Until recently, discovery was virtually unheard of in German litigation, but recent developments have opened possibilities.
by Reinhardt Schuster and Ikze Cho
Before the recent reform of the German Procedural Code (Zivilprozessordnung - ZPO) taking effect as of January 2002, it was nearly impossible to get from a German civil court an order for the inspection of documents of the opposing party. This was the case even if a certain probability was given that such documents would help with the factual clarification of the case. Following a German legal tradition as to the submission of evidence, each party presents all facts that are necessary to support its case. It was the court's duty then to decide judicially on the basis of the facts submitted.
Metaphorically speaking, this Roman tradition would be exemplified by Justitia not wanting to take off her blinding band, fearing that the ability to see would corrupt her impartial judgement. In Germany, a party (especially a defendant) was "not obliged to give its weapons into the hands of the enemy". The burden of proof rested exclusively on the plaintiff, who had to argue and prove the infringement of an intellectual property right, using means and evidence available to him, while the defendant could stay totally passive and need not produce any documents or disclose facts that could clarify the relevant facts of the case. . Thus, any discovery procedure in the sense of the U.S. law was not available and not even imaginable.
Accordingly, before 2002, no efficient claim for inspection and document discovery was afforded to litigants either procedurally or under material law. This situation has changed drastically with an important change in the Civil Procedural Code and with a recent decision of the German Federal Supreme Court rendered on May 2, 2002 under the catchword "Faxkarte" (fax card), and published in German in GRUR 12/2002, 1046).
This article discusses how effectively the new claims for submission and inspection of documents and other evidence can be enforced before a German court and how this "new German discovery" in its result can be compared with US style discovery.
The pre-reform legal situation
The court was able according to pre-reform § 142 ZPO, 1st para., to order the submission of documents and other files (excluding the inspection of objects) from one party, provided that this party had cited that particular document in its briefs. An order of submission according to the old rule could be directed only at that party but not at the opponent nor at any third party. This regulation aimed not so much at preventing lack of information but rather at attaining a fair procedure by opening a possibility for the opposing party and the court to view a document on which the other side had based its argument.
Case law before the new "Fax card" decision
Since the plaintiff has to bear the burden of proof, the plaintiff has often been in the unfortunate position of having to produce evidence from the opponent's sphere about the imitation or illegal commercial use of its patented invention. If, before the reform, the plaintiff requested an inspection of an object, the court would ask for a material basis of that claim, according to § 809 BGB (German Civil Code).
In patent infringement suits, this important basis for claims to submission has traditionally been interpreted very narrowly by the courts. An infringement by the opposing party would have had to be "highly probable" to trigger a claim to the production and inspection of documents of the other side based on § 809 Civil Code. (the so-called old Druckbalken decision). In practice, such a claim was hardly ever successful.
Under these conditions, there was alarge discrepancy between the German claim to inspection and discovery procedures discovery procedure under US law as well as the discovery concept in other Anglo-American jurisdictions.
The new legal situation
The 2002 reform of the Civil Procedural Code
With the procedural law reform, changes inter alia relevant to IP lawsuits have come into effect in §§ 142 and 144 Civil Procedural Code. An order to submission of documents cited by any party may now be addressed to any party, independently of who is bearing the burden of proof. If, for example, plaintiff refers to a certain document, the court can also request documents from the defendant party, provided that an inspection is deemed to be useful for the clarification of the facts.
The court can order this submission within the scope of its discretion. The court has to balance all aspects of the individual case against each other and surely has to have sufficient factual grounds for issuing an order of submission. In any event, such an order is not allowed to lead to an overall investigation or discovery by the court or one party against the other. For this reason, an order of submission of evidence will, as a rule, not be as far reaching as a US-discovery procedure where one party can request it from another. However, the fact that there is a limit to the information that a plaintiff in Germany can demand from the opposing party does not constitute a disadvantage of the German procedure in comparison to American discovery. The German order to submit is more focused and time efficient, because the court can only order such objects to be submitted which are, at the discretion of the court, necessary for the factual clarification of the case. On the other hand, a US discovery procedure can take a very long time, since both parties are allowed to demand almost anything from each other without any real control by the court, and with the concept of relevancy being much more broadly construed.
In Germany, such an order to submit of evidence can be issued in any procedure (including preliminary injunction procedures), at any stage of the proceedings and in any instance, if a need for the court arises for further clarification. This does not necessarily have to concern the clarification of the one and only decisive fact. While not to be interpreted as broadly as the American "relevance", the result might come close to the US sense of the term, since the object to be submitted does not have to serve for the clarification of any specific evidential question only, but can also pertain to the general background information for the court. It is the task of a party's attorney to point out the grounds to the court, and why the submission of certain documents or objects is necessary and should be ordered by the court. It is the task of the other side to state the legitimate reasons why such an order should not be issued.
