‘Punitive’ damages are possible in case of IP infringements according to the European court

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The European court ruled in Case C‑367/15, Stowarzyszenie ‘Oławska Telewizja Kablowa’ v Stowarzyszenie Filmowców Polskich. This case concerns the following:

SFP is an organisation collectively managing copyright which is licensed in Poland and entitled to manage and protect copyright in audiovisual works. OTK broadcasts television programmes by means of a cable network in the town of Oława (Poland).

After notice of termination was given on 30 December 1998 of a licensing agreement that set out the rules on payment between the parties to the main proceedings, OTK continued to make use of copyright works and filed an application with the Komisja Prawa Autorskiego (Copyright Commission, Poland) seeking, in essence, that the fee payable for use of the copyright managed by SFP be set. By decision of 6 March 2009, that commission set the fee at 1.6% of the net income, exclusive of value added tax, earned by OTK from its retransmission of works by cable, not including certain charges borne by it. OTK itself calculated the amount due on that basis and paid SFP the sum of PLN 34 312.69 (roughly EUR 7 736.11) in respect of the income received for the period from 2006 to 2008.

On 12 January 2009 SFP brought an action against OTK, by which it sought, on the basis, inter alia, of Article 79(1)(3)(b) of the UPAPP, an order prohibiting OTK from retransmitting the protected audiovisual works until a new licensing agreement had been entered into and requiring OTK to pay it the sum of PLN 390 337.50 (roughly EUR 88 005.17) together with statutory interest.

By judgment of 11 August 2009, the Sąd Okręgowy we Wrocławiu (Regional Court, Wrocław, Poland) ordered OTK to pay SFP the sum of PLN 160 275.69 (roughly EUR 36 135.62) together with statutory interest and, essentially, dismissed the action as to the remainder. After the appeals which both of the parties to the main proceedings brought against that judgment were dismissed, they both brought an appeal on a point of law. By judgment of 15 June 2011, the Sąd Najwyższy (Supreme Court, Poland), however, referred the case back for fresh examination to the Sąd Apelacyjny we Wrocławiu (Court of Appeal, Wrocław, Poland), which, on 19 December 2011, delivered a second judgment. This judgment was also set aside by the Sąd Najwyższy (Supreme Court) in an appeal on a point of law and the case was again referred back to the Sąd Apelacyjny we Wrocławiu (Court of Appeal, Wrocław) for fresh examination. OTK brought an appeal on a point of law against the judgment subsequently delivered by the latter court.

The Sąd Najwyższy (Supreme Court), which is now required, in the context of this most recent appeal, to examine the case for a third time, has doubts as to whether Article 79(1)(3)(b) of the UPAPP is compatible with Article 13 of Directive 2004/48. It states that under that provision of the UPAPP it is possible, at the request of a person whose economic rights of copyright have been infringed, for compensation to consist in payment of a sum of money corresponding to twice or three times the amount of the appropriate fee. That provision therefore entails a form of penalty.

Furthermore, the referring court is uncertain whether, in order for a person holding economic rights of copyright to be compensated pursuant to Directive 2004/48, he must prove the event giving rise to the loss, the loss suffered and its extent, the causal link between that event and the loss and the fact that the acts of the perpetrator of the infringement are culpable.

In those circumstances, the Sąd Najwyższy (Supreme Court) decided to stay proceedings and refer the following question to the Court of Justice for a preliminary ruling:

‘Is Article 13 of Directive 2004/48 to be interpreted as meaning that the rightholder whose economic rights of copyright have been infringed may seek redress for the damage which it has incurred on the basis of general principles, or, without having to prove loss and the causal relationship between the event which infringed its rights and the loss, may seek payment of a sum of money corresponding to twice the amount of the appropriate fee, or, in the event of a culpable infringement, three times the amount of the appropriate fee, whereas Article 13 of Directive 2004/48 states that it is a judicial authority which must decide on damages by taking into account the factors listed in Article 13(1)(a), and only as an alternative in certain cases may set the damages as a lump sum, taking into consideration the elements listed in Article 13(1)(b) of that directive? Is the award, made at the request of a party, of damages as a predetermined lump sum corresponding to twice or three times the amount of the appropriate fee permissible pursuant to Article 13 of the directive, regard being had to the fact that recital 26 thereof states that it is not the aim of the directive to introduce punitive damages?’

The Court’s decision:

Article 13 of Directive 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 not precluding national legislation, such as that at issue in the main proceedings, under which the holder of an intellectual property right that has been infringed may demand from the person who has infringed that right either compensation for the damage that he has suffered, taking account of all the appropriate aspects of the particular case, or, without him having to prove the actual loss, payment of a sum corresponding to twice the appropriate fee which would have been due if permission had been given for the work concerned to be used.

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