Now more than ever, technology is influencing the way we do business, communicate, move through and around the world, access and manage our homes, receive and administer healthcare, make purchases, secure information, and protect our most valuable property. Morrison Foerster keeps pace with this rapidly evolving landscape across our internationally recognized corporate, finance, intellectual property, and litigation practices. MoFo Tech brings together our insights relating to fields such as blockchain and distributed ledger, cloud and as-a-service technologies, driverless cars, drones, fintech, computer hardware and software, the Internet of Things, semiconductors, and telecommunications. The MoFo Tech blog offers real-time, in-depth analyses of the trends and complex issues shaping the global technology industry.<h2>ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

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Scott Llewellyn’s practice focuses on complex litigation in federal and state courts around the country, with an emphasis on patent and trade secret disputes. Over the past decade, he has worked on some of the most significant, high–profile IP cases involving technology for televisions, smartphones, and self–driving cars, relying on 40 years of experience with computer hardware and software. Scott also has significant experience with business divorce cases before courts and arbitrators, involving a mix of trade secret, patent, tort, and contract claims relating to technology development and implementation.Scott also has successfully tried general commercial arbitration and agency matters, briefed and argued various appeals in federal appellate court, and tried more than 20 cases for the Denver City Attorney’s office, most of them jury trials.Scott also has an active pro bono practice, having worked on a variety of criminal and immigration appeals, and having represented Colorado criminal defense and mental health organizations in high–profile suits against the state of Colorado for violations of the constitutional rights of defendants.At MoFo, Scott serves on the board of the Morrison & Foerster Foundation. In the broader legal community, he serves on the boards of the Colorado Lawyers Committee and Drop in the Bucket (a charity that builds wells and sanitation systems in sub–Saharan Africa).After law school, Scott clerked for the Honorable Clarence A. Brimmer, District of Wyoming, and the Honorable Diarmuid F. O’Scannlain, Ninth Circuit. He was also previously an adjunct professor at the Georgetown University Law Center.

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Partner

Scott Llewellyn’s practice involves complex litigation before state and federal courts around the country, with an emphasis on patent and trade secret disputes for high-tech companies, to which he brings more than 35 years of experience with computer hardware and software, in particular relating to the processing and transmission of audio, video, voice, and other types of data. Mr. Llewellyn has also tried commercial arbitration and agency matters; briefed and argued various appeals in federal appellate court; and tried more than 20 cases for the Denver city attorney’s office, most of them jury trials.

Scott F. Llewellyn

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MoFo Tech brings together legal insights and in-depth analyses on trends and complex issues shaping the global technology industry, covering fields such as blockchain and distributed ledger, cloud and SaaS technologies, driverless cars, drones, FinTech, computer hardware and software, the IoT, semiconductors, and telecommunications.

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At the Intersection of Technology, Law, and Business

At the Intersection of Technology, Law, and Business

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Current State of the AI VC Financing Market

MoFo Tech Law Summit – Tech and Antitrust: Policy Shifts in the Second Trump Administration

