German Federal Supreme Court develops its case law on damages for patent infringement
Managing IP is part of the Delinian Group, Delinian Limited, 4 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2024

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement
Sponsored content

German Federal Supreme Court develops its case law on damages for patent infringement


Matthias Meyer and Daniel Misch of Bird & Bird consider whether a ruling leaves certain companies facing increased exposure to damages through activities that are causally linked to patent infringement acts

In a judgment on November 14 2023 (docket no. X ZR 30/21), the German Federal Supreme Court (FSC) clarified its case law on the calculation of damages for patent infringement using the so-called infringer's profit method.

According to this method of calculation, the infringer must surrender the profits made by infringing a patent. In the underlying case, the defendant was found to have infringed a patent relating to an upholstery machine.

The defendant manufactured and marketed such machines, including through leasing, and offered paper for use in its machines. The FSC ruled that the infringer's profits to be surrendered were not limited to the proceeds from the sale or lease of the machines – i.e., the infringing acts themselves – they also include profits from ‘ancillary’ activities that do not constitute acts of use but are causally linked to acts of patent infringement and have a sufficient connection to the infringing product.

The FSC held that profits from the supply of consumables (i.e., paper) and from the conclusion of leasing and maintenance contracts for the upholstery machines could also be included in the calculation of the infringer's profit.

Furthermore, the FSC emphasised that this even applies to the supply of consumables and the conclusion of leasing and maintenance contracts made after the expiry of the patent, provided they relate to sales or leases of machines that took place during the term of the patent.

Implications of the ruling

The judgment relates to a specific case with its underlying facts. It therefore remains to be seen to what extent the FSC's reasoning can be generalised and applied to other cases. However, on the face of it, the FSC judgment seems to imply an extension of liability for damages, at least for certain types of business models. Companies offering not just a single product but an entire ecosystem should be aware that their exposure to damages may increase as a result of this new case law.

It is possible that not only sales of the infringing product but also sales of related consumables, peripherals, and ancillary services may be taken into account in the calculation of damages. In addition, liability for damages in relation to such ancillary sales may not end with the expiry of the patent but may continue for the life of the infringing product.

However, it remains to be seen whether the case law will actually lead to an extension of liability in individual cases. First, a sufficient causal link between the patent infringement and any ancillary transactions will have to be established on the basis of the specific circumstances.

Even if such a causal link exists, this does not say anything about the amount of damages to be paid. According to German case law, the infringer's profit has to be surrendered only to the extent that it is causally based on the infringement.

This ‘causality share’ is usually only a fraction of the sales price of a device, since the customer's decision to buy a device usually depends on many factors other than the patented technology, such as product design, quality, and brand. The same must apply to profits from ancillary business. Against this background, the factors determining the share of causation will have to be assessed on a case-by-case basis, and the damages awarded may ultimately not be as high as the patentee might have hoped.

more from across site and ros bottom lb

More from across our site

Counsel reveal how a proposal to create separate briefings for discretionary denials at the USPTO could affect their PTAB strategies
The UK Supreme Court rejected the firm’s appeal against an earlier ruling because it did not raise an arguable point of law
Loes van den Winkel, attorney at Arnold & Siedsma, explains why clients' enthusiasm is contagious and why her job does not mean managing fashion models
Allen & Gledhill partner Jia Yi Toh shares her experience of representing the winning team in the first-ever case filed under Singapore’s new fast-track IP dispute resolution system
In-house lawyers reveal how they balance cost, quality, and other criteria to get the most from their relationships with external counsel
Dario Pietrantonio of Robic discusses growth opportunities for the firm and shares insights from his journey to managing director
We provide a rundown of Managing IP’s news and analysis from the week, and review what’s been happening elsewhere in IP
Law firms that pay close attention to their client relationships are more likely to win repeat work, according to a survey of nearly 29,000 in-house counsel
The EMEA research period is open until May 31
Practitioners analyse a survey on how law firms prove value to their clients and reflect on why the concept can be hard to pin down
Gift this article