Monday, June 9, 2014

Buffet Delmas d'Autane and Fabre on Amendments to French IP Damages Law



I’ve reported twice before on the new French legislation on IP damages, here and here.  Recently Xavier Buffet Delmas d’Autane and Jules Fabre sent me a copy of their article Nouveautés, clarifications, carences et incertitudes du dispositif de lutte contre la contrefaçon tel que renforcé par la loi no 2014-315 du 11 mars 2014 (“Novelties, clarifications, gaps, and uncertainties of the plan for fighting infringement as reinforced by Law No. 2014-315 of March 11, 2014”), pages 10-18 of the May 2014 issue of the French IP journal Propriété Industrielle.  The abstract reads as follows (my translation from the French):
Although Law No. 2014-315 of March 11, 2014 does not effect an actual reform, it marks a new effort of the legislature for reinforcing the arsenal of the fight against infringement in French law, which should be welcomed.  Its impact, however, must be tempered, insofar as the law contains less in the way of novelty than clarifications that confirm established standards or practices.  Moreover, one might regret certain gaps, even uncertainties, of a sort that leads us to conclude that the announced objective of the law is not fully attained.
For present purposes, I‘ll just focus on some of the authors' observations concerning the damages provisions of the new law (which also makes some amendments to matters relating to border measures, the saisie-contrefaçon, and the statute of limitations).  As I reported previously, as proposed last year the IP Code’s damages provisions would have been amended to read:
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 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. 
The version actually enacted into law, however, reads as follows:
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 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.
Messrs. Buffet Delmas d’Autane and Fabre express disappointment that the new law affords no significant increase in the damages granted to IP owners.  They argue that both courts and parties have been overcautious in taking into account the infringer’s profits, and that it is not clear that the new law will put an end to this hesitancy.  In this regard, the authors critique a recent judgment I hadn’t come across before, TGI Paris, 3o ch., 3o sect., 11 oct. 2013, no 11/14587.  (Recently I was provided with complimentary access to a service called Darts-IP, from which I was easily able to access the case.)  As the authors note, in this case the court stated that the 2004 Enforcement Directive and its implementation in French law do not envisage the disgorgement of the infringer’s profits, but rather only that those profits may be taken into account in estimating the IP owner’s damages.  The authors also note, among other matters, that the law as enacted discarded the proposed language stating that “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 proceed by the infringement,” on the ground that this risked introducing the concept of punitive damages into French law.  They argue that the proposed text was unclear, but that it would have been desirable to have included language, proposed in 2011, clearly permitting disgorgement in cases involving bad faith infringement.

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