MoFo Tech Law Summit – Responsible Tech: Policy Becomes Practice

AI Dynamics: Regulatory Landscape and Industry Insights

Introducing the MoFo Tech Law Summit – Innovation Under Regulation

FDA is actively monitoring the use of AI and machine learning (ML) software in medical devices and clinical developments, and has taken a number of first steps in building out a regulatory framework.  In 2021, FDA published the <a href="https://www.fda.gov/media/145022/download">AI and Machine Learning Software as a Medical Device Action Plan</a>, which outlines FDA’s approach to regulating AI/ML technologies and next steps in furthering oversight, as well as the <a href="https://www.fda.gov/medical-devices/software-medical-device-samd/good-machine-learning-practice-medical-device-development-guiding-principles">Good Machine Learning Practice for Medical Device Development: Guiding Principles</a>, to inform the development of Good Machine Learning Practice.  FDA also released a <a href="https://www.fda.gov/medical-devices/software-medical-device-samd/artificial-intelligence-and-machine-learning-aiml-enabled-medical-devices">database</a> of AI/ML-enabled medical devices currently marketed in the United States and will update this list as FDA reviews and authorizes additional AI/ML-enabled medical devices going forward.  While AI technology continues to advance far ahead of a regulatory framework, FDA has been collaborating with international counterparts and actively seeking industry and consumer feedback in developing its approach to oversight.  Going forward, we can expect to see additional guidance from FDA, with a continuing emphasis on transparency and diversity as well as ongoing requests for industry feedback.  FDA intends to publish draft guidance on Marketing Submission Recommendations for a Change Control Plan for AI/ML-Enabled Device Software Functions in 2022, although this guidance has been pushed to the B-list in terms of priority.This post is a part of a series on trends in the artificial intelligence space for 2022, authored by MoFo lawyers.

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AI Trends For 2022 - FDA Regulatory

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FDA is actively monitoring the use of AI and machine learning (ML) software in medical devices and clinical developments, and has taken a number of first steps 

AI Trends For 2022 - FDA Regulatory

In the first of a four-part podcast series on tech M&A in partnership with MergerMarket, Corporate Department Co-Chair Eric McCrath sat down with host Julie-Anna Needham to discuss cross-border M&A, accelerated digitalization due to COVID-19, and trends in U.S. acquisitions into Europe.<a target="_blank" href="https://members.mergermarket.com/podcasts?wchannelid=akudzqwqhj&wmediaid=cduo4r4u0s" style="box-sizing: border-box;color: rgb(3, 65, 147);text-decoration-line: none;background-color: transparent;transition-duration: 0.2s;transition-timing-function: ease-in-out;transition-delay: 0s;transition-property: color;">Listen to the podcast.</a>

SoftBank Corporation

onsemi

Uber Technologies

Unity

Divvy

BlackBerry

Autodesk

ShowingTime

Gemini Trust

eBay

Kahoot!

Astroscale

IDIQ

Iovation

NerdWallet

Unilever

Visa

Vontier

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Chair

Eric T. McCrath is the Chair of Morrison Foerster. Eric has been a trusted advisor on hundreds of public and private M&A, private equity, and financing transactions over the course of his career.

Eric T. McCrath

Eric has been a trusted advisor on hundreds of public and private M&A, private equity, and financing transactions over the course of his career. He counsels strategic acquirers and targets in a variety of industries, including technology (semiconductors, software, and Internet), healthcare, consumer products, financial institutions, media, and transportation.

Eric McCrath

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MergerMarket Dealcast Presents: Trends in Tech M&A

MergerMarket Dealcast Presents: Trends in Tech M&A

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In the first of a four-part podcast series on tech M&A in partnership with MergerMarket, Corporate Department Co-Chair Eric McCrath sat down with host Julie-Ann

In this episode of MoFo’s Above Board podcast, host, co-chair of MoFo’s Corporate Finance | Capital Markets practice, and former Chief Counsel of the SEC’s Division of Corporation Finance Dave Lynn speaks with Alex Iftimie, co-chair of MoFo’s Global Risk and Crisis Management group, and Brandon Van Grack, who also co-chairs the group and serves as co-chair of the firm’s National Security practice. Both are former senior DOJ officials who bring their vast experience in cybersecurity to analyze the top cyber events that have defined 2021 thus far and provide practical guidance in response to the following key questions:<ul><li>What are the key cybersecurity threats that boards of directors should be focused on?</li><li>What role should boards be playing in a cyber incident like a ransomware attack?</li><li>What action do you expect to see from U.S. government with respect to cybersecurity?</li></ul>Listen to the <a href="https://protect-us.mimecast.com/s/V4ibCER61yi3lNky0Sw8aQN?domain=www2.mofo.com">podcast</a>.

