AG’s opinion on the compatibility of a national rule awarding damages in form of a pre-determined lump sum with the Enforcement Directive (Directive 2004/48)

Following a reference by Sąd Najwyższy (Polish Supreme Court) to the Court of Justice of the European Union (CJEU) for a preliminary ruling (Case C-367/15), Attorney General (AG) Sharpston gave his opinion that the provisions of the Enforcement Directive (Directive 2004/48) preclude a national rule awarding automatic and predetermined damages to a rightholder whose rights have been infringed and that they do not authorize the award of punitive damages.


The case which gave rise to the request for preliminary ruling comes from a dispute about licensing fees between the Polish Filmmakers’ Association and the Cable Television Association of the Town of Oława.


The Polish Copyright Law allows the rightholder to request reparation of damages in form of a remedy for the caused loss in form of a payment of a lump sum of money corresponding to twice the amount of the appropriate fee which would have been due[1]. The norm excludes any intervention of the Judge on the determination of the damages and can be awarded without taking into consideration the real damages caused by the infringer. The Polish Supreme Court was not sure if punitive damages could be introduced in national law considering that recital 26 of the Enforcement Directive states that it is not the aim of the directive to introduce punitive damages.


The Advocate General argued in the first place that by virtue of article 13(1) of the Enforcement Directive, there has to exist a test of proportionality between the loss suffered and the amount claimed. The awarded damages have to be appropriate to the actual prejudice suffered as a result of the infringement. The Enforcement Directive also states that the remedies have to be fair and equitable (art. 3(1) Enf. Dir.) and the remedies should be determined in each case and taking into account its circumstances. Such determination can only be assessed by the Judge. If the Judge has no say in establishing the definitive amount of the damages, then these conditions are not met.


The second part of the discussion was taken on by the Austrian and the Polish governments which claimed that article 2 of the Enforcement Directive allows for national legislation to include provisions more favourable for rightholders which would render the above issue groundless.


According to the AG, such argument contravenes the general scheme of the Enforcement Directive which aims to ensure an equivalent level of protection throughout the European Union and has not been meant to introduce only minimal harmonisation. Article 2(1) also refers to means and not measures. Such means are meant for example to prevent further infringements and not to allow for changing the meaning of the Directive.


The article thus should not authorize Member States to introduce an entitlement to punitive damages in case of infringement of intellectual property rights.


It will surely be interesting to see if the Court of Justice will issue a ruling in the same line as the AG’s opinion.


The AG’s full conclusion reads as follows:


1.      Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights should be interpreted as precluding a national rule which provides for the automatic payment of a predetermined sum to a rightholder whose rights have been infringed on the application of the rightholder and without any intervention on the part of the competent national judicial authorities in setting the amount of the damages in question.


2.      Articles 3 and 13(1)(b) of Directive 2004/48 should be interpreted as meaning, first, that the onus will be on the rightholder to establish that the circumstances of the case in question justify the making of an award of damages under the national equivalent of subparagraph (b) of Article 13(1) of the directive and that it is accordingly ‘appropriate’ to do so and, second, that they preclude a national rule whereunder a rightholder may claim a fixed sum of two or three times the amount of the fee which would have been payable if the rightholder had given permission for the work to be used. They do not, however, render unlawful a national rule under which the rightholder may claim a sum which is limited to two or three times that amount provided that the rightholder can establish that the sum claimed is proportionate to the damage suffered. The onus is on the rightholder to demonstrate that this is the case.


3.      Article 2(1) of Directive 2004/48 does not authorise a Member State to provide a rightholder whose intellectual property rights have been infringed with an entitlement to punitive damages.


[1]    Article 7(1)(3) of the Polish Copyright Law is the transposition of article 13(1) of the Enforcement Directive. Polish Constitutional Court recently declared unconstitutional the second part of the corresponding clause (art. 79(1)(3)(b)) which awarded three time that amount in case of negligent infringement.


Written by: Ondrej Vachta