The matter at hand
The University of Heidelberg brought an action for a cease-and-desist order against NovaText on the grounds of infringement of its EU trade marks and lodged subsequent claims under trade mark law. The substantive proceedings concluded when the parties reached a judicial settlement. During the following taxation of costs proceedings, the University of Heidelberg claimed costs relating to the assistance of a patent lawyer, even though the correspondence had been between other lawyers. NovaText objected to these costs claiming that the patent lawyer’s assistance was not “necessary for the purpose of obtaining the legal remedy sought” or “added value” to the dispute as prescribed by the German system of civil litigation (paragraph 14).
The Landgericht Mannheim (the Regional Court of Mannheim) and the Oberlandesgericht Karlsruhe (the Higher Regional Court of Karlsruhe), nonetheless, ordered NovaText to pay the University of Heidelberg’s legal costs and set the value of the dispute at EUR 10,528 which included the patent lawyers’ fees. The Higher Regional Court held that paragraph 140(3) of the Markengesetz provided a legal basis for awarding the patent lawyers’ fees, which national legislation precluded an assertion of the patent lawyer’s costs being “necessary” or “valuable” to the proceedings.
The referring court, the Bundesgerichtshof (The German Federal Court of Justice), having doubts whether paragraph 140(3) of the Markengesetz is compatible with Article 3(1) and Article 14 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, asked the ECJ whether the respective articles 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 should be interpreted as precluding national legislation which does not allow the courts to take due account of specific characteristics of that case for the purpose of assessing whether the legal costs incurred by the successful party are reasonable and proportionate.
The judgment of the ECJ
The ECJ reiterates that article 14 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 “lays down the principle that reasonable and proportionate legal costs and other expenses incurred by the successful party are, as a general rule, to be borne by the unsuccessful party” (paragraph 36) in order to “ensure a high, equivalent and homogeneous level of intellectual property protection, which is the specific aim of that provision, which attempts to prevent the injured party from being deterred from bringing legal proceedings in order to protect their intellectual property rights” (paragraph 38). The ECJ also finds that article 14 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 may deny the (full) reimbursement of legal costs “if equity prevents the imposition on the unsuccessful party of the reimbursement of the costs incurred by the successful party, even if they are reasonable and proportionate” (paragraph 39). Article 14 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 furthermore “provides that the legal costs and other expenses to be borne must be ‘proportionate”” (paragraph 47). In line with United Video Properties v Telenet (C-57/15), the ECJ holds that Member States must ensure that the enforcement of intellectual property rights are not ‘unnecessarily costly’ (paragraph 45).
The ECJ, therefore, concludes that “it cannot be inferred from that case-law that, in the exercise of that discretion, the Member States may go so far as to subtract a category of court costs or other expenses from any judicial review of their reasonableness and proportionality” (paragraph 51) as it may “in certain cases, result in a breach of the general obligation laid down in Article 3(1) 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], under which, in particular, the procedures put in place by the Member States must not be unnecessarily costly” (paragraph 51) and “could open the way for misuse of such a provision in breach of the general obligation provided for in Article 3(2) 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]” (paragraph 54).
In light of the foregoing considerations, the answer of the ECJ to the referred question is that “Articles 3 and 14 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] must be interpreted as precluding national legislation or an interpretation thereof which does not allow the court before which an action is brought under that directive to take due account, in each case brought before it, of its specific characteristics for the purposes of assessing whether the legal costs incurred by the successful party are reasonable and proportionate.”