In principle, patent infringements in the patent-protected home country create liability only for those who offer or supply infringing products to the domestic territory. Particularly in the case of automotive suppliers, however, there are invariably constellations in which an act taking place abroad affects the domestic patent infringement. The Higher Regional Court Karlsruhe recently clarified the situation.
Patent liability of foreign suppliers – tyre repair set
In the automobile industry, supply chains with international aspects are on the daily agenda. If the end-product infringes the patent of a third-party at home, the question of whether and to what extent a supplier in the supply chain can be held liable for the infringement is regularly raised. Is the supplier based abroad and conducts its business exclusively there; he can feel secure with respect to the territorial scope of the patents against claims of patent infringement to a large extent. Pursuant to a judgment of the Higher Regional Court Karlsruhe (Az.: 6 U 7/148), the foreign supplier, who has a patent infringement suit brought against him due to his supply to another foreign purchaser, is only liable if he has knowledge that the purchaser intends to supply (directly or indirectly) the patented objects nationally. If this is the case, the foreign infringer must recall the infringing goods also from the national territory (Sec 140a para 3 sentence 1 German Patent Act).
The Japanese Claimant and holder of the European patent 1 291 158 B2 sought an injunction, accounting, destruction and recall/removal of the infringing goods from the distribution channels against the Respondent for alleged patent infringement and requested the determination of the liability for damages to be paid by Respondent. The disputed patent concerned a sealing system for inflatable objects, tires in particular. The Respondent, based in Italy, distributes tire-repairing sets, which are covered by the disputed patent; the Respondent also partly supplies to Germany. On appeal, the Claimant expanded its claim, such that it is now also targeting purely foreign deliveries (i.e. limited to Italian territory). The Higher Regional Court Karlsruhe unanimously upheld the judgment rendered by the District Court Mannheim in the previous instance, as far as it regarded direct shipments to Germany as a patent infringement. Regarding the deliveries abroad the Higher Regional Court dismissed the claim.
According to the opinion of the Higher Regional Court Karlsruhe, the foreign supplier is liable only if he has knowledge that the purchaser, who is also based abroad, intends to supply the patented objects to Germany. This knowledge does not necessarily follow that the foreign purchaser (Fiat in this case) is renowned for supplying his vehicles worldwide. Furthermore, a German product description on the disputed repair-set to the vehicles also did not justify a sufficient indication.
With reference to the jurisprudence of the Federal Supreme Court (FSC GRUR 2012, 621 para. 35 – OSCAR; FSC GRUR 2015, 467 juris-para. 26, 30 – audio signal coding), activities abroad can only justify claims relying on national protective rights (including a German member of a European patent family) if a sufficient economic connection to the local territory can be demonstrated. This is answered in the positive if the acts abroad not only have reflexive national effects, but also aim to facilitate concrete use in inland. This requires the foreign supplier sued for patent infringement to have knowledge that the purchaser based abroad intends to supply the patented objects nationally. Liability of the supplier is only accepted, if he supplies the patented goods while being aware of the country of destination and thus knowingly and wilfully contributes to the inland distribution. The Higher Regional Court Karlsruhe affirmed the opinion of the Federal Supreme Court. If one allows condition intent (“suspicion”) to be sufficient for the finding of liability of the foreign supplier, this leads to an excessive expansion of the domestic patent protection. The supplier would then be exposed to overwhelming liability risks and be subject to unreasonable investigation duties.
In the case at hand, the Higher Regional Court Karlsruhe was of the opinion that the Claimant has failed to produce sufficient indications that would suggest a corresponding knowledge of the Respondent. With respect to the optional equipment such as the disputed repair-set, there could be differentiation between individual countries. Therefore, knowledge of the Respondent here could not be imposed. The supply of motor vehicles to Germany alone does not lead to sufficient knowledge of further distribution in Germany. Even the German user manuals on the repair-set did not change this.
In relation to patent infringing direct supplies to Germany, the Senate further debated the issue of whether the foreign supplier is obligated to recall the goods from the inland. Some hold the opinion that a requirement for a recall abroad, i.e. the registered place of business of the infringer, is unjustified as there exists no destruction obligation. The Higher Regional Court Karlsruhe affirmed, however, that there is a prevailing opinion (see also Kühnen, Handbook of Patent Infringement, 8. ed. 2016, chap. D, para. 570), whereby the recall requirement does not only serve the preparation for the destruction. It is rather, in accordance with the Senate’s opinion, a claim for removal, which should eliminate the fault status caused by the patent infringement and impede the “perpetuation of the infringement in the national distribution chain”. The recall and removal claim is not merely “auxiliary” to the destruction claim; rather, both remedial measures (i.e. recall and destruction) exist independent of one another.
The decision of the Higher Regional Court Karlsruhe clarifies that with respect to cross-border matters, there are generally high standards for the intent requirement when dealing with a potential patent infringement based on further supply to Germany. Conditional intent within the meaning of a “suspicion and thus determination” of the further supply is insufficient in this case. The foreign supplier must have knowledge of the further supply to Germany. The Claimant thus bears a high burden of proof.
The judgment also affirms the leading opinion, whereby the foreign supplier is obliged to recall the patent infringing products delivered to Germany. This had been a contentious issue due to an opposing 2013 decision of the Higher Regional Court Düsseldorf (Az.: I-2 U 98/11). The recall does not, in this case, serve as preparation for the destruction claim as the latter only comes into question for goods, which are in domestic possession or under the ownership of the suppliers at the time of the decision. According to the reasons for judgment, the recall is rather a remedy for the fault status caused by the patent infringement. The further stages of the inland supply chain should be corrected. The unpleasant duty of the infringer to demand the return of the goods from his purchaser thus also applies to foreign suppliers.
The appeal is pending with the Federal Supreme Court under the file number X ZR 120/15.