The German legislator is currently in the act of amending the law on intellectual property. The reform will particularly concern the Patent Act and the Law on Employees´ Inventions.

German patent courts are well-known for their high-quality decisions. However, proceedings for a declaration of nullity of a patent tend to be very time consuming. Appeal proceedings in nullity actions take up to four years. This is partly due to the fact that an infringement action may be suspended until the nullity action is concluded. The alleged infringer may take advantage of the long duration of judicial proceedings, which this link usually causes.

The Federal Government has drafted an amendment act¹ essentially intended to speed up patent invalidity suits. Additionally, there are some minor changes in the Law on Trademarks and in other laws protecting intellectual property. The government also aims at fostering electronically filed patent applications as opposed to conventional applications. The draft suggests a reduction of fees for electronically filed applications from 50 € to 40 €. A newly introduced fee of 20 € per patent claim exceeding 10 claims is expected to reduce the number of patent claims per application. For conventional applications, fees will be 60 € and 30 €, respectively.

According to the draft amendment, judges at the Federal Patent Court shall give a judicial indication to the parties involved in nullity actions in order to accelerate proceedings. They can set a time limit for completion of the parties´ submissions. Subsequently, new please as well as amendments of the patent in question shall be excluded − at least if they would cause an adjournment of the oral hearing. The party concerned may lay forward an adequate excuse for the delay.

In appeal proceedings to nullity actions the Federal Court of Justice currently has discretion to take all measures necessary for the investigation of the case. Neither the factual statements nor the offers of proof of the parties bind the court. However, the draft amendment suggests a limitation of appeal proceedings to the assessment of infringement of federal law.

Because of the judicial indication proposed in the draft, nullity actions might experience not only speedier, but also more focused proceedings before the Federal Patent Court, where technical judges are involved. Against this backdrop, the government argues that a mere legal assessment in appeal should be sufficient. The Federal Court of Justice supports this limitation. In the case "Bodenseitige Vereinzelungsanlage"² the court held that the court of first instance´s evaluation of the claim was subject to the Federal Court´s legal assessment. However, it will be a challenge to present all aspects of prior art right from the beginning. This issue has caused a political debate on the appropriateness of the proposal. However, the lawmaker will most likely adopt it.

German patent law stipulates that any person may file a further suit after his initial action against the same defendant on account of the same or a similar act with respect to another patent only if he was not in a position to claim infringement of that patent in the previous action³. This regulation is to protect smaller competitors of rightholders from obstruction through abusive sets of suits. The government is of the opinion that there is no such imminent danger and suggests deleting the provision without substitution.

The political debate on the amendment act suggests that the parliament will not support this proposal.

It is believed that roughly 80 % of all inventions for which a patent is filed and granted are service inventions. For more than a decade, industry has been claiming that the Law on Employees´ Invention causes unnecessary bureaucracy and has an anti−competitive effect. Furthermore, strategic portfolio management requires the employer´s freedom to decide whether to apply for a patent. However, currently the employer is obliged (and entitled) to apply for domestic industrial property protection for any service invention reported to him.

The present attempt to overcome political obstacles to the amendment of the Law of Employees´ Inventions covers those issues that all stakeholders are expected to feel rather easy about.

So far, the employee´s report of the invention as well as the employer´s claim to a service invention among others needs to be in writing. The draft amendment suggests text format to be sufficient for all communications referred to in the Law of Employees´ Inventions. Text format means a declaration in a document with a clear ending, which indicates the person who has issued the declaration. Relevant types of electronic communication, such as e-mail and computer-generated fax comply with these requirements.

An employer may claim a service invention by means of unlimited or limited claim. Once the employee receives the declaration of a limited claim, the employer acquires a non-exclusive right to use the invention. In practice, the option of limited claims has proved a failure, for the employer is bound to nondisclosure. At the same time, the employee loses part of his right. He retains only a torso. In the new law, there shall be unlimited claims only.

The employer obtains the rights in the service invention by claiming it. Such claim is to be made in writing − so far − and no later than four months from the receipt of a report of the invention. The employer is obliged thereafter to apply for domestic industrial property protection. According to the draft amendment, the assumption of a claim shall substitute the express claim. Only if the employer explicitly releases the invention it shall become free.

This mechanism is meant to safeguard the employee´s right to reasonable compensation. The government aims at providing legal security for service inventions. Nowadays, many tied inventions end up unprotected because of vice of form or missing of a term. The invention then remains assigned to the employee, who often lacks financial resources to file for patent protection.

Many companies apply their own incentive schemes for legal security and for less bureaucracy. They usually include an offer of a lump sum for a waiver of the obligation to apply for a patent. Many of these programs will require review after the amendment law has come into force.

With the exception of the deletion of section 145 of the Patent Act the draft amendment will most probably pass the parliament on May 28, 2009, thus enter into force late summer of 2009. The amendment of the Law on Employees´ Inventions will be applicable to inventions as well as suggestions for technical improvement reported after the amendment act has entered into force.

Winter, Brandl et al., contact person: Dr. Jürgen Kaiser