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Wednesday, January 24, 2007

German Government Passes "Bill for Improving the Enforcement of Intellectual Property Rights".

my earlier posting I had reported that in the German Ministry of Justice the draughtsmen had completed their work on a first Draft "Bill for Improving the Enforcement of Intellectual Property Rights" for casting the

EU Directive 2004/48/EG titled "Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights" into national German law. The new Bill would, if passed by the German parliament, affect the enforcement of German Patents, Utility Models, Trade Marks, Designs as well as Copyrights.

Today the

Draft Bill [in German only, sorry] has been

approved by the German Government [in German only, sorry]. It will appear in Parliament soon.

Up to now German civil law has very little, if any, provisions to be used by the plaintiff for exploring yet unknown facts in the sphere of the defandant. The new bill provides that if there is in all likelihood a case of patent infringement, the infringer may be ordered to hand over documents or other objects to the Court and/or to the injured party or may allow the injured party to directly or indirectly inspect premises, technical processes and the like. This appears to be like a change of paradigm in German IP law.

Some problematic amendmends allowing the exploitation of telecommunication traffic data even in, inter alia, patent infringement cases are still included in the Draft Bill:

"[...] § 140b

(1) Wer entgegen den §§ 9 bis 13 eine patentierte Erfindung benutzt, kann von dem Verletzten auf unverzügliche Auskunft über die Herkunft und den Vertriebsweg der benutzen Erzeugnisse in Anspruch genommen werden.

[...]

(9) Kann die Auskunft nur unter Verwendung von Verkehrsdaten (§ 3 Nr. 30 des Telekommunikationsgesetzes) erteilt werden, ist für ihre Erteilung eine vorherige richterliche Anordnung über die Zulässigkeit der Verwendung der Verkehrsdaten erforderlich, die von dem Verletzten zu beantragen ist. [...]"

I would like to offer a translation as follows:

"[...] Sect. 140b

(1) Any person who uses a patented invention in contravention of Sections 9 to 13 may be required by the injured party to give information as to the origin and distribution channels of the product used, without delay.

[...]

(9) If the information can be obtained only by utilisation of traffic data (Sect. 3 No. 30 German Telecommunications Act) an advance order to be requested by the injured party and issued by a judge is required for handing over the information. [...]"

In the effect, this means that, in the context of proceedings concerning patent infringement and in response to a justified and proportionate request of the claimant, a competent judge may order that information on the origin and distribution networks of the goods or services which infringe the patent be provided by means of analysing telecommunication traffic data. Similar provisions are included in the Bill covering Utility Model, Trade Mark, and Registered design infringement cases.

There appears to be no precedent for this telecommunications clause in the EU Directive 2004/48/EC to be cast into national German Law. It seems to be a national political decision of the German Government to go that step further.

The reasons given in the appendix to the Draft Bill relate to the possible utilisation of the Internet for acts of patent infringement:

"[...] Absatz 9 betrifft den Sonderfall, dass dem Dritten die Erteilung der begehrten Auskunft nur unter Verwendung von Verkehrsdaten im Sinne des § 3 Nr. 30 des Telekommunikationsgesetzes (TKG) möglich ist. Dieser Fall ist bei Rechtsverletzungen im Internet denkbar, wenn Daten mit Hilfe von dynamischen IP (internet protocol)-Adressen, vor allem über so genannte FTP (file transfer protocol)-Server, im Netz ausgetauscht werden. Potenzielle Rechtsverletzer können in solchen Fällen meist nicht unmittelbar über Bestandsdaten ermittelt werden, sondern nur mit Hilfe von Verkehrsdaten. Verkehrsdaten enthalten nähere Umstände der Telekommunikation - insbesondere zeitliche Umstände einer bestimmten Datenverbindung und deren Zuordnung zu einem Telefonanschluss - und unterliegen dem einfachgesetzlich (§ 88 TKG) und verfassungsrechtlich (Art. 10 Abs. 1 GG) geschützten Fernmeldegeheimnis.

Die Möglichkeit, im Internet weitgehend anonym zu kommunizieren, wird in bestimmten Fallgruppen häufig für die Verletzung von Rechten des geistigen Eigentums genutzt. Dies gilt beispielsweise für Tauschbörsen, bei denen in großem Umfang Urheberrechtsverletzungen stattfinden. Hier besteht ein besonderes Interesse an einer Auskunft, ohne die der Verletzer nicht ermittelt werden kann.

Im Hinblick auf die besondere Schutzwürdigkeit von Verkehrsdaten und um Internet-Provider und Telekommunikationsunternehmen von der Prüfung zu entlasten, ob eine offensichtliche Patentrechtsverletzung vorliegt, erscheint es sachgerecht, den Auskunftsanspruch unter einen Richtervorbehalt zu stellen, wie dies in Absatz 9 vorgesehen ist. Die gerichtliche Anordnung setzt einen entsprechenden Antrag des Verletzten voraus. Das Gericht hat das Vorliegen der Auskunftsvoraussetzungen zu prüfen. Hierzu bedarf es allerdings keines gegen den Dritten gerichteten kontradiktorischen Auskunftsverfahrens, sondern es genügt eine gerichtliche Entscheidung, welche die Verwendung von Verkehrsdaten zur Erteilung der Auskunft zulässt. [...]"

