel universe. It was all completely detached from the reality of patent litigation in Germany. Politicians probably didn't know because the pro-reform movement is too incompetent and uncapable to properly and convincingly explain the situation to them, and to debunk certain smokescreens. The anti-reform panelists described the world out there as one in which patent infringement is avoidable, and the scope of a patent is clear by reading its claim 1--when in reality even reasonable people can easily disagree on claim construction, and most patents aren't valid as granted, so they're either invalid or the valid scope is narrower. But in a field of technology where keyword searches aren't nearly as targeted as in chemistry, the problem is already where to start with patent clearance.

Two female patent attorneys stole everyone else the show: Dr. Alissa Zeller of BASF, speaking on behalf of the vci (German chemical industry association), and Dr. Renate Weisse, a Berlin-based patent attorney in private practice. I disagreed with virtually everything Dr. Weisse said, and when referencing her client base she conveniently omitted that it also includes large corporations and "institutions" (presumably patent troll Fraunhofer). Dr. Zeller's views just didn't reflect the reality of the information and communications technology industry; some of what she said may very well apply to her own industry. But the way they advanced their agenda was first-rate.

Dr. Weisse was far more aggressive and outspoken, but Dr. Zeller, too, came across as very assertive, effectively argued in favor of the status quo, and described the potential implications of the current proposal (notwithstanding the Federal Court of Justice already having stated clearly that near-automatic injunctions are here to stay) as if the world was about to descend into chaos.

The two of them could have faced any ten representatives of the pro-reform camp (as opposed to just one) and would have eaten them alive. Their statements at the hearing could be used for any video tutorial on effective IP advocacy.

By contrast, those advocating proportionality just don't have what it takes to win. Their objective--less leverage for patent holders in negotiations--could only be achieved through a systemic departure. But how can they be revolutionaries in the political arena if their own organizations don't even let them act outside 20th-century structures, such as industry associations?

More than a year ago I explained to them what it would take to win. I also created a chart to put the anti-reform camp's talking points into perspective (click on the image to enlarge):

What you see in that chart is the story that was told during yesterday's hearing.

I'm already looking past that reform bill (while still keeping an eye on the process) and profoundly concerned that Nokia and Ericsson may win the pan-European lobbying battle over component-level SEP licensing. In the worst case, the CJEU will even lower the bar for preliminary injunctions (over any category of patents, ultimately also SEPs). But for now I still hope that those who botched the patent reform effort will learn from their mistakes and do better next time. "Next time" is now.

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The most pathetic lobbying campaign in the history of patent policy: from the far left to the far right, the German legislature opposes serious injunction reform

It's been almost 17 years since I first became involved with IP policy, and I was fortunate to need only about a year to make history in that field--not a modest way to put it, but backed up by facts. I thought I had already seen everything in that space. Creative campaigns and uninspiring ones. Authentic and fake grassroot movements. Smart and not so smart people. Suits and hoodies. Shaved faces and long beards. University students and professors. Winners and losers. Narrow and unanimous votes. But with all that active and passive experience I just couldn't believe my eyes when I read the transcript (PDF, in German) of a January 27 plenary debate in the German Bundestag (Federal Parliament) on patent (and particularly patent injunction) reform.

What follows is not even an exaggeration: if those pro-reform companies (the ones who want a proportionality check before courts issue patent injunctions) had never contacted a single person in that parliament, or if they had asked their pets to place phone calls to the parliament, the outcome couldn't have been much worse; it might even have been better. Those companies actually represent a fairly significant part of the German economy--but clout doesn't matter if you don't know how to use it, or if you are so misguided that you shoot yourself in the foot every step of the way.

Terms like "failure" or even "disaster" would have too positive a connotation to describe what has happened. It's more appropriate to call it an insanity.

So here's a summary of what the speakers said about an injunction reform proposal that the German judiciary has already rendered ineffectual before it's even enacted (worse than dead on arrival):

• Christian Lange, a social democrat and parliamentary state secretary spoke on behalf of the Federal Ministry of Justice and Consumer Protection, which drafted the bill. Mr. Lange said the new injunction statute would "clarify that proportionality considerations may lead, in exceptional cases, to a limitation of injunctive relief in accordance with current law and Federal Court of Justice jurisprudence." He then goes on to describe the proposal, twice more, as a mere "clarification" and to assure his colleagues that "the value and the enforceability of patents is not called into question."

  What the ministry's representative said here is consistent with the German government's portrayal of this measure: they say they're not going to change anything, just clarifying. If this was truly a reform, you'd hear something else. The government would say: "There's a pressing problem we've identified. And here's our solution."

• The next speaker, after the government's represenative, always comes from the largest opposition party, which is presently the right-wing Alternative for Germany (AfD; the only corona-denier party in the German parliament). No other party wants to be associated with them in any way, and most lobbyists wouldn't want to talk to them. The AfD's Mr. Peterka took a variety of patentee-friendly positions. While he acknowledged that proportionality should be a statutory criterion for injunctions, even he spoke out against third-party interests (specifically, the interest of customers in the availability of a product, which he called "overreaching").

• The most important speaker in this debate was Ingmar Jung, the rapporteur of the chancellor's party on this bill. Given that Germany is a parliamentary (not presidential) democracy with hardly anyone ever crossing the aisle, the government coalition uses its parliamentary majority to pass laws. There's no way anyone could build a majority in that parliament for a patent reform proposal unless the chancellor's party backs it.