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Brandon L. Van Grack co-chairs Morrison Foerster’s National Security and Crisis Management groups. 

Brandon Van Grack

Brandon Van Grack - National Security Lawyer

Brandon L. Van Grack

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Above Board Podcast: 2021 Cyber Events Shaping the Horizon

Above Board Podcast: 2021 Cyber Events Shaping the Horizon

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In this episode of MoFo’s Above Board podcast, host, co-chair of MoFo’s Corporate Finance | Capital Markets practice, and former Chief Counsel of the SEC’s Divi

Although the European, U.S., and UK Patent Offices have denied patent applications on the grounds that an AI system cannot be listed as an inventor, not every country seems to be following that approach and some may be set to buck the trend.Last year, we <a href="https://mofotech.mofo.com/topics/can-ai-be-an-inventor.html">reported</a> on the first European Patent Office (EPO) ruling on its approach to patent applications that designate artificial intelligence (AI) systems as inventors. Both the UK Intellectual Property Office (UKIPO) and the EPO reasoned that AI systems cannot be inventors. However, South Africa and Australia did not follow suit this year.What did DABUS “invent”?The “Artificial Inventor Project,” an international group of patent attorneys, filed patent applications directed to inventions that were supposedly “invented” by DABUS, an AI system developed by Dr. Stephen Thaler. The applications are directed to a light-emitting device that could be used as an emergency signal beacon and a food container.Success in South Africa could be prematureA patent application was granted in South Africa by the Companies and Intellectual Property Commission, listing DABUS as the inventor and Dr. Thaler as the owner of the patent.A contributing factor to the grant is the lack of definition of “inventor” in South African patent law and the structure of the local patent system. Patent applications are not formally examined prior to their grant – they will be granted if they meet the required formalities as a minimum.Thus, the local patent office did not undertake a substantive examination of the patent application ahead of its grant.Now the patent is vulnerable to applications made against it that are filed in the South African court. Any third party may apply to the Court of the Commissioner of Patents to revoke the patent. The patent could be revoked for a number of grounds, including lack of inventiveness, lack of novelty, and most pertinently, because Dr. Thaler, who is not the inventor, was not entitled to apply for it.The Federal Court of Australia’s decisionIn Thaler v Commissioner of Patents [2021] FCA 879, the Australian court reasoned that the ordinary meaning of “inventor” does not exclude non-humans. It also found that in patent law, unlike copyright law, there is no requirement for a human inventor.Dr. Thaler argued that the objectives of the relevant legislation supported AI systems being recognized as inventors because it is intended to promote technological innovation and the dissemination of technology.The court also considered that various persons can contribute to the output of an AI system, and that recognizing the AI system as the inventor would avoid uncertainty as to who should be recognized for the inventive process.While the court was only faced with deciding whether DABUS could be an inventor, it also discussed whether Dr. Thaler could be the patent grantee. The court found in favor of Dr. Thaler by determining that he could be a grantee since he derived title to the invention. Dr. Thaler owns and controls DABUS, therefore its inventions are in Dr. Thaler’s possession.Status of global DABUS applications<ul><li>In the UK, Dr. Thaler appealed to the UK Court of Appeal in July 2021, after rejections from the UKIPO and the UK High Court. </li><li>A hearing date has been set for a European appeal in December 2021. </li><li>The Deputy Commissioner of Patents in Australia has four weeks to appeal the July 30, 2021 decision. </li></ul>Further similar patent applications involving issues of AI inventorship have been unsuccessful in Canada, China, Taiwan, Germany, and the United States. There are still pending applications in India, Israel, Japan, and South Korea. Given the fate of the DABUS applications thus far, it is advisable to continue listing the individuals, not the AI systems, as the inventors on patent applications.

