Member Article

Patents offer useful services. With them, the holder can prevent competitors from offering products using the patented technology. In addition to the rights that a patent holder has had up until now (injunction, disclosure, indemnification), now a fourth right is joining in on the action and is continuously gaining in significance. This right involves the right to inspection. It is especially important in the case of process patents and at trade shows.

In many cases, patents are not obviously and openly infringed upon, but instead the infringement takes place in production halls, laboratories and office rooms. That is what makes life sometimes so incredibly difficult for the patent holder. How is he expected to provide evidence of a patent infringement that will hold up in court if he cannot get his hands on the most important piece of evidence, the patent-infringing object itself, and then getting it before a judge? Especially in cases when the patent does not relate to a product, but instead to a process and this process is only applied in closed production halls, many lawsuits are dismissed because of “lack of evidence”.  In this kind of situation, German courts provide assistance to the patent holder. They allow a patent holder to carry out an inspection at the location where an alleged patent infringement is being carried out. If the patent holder can credibly show that a patent infringement is probable, even though the ultimate evidence may still be missing, he may submit an application to the court to have an expert be appointed to carry out an inspection at the production facilities. Should the operator of a production facility refuse the expert entry, he is even able to gain entry by force, meaning he can even force his way in with the help of the police. The expert will then let the court know what he found at the location. If he does in fact find the missing evidence, the court will inform the plaintiff accordingly. He may then file a patent infringement complaint and demand an injunction, disclosure and compensation for damages. Using the evidence obtained by means of the inspection, this kind of complaint is likely to be successful.

European Directive 2004/48/EC (also know as Enforcement Directive) obligated the Member States of the European Union to amend their national laws so as to protect and enforce industrial property rights. In doing so, they must also find ways to accommodate options available to carry out an inspection and to preserve evidence. These provisions were to be implemented by April 29, 2006. The German legislator has done so only by enacting the “Act on the improved enforcement of intellectual property rights” on April 11, 2008. However, even prior to this implementation German special courts for patent disputes have taken into consideration the requirements of the European directive when applying regulations already in place. The right to inspection in substantive law has previously been derived from Section 809 German Civil Code (BGB) and the proceedings often involved a combination of an independent pre-trial discovery and preliminary injunction proceedings. In particular, at Landgericht (Regional Court) Düsseldorf, the most important court for patent disputes in Europe, these types of inspection orders have by now become a matter of routine. From now on, inspection orders will be issued on the basis of the newly enacted law. Inspection orders are also possible in other European countries. In France, as “saisie contrefaçon”, they are comparatively easy to be obtained. If a patent holder owns a patent in both France and in Germany, he is often well advised to first obtain a “saisie contrefaçon” in France and then to initiate patent infringement proceedings in Germany.

An inspection order will not be issued based on a general request, but instead the application filed must include an accurate description of what the inspecting expert is allowed to take with him into the facilities and what he is allowed to do there. If the expert is unable to remove the enclosure of a piece of production equipment in order to be able get a good view of the inside, this is the expert’s problem or rather the problem of the patent holder who filed the application. The party opposing the application need do nothing but stand close by with folded arms and is not required to assist the expert. So as a result, if the application is to actually bring about the desired success, the applicant must list what tools the expert needs to have with him and what kind of assistants will be required on site. In order to be able to suitably formulate the application, it can be advisable to simulate an inspection in advance. Because of this, the process of reparing this kind of application is often very involved. However, the achieved effect and benefits in many cases do considerably outweigh the costs and efforts. However, the right to inspect does not only play a major role for process patents and production equipment, but also if foreign companies exhibit their products at German trade shows. If evi- dence is lacking at the beginning of a trade show and cannot be obtained easily (by means of photographs or brochures), often an inspection or even an examination of the objects being displayed is an advisable option. If the inspection order can be prepared before the trade show even begins, it can be served and executed during the trade show. The expert can begin his appraisal of the exhibits immediately. In doing so,  evidence can be obtained that a patent is in fact being infringed upon and that the infringement did take place in Germany.  Many companies are not aware of the risk that they themselves might be subjected to an inspection order. Both production facilities as well as trade show booths may be the focus of patent holders. However, no one is fully unprotected against an inspection order. There is the option of filing a so-called protective brief at the competent court, thus demonstrating why an inspection order would not be admissible, or why at least the opposing party would need to grant permission to take certain measures to protect its trade secrets. A company might, for example, file that the opposing party is allowed to cover from view screens of operating panels for manufacturing machines. What might also be filed is that the expert would need to observe certain safety regulations and/or would have to wear certain kinds of clothing in clean rooms. This way, a company can at least prevent that undesirable side evidence is found or that the production operation is disrupted. At least as important as submitting a protective brief is to have the company’s own employees prepared in the case of any inspection order. Once an inspection order has been served, many staff members simply do not know how to respond. Often, they react by refusing entry or by becoming aggressive and in doing so escalate the situation, which is not wise. What happens just as frequently is that employees are quick to provide assistance and naively provide the expert with too much information. If employees are confronted with an inspection order unprepared, rumors could be started. Some employees might even begin wondering whether their own company is doing anything illegal.  A brief employee training session can be effective as a means to counteract any unwanted reactions. If an inspection order were then issued, employees are prepared to react professionally and the expert will receive only the information that he in fact has a right to receive.