  Mr. Jung said that even the government's proposal (which was drafted by the junior coalition partner, the Social Democratic Party) goes too far for his taste. Mr. Jung would accept a statute along the lines of the Federal Court of Justice's Heat Exchanger decision, which basically said that patent injunctions are automatic but under the most egregious of circumstances one could talk about time-limited, minor enforcement restrictions (which even in that particular case weren't deemed to be warranted). In his plenary speech, Mr. Jung criticized that the "bona fide" criterion had been dropped since the ministry's very first draft while third-party interests made it into the statute, and said: "This, I must admit, we'd really like to discuss again in terms of its practical implications. That's what the parliamentary process is for." This means that the most powerful party in that parliament--without which there just won't be a majority--is not only opposed to serious injunction reform: they even hope to further dilute the statute.

• Speaking for the second-largest opposition party, the libertarian Free Democratic Party, Roman Mueller-Boehm conflated bifurcation and the risk of companies being extorted by the enforcement of injunctive relief, but then emphasized that "small inventors, who make a significant contribution to technological progress, could be bullied or simply ignored by large corporations." That's the "intelligent infringement" type of rhetoric of those advocating strong IP enforcement. And with a view to those small innovators, Mr. Mueller-Boehm said that his party is "concerned" about proportionality and whether it will be a targeted response to the problem of "patent trolls": "We believe some modification or different solutions are needed. For example, we think that proportionality considerations shall only benefit someone who proves that he has previously performed a meticulous patent clearance and hasn't just tried to get away with an infringement."

  That is, of course, unrealistic in light of millions of patents. In some industries it may still work, but certainly not in information and communications technologies.

• What comes now is something I had never seen in a patent policy debate in Europe: even the far-left (post-communist) Left Party (the legal successor to the communist party that ruled East Germany) sided with patent holders all the way and opposed proportionality. On the Left Party's behalf, Mrs. Gökay Akbulut supported the libertarian FDP's demand that infringers should only be able to benefit from a proportionality consideration if they met their obligations to perform patent clearance. She also supported the Federal Council's position, which is anti-reform. And she called on her colleagues in the legislature to heed the concerns of research entitites, small and medium-sized companies and others who "need strong and differentiated patent protection for their innovations" with particular emphasis on "individual inventors."

• The Green Party is normally also receptive to balanced positions on IP enforcement, to almost the same extent as the Left Party. And their speaker, Tabea Roessner ("Rößner" in German), was one of the most eloquent critics of EU copyright reform ("upload filters"). But in last week's debate, she stressed that "innovation depends on strong patent protection" and--lo and behold--reminded everyone that "the heart of [Germany's] high level of patent protection is the entitlement to injunctions" and she believes that "softening" it "threatens Germany's innovation economy." She went on to argue that proportionality should not make it into the statute, and cases in which a complete product range could be enjoined as a result of an injunction over a single patent were "very, very rare in reality."

• For the junior coalition partner, the Social Democratic Party, Dr. Nina Scheer, warned against "abuse" of patent injunctions, but even she merely proposes enshrining the Heat Exchanger case law in the injunction statute.

• The most reform-friendly speaker came last: the Christian Social Union's Alexander Hoffmann. The CSU is the CDU's regional sister party (only in the state of Bavaria) and, therefore, also a member of the government coalition. Mr. Hoffmann indicated that automotive companies and other defendants could be harmed by the enforcement of injunctions. But there's no reason to assume that Mr. Hoffmann can counterbalance Mr. Jung's reform-hostile positions, given that the CDU is far larger, and even Mr. Hoffmann's own party, which governs the state of Bavaria, apparently supported anti-reform positions in the Federal Council.

I had to follow patent policy for almost 17 years to learn about a debate in a parliament in Europe where even a far-left party and the Greens had been lobbied successfully by the likes of Siemens, Nokia, and Ericsson. That's like hell freezing over, but in the most negative sense.

Those advocating patent injunction reform in Germany are so incredibly uncapable that they've lost the lobbying battle from the far left to the far right, at all levels. They've wasted money and time, especially in and on industry associations of all sorts. For nothing.

Those opposing reform (BASF, Bayer, Nokia, Qualcomm, 3M, Panasonic, the German chemical industry association, the German research-focused pharmaceutical industry association, and Fraunhofer wrote an open letter to politicians ahead of that parliamentary debate, warning against injunction reform (see this German-language press release by the chemical industry). But that's just them pretending to be worried. They know they have nothing to fear. They have the judges on their side, and they have the most inept opponents they could possibly have: their own dogs would probably instill more fear in them than this reform process. Nevertheless, they know how to play the game, and they don't leave anything to chance. They shed crocodile's tears over a dilution of patent protection. And they keep on winning. It's a farce. But the miserable failure of those pro-reform companies does not even deserve to be called a farce.

An organization like ip2innovate should draw the appropriate conclusions and dissolve itself. And the German automotive industry association should stay focused on other policy areas (such as emissions standards). They've all delivered conclusive proof they're not up to the challenge. They couldn't persuade the far left, the Greens, the libertarians, the conservatives. Patent abusers are laughing now--all the way to the bank. I'm not laughing, but I've just reopened that PDF (the transcript of the parliamentary debate) and there aren't enough facepalms in the world to express my feelings about it.