I would like to offer my own translation as follows:

"[...] Para. 9 relates to the special case wherein the third party effectively can obtain the desired information only by utilisation of traffic data in the sense of Sect. 3 No. 30 of German Telecommunications Act (TKG). This case is conceivable in conjunction with infringements committed on the Internet if data exchange is made in the network by using dynamic IP addresses, in particular via so-called FTP servers (File Transfer Protocol). In such cases, potential infringers can, in most cases, not be investigated by utilisation of static data but only by utilisation of traffic data. Traffic data comprise particular circumstances of the telecommunication - in particular date and time of a particular data connection and the correlation thereof to a subscriber telephone line - and are subject to the secrecy of telecommunications as protected by simple law (Sect. 88 of German Telecommunications Act) as well as by the constitution (Article 10 Para. 1 of the German Basic Law).

The option to communicate virtually anonymously over the Internet is used in certain groups of cases for committing acts of infringement of intellectual property rights. This holds for example with regard to file sharing software where large-scale Copyright infringements are occurring. Here there is a particular interest to obtain information whithout which the infringer cannot be investigated.

In view of the specific need to protect traffic data and in order to disburden Internet providers and telecommunication companies from the examination as to whether or not an act of obvious patent infringement is present, it appears to be appropriate to put the right to information under the reservation of approval to be given by a judge as done in para. 9. The court order requires a related request of the injured party. The Court has to examine the prerequisites for giving the information. To this end, contradictory proceedings against the third party for obtaining information are not required but a Court decision allowing the utilisation of traffic data for providing information is sufficient. [...]"

As it is also the case in the context of

criminal sanctions against patent infringers as recently mooted on EU level, patent law appears not to be the right turf for allowing deep cuts into civil rights of any third parties because of the inherent enormous complexity thereof. Drastic measures might, under some circumstances, be appropriate to combat 1:1 counterfeiting piracy where infringing goods can easily be identified also with no or little expertise. But patent law is different. The German Draft Bill stresses that the enforcement of this "Right of Information" shall be limited to cases where providing such information is not disproportionate in the individual case - whatever that might mean in practice under the given circumstances.

The present Bill stipulates that the Court responsible for ordering to hand out telecommunication data shall exclusively be the regional court (Landgericht) of that area where the third party obliged to give information (i.e. the Internet user, not the telecommunications company) has its domicile, is seated, or has a place of business. Let us assume that plaintiff argues that thousands of Internet users scattered all across Germany have used some service over the Internet which allegedly infringes some patent claim. If plaintiff decides to do some power play, judges in the regional Courts of all affected regional court districts would be confronted with requests to hand out telecommunication traffic data in accordance with the provisions of this bill. They never have seen that matter before, and they have to go through maybe thousands of pages full of complicated technical details. Hence, such decisions are not dealt with in the context of the main infringement proceedings but rather remotely in an accessory stlyle, perhaps much like issuing a search warrant.

How on earth could an unfortunate judge sitting behind his desk in a Court somewhere in Germany properly determine on any reasonable time scale whether or not a complex software application say, for example, exchanging over the Internet voice-over-ip data in some intertwined Skype-like style with a multitude of other computers partially located in Germany, partially located abroad, might infringe a particular German patent with an independent claim running over one and a half pages if he is asked to allow a large-scale confiscation of Internet traffic data of German Internet users from their respective Internet access providers?

And, of course, the provision of an analogous clause in the context of German Utility Model law appears to be a bad mishap. Does German Government really intend to allow exploitation of telecommunication traffic data on the basis of a non-examined intellectual property right? The judge in charge with the request would also have to assess the validity of the Utility Model in question.

Maybe such judge would perceive two options as to how to get rid of this problem: The first would be to adopt a practice of virtually blind-signing any request presented by a would-be victim of patent infringement as it is today's general practice well beyond the field of IP law in the crime-related circuits of the courts when the public prosecutor asks a judge to sign a search warrant. The second would be to turn away such requests giving a reason that an act of patent infringement could not be properly established.

Anyway, the language of the reasons as given by the Government are recruited on the field of Copyright piracy (where they are heavily debated) and do not give any confidence that the drafters of the bill actually have understood the Internet. Why should be a data transmission undertaken by means of FTP be more dangerous or illicit than, say, on the basis of HTTP? By the way, in fact most of the legal problems with file sharing software are somehow related to the utilisation of

peer-to-peer protocols, neither to

FTP or to

HTTP.

Hence, it appears not to be clearly excluded that the Draft Bill would, inter alia, allow traffic data of ordinary Internet users be accessed not only for copyright enforcement purposes (already fiercely under dispute) but also for patent and trade mark enforcement cases, provided a competent court issues the required warrant. Perhaps such undertaking in the context of patent, utility model, and maybe even trade mark law should be seen as somehow overbroad and, hence, inappropriate.

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[UPDATE 2006-02-05] The Draft Bill has eventually surfaced in the Parliamentary stage as Printed Matter of the Second Chamber of the German Parliament ("Bundesratsdrucksache")

No. 64/07.

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