CJEU: No automatic damages for a wrongful preliminary injunction

Preliminary injunctions (PIs) allow rapid and effective action against infringements of intellectual property rights. To this end, the procedural rights of the parties are restricted and the evidence requirements are lowered. However, under the Austrian legal systems these advantages come with a trade-off: In subsequent main proceedings the PI is reviewed and if it turns out that the PI was wrongly granted, the rights holder must indemnify, irrespective of fault, any damage that the alleged infringer has suffered through the unjustified PI. This system, which can also be found in other European countries, is now called into question by the CJEU decision Bayer Pharma v. Richter Gedeon and Exeltis, Case No. C-688/17.

In this decision, the CJEU deals for the first time with Art 9 (7) of the Enforcement Directive, which stipulates that if a PI is revoked, the applicant must pay “appropriate” compensation. According to the CJEU “appropriate” means that a claim for damages must be justified in view of the specific circumstances of the individual case (para 51 of the decision).

The courts of the Member States are therefore not obliged to automatically and in any event order the applicant to pay damages for an unjustified PI (para 52 of the decision).

Therefore, also a liability regime such as that provided for under Hungarian law, which is much less advantageous for the subject of a PI than that of Austria, is permissible under Union law. In the case at hand, it was decided that an alleged patent infringer against whom a PI was issued, which later proved to be wrong as a result of the patent being revoked, does not have a claim for damages because he acted at his own risk and the applicant did not act improperly by requesting the PI.

Only if, after taking into account all “objective circumstances” the court concludes that the possibility of a PI was “abused” (para 70 of the decision), does Union law provide for damages.

However, when is a PI abusive? The mere fact that the PI was later revoked because the underlying patent was declared invalid (as in the case at hand) or no patent infringement was found in the main proceedings is expressly not sufficient for this purpose (para 52 of the decision).

For Austria, the question now arises whether the Austrian strict liability regime, with its automatic liability in each case in which a PI is revoked, can be maintained.

  • This is questionable not least because, as mentioned above, the CJEU emphasises that claims for damages which are triggered solely by the fact that a PI is subsequently revoked would run counter to the objective of the Enforcement Directive, namely to ensure a high level of protection of intellectual property (para 65 of the decision).
  • Furthermore, the court states that the term “appropriate compensation” is to be regarded as an autonomous concept of Union law which must be interpreted uniformly throughout the EU (para 49 of the decision).

Therefore, this decision of the CJEU is likely not the end of the story.