Spicing up trademark damages in Europe
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Spicing up trademark damages in Europe

The speakers on this morning’s session on damages in Europe have a plan to keep discussion lively. Simon Crompton explains how the jurisdictions will be compared and contrasted

On the morning last month when the INTA Daily News contacted the members of today’s Damages in Europe panel, none of them was available. Not a single one. The next day, speaker Nick Bolter from Edwards Angell Palmer & Dodge in London revealed why: “We all met up in Paris to discuss the panel, then went for lunch to get to know each other a bit better. We’ve all experienced panels at INTA and other conferences in the past and we felt that these discussions work a lot better if there is a little spark between the speakers. So we sat down and talked about how the discussion would be structured, and then went out to lunch.”

Of course, one of the key ways in which a panel discussion gets that ‘spark’ is by finding ways to compare and contrast speakers’ experiences. This is particularly key when the object of the panel – as with this one – is to give the audience a round-up of developments across a number of countries. To that end all the speakers have planned when one country has an interesting overlap with another, so that interruptions and side-points can be effectively inserted without straying off topic.

“I think we’ve found enough areas where that interaction will work,” continues Bolter. “Particularly if we look at both procedure and then costs in the different jurisdictions, so damages extending to damages plus costs. And key to everyone’s points will be comparing with the U.S., which shows the greatest contrast with any European country and will be of particular interest to an audience in the U.S.”

Bolter will give the UK perspective, with Rebecca Delorey of Gilbey Delorey looking at France and Gregor Vos of Klos Morel Vos & Schaap going through the situation in The Netherlands. Claus Eckhartt of Bardehle Pagenberg will moderate the discussion as well as discussing trademark damages in Germany.

“I will start off by providing an overview of the pertinent EU regulations, the Harmonization Directive and the general CTM system, then the Enforcement Directive—which is really the key piece of legislation for our discussion,” says Eckhartt.

The Enforcement Directive specifies how damages should be applied throughout Europe, but practice still varies considerably among countries that have transposed it into their national law. Indeed the European Commission recently issued a study on how that Directive has been transposed, the findings of which will form the basis of Eckhartt’s initial run through of the major jurisdictions.

“The Netherlands and Germany are quite compliant with the Directive, though there are still some slight differences in practice, while there are a few idiosyncrasies in France and some much bigger differences in the UK,” explains Eckhartt.

Each speaker will give a short presentation explaining these differences, followed by a practical example of how a client gets an award of damages in practice: what evidence is required, what points of procedure are worth remembering. Eckhartt himself will also go into some detail regarding the award of costs as damages, which all the speakers feel is an essential part of the discussion.

“Costs are an important part of the discussion when you are deciding what action to take,” says Eckhartt. “Clients ask at the beginning of the process: ‘Will I get my costs back if we prevail? What is the magnitude of reimbursement I can expect?’ It makes a big difference as to whether the action is worthwhile or not. Particularly when compared to damages, as you don’t want to end up winning but still pay more in costs than you get back.”

The approach to costs varies quite considerably between European jurisdictions still. In the Netherlands the winning party tends to get all of its costs back as long as they are reasonable, which surprises some companies that haven’t litigated there before. In Germany this is unheard of – litigants only get back basic costs based on a statutory fee system and will often end up paying more for the case than they get back. In the UK there are usually reimbursement proceedings, with the court having greater discretion as to the costs it awards. Around 60% of costs is good, with over 70% being exceptional in the speakers’ experiences.

“The interesting differences between the countries are often about procedure,” comments Bolter. “Because until the Enforcement Directive came in a lot of the continental European countries didn’t have any arrangements for recovering costs. Indeed I believe in the Netherlands, IP cases are the only ones where you can recover costs. This means that in The Netherlands there is little incentive to settle and it doesn’t matter if your lawyers spend a lot of time discussing damages, because you won’t end up paying for it.”

