France Amends Damages Provisions of its Intellectual Property Code

In January, I posted this report on a pending French bill that would, among other things, amend the damages provisions of the Code de la Propriété Intellectuelle (Intellectual Property Code).  Specifically, the bill aimed to alter the relevant text from this (translated into English by Margaret Wade and me):

For assessing damages and interest, the court takes into account the negative economic consequences, including loss of profit, suffered by the injured party, the profits realized by the infringer and the moral prejudice caused to the rightholder by the infringement.

However, the court may, alternatively, upon request by the injured party, award damages as a lump sum that shall not be less than the amount of royalties or fees that would have been due if the infringer had requested authorization for the use of the right infringed. 

to this:

For assessing damages and interest, the court takes into account distinctly:

the negative economic consequences, including loss of profit and the loss sustained by the injured party;

the moral prejudice incurred by the latter;

 

the profits realized by the infringer and, where appropriate, the savings of intellectual, material, and promotional investments which the latter has derived from the the infringement.

 

If the court determines that the resulting amounts do not make good the entirety of the prejudice suffered by the injured party, it orders to the profit of the latter the confiscation of all or part of the revenue procured by the infringement.

However, the court may, alternatively, upon request by the injured party, award damages as a lump sum.  This amount is higher than the royalties or fees that would have been due if the infringer had requested authorization for the use of the right infringed.

My post mentioned that the amended provisions would read alike for all the various IP rights, including patents, copyrights, and trademarks.  (Actually, there was one small difference.  Instead of referring to a copyright infringement (contrefaçon) and copyright infringer (contrefacteur), the bill referred to an impairment of rights (atteinte aux droits) and an "author of the impairment" (auteur de l'atteinte aux droits).  This is carried over into the version discussed below as well.)  My post also mentioned articles on the pending legislation in Propriété Industrielle by Professor Christian LeStanc and by Xavier Buffet Delmas d'Autane and Jules Fabre.  Messrs. Buffet Delmas and Fabre characterized these amendments to the remedies provisions as the most ambitious part of the proposal; and expressed the view that, although judges had been reluctant to apply the new rules for calculating damages permitted under the 2007 revision and therefore that the proposal is a step in the right direction, there was reason to regret that the proposed amendment doesn't mention taking into account the infringer's bad faith.  They also discussed proposed amendments relating to customs and to saisies-contrefaçon.

  

Anyway, in a short article recently published in Bloomberg BNA's World Intellectual Property Report (accessible here, but you need a subscription), Buffet Delmas and Fabre report that a version of the bill has now been enacted into law, specifically Law No. 2014-315 of March 11, 2014.  Here's a link to the law, as passed by the National Assembly (in French).  It looks the damages provisions were altered slightly from the version that had passed the Senate and that previously blogged about.  In particular, the patent damages provision (article 615-7) now reads:

Pour fixer les dommages et intérêts, la juridiction prend en considération distinctement :

« 1° Les conséquences économiques négatives de la contrefaçon, dont le manque à gagner et la perte subis par la partie lésée ;

« 2° Le préjudice moral causé à cette dernière;

« 3° Et les bénéfices réalisés par le contrefacteur, y compris les économies d'investissements intellectuels, matériels et promotionnels que celui-ci a retirées de la contrefaçon.

« Toutefois, la juridiction peut, à titre d'alternative et sur demande de la partie lésée, allouer à titre de dommages et intérêts une somme forfaitaire. Cette somme est supérieure au montant des redevances ou droits qui auraient été dus si le contrefacteur avait demandé l'autorisation d'utiliser le droit auquel il a porté atteinte. Cette somme n'est pas exclusive de l'indemnisation du préjudice moral causé à la partie lésée.

I would translate this as follows, with the changes in boldface:

For assessing damages and interest, the court takes into account distinctly:

the negative economic consequences, including loss of profit and the loss sustained by the injured party;

the moral prejudice incurred by the latter;

 

and the profits realized by the infringer, including the savings of intellectual, material, and promotional investments which the latter has derived from the the infringement.

 

If the court determines that the resulting amounts do not make good the entirety of the prejudice suffered by the injured party, it orders to the profit of the latter the confiscation of all or part of the revenue procured by the infringement. 

However, the court may, alternatively, upon request by the injured party, award damages as a lump sum.  This amount is higher than the royalties or fees that would have been due if the infringer had requested authorization for the use of the right infringed.  This amount is not exclusive of the compensation for the moral prejudice suffered by the injured party.

Notice also that the paragraph that in the earlier bill read "If the court determines that the resulting amounts do not make good the entirety of the prejudice suffered by the injured party, it orders to the profit of the latter the confiscation of all or part of the revenue procured by the infringement" is now gone.

I'm sure there will be some commentary in upcoming issues of the French IP journals explaining the reason for these changes.  I would guess it may have something to do with the ongoing question of whether the amount of the infringer's profit is properly considered only as an aspect of the IP owner's damages, or may be awarded as an alternative remedy (disgorgement).  I will keep readers abreast of what I learn.

Finally, M. Fabre pointed out to me in a recent email that (as stated in the two articles he coauthored with M. Buffet  Delmas) the new law also extends the statute of limitations from three to five years.  (It was already five years for copyright, but not for patents and trademarks; see also this post by Brad Spitz on the Kluwer Patent Blog from November 2013.)  This too will, presumably, have an impact on damages awards.