Is your jurisdiction party to the Paris Convention for the Protection of Industrial Property? The Patent Cooperation Treaty (PCT)? The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs)?
Germany is a party to all these treaties.
Can the licensee be contractually prohibited from contesting the validity of a foreign licensor’s intellectual property rights or registrations in your jurisdiction?
No-challenge clauses in licence agreements concerning patents and utility models are in general considered to be a violation of EU antitrust law and therefore void (article 5(1)(b) of the Technology Transfer Block Exemption (TTBER) Regulation (EU) No. 316/2014)). The requirement is, inter alia, that the agreement is liable to affect trade among the member states of the European Union. Exceptions exist where the licence is granted royalty-free or where the licensed technology is outdated (ECJ, Case C-65/86).
After the amendments to the TTBER and the Commission Notice (TTBER Guidelines) in May 2014, a stricter approach has been taken on no-challenge clauses. First, although no-challenge clauses in the context of a settlement or non-assertion agreement are generally considered to be allowed under antitrust law even after the amendments (Commission Notice (TTBER Guidelines) 2014/C 89/03 at 242), the amended TTBER Guidelines stipulate that they may be prohibited under article 101(1) of the Treaty on the Functioning of the European Union under specific circumstances with mentioning, as one of those circumstances, the case where an intellectual property right was granted following the provision of incorrect or misleading information (TTBER Guidelines at 243). No-contest clauses in trademark or design licence agreements are judged according to the same criteria.
Second, although, in the case of an exclusive licence, the licensor may continue to reserve the right to terminate the licence agreement, in the case of a challenge of the licensed intellectual property right by the licensee, regarding the case of a non-exclusive licence, whether the reservation of such right in the case of a challenge is considered to be a violation of EU antitrust law has to be decided on a case-by-case basis (article 5(1)(b) of the TTBER). The same applies to a clause of automatic termination in the case of a challenge by the licensee.
Invalidity or expiry
What is the effect of the invalidity or expiry of registration of an intellectual property right on a related licence agreement in your jurisdiction? If the licence remains in effect, can royalties continue to be levied? If the licence does not remain in effect, can the licensee freely compete?
The expiry or a final decision of invalidity of an intellectual property right usually leads to the expiry of a related licence agreement if there is no provision about the term of the agreement. However, the agreement may be set to run beyond the lifetime of the intellectual property right; for example, for a fixed period of time. Such a clause is common in agreements that grant a licence to know-how in addition to a licence to intellectual property rights. In the case of a plurality of licensed intellectual property rights, parties typically set the term of the agreement to the period of protection of the intellectual property right that expires last.
For patents and utility models, the European Commission considers a clause that extends the licensee’s obligation to pay royalties beyond the lifetime of the licensed intellectual property right as not being in conflict with antitrust law (TTBER Guidelines at 187). However, this issue has not yet been decided by a court. Where the licence concerns a plurality of intellectual property rights, the agreement should specify whether royalty payments are reduced accordingly if one of the intellectual property rights expires, or whether the same royalty amount is due until all intellectual property rights have expired. The rules mentioned are also applicable to trademark and design licences, whether Community rights or national rights.
In Germany, unless otherwise agreed by the parties, royalties already paid by the licensee do not have to be paid back in the case of an invalidation of the licensed intellectual property right, and outstanding payment obligations for royalties that become due prior to the invalidation have to be fulfilled.
After expiry or invalidation of the licensed intellectual property right, the licensee is free to compete unless the licence agreement comprises a non-compete obligation for a time period after the expiry or invalidation. The validity of such a non-compete obligation under antitrust law depends on the circumstances of the case; in particular, the effect it may have on the competitive situation after the expiry of the intellectual property right.
Requirements specific to foreigners
Is an original registration or evidence of use in the jurisdiction of origin, or any other requirements unique to foreigners, necessary prior to the registration of intellectual property in your jurisdiction?
Germany has no such requirements.
Can unregistered trademarks, or other intellectual property rights that are not registered, be licensed in your jurisdiction?
Unregistered trademarks, as well as all other intellectual property rights that do not require registration (eg, copyrights), can be licensed in Germany.
Are there particular requirements in your jurisdiction to take a security interest in intellectual property?
There are no specific formal requirements in Germany for taking a security interest in intellectual property. In particular, since 1 January 1999, it is not necessary to conclude the security interest in writing. It is also not necessary to register the security interest, but it is possible (and may be advisable) to do so under section 30(2) of the German Patent Act; section 29(2) of the German Trademark Act; and section 30(2) of the German Design Act.
Proceedings against third parties
Can a foreign owner or licensor of intellectual property institute proceedings against a third party for infringement in your jurisdiction without joining the licensee from your jurisdiction as a party to the proceedings? Can an intellectual property licensee in your jurisdiction institute proceedings against an infringer of the licensed intellectual property without the consent of the owner or licensor? Can the licensee be contractually prohibited from doing so?