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Patent injunction reform in Germany: next lobbying defeat for pro-reform forces as Federal Council speaks out against proportionality

Yesterday there was good news for those advocating a balanced approach to patent injunctions, as the Munich Higher Regional Court increased the amount of the collateral to be provided by Nokia in a standard-essential patent (SEP) case against Daimler by a factor of almost 100 to over $2 billion. That was to be expected after a similar decision in a Conversant v. Daimler case.

But today there's been a political setback that I had predicted as well: one of Germany's two legislative institutions, the Bundesrat (Federal Council), today adopted its Legal Affairs Committee's recommendation for a statement on patent reform (PDF, in German).

The Federal Council is not realistically going to exercise its veto right (which a supermajority of the Federal Parliamnet could overrule anyway). But its position is going to bear significant political weight in the further process, particularly among the governing coalition parties' parliamentary delegations from various influential federal states.

In a nutshell, the Federal Council tells the Federal Parliament to preserve the status quo of near-automatic patent injunctions no matter how disproportionate, except under the most egregious of circumstances where even the Federal Court of Justice said in its Heat Exchanger decision that an injunction might have to be tailored, even if only slightly so and only in cases that are few and far between.

The Federal Council even issues a stern warning that any reform going further than existing case law--such as by taking third-party interests into account--would jeopardize Germany as a patent jurisdiction.

This reform process is on the wrong track. There was a glimmer of hope a few months ago, but at each of the key procedural milestones this year--the first draft by the Federal Ministry of Justice, the official proposal by the Federal Cabinet, and now the Federal Council's advisory opinion--went wrong, so unless there's a huge surprise, this legislative process simply isn't going to bring about any such thing as serious change. The courts will continue to hand down injunction after injunction, and while lawyers will be able to bill their clients for pages and pages of argument over proportionality, the courts won't really reach that point except once a year or so. Most of the time the courts will quickly determine that a case isn't quite so exceptional as to justify a deviation from the longstanding principle of automatic injunctions.

For parts of the German economy, the current situation is unsustainable, but change just isn't coming. Only political amateurs would believe that you can achieve reform the defensive way, by asking for almost nothing and contenting yourself with even less than that. It's like starting a revolution by kowtowing to the king. Just won't work.

If professionals had been at work, it actually wouldn't have been too hard to get the Federal Council to speak out in favor of injunction reform. It would have been feasible to get support from multiple influential states (especially some with many automotive jobs), and while the two most populous ones (North Rhine-Westphalia, which operates the Dusseldorf court system, and Bavaria, which is home to large parts of the European patent law industry) would have been hard to win over, one could at least have created a situation in which one or both of them would have declared themselves neutral.

But what you can you expect when the broadest-based pro-reform lobbying group, ip2innovate, is totally misguided? Google, SAP, and Daimler simply botched the organization's statutory proposal, and the likes of Microsoft, BMW, and Deutsche Telekom incompetently and foolishly followed their lead.

When this process is over, they're all going to get just the same bad decisions from the courts as before. They'll merely have to spend more money on attorneys' fees.

The end of the legislative term is approaching fast. The parliamentary decision won't take more than a very few months. It will be extremely hard, if not next to impossible, to put patent injunction reform on the agenda again in 2022 or 2023. A historical opportunity will have been wasted, despite my efforts to educate some people while there still would have been the chance to play it smart.

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The lemmings of patent injunction reform: Microsoft, BMW, Deutsche Telekom joined ip2innovate during German reform process

Political decision-making processes tend to be so complex that it's often very difficult to identify a clear causation between what went wrong and why. In connection with Germany's patent reform, which has been carefully crafted by the country's government to change almost nothing at all (see my initial reaction to yesterday's official legislative proposal), one can infer from publicly-accessible documents that the Brussels-based ip2innovate lobby group (Google, Daimler, SAP etc.) committed the colossal blunder that most likely condemns the reform effort to fail. "Be careful what you wish for." IP2I advocated the term "Einzelfall" that is now the central term that will render the reform ineffectual because the government's official legislative rationale clearly defines it as "hardly ever happens." Now the losers are trapped in a no-through one-way street as they can't lobby against their own proposal. They dug their own reform's grave.

Germany's leading information & communications technology news site, Heise online, quotes my analysis in an article on yesterday's legislative proposal, including my criticism of IP2I's lack of strategic sophistication. For what I know, however, chip makers Nvidia and Intel, while they're longstanding IP2I members, can't be blamed for the "Einzelfall" crap.

Were IP2I only a fringe group of the patent reform movement, the others could still combat that "Einzelfall" term effectively. But birds of a feather flock together, and lemmings famously follow other lemmings. With the sole exception of Volkswagen (the whole group including subsidiaries like Audi and Porsche), IP2I's membership directory lists practically every large German organization that demands injunction reform.

Over the course of this year, the misguided IP policy groups of three large organizations--two of them among Germany's largest corporations--joined IP2I:

• Microsoft,

• BMW, and

• Deutsche Telekom.