HM Revenue and Customs

Home Office, Department for Communities and Local Government, Department of Health

Intel

ITworx

lastminute.com

NYSE-listed health tech company

One of UK's largest public EV charging networks

Phoenix Group

Telenor

UK Border Agency

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Alistair Maughan co-leads Morrison & Foerster's European Technology & Commercial Practice.

Alistair Maughan

Alistair advises on the deployment of new technology platforms involving, for example, the internet of things, AI and machine-learning, and blockchain and distributed ledger technology.

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Associate

Georgia Wright is an associate based in the London office of Morrison & Foerster and is a member of the Technology Transactions Group and the Global Privacy Group.
Georgia advises clients on a range o

Georgia Wright

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Of Counsel

Anna Yuan’s practice focuses on patent prosecution, IP due diligence, post-grant proceedings, and IP litigation support. 

Anna Yuan

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AI as a Patent Inventor – an Update from South Africa and Australia

In the Public Eye: USPTO Issues Report on AI

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Although the European, U.S., and UK Patent Offices have denied patent applications on the grounds that an AI system cannot be listed as an inventor, not every c

AI as a Patent Inventor – an Update from South Africa and Australia

UPC – And it got up againHaving been sent down for the count by constitutional complaints in Germany, the road finally seems paved for the Unified Patent Court.  On July 9, 2021, the German Federal Constitutional Court (GFCC) announced that it had dismissed two applications for a preliminary injunction seeking to void the German Act of Approval of the Agreement on a Unified Patent Court (the “Bill”).  Based on these applications, the GFCC had (once again) asked Germany’s president to suspend the Bill’s ratification, the final major step before the UPC can come into existence.Germany – The ultimate battle ground The so-called “European Patent Package” is comprised of by two EU regulations and an international treaty, the Agreement on a Unified Patent Court (UPCA).  The two regulations pertain to the creation of the Unitary Patent (UP), a single patent having effect in all participating EU Member States.  Both regulations, which are based on the concept of “enhanced cooperation” (i.e., a framework allowing EU Member States to work closely together), passed in 2012 and were not challenged.  Even though these regulations have technically been in effect since 2013, they have remained pending until the UPCA’s ratification.The UPCA is the foundation of the corresponding Unified Patent Court (UPC), a court system for litigation over UPs with effect in all participating Member States.  25 of the EU Member States (all except for Spain, Croatia, and Poland) signed the UPCA in 2015.  To enter into force, however, it must be ratified by at least 13 Member States, including the three with the highest number of European patents (originally, Germany, France and UK).Everything seemed close to set when all 35 of the 631 members of the Second Chamber of the German Parliament (Bundestag) who were present on that day unanimously decided to pass the UPCA in 2017, making Germany the 13th state expected to ratify the UPCA.  That left only the UK’s ratification remaining for the UPC to take off.  (With BREXIT, the UK’s ratification is no longer necessary, as the UK has withdrawn from the UPCA.)The plot started to twist in 2017 when a first constitutional complaint put ratification on hold in Germany.  The GFCC held in November 2020 that, due to the UPCA’s transfer of sovereignty, a different majority for ratification was required by the German Basic Law (Grundgesetz).  The GFCC further held that that majority was not satisfied with only 35 parliamentarians present.  To warrant democratic legitimization, the UPCA therefore had to take at least another turn before the Bundestag.  Due to this formal deficit, the GFCC had no reason in the meantime to assess the UPCA’s conformity with substantial aspects with the Basic Law.  It did, however, suggest that there might be violations. The formal deficits were overcome in December 2020 when both the Bundestag and the German Federal Council (Bundesrat) approved the legislation with the necessary majority.  Complainants subsequently lodged two new preliminary complaints in order to again delay the UPCA’s ratification.  