An exclusive or sole licensee of a patent or utility model can institute proceedings against an infringer of the licensed intellectual property without the consent of the owner or licensor unless he or she has been contractually prohibited from doing so. Contrary to that, a non-exclusive licensee of a patent or utility model has no standing to sue, but the right to sue can be granted by the owner of the patent or utility model to the non-exclusive licensee. If the licensee then brings suit, the owner can no longer do so.
A licensee of a German trademark, be it a non-exclusive licensee, a sole licensee or an exclusive licensee, can institute proceedings against an infringer only with the consent of the owner (section 30(3) of the German Trademark Act). Regarding Community trademarks, a non-exclusive licensee always needs the consent of the owner, whereas an exclusive licensee has the right to bring an infringement action if the licensor, having been requested to bring the action, does not do so within a reasonable period (article 22(3) of the Community Trademark Regulation). The same rules apply for German or Community designs (section 31(3) of the German Design Act and article 32(3) of the Community Design Regulation). Since the general rule is that a licensee can act only with the consent of the owner, a sole licensee might have to be treated like a non-exclusive licensee. However, there is no case law on the rights of the sole licensee in this regard as yet.
As a rule, the owner of an intellectual property right has standing to sue. Exceptions to this rule exist where the owner has granted an exclusive licence and is not affected by the infringement, because, for example, he or she receives no running royalty fees from his or her licensee, or where the owner has granted his or her right to sue to the licensee, at least if the licensee made use of that right. If the owner has the standing to sue, he or she can institute proceedings without the licensee, even if the licensee has already instituted his or her own proceedings. Licensees may join in the action of the owner to recover their own damages. However, at least for patents, German case law acknowledges damages claims only for exclusive licensees, not for non-exclusive licensees (BGH, Case No. X ZR 48/03). As regards damages caused by trademark or design infringement, German courts have decided that a licensee (be it a non-exclusive or an exclusive licensee) cannot claim his or her own damages, but only claims of the licensor (BGH, Case No. I ZR 93/04).
Can a trademark or service mark licensee in your jurisdiction sub-license use of the mark to a third party? If so, does the right to sub-license exist statutorily or must it be granted contractually? If it exists statutorily, can the licensee validly waive its right to sub-license?
It is recognised that an exclusive licensee may sub-license the use of the trademark to third parties, unless the right to sub-license has been excluded in the licence agreement. In the case of a non-exclusive licence, the licensee is not entitled to grant sub-licences, unless such right was explicitly granted in the licence agreement.
Jointly owned intellectual property
If intellectual property in your jurisdiction is jointly owned, is each co-owner free to deal with that intellectual property as it wishes without the consent of the other co-owners? Are co-owners of intellectual property rights able to change this position in a contract?
The provisions of sections 741 to 758 of the German Civil Code apply to joint ownership of patents and trademarks. In contrast, joint ownership of copyright is governed by the special provision of section 8 of the German Copyright Act.
Each of the joint patent or trademark owners has the right to use the subject protected by the intellectual property (section 743(2) of the German Civil Code). If one of the co-owners is incapable of exploiting the patent or trademark, he or she is at least entitled to compensation for the use by the other co-owners. However, compensation is due only for uses that occur after the date on which the non-using co-owner has demanded compensation (German Federal Court of Justice, Case No. X ZR 152/03). Compensation may be calculated as reasonable royalties. Similarly, if one of the co-owners uses the patent or trademark to an extent that exceeds its share, the other co-owners can demand compensation. Co-owners of copyrights (co-authors) need to reach consent on the publication, exploitation or alteration of a copyrighted work (section 8(2) of the German Copyright Act, first sentence). However, a co-author may not refuse his or her consent to publication, exploitation or alteration contrary to the principles of good faith (section 8(2) of the German Copyright Act, first sentence).
Acts that affect an intellectual property right as a whole, such as a transfer of the intellectual property right, a licence to the intellectual property right, or using the intellectual property right as a security, require consent by all co-owners (section 747 of the German Civil Code, second sentence for patents and trademarks; and section 8(2) of the German Copyright Act, for copyrights). On the other hand, each co-owner of a patent or trademark (but not of a copyright) is free to transfer his or her share to a third party (section 747 of the German Civil Code, first sentence), which will then give the third party the right to use the patent or trademark instead of the previous co-owner. A co-owner may also give a licence to a third party to use the patent or trademark in place of the co-owner, or use his or her share in the patent or trademark as security. A co-owner of a copyright may waive his or her share of the exploitation rights.
Co-owners of intellectual property rights are able to change this position in a contract. For example, they can decide that the right to use may be governed by a majority decision of the joint owners (section 8(4) of the German Copyright Act), but they cannot transfer it to a third party.