Deutsche Telekom's IP department habitually hurts the company's interests. They even contributed their cellular standard-essential patents (SEPs) to the abusive Avanci pool. They might have found it convenient, and maybe they thought it was "cool" to join some large patent holders in a pool, but Avanci is all about driving up licensing costs, which runs counter to Deutsche Telekom's interests. Also, Deutsche Telekom is still the only company known to have made a huge royalty payment to patent troll IPCom. They could have avoided it by simply insulating their then-outgoing CEO from the potential fallout from IPCom's patent assertions against him. Instead, they paid hundreds of millions of dollars at a time when Nokia and HTC were actually defending themselves very successfully against that same patent portfolio. Deutsche Telekom also has a reputation for having caved to other patent holders in situations in which many others wouldn't have done so.

As I already noted yesterday, Deutsche Telekom might benefit to some degree from the fact that the reform bill makes harm to third parties a factor. In Dusseldorf that might help; in Munich and even in Mannheim, it most likely won't. Those courts will tell them to take a license. If patent holders seek injunctions that threaten to shut down Deutsche Telekom's network, it's just a means to an end. The end is a costly license deal; leverage from an injunction is the means. So those patent holders will make a licensing offer, and the courts will then tell Deutsche Telekom that the harm they suffer isn't irreparable: they don't have to switch off their network infrastructure as they can take a license. I already explained based on the January draft bill how this would work.

The world's top three smartphone makers--Apple, Samsung, and Huawei--are notably absent from IP2I's membership directory. They have to defend themselves against German patent infringement complaints all the time. In order for them to be in a better position, the hurdle for a useful injunction reform statute would be considerably higher than for Deutsche Telekom (which can at least argue that third parties depend on access to its network) and German car makers, which have substantial manufacturing operations that would be susceptible to a German injunction. Again, I believe even Deutsche Telekom and those automotive companies will ultimately just be coerced into taking licenses on unreasonable terms. But at least they have far more of a hardship argument than foreign companies that export their smartphones and similar devices to Germany.

As foreign companies with limited head counts in Germany, those three would have found it difficult to make much of an impact. If Huawei had joined, it could even have been counterproductive, considering that those opposing reform (such as Nokia) would presumably have tried to politicize the debate.

Whether Apple and Samsung should have done more, in quantitative as well as qualitative terms, is a question those companies will answer for themselves when this reform process is over. Where the process stands today, the most likely outcome is that they'll just spend more money on proportionality arguments (lawyers, experts) but those suing them will have basically the same leverage in negotiations as today. There's an asymmetry here: patent trolls, or companies that practically behave like trolls by suing companies they're not competing with, only stand something to gain, and nothing to lose. They typically wield portfolios, not individual patents, and they can sue in three or more different German venues as they need leverage in only one of them.

This is frustrating to watch. It must be far more frustrating for companies to find themselves on the receiving end of those lawsuits. I warned many of them a year ago, and earlier this year. I told them what was going wrong, and how they'd have had to fix it. There was some hope last month because the previous draft looked like the government had made concessions on the statute and simply hadn't updated the legislative rationale yet. Now that the legislative rationale suggests it's easier to spot a pink elephant in your garden than a German patent case in which an injunction would be denied over proportionality considerations, and with most reform advocates being bound to IP2I's misguided March 2020 submission proposing "Einzelfall," it's extremely hard to imagine a turnaround.

Besides IP2I, there's only one other major industry group pushing for reform, and that's the VDA (German automotive industry association). They have members such as Bosch that prevent them from taking really strong positions, and they lack IP policy expertise at the staff level. So it would be a surprise if they could solve the problem IP2I has created.

I'm quite sure I'll point to yesterday's posts as well as this one many times in the coming years whenever some high-profile German patent injunctions come down or the possibility of such injunctions forces companies into license agreements. I'll be looking out for that pink elephant, and maybe I'll spot one once every while, but I won't blame the judges for what is the only reasonable interpretation of this statute in light of the official commentary: you normally don't even have to conduct a full-blown proportionality analysis because defendants will fail to distinguish their situation from that of any other defendant who has the choice of simply taking a license.

Before the Bundestag (Federal Parliament) formally receives the bill, the Bundesrat (Federal Council) will analyze the proposal and make an official statement that is going to influence the parliamentary process. Chances are that the Federal Council will either say that even this reform proposal goes too far or that it's acceptable but will warn against seriously restricting access to patent injunctions. Some conservative politicians in the Federal Parliament will almost certainly prevent any impactful reform from being passed into law, and time is on their side as the end of the legislative term is approaching (and COVID complicates everything).

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Google, SAP, Daimler (ip2innovate) botched patent injunction statute: "Singularity Killed the Reform"

If you noticed the allusion to a band name in the headline, you might have grown up in the 80s, in which case you may also remember the famous line "I pity the fool." Otherwise you might know the proverb "curiosity killed the cat". Whatever, those opposing German patent injunction reform are now on the winning track as I explained in my previous post, and in the losing camp, three companies are particularly responsible for a monumental f..kup:

Google, SAP, and Daimler.

Volkswagen deserves credit for having started the push for patent injunction reform in Germany. The three companies listed above will go down in history as the main culprits unless there's a second reversal of fortune. I'd like things to work out, but I increasingly doubt it. The anti-reform movement is just too sophisticated for a pathetic bunch of amateurs.