The complainants asserted that the UPCA violated a number of rights and principles:-        The individual’s right to democratic self-determination (as the power of the German Parliament would be undermined)-        The fundamental right to effective legal protection (due to a lack of independence of the UPC judges, whose six-year terms with the possibility of re-election permit potential indirect bias)-        The individual’s right to a lawful judge (as one of the central divisions was to be in London)-        An "eternity guarantee" regarding fundamental principles of the Basic Law (arising from UPCA’s unrestricted prioritization of Union Law, which might cause the GFCC to lose its position to warrant these principles)-        Irreconcilability of the UPCA with Union Law (since cooperation between the European Court of Justice and Member State Courts is impaired by a court that is separate from the courts of the Member States) and other democratic deficits as well as deficits in the rule of law (e.g., because the UPCA was enacted despite changes due to BREXIT)-        The principle of autonomy of Union Law which was violated because the UK is still a contracting partyThe GFCC held that the complainants failed to sufficiently substantiate their assertions.  It explained that individuals can allege a violation of their right to democratic self-determination, which requires a very stringent showing.  But they do not have the right to challenge a democratic parliamentary decision. As the complainants are unlikely to overcome this fundamental deficit and succeed with a further complaint on the merits, the field is open for the UPC.  Before starting to hear cases, the UPC will enter into an 8-12 month pilot phase.  During this phase, judges will be appointed and trained, the IT systems will be set up, and other pre-operational measures taken.  To start the pilot phase, two more Member States who have already ratified the UPCA will need to sign the Protocol on Provisional Application.  These procedural formalities are not likely to lead to further delays, as some Member States do not require a lengthy parliamentary ratification process but only a signature or a unilateral declaration to do so.The new arena – UPCThe dawn of the UPC should signal the end of the need for fragmented patent enforcement, due to its exclusive competence over traditional European Patents (EP) as well as UPs.  Its decisions and orders will be enforceable in any contracting EU Member State.  The court will be structured as a Court of First Instance (i.e., comprising local, regional, and central divisions, the latter seated in Paris and Munich), a Court of Appeal (in Luxemburg), and a Registry. Now that the UK has withdrawn from the UPCA in the context of BREXIT, it remains to be seen where the third seat of the central division (formerly London) will be located.  Italy is promoting Milan as a third venue, and other possible candidates are Amsterdam and Paris.  Pending this decision, responsibilities will likely be shared between Munich and Paris.Together with the UPCA, a transitional regime will come into effect, allowing for any EP granted to be transformed into a UP for uniform protection with equal effect.  Plaintiffs will be free to choose whether to commence proceedings based on UPs before the national court (i.e., in the traditional fragmented system) or the UPC.The fragmented patent landscape will persist for at least a while, however.  This is because a UP covers only the territories of those Member States that ratified the UPCA at the moment of registration of unitary effect, i.e., the registration of a UP or the transformation of an EP into a UP.  Up to now, 15 Member States have ratified the UCPA, and after the GFFC’s ruling, Germany has been given the green light do so as well.  Spain and Croatia are the only two Member States that are not yet participating in either the Unitary Patent System or the UPC, but they may do so at any time.  Thus, even with the UPC up and running, the patent landscape will remain segmented into different “layers” of Unitary Patents, each different in territorial scope.In the long run, the Unitary Patent System definitely has the potential to significantly reduce costs and increase efficiency and legal certainty of patent enforcement in Europe.

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Wolfgang advises clients on contentious and non-contentious matters involving their most valuable intellectual property assets in the digital, high-tech, life sciences, and pharmaceutical industries.

Wolfgang Schönig

Wolfgang Schönig is a partner of Morrison Foerster (International) LLP based in our German office in Berlin. His practice specialty is advising on IP aspects relative to transactions in, among others, the life sciences, AgTech and pharmaceuticals industry, as well as legal representation in IP disputes. Wolfgang is specialized in research and development collaborations, complex licensing agreements, technology acquisitions, know-how protection strategies, and employee invention law.

