CJEU Judgment on the moment of invoking the right of information regarding the origin of infringing products
Only a few days ago, on January 18, 2017, the Court of Justice delivered an interesting preliminary ruling in Case C-427/15, following the request lodged by the Supreme Court of the Czech Republic. The reference was made in proceedings between NEW WAVE, a.s. and ALLTOYS, spol. S.r.o. concerning the interpretation of Article 8 of the Directive 2004/48 on the enforcement of intellectual property rights.
The main proceedings concerned the admissibility of a new lawsuit filed by NEW WAVE against ALLTOYS, after obtaining a final judgment declaring that the latter had violated the plaintiff´s trademarks rights over the term “MegaBabe” and ordering ALLTOYS to refrain from wrongful conduct in future and to withdraw the concerned products from the market.
After those proceedings were concluded, NEW WAVE brought a second action seeking for ALLTOYS to be ordered to communicate to it all information on the origin and distribution networks of the goods bearing the MegaBabe mark stocked, marketed or imported by ALLTOYS at any time in the past or present, specifically the first name and surname or commercial or trading name and permanent residence or seat of the supplier, manufacturer, stockist, distributor and other previous holder of those goods, as well as information on the quantity supplied, stocked, received or ordered and the quantity sold, and precise data on the selling price of the various articles and the price paid by ALLTOYS to the supplier for goods supplied.
These new proceedings focused on determining whether it was possible to invoke the right of information in a separate lawsuit brought after the final termination of the main infringement proceedings, in view of the national legislation that transposed Article 8 of the Directive 2004/28.
Upon appeal of ALLTOYS on a point of law against the appellate court´s judgment, the Supreme Court observed that there were differences between the Czech law and the text of the Directive, given that the former provided that information may be obtained by making an application “in proceedings for infringement of a right”, while the latter used a broader expression, namely “in connection with proceedings for infringement”.
The Court also noted that the above differences also existed between other linguistic versions. Thus, the Czech, English and French versions of the Directive use respectively the words ‘in connection with proceedings’, ‘in the context of proceedings’, and ‘within the framework of proceedings’.
That being so, the Court decided to suspend the proceedings and refer to the Court of Justice a preliminary question on whether Article 8 of the Directive must be interpreted as applying to a situation, such as that at issue in the main proceedings, in which, after the definitive termination of proceedings in which it was held that an intellectual property right was infringed, the applicant in separate proceedings seeks information on the origin and distribution networks of the goods or services by which that intellectual property right is infringed.
The Court replied saying that the expression ‘in the context of proceedings concerning an infringement of an intellectual property right’ cannot be understood as referring solely to proceedings seeking a finding of an infringement of an intellectual property rights and that, it does not exclude Article 8(1) from also covering separate proceedings, initiated after the definitive termination of proceedings in which it was held that an intellectual property right was infringed.
Moreover, it declared that it was apparent from the wording of Article 8(1) that the obligation to provide information is directed not only at the infringer of the right in question but also at “any other person” mentioned in that provision and that is not necessarily party to the proceedings in which a finding is sought of an infringement of an intellectual property right.
Finally, the Court indicated that the right of information laid down in Article 8(1) is a specific expression of the fundamental right to an effective remedy guaranteed in Article 47 of the Charter of Fundamental Rights of the EU and therefore, without full knowledge of the extent of the infringement, the intellectual property right holder would not be in a position to determine or calculate precisely the damages he was entitled to by reason of the infringement.
As regards the Spanish legislation, the proceedings especially designed to obtain information on the origin and distribution networks of the goods or services by which the intellectual property right is infringed are the so-called pretrial proceedings regulated in Article 256 and following of the Civil Procedural Law (in Spanish).
On the other hand, the information concerning the quantity of the infringing products sold, precise data on the selling price of the article and the price paid by the infringer to the supplier are usually obtained in the main infringement proceedings during which the applicant is entitled to request the other party to reveal its accounts in order to calculate the damages suffered, in accordance with Article 43.4 of the Trademark Law (in Spanish).
As it may be observed, the former proceedings are initiated before or in order to prepare the future infringement proceedings and the latter is an integral part of such proceedings.
In these circumstances, the Court of Justice raises an interesting possibility of reversing the usual order of things by initiating, in the first place, the proceedings seeking a finding of an infringement of an intellectual property rights and, in the second place, separate proceedings centered on obtaining information on the origin and distribution networks of the infringing goods.
The latter possibility can be particularly helpful in cases where the plaintiff wishes to act swiftly and where the priority is to obtain an injunction against the infringer as soon as possible to prevent further damages.
In this context, it should be kept in mind that, depending on the case and on the Court, the pretrial proceedings can last several months or more, delaying the possible injunction order against the infringer considerably.
Likewise, the action for damages not only can add an extra and unnecessary layer of complexity to the principal dispute but also be in many cases premature.
This is why, the new Spanish Patent Law 24/2015 (in Spanish) entering into force in April this year, stipulates that the calculation and settlement of the compensation for damages shall be carried out in the enforcement stage, given that at the moment of filing of the action, the plaintiff may not have all the necessary information to specify the amount of the damages claimed and, also because the calculation of damages requires considerable evidence and thus higher costs and complexity of the proceedings that are not justified if the final ruling dismisses the infringement action in the end.
The above provision should be regarded as also applicable in the trademark infringement proceedings, according to the reference to Patent Law provided for in the First Additional Provision of the Spanish Trademark Law.
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- The Donna Karan Case or “How the Spanish Supreme Court re-construes its doctrine on damages in cases of infringement involving previously valid registered trademarks”
- “Youkioske”, Record Conviction for Copyright Crime
- What is the Scope of the “Reasonable Compensation” for a Trademark Infringement Established in Art. 9.3 EUTMR? – CJUE Judgment of 22 June 2016, C-280/15, “Nikolajeva”