The documents that prove what went wrong and who's to blame are all public. So let me explain, but again, I'd like nothing more than to be proven to have been too pessimistic. Until the last moment I'll hope that the broken German patent litigation system will be fixed.

So, here's the chronology of events:

In January, the Federal Ministry of Justice and Consumer Protection published a first draft reform bill that Germany's leading patent litigators said was going to change nothing, or at least wasn't going to have significant impact. It then gave stakeholders until mid March to submit comments.

A lobby group named ip2innovate, which is based in Brussels and mostly focuses on EU patent policy, made a submission (PDF, in German) that I largely agreed with, though I expressed concerns about their statutory proposal. Back then I commented on dozens of statements, so I didn't go into detail.

Here's a screenshot of the worst blunder in this whole reform debate (click on the image to enlarge; this post continues below the image):

The first sentence of their proposed amendment to the patent injunction statute is this (in German):

"1Der Anspruch nach Absatz 1 ist ausgeschlossen, soweit die Inanspruchnahme im Einzelfall unverhältnismäßig ist." (emphasis added)

This means that injunctive relief shall be unavailable to the extent that its enforcement would be disproportionate "im Einzelfall." What does "im Einzelfall" mean? That's the problem. The term can be understood in two ways, neither of which reflects favorably on those who proposed it:

• non-judgmental interpretation: "in the individual case to be decided"

• with a quantitative connotation: "only in rare/outlier cases"

It was an utter stupidity at any rate to use a term that simply isn't a well-defined legal term. I can't remember ever having seen a German statute that contained the word. Therefore, the first thing courts will turn to when trying to make sense of the term is, besides the context, what the legislative rationale (the official commentary provided along with the law) says. I'll get to those two determinants--context and legislative rationale--in a moment.

Anyway, if the plan is to inject a new term into the law that wasn't there before, a lobby group (unless someone inside the group seeks to sabotage the effort or people don't know what they're talking about) would at least pick a term that has framing value. You'd want to use a term that has a connotation that suits your agenda. The last thing you'd want to do is shoot yourself in the foot like ip2innovate did.

Even in a neutral context and without the risk of a legislative rationale ascribing a particular meaning to the term, "Einzelfall" was the equivalent of an own goal in certain sports, or unforced error in others. That's because the non-judgmental interpretation would not be as persuasive a proposal as the quantitative one. Let's face it: the law is always used to decide individual cases. It's the single most fundamental principle of statutory interpretation (which some of the people working for ip2i's members may have learned about a loooong time ago, maybe too long) that if a term can be given one meaning that makes sense and one that doesn't, you pick the former, not the latter. Interpretation 101. With "individual case" being nonsensical, no judge could be blamed for interpreting "Einzelfall" in the sense of "rare outlier, or singularity." One could debate just how rare. But there could be no reasonable argument over whether at least some degree of rarity is implied.

To be clear, I'm not "Monday-morning-quarterbacking" here. I actually made a hands-down superior statutory proposal that I sent to a variety of companies (some of which were and are ip2i members) and select academics in January. When the German reform process is over, I'll publish it. Or maybe before. We'll see. Dozens of witnesses can confirm I shared it with numerous industry players in January 2020. So I don't just pretend to know better with the benefit of 2020 hindsight. I already did back then. And among the proposals that were officially submitted, I supported the one by the Max Planck Institute, which didn't contain any crap like "Einzelfall" either.

Now, fast forward to early September, when the ministry finally published its second draft. It already incorporated the term "Einzelfall"--and did so in connection with a reference to "besonderen Umständen." That term, just like "Einzelfall", can be interpreted in two ways:

• non-judgmental interpretation: "specific" = "under the given circumstances"

• with a qualitative connotation: "special" = "only under extraordinary circumstances"

Here, again, the non-judgmental interpretation would be devoid of any meaning as any case is decided based on its facts. And then, when you have in the very same, narrow context the combination of two terms (grammatically related to each other in the statute) that can be interpreted judgmentally or non-judgmentally, with the judgmental interpretation making sense while the other doesn't, you'd really need the legislative rationale to support a non-judgmental interpretation--or a mildly judgmental one, meaning that it would suffice for the circumstances to be somewhat special and that injunctive relief wouldn't be abolished entirely, or in a vast majority of cases.

When ip2i submitted its feedback to last month's draft (PDF, in German), it complained that "besondere" (special/specific) was "redundant" in the context of "Einzelfall". They started to realize they had botched this by proposing a term that renders the whole reform statute pointless--even without "besondere Umstände" (though even more so in that context, which basically doubles the problem).

Too late. When you're trapped, you're trapped. The proposal that the executive government adopted today (which still doesn't pass it into law, but that's what the executive officially submits to the legislature) contains the same problematic passage, has made two other terms in the statute less favorable to the interests of defendants, and the draft legislative rationale has deteriorated sharply.

On page 64 of the early September draft ("Referentenentwurf"), the ministry wrote:

"Eine dauerhafte Versagung des Unterlassungsanspruchs wegen unverhältnismäßiger Belastung des Schuldners wird hingegen nur in sehr wenigen Fallkonstellationen in Betracht kommen."

This means:

"A permanent denial of an injunction due to a disproportionate burden on the infringer will, however, only be part of the consideration in a very few case patterns."

