IP-Com extends its patent reach towards HTC in Germany

In our blog: “Do Not Blame Patent Trolls” of February 2, we touched upon a new player in the patent arena in Europe, IP-Com in Germany. Since then the debate has heated up whether NPEs (Non Practicing Entities) have reached Europe. They did (actually a while ago). In a Dow Jones Newswire, hot from the press, Stuart Weinberg reports on the background of the patents IP-Com bought from Bosch to subsequently assert those against Nokia in a German court.

Just very recently HTC, a major Taiwanese player on the electronics market in Europe became the next target of Europe’s latest addition to the family of NPEs, IP-Com, attacking HTC’s mobile communications handhelds. IP-Com (from Munich) obtained from the Frankfurt court a preliminary injunction (“Einstweilige Verfügung”) against HTC. This is an ex parte court order obtained without hearing HTC. Next week HTC will get its chance in the District Court (Landesgericht) Frankfurt opposing this injunction.

It’s a déjà vu. In our blog “Sisvel brings Patent Wild West into Germany” we commented about previous tactics another NPE used in getting SanDisk on their knees. IP-Com opts for the a more common approach, using the possibility to obtain a preliminary injunction. Germany used to be one of the few countries where an ex parte injunction, even in complex patent cases, could be obtained. No longer so. Since the enactment in most EU laws of the European Directive 2004/48 of 30 April 2004 on Enforcement of Intellectual Property Rights[1], every EU country has the possibility to obtain such ex parte injunctions. The idea behind is that those injunctions were needed to fight against counterfeit and would commonly be used against imports of counterfeit consumer goods, not in patent disputes. The reason being that patent cases are usually about either defending market share or obtaining license fees from an unwilling party. In the former case an injunction is a possibility. In the latter case this is rare, mostly granted only when there is a serious risk that the alleged infringer can’t pay any royalty or damage the patent holder may occur once the injunction is being upheld. In this respect the comment of Ray Niro in the Dow Jones newswire -("Germany may actually have a more enlightened view of the need for injunctive relief when patents are being violated than we do”) is mostly misconceived.

** Only a few courts in Germany tend to allow preliminary injunctions more easily then others. These German “rocket docket” courts are not the ones that do the bulk of the patent cases (being concentrated in Hamburg, Düsseldorf and München)

** As a flip side, these courts do that because they have provide a fast remedy against any such ex parte injunctions as the alleged infringer and “victim” of the injunction can ask the court to stay the injunction pending a hearing they request where their side of the story can be heard. This happens fairly quickly after the injunction is being given. Only then the court hears the full story by both parties and can either upheld or lift the injunction.

** Ex parte injunctions are allowed in any European jurisdiction after the Enforcement Directive. However, UK, France and Netherlands are very difficult to get a preliminary injunction in somewhat complex patent cases. Netherlands’ courts still are very reluctant to provide those types of preliminary injunctions as they have other fast alternatives like the well known “kort geding” (where even in patent cases a preliminary injunction can be given in 6-8 weeks). Ex parte injunctions in patent cases have not been granted, as far as we know, in The Netherlands, nor in any other EU country.

So any suggestion that Germany is a better place for NPE to litigate can not be based upon a tactical advantage of a preliminary injunction. So why would NPEs choose Germany? Firstly because unlike UK patent judges, German courts are generally more friendly on EP patents that come out of the EPO. Germany as the only EU country also has the system of bifurcation (validity and infringement are being dealt with by different courts in Germany), all of which helps the NPE as a patent owner.

[1] See “Summary of the Implementation of Directive 2004/48 on the Enforcement of IPRs in EU member States as per October 2006”) on the right side of the ipeg blog, under “Patent, Innovation and R&D documentation”