Introduction
While the arbitrability of patent validity disputes has long been established in many jurisdictions, the issue remains a subject of controversy in others, particularly in Germany. This debate arises from the fact that patents are intellectual property rights granted by a sovereign state, the validity of which is traditionally determined by state courts. Recently, the German Federal Court of Justice (Bundesgerichtshof) had another opportunity to take a definitive stance on this matter.[1] However, the German Federal Court of Justice left the question unanswered. Instead, the case turns on the arbitral tribunal’s competence to determine its own jurisdiction – which applies also with regard to the arbitrability of patent validity issues. Jurisdictions in both common law and civil law traditions which have affirmed the arbitrability of patent validity disputes provide valuable insights for comparison.
Factual Background
The defendant in the case before the German Federal Court of Justice is the owner of a patent relating to brake systems. The parties had entered into a license agreement which covered the relevant patent and contained a standard DIS arbitration clause. Pursuant to the arbitration clause, all disputes arising in connection with the license agreement or its validity shall be finally settled in accordance with the DIS Arbitration Rules, excluding recourse to state courts.
During the contractual relationship, an arbitration was conducted regarding claims arising from the license agreement. The claimant in the arbitration sought to compel the defendant (the patent owner) to withdraw certain patents licensed under the contract. The arbitral tribunal issued two partial awards in August and December 2021, followed by a final award in January 2022. In these awards the tribunal decided inter alia that a claim for revocation of a patent was in principle arbitrable, but that such claim was not covered by the arbitration clause in the license agreement at hand.
Subsequently, the claimant brought a nullity action before the German Federal Patent Court (Bundespatentgericht), claiming that the patent in dispute extended beyond the original application and therefore requesting that the patent be declared invalid by the German Federal Patent Court. The patent owner objected to the nullity action based on the arbitration defense in Section 1032(1)[2] of the German Code of Civil Procedure, invoking the arbitration clause in the license agreement. The German Federal Patent Court dismissed the objection and declared the patent in dispute largely invalid. The patent owner appealed the judgment of the German Federal Patent Court to the German Federal Court of Justice. The appeal was unsuccessful.
Decision of the German Federal Court of Justice
At the outset of its decision, the German Federal Court of Justice addressed the much-debated question of the arbitrability of patent validity disputes, outlining the different legal views on this matter. The prevailing view in legal scholarship has traditionally been that patent validity disputes are not arbitrable, because patents are intellectual property rights granted by an administrative act (“Verwaltungsakt“) and as such are not subject to party disposition. Consequently, the validity of patents can only be determined by state courts (with erga omnes effect). The opposing view argues that patent validity disputes can be subject to a decision of an arbitral tribunal – at least with inter partes effect.[3]
In the case at hand, the German Federal Court of Justice left this question unanswered, because it was not decisive. Rather, in rejecting the appeal, the German Federal Court of Justice decided that the arbitration defense (Section 1032 German Code of Civil Procedure) did not apply because the arbitration clause in the license agreement did not grant the arbitral tribunal the power to decide on the validity of the patent. Thus, the case turned on the interpretation of the specific license agreement and its arbitration clause.
The German Federal Court of Justice underscored the importance of the so-called competence-competence provision in Section 1040(1) German Code of Civil Procedure [4]. According to this provision, the arbitral tribunal can decide on its own jurisdiction and on the existence and validity of the arbitration agreement. The German Federal Court of Justice concluded that the competence of the arbitral tribunal to decide on its own jurisdiction includes the question of whether this jurisdiction covers patent validity disputes. In the specific case at hand, it did not.
Arbitrability of Patent Validity Disputes in Other Jurisdictions – a Brief Overview
With the question of the arbitrability of patent validity disputes still undecided in Germany, one is prompted to ask how other jurisdictions deal with this matter. A look beyond Germany reveals that several jurisdictions, both in civil and common law, have adopted a more liberal approach to the arbitrability of patent validity disputes.
Switzerland
Switzerland is one of the civil law jurisdictions which recognizes the arbitrability of patent validity disputes. Swiss law is very liberal in that regard:[5] An arbitral award which declares a Swiss patent invalid can be submitted to the Swiss Federal Institute of Intellectual Property for cancelling the patent from the Swiss patent registry, provided that the arbitral award is final and enforceable. As a consequence, an arbitral award declaring a Swiss patent invalid even has erga omnes effect[6] – just like a state court judgment on the invalidity of a patent.