At the time, I was being optimistic and assumed that the rationale had not been updated yet. But today's version leaves no more room for such wishful thinking:

"Eine dauerhafte Versagung des Unterlassungsanspruchs wegen unverhältnismäßiger Belastung des Schuldners wird hingegen nur in sehr wenigen besonders gelagerten extremen Fallkonstellationen in Betracht kommen. Sie setzt voraus, dass unbilligen Härten für den Unterlassungsschuldner nicht durch eine Umstellungs- und Aufbrauchfrist hinreichend Rechnung getragen werden kann." (emphasis added to highlight what was inserted in October)

Here's my translation:

"A permanent denial of an injunction due to disproportionate hardship on the infringer will, however, be part of the consideration only in a very few, specially-structured, extreme case patterns. It would be a requirement that inequitable hardship on the infringer could not be sufficiently addressed through a workaround and use-up period." (emphasis added to highlight what was inserted in October)

This is like the postmortem of an abysmal failure. With this official commentary, the bill would provide a dictionary to the courts:

• "Einzelfall" = "very rare, extreme case" ("singularity")

• "besonderen Umständen" = "there must be something out of the ordinary about the circumstances, the circumstances must stand out in a structural sense"

This means the courts will rarely even have to take a closer look at proportionality arguments--unless, as I'll say now for the last time, the pro-reform camp manages to turn this around.

The more realistic assumption is that there won't be any truly helpful developments. If any of the people representing their companies had to report to me, I'd want to know who proposed or supported "Einzelfall" and who opposed it, as that would tell me whether or not I could trust those people to vigorously defend their companies' interests.

The largest U.S. company among ip2i's longstanding members (Microsoft just joined recently) is Google. The search and Android company's European in-house patent litigator, Ralf Uhrich, may actually even benefit from this mess. While he manages Google's patent cases in other European jurisdictions as well, he is admitted to practice in Germany, and may very well return to private practice, such as to Quinn Emanuel, where he left as an associate. In Germany, becoming in-house counsel is typically a one-way street and not considered an upgrade. But Google is an American company, and the relationship between Google and QE is special. As a future QE attorney, Mr. Uhrich would be much less busy if Germany actually reformed its patent injunction regime. Near-automatic patent injunctions are a boon for German patent litigators.

Ip2i's largest European member is SAP. SAP actually hasn't been sued over patents in Germany in a long time (at least that was the case last time I checked). If SAP really had a problem with German patent injunctions, they'd presumably have entrusted someone more senior than Ina Kock, an in-house patent prosecution counsel, with this reform project. While SAP is a great employer in some other fields, it's a rather unpopular one among German patent attorneys. The company is HQ'd in the middle of nowhere, and patent attorneys at other major tech companies working in Munich (Europe's patent capital) make at least 50% more because they have more opportunities. Her background is patent prosecution, not litigation, and unlike in-house patent counsel of companies that regularly get sued, she hasn't even had the opportunity to really figure out how things actually work in German courts. Then, participating in ip2i conf calls may spice up her professional life, as she'd otherwise just be spending eight hours a day to get software patents granted in contravention of a subject-matter exclusion under the European Patent Convention. I guess that's far more important than achieving a positive outcome.

This was just come color that may explain why ip2i has performed so poorly. But I still hope they're going to get this reform effort on track, alongside some other organizations such as the German automotive association (VDA).

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Distorted picture of stakeholder positions on German patent injunction reform: submissions to Federal Ministry of Justice

Leading litigators agree that the first draft of a German patent reform bill put forward by the Federal Ministry of Justice and Consumer Protection (BMJV) would change either nothing at all or, at best, extremely little about access to patent injunctions. This blog already said within a couple of hours of the dissemination of the document.

Stakeholders had until March 10 (last Tuesday) to provide feedback to the ministry. Throughout the course of the week, the ministry uploaded those documents whose submitters had not requested confidential treatment.

To my dismay, the proponents of meaningful injunction reform have lost the second round in a row. They had originally achieved a breakthrough in the sense that the ministry, which at the outside envisioned a low-key reform package along the lines of a "service update" for computer programs, has dared to touch the holy cow of German patent law--§ 139 PatG (Art. 139 German Patent Act, the injunction paragraph)--at all. But what has otherwise happened is a disaster for the pro-reform movement:

1. The actual proposal is lopsided in patentees' favor and designed to eliminate or at least minimize any potential impact.

2. And now, due to utter political incompetence in some places, outdated internal rules in others, and obsolete conventions on the part of key local pro-reform forces, the ministry has received more than enough backing to either turn its first draft into the federal government's formal proposal or make merely cosmetic changes to it.

   There's obviously nothing that pro-reform forces could have done about their rivals' actions. Their failure lies in the fact that they didn't (even though I told many of them a long time ago) restructure and broaden their alliance in an effort to overcome resistance to reform. Those who want a more balanced statutory framework are now on the losing track unless the dynamics of the parliamentary process result in a turnaround. An economic majority actually wants reform, and only a minority opposes it--but the majority doesn't know how to win, or the few individuals who do know just aren't allowed to do what needs to be done, while the patent-extremist minority plays it smart (those organizations have highly experienced, global IP policy teams, unlike the German automotive industry, for instance) and has the relevant ministry officials on its side.