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Green Light for UPC

Japan: Privacy Updates on Handling Personal Information in the “Digital Market”

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UPC – And it got up again
Having been sent down for the count by constitutional complaints in Germany, the road finally seems paved for the Unified Patent Court

Green Light for UPC

The German patent system has repeatedly proven to provide reliable and effective means to enforce patent rights against infringers. There are three key reasons why the German patent system is so attractive for patentees when seeking to enforce their rights in Europe:<ol><li>Injunction gap: Infringement and validity are heard by different branches of the judiciary (bifurcation). The infringement courts only stay the proceedings pending parallel nullity actions if they have a strong indication that the patent-in-suit is invalid. That is, unless the patent is obviously invalid, first instance proceedings can be completed in about 1.5 years. Parallel nullity actions usually take much longer. Among other disadvantages for the defendants, this gap may result in unfavorable settlements based on potentially invalid patents. </li><li>De facto automatic injunction: If infringement is found, the default remedy is an injunction. While infringement courts do have some discretion if and to what extent an injunction shall be granted, they almost never make use of it. This as well provides substantial leverage to patentees in settlement negotiations.</li><li>Preliminary injunctions: Preliminary injunctions are available, even in complex cases.</li></ol>RECENT DEVELOPMENTSAll three areas are subject to recent developments: <ul><li>On June 10, 2021, the Second Act on the Simplification and Modernisation of the Patent Act (Zweites Gesetzes zur Vereinfachung und Modernisierung des Patentrechts) (“Bill”) passed the German Parliament (Bundestag). Among other things, the Bill introduced: <ul><li>A rule pursuant to which the nullity court (Bundespatentgericht [Federal Patent Court]) “shall” provide to the litigants a first indicative assessment of the case (qualifizierter Hinweis) within six months after the nullity action has been filed. The rationale is to inform the litigants (and the infringement court) prior to the first instance decision on the preliminary reasoning of the nullity court. However, this provision alone will only have little impact unless funding and staffing of the nullity court will be significantly improved, which is a separate topic currently discussed in Germany.</li><li>A codification of a proportionality test providing courts an express basis for temporary or permanent suspension of the injunction against a fair compensation in addition to potential damages for past infringement. While it is unlikely that this rule will dramatically change the way injunctions are being granted in Germany, it may provide relief in certain edge cases as the case law evolves on this issue. Such edge cases may include unreasonably aggressive patent trolls, extreme cases of discrepancy between the value of the invention and the economic loss suffered by the defendant, or detriment to paramount interests of third parties like access to lifesaving medicines or access to vital infrastructure. It is unlikely, however, that the new law will have an impact on evolving case law on standard-essential patent (“SEP”) litigation.</li></ul></li></ul>The Bill will likely enter into law in the fall.<ul><li>With respect to preliminary injunctions, already in January of 2021, the Regional Court of Munich has challenged the long-standing practice of courts in Germany requiring the claimant of a preliminary injunctions to demonstrate sufficient prospects of validity of a patent-in-suit, e.g., by showing that the patent has survived inter partes opposition or revocation proceedings or is otherwise largely accepted by the industry as valid. (NB: there are exceptions from this rule, for instance, to protect pharma companies against generic entry, where no such “strength” of the patent has to be demonstrated.) Arguing that this practice discriminates against patentees of newly granted patents, the Munich court has asked the European Court of Justice (“CJEU”) to decide whether this is in line with European Law. The CJEU’s decision cannot be expected until the beginning of 2022.