Patent compliance - FTO analysis as one part of a puzzle to avoid injunctive relief? | Fieldfisher
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Patent compliance - FTO analysis as one part of a puzzle to avoid injunctive relief?


United Kingdom

The "second law for the simplification and modernization of patent law" recently entered into force in Germany. An essential aspect of the law is the codification of a proportionality test for injunctions that already has been established in case law. According to the explanatory memorandum to the act, an infringement analysis (so-called freedom-to-operate analysis or FTO analysis) obtained before a product is put on the market can, in addition with other aspects, have an influence on whether an injunction is granted or whether it would be denied as disproportionate. In order to minimize liability, it is therefore advisable to carry out such an FTO analysis before putting a product on the market.

Up to now in Germany, injunctions have regularly been granted irrespective of negligence. Thus, under the existing legal situation, provided that plaintiff has applied it, an injunction is granted if the court finds infringement of a patent and an additional risk of first or repeat offence. The later enforcement of the injunction then leads to a production and/or distribution stop of the infringing embodiments. 

The existing Sec. 139 (1) Patent Act, which governs injunctive relief, has been amended by the new law to include the following sentences:

"The claim [for injunctive relief] is excluded insofar as, due to the particular circumstances of the individual case and the requirements of good faith, the claim would lead to disproportionate hardship for the infringer or third parties which is not justified by the exclusive right. In this case, the infringed party shall be granted appropriate compensation in money. The claim for damages under subsection 2 shall remain unaffected."

The most recent codification of the principle of proportionality and the explanatory memorandum to the law suggest that there now could be more cases in which no so-called automatic injunction is granted. So far, only the Federal Court of Justice has made statements with regard to the proportionality of injunctive relief in its "Wärmetauscher" decision. In this respect, the aim of the legislator is to clarify that the claim for injunctive relief can be limited in individual cases by way of exception. In particular, the explicit reference to the requirement of good faith clarifies that an overall assessment has to be made which also takes into account the legitimate interests of the patent proprietor when assessing whether there is unjustified hardship precluding the right to injunctive relief (BT-Drucks. 19/30498).

The legislator mentions several examples where a denial of an injunction due to disproportionality can be considered. Among these examples are the sole monetization interests of non-practicing entities through licensing of the patent, substantial economic damage caused by the injunction, and a relevance of the infringed patent only for a subordinate, non-necessary element of a complex product. In addition, third-party interests may be taken into account. Finally, subjective elements may also play a role in the assessment of the proportionality of a claim for injunctive relief.

It is precisely such subjective aspects that could play a significant role in patent compliance. Therefore, it is worth taking a closer look at these elements.

According to the intent of the legislator, the subjective elements of the patent infringer are of particular importance, i.e. the nature and extent of his negligence and whether the infringer has taken possible and reasonable precautions to avoid a patent infringement, e.g. by an appropriate FTO analysis (BT-Drucks 19/25821). 

A convincing FTO analysis could be decisive for the court in the overall consideration of the case to deny or limit the injunctive relief and thus also to prevent a production and/or distribution stop of the infringing products or to grant a grace period for use or adaptation. Therefore, the question arises which requirements such an FTO analysis has to meet so that it can be used in a later patent infringement lawsuit with regard to the question of the disproportionality of an injunction. 

The case law on negligence in damages claims can provide valuable guidance on the necessary scope and sufficient level of detail of an FTO analysis in this regard.

The courts have developed comparatively high requirements in the negligence context for different market participants. As a result, in only very rare cases the courts have denied negligence.

According to this established case law, business owners are generally required to inform themselves about third-party intellectual property rights that may affect their business. In this regard, the courts have developed a graduated system as to which level of care must be complied by the individual types of players on a market. 

The strictest level of care applies to manufacturing and importing companies. According to the case law, a manufacturing company is expected to be aware of patents and patent applications in their industry. A company is therefore required to check at an early stage whether their processes or products infringe a third party right. A domestic importer of goods manufactured abroad may not rely on the information provided by the foreign manufacturer, but must actively check the intellectual property right situation. 

The obligations for distributors are less strict. In principle, however, it is expected that they inform themselves about the intellectual property right situation affecting their business and, if an infringement of third party patents cannot be ruled out, check the scope of protection of these rights. The duty of a distributor within the supply chain can be reduced to making sure that a serious and careful examination by an expert has already taken place. However, upon receipt of a notice of infringement, a distributor is expected to deal with the legal situation and the infringement allegations the latest. In case of department stores, there is no obligation to check the intellectual property right situation without special cause if they have purchased the goods from a domestic manufacturer. 

Negligence rejected only in a few cases 

In only a few decisions the courts ruled that companies have not acted negligently even though they infringed a patent. 

The courts have assumed that a manufacturing company acted negligently, even though it had commissioned an expert opinion on the property rights situation by a patent attorney, but this was limited to the intellectual property rights of only two companies. The court denied the defendant the possibility of exculpation because they only had examined a fraction of the possible property rights in the relevant field (LG Mannheim, GRUR 53, 33). In another decision, the Federal Court of Justice held that an infringer cannot exculpate himself from the accusation of negligence by merely pointing out that they hired a patent attorney to check the property right situation. Rather, it would have been necessary to specify to which extent the patent attorney examined third party rights and which resulting legal advice was given (BGH, GRUR 1993, 460 - Wandabstreifer).

In another court's decision, a retailer (in this specific case, a seller of cell phones) was able to avoid any liability based on negligence. Under the circumstances of the individual case, it was sufficient to show, among other things, that they purchased the complex products from globally active and well-known manufacturers and therefore could assume that these manufacturers had independently examined the property rights situation and had themselves only ordered the various components from companies entitled to use the relevant patents (OLG Düsseldorf, judgment of February 16, 2006, I-2 U 32/04). 

Conclusions for FTO analyses:

  • The scope and level of detail of the FTO analysis and the prior search for relevant patents depend on the general purpose of the company and its role in the market. A retailer cannot be expected to carry out extensive research on every product detail. However, a manufacturing company will have to meet stricter requirements. Depending on the purpose of the company and the industry, a simple search based on names of patentees, which should then include all competitors, may be sufficient. 
  • Distributors should actively seek to obtain relevant product and intellectual property rights information from the manufacturer. 
  • The FTO analysis should be carried out by experienced attorneys specialized in patent law, if necessary together with experienced patent attorneys in technically complex cases.  
  • An analysis of whether a product makes literal use of a patented invention should in principle be sufficient. It will probably not be necessary to prepare complete so-called claim charts, and it should be sufficient to comment on the feature of the patent claim which is obviously not infringed. It should not be necessary to analyze an equivalent patent infringement in detail (unless such an infringement is obvious).  
  • The scope of the search and the depth of the analysis, i.e. the effort that is required but also sufficient, must also be assessed in relation to the risk that the patent will actually be asserted.
  • In particularly critical or significant cases, obtaining a second opinion may be indicated.

However, it remains to be seen what specific requirements future case law will determine for FTO analyses.


Before a company starts producing or distributing a product, they should actively deal with the existing patent situation. A convincing FTO analysis - as one of several parts - is a possibility to avoid the full harshness of an unrestricted injunction and thus considerable financial loss in a later patent infringement lawsuit. Based on previous case law on negligence in damages claims, it can be assumed that only a thorough and comprehensive FTO analysis may form the basis for a successful defense against an injunction.

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