The matter at hand

In this patent matter, Bayer applied to the referring court, the Fővárosi Törvényszék (Budapest High Court, Hungary), for provisional measures to prohibit Richter and Exeltis from placing products on the market which infringed Bayer’s rights in a patent relating to a pharmaceutical product containing a contraceptive ingredient. The provisional measures were granted, although the defendants had already submitted an application for a declaration of invalidity of that patent. On appeal, this decision was set aside due to procedural defects and the case was referred back to the referring court, which this time denied the provisional measures due to the advanced stage of the proceedings for a declaration of invalidity.  Finally, the patent was declared invalid.

Richter and Exeltis subsequently requested the referring court to order Bayer to provide appropriate compensation for the losses suffered as a result of the provisional measures. However, the Hungarian legislation precludes this in circumstances where the losses which the defendant has suffered are due to ‘his not having acted as may generally be expected in order to avoid or mitigate his loss’, even if the patent on the basis of which the provisional measures were requested and granted has subsequently been found to be invalid. The referring court wanted to know whether this legislation conflicts with Article 9(7) 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 provides 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’.

The judgment of the ECJ

The ECJ holds that Article 9(7) 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 (merely) requires the Member States to provide ‘authority’ to their national courts to order the applicant to pay an appropriate compensation if the conditions of this provision are met. The ECJ holds that it is therefore “for those national courts to assess, in the exercise of the powers conferred on them, the specific circumstances of the case before them in order to decide whether it is appropriate to order the applicant to pay to the defendant compensation which must be ‘appropriate’, that is to say, justified in the light of those circumstances” (paragraph 51). This means that “while the exercise of these courts’ authority to grant such compensation is strictly subject to the preconditions [of Article 9(7)] (…) the fact that those conditions are satisfied in a specific case does not mean that the competent national courts will automatically and in any event be obliged to order the applicant to provide compensation” (paragraph 52).

As to the interpretation of the concept of an ‘appropriate compensation’, the ECJ refers to recital 22 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, from which it follows that the appropriate compensation laid down in Article 9(7) is intended to cover the costs and injury to which the defendant is subject following an “unjustified application” for provisional measures (paragraph 60). In this regard, the ECJ notes, again referring to recital 22, that provisional measures are particularly justified where any delay would cause irreparable harm to the holder of an intellectual property right. According to the ECJ, this means that “a finding that an application for provisional measures is unjustified presupposes, primarily, that there is no risk that irreparable harm may be caused to the holder of an intellectual property right in the event of delay in the adoption of the measures sought by him”. The ECJ rules that such risk does, however, exist “where defendants market their products even though a patent application has been submitted or there is a patent hindering marketing”. In those circumstances, therefore, “the application for provisional measures submitted (…) in response to such conduct cannot be regarded a priori as ‘unjustified’ for the purposes of Article 9(7)” (paragraph 63). In other words, “the fact that the provisional measures at issue in the main proceedings have been repealed, although that may (…) constitute one of the conditions necessary for the exercise of the authority laid down in Article 9(7) of Directive 2004/48, by contrast, it cannot be regarded in itself as a decisive factor in proving the unjustified nature of the application which gave rise to the provisional measures which have been set aside.”

The ECJ considers that a different conclusion could have the effect of discouraging the holder of the patent in question from availing himself of the measures referred to in Article 9 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 and would thus run counter to the directive’s objective of ensuring a high level of protection.

Referring to 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, the ECJ holds that Member States and the national courts are required to offer guarantees “that the measures and procedures referred to in Article 9 [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] are not to be abused” (paragraph 68). To that end, “the competent national courts must determine whether, in a given case, the applicant has not abused those measures and procedures”, taking “due account of all the objective circumstances of the case, including the conduct of the parties” (paragraphs 69 and 70).

On this basis, the ECJ concludes “that Article 9(7) 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], in particular, the concept of ‘appropriate compensation’ referred to in that provision, must be interpreted as not precluding national legislation which provides that a party shall not be compensated for losses which he has suffered due to his not having acted as may generally be expected in order to avoid or mitigate his loss and which, in circumstances such as those in the main proceedings, results in the court not making an order for provisional measures against the applicant obliging him to provide compensation for losses caused by those measures even though the patent on the basis of which those had been requested and granted has subsequently been found to be invalid, to the extent that that legislation permits the court to take due account of all the objective circumstances of the case, including the conduct of the parties, in order, inter alia, to determine that the applicant has not abused those measures” (paragraph 71).