Tuesday, January 3, 2023

CJEU to Consider Once Again Article 9(7) of the Enforcement Directive

Article 9(7) of the European Communities' Intellectual Property Rights Enforcement Directive states that where "provisional measures are revoked or where they lapse due to any act or omission by the applicant, or where it is subsequently found that there has been no infringement or threat of infringement of an intellectual property right, the judicial authorities shall have the authority to order the applicant, upon request of the defendant, to provide the defendant appropriate compensation for any injury caused by those measures."  Readers may recall that in its 2019 decision in Bayer v. Richter the Court of Justice for the European Union (CJEU) held that article 9(7) does not necessarily require the IP owner whose rights are later invalidated to compensate a party who has been preliminarily enjoined from entering the market prior to invalidation, at least where the patent owner's conduct was not abusive and the defendant did not try to mitigate its loss by seeking to invalidate the patent prior to at-risk launch.  Although the precise contours of the decision remain to be fleshed out, some of the commentary following the decision, including my own preliminary thoughts on the case, has been negative.  See Agnieszka Sztoldman, Compensation for a Wrongful Enforcement of a Preliminary Injunction under the Enforcement Directive (2004/48/EC), 42 E.I.P.R. 721 (2020); see also Léon Dijkman, CJEU rules that repeal of provisional measure does not automatically create liability for wrongful enforcement (2019) 14 Journal of Intellectual Property Law and Practice 12 (2019).  In any event, the CJEU will have an opportunity to revisit article 9(7) in the pending case of Mylan AB v. Gilead Sciences Finland Oy, Case C-473/22.  So far the case does not appear to have attracted as much attention as I would have expected, although I learned about it myself from a recent write-up on the EPLaw Blog.  Anyway, it appears that Finland awards compensation to an enjoined defendant on a strict liability basis, in cases in which the IP in suit is later invalidated, and so the present case poses the following questions


          Is a compensation regime based on strict liability, such as that described above (paragraphs 16 to 18 of this request for a preliminary ruling) which is in force in Finland, to be regarded as compatible with Article 9(7) of the Enforcement Directive? . . . .


            If the first question is answered in the negative, what then is the nature of the liability for compensation on which the liability under Article 9(7) of the Enforcement Directive is based? Is that liability to be regarded as a form of liability based on fault, an abuse of rights, or some other ground?


            In relation to the second question, what circumstances must be taken into account in assessing the existence of liability?


            In particular, as regards the third question, must the assessment be made solely on the basis of the circumstances known at the time when the provisional measure was obtained, or is it permissible to take into account, for example, the fact that the intellectual property right on whose alleged infringement the provisional measure was based was subsequently, after that measure was obtained, found to be invalid ab initio and, if so, what significance is to be attached to that circumstance?

The commentators I linked to above had foreseen the potential incompatibility of Bayer v. Richter with such strict liability regimes, as did Tanguy de Haan in his article The CJEU sides with IP right holders: the Bayer Pharma judgment (C-688/17) and the consequences of the Europeanisation of provisional and precautionary measures relating to IP rights, 42 E.I.P.R. 767 (2020).  It will be interested to see if the Court interprets that decision broadly or narrowly.

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