CJEU Ruling On The Enforcement Directive

Authors: Vilhelm Schröder and Jasmin Metwally

Introduction

On 11 January 2024, the Third Chamber of the Court of Justice of the European Union (the “Court”) handed down a judgment concerning the interpretation of Article 9(7) of Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights (the “Enforcement Directive”).

Questions Referred to the Court

Pursuant to Article 9(7) of the Enforcement Directive, “where the provisional measures are revoked or where they lapse due to any act or omission by the applicant, or where it is subsequently found that there has been no infringement or threat of infringement of an intellectual property right, the judicial authorities shall have the authority to order the applicant, upon request of the defendant, to provide the defendant appropriate compensation for any injury caused by those measures.”

The main question in the case (C-473/22) was whether Article 9 (7) of the Enforcement Directive precludes a national legislation that provides for a strict liability regime for the applicant of a provisional measure, meaning that the applicant must compensate the defendant for any injury caused by the measure, regardless of the applicant's fault. In Finland, the Code of Judicial Procedure (7/1734, as amended) provides that where a provisional measure has been obtained unnecessarily at the request of a party, that party must compensate the other party for the injury caused by the measure and its enforcement, including the costs incurred.

Ruling of the CJEU

Firstly, the Court pointed out that it is for the judicial authority to which such an application has been made to examine whether the three conditions laid down in Article 9(7) of the Enforcement Directive are satisfied. The context of the provision as well as the objectives of the legislation shall be considered when interpreting said provision. Thus, the Court concluded that Article 9(7) must be interpreted as laying down a minimum standard concerning the enforcement of intellectual property rights while, in principle, leaving the Member States a possibility to opt, as the case may be, for a strict liability regime or a fault-based liability regime.

The Court ruled that Article 9(7) of the Enforcement Directive does not preclude national legislation adopting a strict liability regime, as long as the court can take into account all the circumstances of the case, including the defendant's conduct, in order to adjust the amount of damages if necessary. Moreover, the Court pointed out that the right to compensation is strictly limited to the injury suffered by the defendant and caused by the unjustified provisional measures sought by the holder of the intellectual property right at issue. Furthermore, the Court stated that the strict liability regime must comply with the requirements of Article 3 of the same directive, namely that it must be equitable, proportionate, dissuasive, and not create barriers to legitimate trade or be abused.

The ruling confirms that the EU Member States have discretion in determining the liability regime for the applicant of the provisional measure, as long as they respect the standard set by the directive and the TRIPS Agreement. In addition, the judgment clarifies the criteria that the national courts must apply when considering compensation.