This order can also be directed at third parties not involved in the suit. This exemplifies how far an order to submission can now reach and it also underlines the approaching of German and American laws in this respect. As in the US, an order to submission of evidence against thirds can, according to § 144 Civil Procedural Code, be enforced, with the difference that in Germany one party (mostly the defendant) does not have to follow such an order. However, the court can negatively evaluate any refusal to submit documents or objects.
As explained above, this extends not only to documents but also to the inspection of objects (§ 144 Civil Procedural Code), that is to anything that can be perceived by the human senses. For the inspection of objects not even reference has to be made in the briefs. The court can order a submission at its own initiative, if it deems an inspection to be necessary for the factual clarification.
These new regulations now have the following purpose: An active clarification of the facts by the court. Now, the traditional passivity of the court and the "right to passivity" of the party not carrying the burden of proof is no longer the rule. Plaintiff, defendant and the court are now to build a working team for the purpose of finding the truth. This new principle can be described as a "cooperation maxim".
The leading case "fax card"
The above explained new and broad procedural possibilities have now been supported by a recent decision ("fax card") of the German Federal Supreme Court. The Court has rendered in the "fax card" case a decision which, with regard to the claim to submission of evidence according to § 809 Civil Code (see below), demands only a "certain amount of" probability (of infringement) as opposed to the earlier necessary "high" probability. As a consequence, this claim is becoming interesting also for those holders of property rights who, at first, want to gain certainty about a potential infringement in order to decide whether it is worth while to file an infringement action or not. In summary, there are three new points:
a) The alleged patent infringement need not be "highly probable". A "certain", that is a smaller probability suffices.
b) The objects to be inspected no longer have to be directly connected to the accused object. The object to be produced merely has to be situated in the context of the case and provide potential evidence. In the "fax card" case, the source code of an alleged copyright infringing software was claimed to be produced.
c) An investigation destroying or impairing the product sample to be examined is allowed, depending on the type and value of the product. The object to be inspected may even be dismantled.
The German court decides, by means of a balancing of both parties' interests and of the interest in secrecy of the party obliged to submit evidence. The court can decide on the interest in secrecy in a flexible manner by inserting a modality in its order of inspection which takes into account both the interest in inspection and the interest in secrecy.
One such modality to be considered by the court is, in particular, the appointment of an independent expert obliged to secrecy by oath. In case of doubt, this leads to a disclosure only vis à vis an expert who is skilled in the respective technical field and obliged to secrecy, and who can then inform on whether and to what extent the inspected object is identical with the protected object of the plaintiff. Here, the court can advance in a two-step procedure: The assessment by the expert can only be shown to the plaintiff after the court has heard the defendant, who can make a statement as to the correctness of the expert's findings and to its own interest in secrecy. The court can then decide whether and to what extent the findings of the expert are to be forwarded to the plaintiff.
Furthermore, also the so-called in camera procedure or a safety deposit can be taken into consideration. In any event, the court will first and foremost determine whether other evidence is available within reasonable limits of procurement. If that is the case, the plaintiff must, as a priority, make the necessary efforts to offer such evidence.
These new possibilities (§ 809 Civil Code, §§ 142, 144 Civil Procedural Code) should be considered for application in combination by the plaintiff for getting an enforcement of a claim to submission of evidence. Practically, one can imagine the following steps:
In the early phase, before the suit is pending, plaintiff can file for a preliminary injunction according to § 809 Civil Code. Here, the plaintiff has to convince the court only of a certain probability of the infringement, which might necessitate, for instance, a thorough examination of defendant's commercial catalogues.
If the suit is already pending, plaintiff can additionally ask the court for an order of submission of evidence according to §§ 142, 144 Civil Procedural Code, which should be substantiated by a stating of reasonable grounds for an inspection.
Points of importance for international clients
This modernization of the law and jurisdiction with regard to a claim to document production and inspection of objects can have positive effects especially on the patent owner as plaintiff in an infringement suit. The new legal situation must not necessarily be of negative consequence to the defendant charged with infringement, since, while making sure that secrecy is observed, infringement related facts, as the case may be, can be established very quickly. Since the claim to inspection can already be filed in a preliminary procedure before the main suit, such an accelerated procedure constitutes a quick and low cost early test before a full blown infringement suit. Since the inspection is not left to the parties but is being focussed on the essentials by the discretion of the court, a decision on a claim to inspection will not take a long time.
The question of whether the German courts of the various instances will follow this tendency can only be answered positively, considering the unambiguous wording of the reformed paragraphs of the Civil Procedural Code as well as the relevance of the Supreme Court decision. The judicial evaluation of the "fax card" decision stands in context and is harmonizing with the respective articles (in particular art. 43) of the TRIPS agreement. The reform of the Civil Procedural Code and the leading case "fax Card" have now created a direct legal basis, by which the TRIPS regulations obtain direct impact on patent litigation in Germany.
© by Reinhardt Schuster and Ikze Cho 2003. This article was first published in Managing Intellectual Property, Patent Yearbook 2003.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.