The big issue for UK cases as opposed to the rest of Europe is that a UK case requires greater manpower with its requirements for discovery, leading to greater costs that the victor will be seeking to recover. “You can easily find yourself in a situation where the 30% to 40% of costs that you don’t recover exceed the damages awarded, which I think is why so few cases in the UK get to the question of damages,” says Bolter.

“A lot of people spend a lot of hours on that kind of work,” agrees Eckhartt, though he notes that the new procedures for the Patents County Court in the UK could provide a realistic alternative, with smaller and – most important of all – capped costs.

The most recent trademark case handled by the Patents County Court seemed to be good news on this issue. It concerned alleged trademark infringement by Louis Giboin and others of the Yellow Pages trademarks, both a word mark and the ‘walking fingers’ logo. Although the defendants and their websites were not based in UK, Judge Colin Birss asserted that their websites would be seen by consumers in the UK as being directed at them and potentially supplied in the UK. Yell, the owner of the YELLOW PAGES trademarks, went in knowing that its costs would be limited to £50,000 ($72,000).

Towards harmonization

Eckhartt believes that new approaches such as the Patents County Court in the UK are signs that practice will eventually become more harmonized across Europe. “It will take a few years, but that’s the direction we’re moving in,” he says. “Trademark law is often an issue of language, how a word is interpreted in different linguistic regions, so I think that is one reason harmonization was always going to be slow.”

Explaining this well is important in Eckhartt’s view because he expects an audience of largely U.S. lawyers that is looking for a step-by-step explanation of how damages in Europe function. “People will probably be attracted at the idea of wandering along and hearing about damages in Europe. Perhaps they have a case that could be taken to Europe and want to know what kind of damages they could expect,” says Eckhartt.

The session takes place today, making it among the first of this year’s panels. Ironically, at last year’s Annual Meeting Bolter was part of a panel in the very last session, looking at trademarks online and related issues. “We had very good attendance at that session, despite it being the last one, but I think that might have had more to do with the fact that the Google ADWORDS cases were going through the courts and our session was very topical. Also, we had Russ Pangborn, head of trademarks at Microsoft, and people were very keen to ask him questions. There were a few members of the press there too.”

If you want to spice up this year’s session, just ask the panellists how much it costs to litigate in the various jurisdictions and which offers the best value for money.

Europe and the U.S. Compared

The biggest differences between damages and costs in Europe and the U.S. are that in the U.S. costs don’t tend to be recoverable, but damages can sometimes take on a punitive role. The combination can have a big effect on the strategy that trademark owners end up pursuing when faced with infringement.

Nick Bolter points out that Europe is not as clear cut on punitive damages as some might assume: “Here in the UK we’ve been involved with a few cases where damages are discussed in respect of a license and there’s a definite feeling that the damages should be more than the license fee an infringer would have had to pay if he had not infringed. That doesn’t seem fair. So damages end up being around twice the license fee. That’s an interesting position to take for a jurisdiction that says it doesn’t award punitive damages.”

The Enforcement Directive mentions the concept of moral prejudice in awarding damages, but courts in at least the four jurisdictions covered in this session have never made more than a passing reference to it.

“One of the reasons I think moral prejudice hasn’t come up in European cases is that the award of damages just isn’t a precise science. There’s no system where you get twice for one kind of infringement what you do for another,” says Bolter. “We’ve had cases in Germany where we put together a mountain of evidence on the potential damages suffered, the normal fees that would be paid in a similar license if one were issued, have experts talk about licenses and potential markets. And then the judge will pick out a number that just feels right. The Court never breaks it down really.”

In a recent case at the UK Patents County Court that Bolter was involved with, the defendant previously held a license to use of a trademark but ceased paying and carried on using it. No defense was presented and the judgment was quite straightforward, but Judge Birss awarded damages that were exactly twice what the license fee would have been had the defendant carried on paying. “If the license fee is £2,500, there’s no way that the loss is £5,000, but that’s what you get in damages. So the punitive nature is implicit,” says Bolter. “Though it’s not like the US where you can turn up at a case like that and get £20,000.”

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