Wednesday, May 12, 2021

France's Cour de Cassation Overturns Appellate Judgment on Damages

The case is Time Sport International SAS v. Décathlon France SAS, Décathlon SA et DHG Knauer GmbH, Cour de Cassation comm., March 17, 2021, PIBD 1159-III-1.  I have blogged about this case, involving a patent relating to bicycle helmets, twice before, first after the initial decision of the Tribunal de la grande instance de Paris in 2016 (see here), and again after the decision of the Cour d'appel de Paris in 2018 (see here).  To make a long story short, the trial court awarded, inter alia, 20% of the gross profits of distributor Décathlon France and manufacturer Knauer, pursuant to a provision of  article 615-7 of the French IP Code, which at the relevant period of time read in part (translated) "To set damages, the court takes into account the negative economic consequences, including the loss of profit suffered by the injured party, the benefits made by the infringer and the moral prejudice caused to the right-holder because of the infringement."  The appellate court reversed, and as to Knauer awarded 6% of Décathlon's turnover--effectively, a reasonable royalty under the second sentence of article 615-7, which at the relevant period of time stated that a court could "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"--amounting to just €28,620.90.  The Cour de Cassation now reverses the appellate court, concluding that it is up to the plaintiff to choose which compensation method it wants, and here the plaintiff requested an award based on Knauer's profits, not a reasonable royalty.  In this regard, the high court's rationale seems similar to its rationale in a 2019 decision I blogged about, Carrera SARL et Texas de France SAS v. Muller et Cie, PIBD No. 1112, III, 120 (Jan. 23, 2019) (see here), which also held that it is up to the plaintiff to select its method of compensation.  (See also this discussion of Carrera on the Patent My French blog.)  In neither Time Sport not Carrera, however, does the Cour de Cassation explain exactly what it means to "take into account" the defendant's profits:  does it mean that the court may award a disgorgement of those profits, or only (literally) take them into account in estimating the plaintiff's actual loss?  Though in case like Time Sport in which the plaintiff isn't practicing the patent itself, from an economic perspective wouldn't the actual loss essentially be its forgone royalty--and if so, is there a meaningful difference between this royalty and the royalty a court would award under article 615-7 para. 2?

For my previous post on the 2014 amendments to article 615-7, which were not at issue in Time Sport, see here.

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