• Damages for Groundless Threats – Think before you write!

    Section 70 of the UK Patents Act provides for relief in certain circumstances against unjustified threats of action for patent infringement. The German Patents Act contains no such provision, but relief for groundless threats (unjustified warning letters) can be derived from the general provisions of the German Civil Code. It has been established practice that unjustified warnings are considered an “interference with the business” of the recipient, and liability arises for damages suffered as a result. Recently, this practice was put in question, and the German Supreme Court BGH referred the matter to its Grand Senate which has now handed down its decision, confirming and restating the practice.

     

    Why send a warning letter in Germany?

    Although a warning letter is not a prerequisite for initiating court proceedings in respect of patent infringement, it is nonetheless advisable. This is because, in the rare case where the defendant accepts the charges against him, the claimant (usually the proprietor) has to bear all costs of the court proceedings. On the other hand, where a justified warning is given before litigation, the patentee can claim back any expenses incurred in connection with the warning because the infringer is considered to “benefit” from the warning letter by having the chance to avoid finding himself at the receiving end of a court action.

     

    The BGH decision

    On a 2004 referral from the German Supreme Court ( Case I ZR 98/02, [2004] GRUR 958), the Grand Senate of the BGH has now confirmed German established practice and ruled that recipients of unjustified warning letters are indeed entitled to damages ([2005] GRUR, 882). In doing so, it rejected arguments that awarding damages against unjustified warning letters had the effect of restricted IP owners in enforcing their rights. Although the case in question related to a trade mark, the BGH indicated that the decision extended to other IP rights.

     

    Comment

    It is somewhat ironic that the “common law” Britain benefits from a statutory codification of threats law, whereas “civil law” Germany continues to rely on case law. Nevertheless, the BGH has now clarified the status quo. The decision confirms that, in Germany as in the UK, the onus is on the patent owner to carefully consider the strength of a case before threatening court action.