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.

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The Issue

If intellectual property rights are infringed, the rights holder may – as an alternative to compensation for the damages actually suffered or a reasonable royalty – request the surrender of the infringer’s profits.

The first step is to determine the “net profits” of the infringer. According to case law, variable costs for the manufacture and distribution of the infringing products may be deducted, whereas fixed costs may not. This includes administrative costs, directors’ salaries, plant rents, depreciation of fixed assets, etc, since these costs would have been incurred irrespective of the manufacture and/or distribution of the infringing products (4 Ob 182/13p, Grant’s, ecolex 2014/137).

In the decision 4 Ob 213/18d – LED-LENSER, rendered in 2019, the Austrian Supreme Court (OGH) – as far as can be seen – for the first time dealt with the question if and to which extent the infringer’s profits payable to the right holder are to be further reduced in order to appropriately consider the causal nexus between IP infringement and profits made.

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