Is your jurisdiction a ‘first to file’ or ‘first to invent’ jurisdiction? Can a foreign licensor license the use of an invention subject to a patent application but in respect of which the patent has not been issued in your jurisdiction?
Germany is a ‘first to file’ jurisdiction. A licensor can grant a licence for the use of an invention even before filing a patent application, or after the filing of a patent application but before grant of the patent (section 15(2), (1) of the German Patent Act).
Scope of patent protection
Can the following be protected by patents in your jurisdiction: software; business processes or methods; living organisms?
Only technical inventions can be patented in Germany (section 1 of the German Patent Act). Consequently, software and business methods ‘as such’ are not patentable, but technical aspects of software and technical implementations of business methods can be protected by patents, provided that the technical aspects are novel and inventive.
Living organisms are not precluded from patent protection per se. However, there are a number of exclusions and restrictions. The recent amendment of section 2a of the German Patent Act decided a question that is yet to be answered on behalf of the European Patent Office (see pending cases No. G 2/13 - Broccoli II and No. G 2/12 - Tomatoes II): besides the exclusion of patentability of plant and animal varieties as well as of essentially biological processes for the production of plants or animals, plants and animals obtained exclusively via such processes are now also excluded from patentability.
Trade secrets and know-how
Is there specific legislation in your jurisdiction that governs trade secrets or know-how? If so, is there a legal definition of trade secrets or know-how? In either case, how are trade secrets and know-how treated by the courts?
There are some provisions in German legislation that govern the protection of trade secrets or know-how, which can primarily be found in the Act against Unfair Competition. These provisions apply to employees and third parties. There is no statutory definition of trade secrets. According to the notion developed by the German jurisprudence, a trade secret covers all information connected to the business that is not public knowledge, which the owner of the business seeks to keep secret for reasonable economic interests, and which according to the will of the company owner, which has expressly been made known or is recognisable, should be kept secret. Therefore, for information to qualify as a trade secret, it must fulfil four cumulative requirements:
Even though trade secrets are not regarded as intellectual property rights in Germany in the sense of a granting its holder exclusive rights, and the remedies available for intellectual property rights in the EU Enforcement Directive (2004/48/EC) do not apply to them, courts do grant injunctions and damages when information is used that was passed on in breach of trade secret law.
Does the law allow a licensor to restrict disclosure or use of trade secrets and know-how by the licensee or third parties in your jurisdiction, both during and after the term of the licence agreement? Is there any distinction to be made with respect to improvements to which the licensee may have contributed?
The licensor can restrict the disclosure and the use of trade secrets and know-how by the licensee or third parties during and after the term of the licence agreement. Liability of third parties arises only if they are also contractually related to the licensor. Otherwise, general law prohibiting the disclosure of trade or commercial secrets applies.
Secrecy obligations and use restrictions after the termination of the licence agreement are exempted from antitrust rules by article 2 of the TTBER. However, if the know-how becomes publicly known after the date of the agreement or it proves to not have been secret at the date of the agreement, any restrictions lose exemption from antitrust rules, since only secret know-how can be the object of an agreement restricting competition. According to the German antitrust authority, the lawfulness of an absolute duration of such restrictions, for example, 20 years, is questionable. Therefore, licence agreements should limit disclosure for such time as the licensed trade secret continues to exist.
After the amendments to the TTBER and the TTBER Guidelines in May 2014, any direct or indirect obligation on the licensee to grant an exclusive licence to the licensor in respect of any improvements to the licensed know-how made by the licensee, or to assign to the licensor the licensee’s rights in the improvements is not exempted from antitrust rules (article 5(1) of the TTBER). Before the amendment, the subject not exempted from antitrust rules was limited to ‘severable’ improvements. Therefore, the permissibility of restrictions regarding improvements made by the licensee may conflict with antitrust law, depending on the circumstances of the case.
What constitutes copyright in your jurisdiction and how can it be protected?
Literary, scientific and artistic works are protected via copyright, which includes, in particular:
Translations and other adaptations or modifications of a work may constitute copyrighted creations of the person having created the adaptation or modification. Collections of works, of data or of other independent elements, which, by reason of the selection or arrangement of the elements, constitute a personal intellectual creation, are also protected by copyright.
Copyright protection requires that a work is the author’s individual creation, which requires a certain level of originality. Recent decisions of both the Court of Justice of the European Union (Case C-5/08) and the German Federal Court of Justice (Case No. I ZR 143/12) show a tendency towards a lowering of this threshold and a more equal threshold for different work categories.
Works that can be subject to copyright are protected without registration; the mere act of creation establishes the copyright.
Law stated date
Give the date on which the information above is accurate.
17 January 2021
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