While the actual legislature--the Bundestag (Federal Parliament)--has every right and every opportunity (and would have every reason) to fundamentally improve the bill, parliamentary experts will start their analysis of where the relevant stakeholders stand with the submissions to the ministry. And those submissions present a distorted picture, for the reasons stated above.

In this post I'll focus only on the proportionality of injunctions, not on other aspects of the reform bill that the submissions touch on, except where there is an inevitable overlap.

Submissions in favor of major improvement over the status quo (i.e., fewer injunctions)

Max Planck Institute for Innovation and Competition: That one is fantastic. They explain the issues with the present proposal and propose a straightforward proportionality requirement (which would bring German patent law into compliance with EU law). Among other things, they also argue for taking third-party interests into account, and they explain why proportionality considerations are also critical with respect to standard-essential patents (SEPs). Unfortunately, they don't represent an industry, but I will propose a solution: why don't a number of major companies (either German corporations or international ones with substantial operations in Germany)--regardless of whether they've already supported the submissions of one or more industry associations--throw their full weight behind the Max Planck Institute document and say that they support it 100% even though they might have settled for less before in order to build consensus within industry groups? The Max Planck Institute is a world-class academic institution, not a campaign HQ. They wouldn't seek endorsements, but I am going to contact some key pro-reform players the next few days and urge them to publicly (such as through this blog, where I could publish the names of organizations who confirm their agreement with the Max Planck paper to me just like their PR departments would confirm the existence of a pending litigation) declare themselves 100% (no ifs, no buts, no nothing) in agreement with the Max Planck submission. Let's make the Max Planck Institute's submission the economic majority's lodestar and tell it to the Bundestag.

Germany's leading SME organization (Bundesverband mittelständische Wirtschaft, BVMW): This submission makes strong policy arguments from the perspective of small and medium-sized companies and blend them with reasonably profound legal criticism of the proposal, expressing serious doubts about whether we would see much (if any) improvement. What the BVMW does not provide is a statutory counterproposal, but what the Max Planck Institute suggests would undoubtedly meet the BVMW's criteria.

Patentverein (medium-sized companies advocating balanced patent policy) and BITMi (IT-specialized SME organization): One could interpret these two submissions as an endorsement of the ministry's statutory proposal. However, those are very small organizations and simply don't have the resources to assess the actual legal impact of a statutory proposal. Their papers make it very clear they want proportionality (and above all else, they'd like to close the injunction gap). Both are, however, members of the Mittelstandsallianz (SME Alliance) led by BVMW, and BVMW gets it right that the present proposal falls short of what's needed. For that reason, I count those two organizations, despite the shortcomings of their submissions, in the pro-reform column: their policy positions are clearly pro reform, and if they didn't back the BVMW's criticism, the BVMW surely would have mentioned it, as the BVMW's submission explicitly mentions the Mittelstandsallianz and an aggregate membership of 900,000 organizations.

Verband der Automobilindustrie (VDA, Automotive Industry Association): This submission explains the issues in great detail and proposes various improvements to the statute. It's good--but not very forceful in the end. I therefore call on those automotive industy players who are in favor of meaningful reform (which applies to the vast majority of them) to back the structurally superior Max Planck Institute's submission, especially since there is no philosophical conflict here. The best is the enemy of the good.

ip2innovate: That group has mostly non-German members such as Google, Microsoft, and Intel. Its German members are SAP, Daimler, and Adidas (a company that is also affected by the threat of patent injunctions). Daimler is also a member of the VDA, but it's a reasonable assumption that Daimler actually supports the further-reaching proposal--the ip2innovate submission. ip2innovate's paper is OK for the most part, though there is a huge issue with its statutory proposal: it does spell out some criteria to consider, but in doing so risks discounting the importance of criteria not mentioned, such as the relative importance of a patented invention to an accused product. The Max Planck Institute, with its far greater sophistication, avoided falling into that trap. As for the backing of German companies, Daimler and Adidas are undoubtedly suffering under the current situation. SAP, while it's the most valuable German company, actually never gets sued over patents in Germany. At least one can't find any recent cases on Darts IP. Even if they were enjoined, software patents can usually be worked around very easily and seamlessly. So they're lobbying for reform without actually being affected (so far). That is a limiting factor in the further debate. It doesn't make their position meaningless, but does diminish its weight--though the weight that remains is still significant.

Vodafone: Not a German company, but operator of the second-largest cellular network in the country and a provider of critical infrastructure to many German companies, including many SMEs (as the submission mentions). Their one-pager simply points out that the initial proposal doesn't go far enough. It would have been great if they could have made a joint submission with Deutsche Telekom (and possibly others). But Deutsche Telekom's position was voiced very clearly in 2018 on the corporate website, where they complained about the extent to which Germany's patent law impedes innovation.

ACT | The App Association: A low-quality submission by an organization that claims to represent 5000 SMEs "in Germany, the EU, and worldwide" (my translation), but then mentions only one German member company in its submission. Not worth discussing, and certainly won't impress anyone in German politics.

Nvidia: The strength of this particular submission is its analysis--clearly provided by a law firm--of proportionality as prescribed by the Intellectual Property Rights Enforcement Directive (IPRED) of the European Union. That part of the filing is world-class. When it comes to political clout, however, Nvidia is, at best, of secondary relevance in Germany. That said, whatever law firm authored the analysis of EU proportionality law for them did a great job.

