Tuesday, July 5, 2022

CJEU: Costs for Sending Cease-and-Desist Letter Are Reimbursable

Jan Jacobi published an interesting post on IPKat titled CJEU confirms extrajudicial costs are 'other expenses' which may be claimed in IP infringement cases.  The post, which I commend to readers' attention, discusses an April 28, 2022 judgment of the CJEU that had escaped my attention, Koch Media GmbH v. FU (No. C-559/20).  The judgment itself is available on the CJEU's website here in the original German and several other languages, though not yet English.  The underlying case is a copyright action, but since the court's reasoning is based on the IP Rights Enforcement Directive (IPRED), that reasoning would be applicable to all types of IP cases.  Bottom line is that, since a warning letter can help to stave off an infringement proceeding, reasonable and proportionate expenses incurred in connection with sending such a latter are reimbursable "other expenses" under article 14.  National laws imposing caps on recoverable expenses are permissible but only to the extent they permit the recovery of such reasonable and proportionate expenses.  

Here, article 97a of the German copyright law requires service of a warning letter prior to suit, but generally caps the recoverable expense of sending one, when the defendant (as here) is a natural person and acts without a commercial or professional purpose, at the amount of attorney's fees that can be recovered against a defendant in a claim for injunctive relief where the value of the subject matter in dispute is 1000 euros.  In this particular case, that limit resulted in the recovery of only 124 euros, much less than what the plaintiff Koch actually incurred.  Most relevant to the present case, as in the CJEU's earlier decision in United Video Properties (discussed on this blog, e.g., here) is IPRED article 14, titled "Legal Costs," which states that " Member States shall ensure that reasonable and proportionate legal costs and other expenses incurred by the successful party shall, as a general rule, be borne by the unsuccessful party, unless equity does not allow this."

Below is my (unofficial, of course) translation from the German of the operative part of the judgment.  I've tried to translate it into readable English without distorting the meaning.

"1. The term 'other expenses' as used in IPRED article 14 should be interpreted as including costs that an IP rights holder incurs in connection with its representative's efforts to effect an enforcement of these rights out of court, for example the costs associated with a warning letter.  

"2. The term 'other expenses' as used in IPRED article 14 should not be interpreted as conflicting with a national law stipulating that, in a case in which a natural person infringes an IP right other than for a professional or commercial purpose, the rights holder's claim to reimbursement is generally to be determined based on the value of the subject matter in dispute as delimited by that national law, so long as the national court is of the view, upon consideration of the specific circumstances of the matter at issue, that the application of the cap is not inequitable."

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