The matter at hand

Mr. Hansson, the holder of a Community plant variety right called ‘Lemon Symphony’, obtained an order from the Regional Court of Düsseldorf requiring Jungpflanzen to pay compensation for the damage resulting from an infringement of Mr. Hansson’s Community plant variety right, which damage was calculated on the basis of the licence fee which Jungpflanzen should have paid him. The court, however, did not uphold Mr. Hansson’s other claims, which related to payment of an ‘infringer supplement’ to the licence fee calculated at half of the amount of the fee claimed and reimbursement of the costs related to the proceedings.

Both parties appealed against that judgment before the Higher Regional Court in Düsseldorf, which referred a large number of questions to the ECJ regarding the interpretation of Article 94 of the Plant Variety RegulationCouncil Regulation [EC] No 2100/94 of 27 July 1994 on Community plant variety rights and Article 13 of the Enforcement DirectiveDirective 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights.

The judgment of the ECJ

With regard to the payment of an ‘infringer supplement’, the ECJ first of all establishes that Article 94 of the Plant Variety RegulationCouncil Regulation [EC] No 2100/94 of 27 July 1994 on Community plant variety rights cannot be interpreted as providing a legal basis, to the benefit of the rightholder, which permits an infringer to be required to pay punitive damages established on a flat-rate basis (paragraph 34).

According to the ECJ, this interpretation is consistent with the objectives of the Enforcement DirectiveDirective 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights, which lays down a minimum standard concerning the enforcement of intellectual property rights in general (paragraph 36) and from which it follows that:

(i). remedies provided for in the Enforcement DirectiveDirective 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights should be determined in each case in such a manner as to take due account of the specific characteristics of that case (paragraph 37);

(ii). “the aim of any compensation is not to introduce an obligation to provide for punitive damages” (paragraph 38);

(iii). Member States are to ensure that the competent judicial authorities, on application of the injured party, order the infringer to pay “damages appropriate to the actual damage suffered by him as a result of the infringement” (paragraph 39).

“In those circumstances, Article 94 of [the Plant Variety RegulationCouncil Regulation [EC] No 2100/94 of 27 July 1994 on Community plant variety rights] does not permit an infringer to be ordered to pay a flat-rate ‘infringer supplement’, as described by the referring court, since such a supplement does not necessarily reflect the damage suffered by the holder of the variety infringed, although [the Enforcement DirectiveDirective 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights] does not prevent the Member States from laying down measures that are more protective” (paragraph 40).

The ECJ continues that Article 94 of the Plant Variety RegulationCouncil Regulation [EC] No 2100/94 of 27 July 1994 on Community plant variety rights does not permit the rightholder to claim restitution of the gains and profits made by an infringer either. “In fact, both the ‘reasonable compensation’ and the amount of compensation payable under Article 94(2) of [the Plant Variety RegulationCouncil Regulation [EC] No 2100/94 of 27 July 1994 on Community plant variety rights] must be set on the basis of the damage suffered by the injured party and not on the basis of the profit made by the person who committed the infringement. Although paragraph 2 of Article 94 refers to the ‘advantage derived … by the person who committed the infringement’, it does not provide that that advantage has to be taken into account, as such, in the amount of the financial compensation actually awarded to the holder” (paragraph 41).

Instead, the reasonable compensation provided for in Article 94(1) intends “to make good the loss suffered by the holder of a plant variety right who is the victim of an infringement” (paragraph 46), which loss consists of “the amount of the fee which would be payable for licensed production” (paragraph 47). It follows from that interpretation that reasonable compensation “includes loss or damage that is closely connected to failure to pay that compensation” (paragraph 52). This includes default interest (paragraph 53), but excludes “costs incurred for monitoring compliance with rights of the plant variety holder” (paragraph 51).

“Consequently, the answer to Questions 2 and 3 is that the concept of ‘reasonable compensation’, provided for in Article 94(1) of [the Plant Variety RegulationCouncil Regulation [EC] No 2100/94 of 27 July 1994 on Community plant variety rights], must be interpreted as meaning that it covers, in addition to the fee that would normally be payable for licensed production, all damage that is closely connected to the failure to pay that fee, which may include, inter alia, payment of default interest. It is for the referring court to determine the circumstances which require that fee to be increased, bearing in mind that each of them may be taken into account only once for the purpose of determining the amount of reasonable compensation.” (paragraph 54).

As to whether or not out-of-court expenses must be compensated and costs incurred in an unsuccessful interlocutory application preceding successful proceedings on the merits, the ECJ leaves much up to the discretion of the national courts; It is “not contrary” to the Plant Variety RegulationCouncil Regulation [EC] No 2100/94 of 27 July 1994 on Community plant variety rights not to take such costs and expenses into consideration, but “a condition for not taking those expenses into account is that the amount of the legal costs that are likely to be awarded to the victim of the infringement is not such, in view of the sums he has incurred in respect of out-of-court expenses and their utility in the main action for damages, as to deter him from bringing legal proceedings in order to enforce his rights” (paragraph 64).