Ensuring your product is protected is a clear must when it comes to ensuring the development of your business runs smoothly.
On this topic, Joachim Gerstein explains: “Germany has a strong patent court system and plenty of innovative companies and so it is advisable to work seriously with IP. In particular, SMEs should be aware of the risk of weakening their position compared to the big players when ignoring investments in IP.”
Below, he discusses the role Germany plays in patent disputes, as well as changes we should keep an eye on in 2018.
From your experience, what is the most difficult aspect for suppliers involved in patent infringement?
The supplier is faced with claims from the patent owner on the one side and from his customer on the other side. A careful review of the contractual obligations towards the customer is advisable, since liability fails often with invalid standard business terms, or in case of SEP, due to the lack of a guarantee clause. The difficulty for the supplier is the balancing act between assisting the customer in the patent dispute and discussing the liability with the customer without damaging the trustful business relationship.
Can you think of anything which may help ease this difficulty?
Care should be taken when negotiating development or production agreements in order to clearly specify the duties and exemptions of liability of patent infringement. In most cases standard business terms are overstressed by the customer to attempt shifting liability for the royalty rates for SEP to the supplier, without the chance for adapting the market price. Royalty rates and cost risks should be considered in the early price negotiations or clearly transferred to the burden of the customer.
What role does Germany play in such patent disputes?
The district courts of Düsseldorf and Mannheim are word-class and well-esteemed for handling patent disputes, in particular related to standards. After the general guidance by the European Court of Justice (ECJ) in the Huawei vs. ZTE case C-170/13, the German courts are on-going to provide more detailed rulings related to licensing of SEP. The European Commission (EC) just published additional guidance. It is exciting to see how relevant the EC guidelines are for the German courts in the next future.
How does this affect the Internet of Things (IoT)?
In particular, SMEs and suppliers should be more sensitive when implementing communication chipsets in their products. IoT is the new battlefield for patent disputes and excessive demands for royalties.
Are there changes in Germany to which you are keeping an eye on for 2018?
Design protection provides a cheap and sharp sword against competitors to protect investment in products. However, the scope of technical features in a design is not clearly specified yet. The higher district court Düsseldorf brought several cases before the ECJ (e.g. case DOCERAM C-395/16) which provide guidelines which are of interest.
Anyhow, design should be stronger considered in the early stage of the technical development to provide strong protection in addition to patents for the technical ideas behind the product.
Joachim Gerstein, LL.M.
- Patent Attorney -
Gramm, Lins & Partner
Patent- und Rechtsanwälte PartGmbB
Freundallee 13a
30173 Hannover
Germany
Tel.: 0511-51 51 20-0
www.grammpatent.de
Joachim Gerstein, LL.M. is patent attorney and managing partner of the IP law firm GRAMM, LINS & PARTNER located in Hannover and Braunschweig, Germany, with roots of the law firm reach back to the year 1896. He is focused on patent prosecution and litigation in the field of electronics and standard essential patents (SEP) and design litigation.
Gramm, Lins & Partner specialises in providing comprehensive IP law consultation services for mid-sized businesses and international corporations. Their attorneys provide companies with a range of consultation services and not only take legal questions into account but also the economic situations and special interests of individual clients.