Neutral on proportionality

BITKOM (German information and communications technology industry association): Due to dissent within their membership, they couldn't take a position. Most ICT companies clearly want reform, but the likes of Siemens, Nokia and Ericsson also have significant weight within that organization. In connection with the EU software patent directive, BITKOM was one of my numerous opponents and we defeated them (both with respect to a non-legislative resolution by the Bundestag and a legislative decision by the European Parliament). It looks like I may never agree with them on patent policy, but at least they're neutral this time.

progenerika (generic drug industry association): Their submission focused only on the injunction gap. In the field of pharmaceutics, proportionality--provided that a patent is reasonably certain to be valid--is typically a non-issue given that there is almost a 1:1 relationship between a patent and a product, so one can hardly argue that only a minor feature of a complex multifunctional product was affected.

Submissions in favor of the status quo (and the ministry's first draft)

BDI (German industry association): The BDI is an umbrella association of associations. Two of its members, VDA (which wants reform) and BITKOM (which is internally divided), officially distanced themselves from the BDI's submission. The biggest issue with the BDI's submission is that they seek to limit the impact of any statutory change to enforcement stays (as opposed to a denial of injunctive relief in a given case). As for third-party interests, they may see a point with respect to telecommunications networks, but are afraid of further-reaching effects. They do speak out clearly against non-practicing entities (NPEs), and they mention the problem of complex products. So the BDI submission isn't all bad, but on the bottom line it's more of an anti-proportionality than pro-reform position. And the BDI's submission hurts the cause by appearing to isolate the automotive industry, though in reality there's a strong interest in reform in multiple industries (such as telecommunications, semiconductors, and further above I even mentioned Adidas as a member of ip2innovate). [Update on 03/17] The BDI paper had to be withdrawn, validating what I wrote about a strong interest in patent injunction reform across multiple industries. [/Update]

ZVEI (electronics industry association): They make it clear they seek to preserve the status quo and they'd like the ministry to make it even clearer that nothing should change. This one may have been influenced very strongly by Siemens.

Siemens: Whether this submission by Siemens's patent department serves the company's long-term interests is another question. In the IoT era they will increasingly find themselves on the receiving end of patent assertions. But for now, they are radical proponents of strong patent enforcement. While I disagree with them, they did the right thing by making a submission in their own name as opposed to just relying on associations.

vfa (pharmaceutical industry association) and VCI (chemical industry association): Those two organizations' joint submission promotes superstrong patent enforcement. They'd like to further weaken the ministry's first draft.

Ericsson: A foreign company, though still far more relevant to German policy makers than, say, Nvidia's local sales office. Unsurprisingly, they take a radical position in favor of strong patent enforcement. Just like Nokia, Ericsson is a company that failed in the mobile handset business and has fallen behind technologically in the field of network infrastructure, so they're ever more interested in patent monetization.

VPP (organization of 2,500 German IP professionals): This submission, unsurprisingly, favors strong enforcement. VPP's president is simply Siemens's chief patent counsel. So this doesn't really add anything.

German patent attorneys' association: Obviously in favor of the status quo. The more patent litigation in Germany, the merrier--from their vantage point.

German Bar Association: What I just said obviously applies to German attorneys at law involved with patent litigation: they wouldn't want anything to happen that would have more than a non-negligible impact on the attractiveness of their jurisdiction to plaintiffs. Policy makers are well-advised to just ignore that submission.

Berlin-based patent attorney: A patent attorney filed a submission on her own, claiming to mostly represent SMEs, which is ridiculous when you have the country's largest SME organization (BVMW) actually advocating reform. There obviously are SMEs who want strong patent enforcement--some but not all of whom are simply patent trolls. But patent attorneys aren't legitimate SME representatives, simple as that.

German inventors' association: Their membership base is just a few hundred individuals.

DABEI (another inventors' association): This submission is slightly more moderate than the one by the German inventors' association. It proposes an enforcement stay for up to six months in cases of extreme hardships, contingent upon various requirements.

Sanofi-Aventis: They caution against any further-reaching restrictions of access to injunctive relief, but would like the ministry to provide greater clarity. And in case they get sued, they'd like the interests of patients who need access to their medications to be taken into account.

Japan Business Machine and Information Systems Industries Association (JBMIA): They hate patent trolls, but they want their members (such as Sharp, Sony, Panasonic, Fuji, and Toshiba) to have just the same access to injunctive relief as now. They're apprehensive of anything that would look even remotely like eBay v. MercExchange (though the ministry's first draft is lightyears away from it).

Conclusion

One can see that those seeking to preserve the status quo are better-organized and more outspoken, as opposed to just focusing on association-level consensus building.

Some of those advocating reform mean well, but on average aren't as sophisticated as their rivals.

The pro-reform camp needs a much better statute than the one the ministry proposed, but the ministry officials can (legitimately!) portray the balance of the submissions as validating their approach. That is due to a distortion: in reality, the economic majority wants reform, but it failed to make this clear.

It's too late to orchestrate more (and better) pro-reform submissions, but it would make a huge difference now if some major players could officially subscribe to the Max Planck Institute's stellar submission. Rallying behind that paper is the best shot the pro-reform camp has at this stage. But there is a risk of most if not all of the key players being unable to do so just due to internal rules that are unfit for a patent policy debate in the 21st century.

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