</li></ul>While the changes introduced by the Bill will likely strengthen the defendants’ position in German patent litigation proceedings, the CJEU referral has the potential to significantly strengthen the patentee’s position. Below, we will shed more light on the proportionality test introduced by the Bill.PROPORTIONALITY TESTNew § 139 para. 1 of the German Patent Act (Patentgesetz) now reads:“The [injunction] claim may be excluded to the extent that the claim due to the special circumstances of the individual case and the requirements of good faith would lead to disproportionate hardship for the infringer or third parties, not justified by the exclusive right. In this case the infringed party shall receive a reasonable monetary compensation. The claim for damages [. . .] remains unaffected.”The German legislator reiterates, in his explanatory statements underlying the Bill, that the new provision is a mere codification of what has been the law anyway. He stresses that the principle of proportionality is a cornerstone of the German Constitution and the German legal system in general and that judges must apply this principle regardless of whether it is expressly laid down in a statue or not. He also points to the European <a href="https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32004L0048R%2801%29">Directive 2004/48/EC</a> on the Enforcement of Intellectual Property Rights that also clearly calls for all judicial decisions to be proportionate.In addition, the legislator notes that the German Federal Court (Bundesgerichtshof – “GFC”) in its Heat Exchanger decision (Case No. X ZR 114/13) held that a grace period may be granted under exceptional circumstances in patent cases—but did not do so in the case at hand— namely, “if the economic consequences of immediate compliance with the injunction effect and disadvantage the infringer [. . .] beyond the disadvantages which would be caused by its grant as intended, to an extent which makes the unconditional injunction appear unreasonable.”However, the legislator complains that the lower infringement courts did not sufficiently pick up on this proportionality assessment established by GFC, warranting express codification. As a result, it is likely that this issue will be more prominently discussed between litigants in the future and that the courts will have to provide more detailed reasoning on this issue than in the past. The reasoning and further specification provided by the legislator in its explanatory statement that will be relevant in these discussions can be summarized as follows:<ol><li>Delaying or suspending an injunction must be the absolute exception. </li><li>The risk of being enjoined from the market, including all of its economic consequences, is inherent to the German patent system.</li><li>The right to an injunction does not require the plaintiff to actually practice the invention or that the defendant use the invention intentionally. </li><li>There is a presumption that the patentees’ interest prevails, and the burden on showing disproportionality is on the defendant. The plaintiff has the benefit of doubt.</li><li>Facts that speak in favor of the defendant can be:<ol><li>If the unconditioned grant of an injunction would result in extraordinary high costs or losses on the part of the infringer that are in stark disproportion to the value of the patent-in-suit. This may be the case in complex products where the patent‑in‑suit only has a subordinate role.</li><li>If the “design around” takes an unusually long time because of regulatory requirements, again in light of the actual value and relevance of the patent-in-suit.</li><li>If the defendant infringes despite having conducted customary freedom-to-operate (“FTO”) searches.</li><li>If the plaintiff has delayed bringing suit until a moment where defendant has made significant investments, but the plaintiff could have brought suit earlier. </li><li>If substantial third-party interests would be affected, e.g., cut off from lifesaving medicaments or essential infrastructure.</li><li>“Patent trolls”, i.e., patent accumulators with the sole purpose to generate royalty income for its shareholder, may not be entitled to an injunction (or even a compensation in addition to “regular” damages) if it can be shown that patents have been acquired specifically to use the threat of an injunction to extract unreasonably high license fees or any other type of bad faith.  (NB: the explanatory statements are quite clear that non-practicing entities (“NPEs”) are not generally disapproved or “evil”, and that also for NPEs there is a presumption for an entitlement to an unconditioned injunction.)</li><li>The impact of the patentee shall be as minimal as possible, and courts must carefully consider duration of the denial of an injunction (i.e., short grace period vs. permanent suspension). </li><li>Baseline for the compensation for the suspension of the injunction to be awarded on top of damages for past infringement should be what reasonable parties would have agreed to for such use. The compensation can be higher if the defendants did not perform a customary FTO search. It can be lower, if the plaintiff is denied the injunction for reasons of bad faith.</li></ol></li></ol>Although the legislator’s explanatory statement addresses NPE and third-party interests, the statement is unlikely to override the evolving case law on FRAND (fair, reasonable, and non-discriminatory) licensing. Especially in the SEP context, FRAND case law seeks to balance all involved interests and thus inherently reflects a proportionality assessment.