France
In contrast, France has followed a more traditional approach on this matter, in principle granting French state courts the power to declare a patent invalid. However, in a decision from 2008 the Paris Court of Appeal held that patent validity disputes are arbitrable if the validity issue is raised during an arbitration in relation to a contractual dispute about the patent.[7] Unlike in Switzerland, the tribunal’s decision still has only inter partes effect.[8]
England
As a general rule in English law, matters concerning civil interests of the parties are arbitrable, including patent disputes.[9] In a decision from 2005, the Court of Appeal acknowledged that it was reasonable for the arbitral tribunal to decide on the general validity of a patent if such a determination was relevant to the tribunal’s considerations.[10] Also in England, an arbitral award which deals with patent validity only has inter partes effect.[11]
United States, Hong Kong and Singapore
In the United States, the US Federal Arbitration Act contains practically no restriction as to which disputes can be arbitrated.[12] With regard to patent validity disputes, the arbitrability of such disputes is expressly confirmed by statute in 35 U.S.C. § 294. A decision by the arbitral tribunal has only inter partes effect.[13]
Other countries such as Hong Kong and Singapore have in recent years amended their arbitration legislation to confirm the general arbitrability of patent validity disputes.[14]
Conclusion and Outlook
In Germany, the arbitrability of patent validity disputes remains uncertain. The German Federal Court of Justice as the highest court in civil matters has not yet given its view on the matter. Considering that other jurisdictions have recently established the arbitrability of patent validity disputes in their legislation, the ongoing political discussions on a revised arbitration law in Germany may offer a legislative chance to clarify the arbitrability of patent validity disputes.[15]
[1] Case no. X ZR 124/22, GRUR 2025, 305.
[2] Section 1032(1) German Code of Civil Procedure: “Where an action is brought before a court in a matter that is the subject of an arbitration agreement, the court is to dismiss the action as inadmissible, provided that the respondent has raised a corresponding objection prior to commencement of the hearing on the merits of the case, unless the court finds that the arbitration agreement is null and void, ineffective or incapable of being performed.”
[3] For a detailed discussion of this view see the judgement of the District Court of Munich of 5 May 2021, which confirms in obiter dictum the arbitrability of patent validity disputes: District Court of Munich confirms arbitrability of patent validity disputes – Global Arbitration News.
[4] Section 1040(1) German Code of Civil Procedure: “The arbitral tribunal may rule on its own jurisdiction and in this context on the existence or the validity of the arbitration agreement. For that purpose, an arbitration clause is to be treated as an agreement independent of the other terms of the contract.”
[5] Chapter 3: Major Approaches to Arbitrability in Different Fields of Law, in Fabien Gélinas and Leyla Bahmany, Arbitrability: Fundamentals and Major Approaches 2023, para. 429.
[6] Groz, Picht, Zehner, Schiedsgerichtsbarkeit und das Übereinkommen über ein Einheitliches Patentgericht (Schellenberg Wittmer, Monthly Newsletter May 2023).
[7] Chapter 3: Major Approaches to Arbitrability in Different Fields of Law, in Fabien Gélinas and Leyla Bahmany, Arbitrability: Fundamentals and Major Approaches 2023, para. 428.
[8] Ibid.
[9] Karyl Nairn, Maximilian Szymanski, et al., ‘National Report for England and Wales (2021 through 2023)’, in Lise Bosman (ed), ICCA International Handbook on Commercial Arbitration 2023, pp. 28-29.
[10] Chapter 3: Major Approaches to Arbitrability in Different Fields of Law, in Fabien Gélinas and Leyla Bahmany, Arbitrability: Fundamentals and Major Approaches 2023, para. 427.
[11] Ibid, referring to further commentaries.
[12] Catherine M. Amirfar, Natalie L. Reid, et al., ‘National Report for the United States of America (2018 through 2023)’, in Lise Bosman (ed), ICCA International Handbook on Commercial Arbitration 2023, p. 24.
[13] 35 U.S.C. § 294(c).
[14] For Hong Kong, see Arbitration Ordinance (Cap. 609), Section 103D; for Singapore, see Section 26B of the International Arbitration Act 1994 and Section 52B of the Arbitration Act 2001. For details, see Chapter 3: Major Approaches to Arbitrability in Different Fields of Law, in Fabien Gélinas and Leyla Bahmany, Arbitrability: Fundamentals and Major Approaches 2023, para. 431 et seq.
[15] Heinze, GRUR 2025, 963, 970 (“a rare opportunity to clarify the arbitrability of patent validity disputes“).
