Strict liability in preliminary injunction proceedings: Advocate General opinion
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In a case that is being closely watched, Advocate General Szpunar recently issued an opinion on whether the strict liability regime for losses caused by preliminary injunctions (PI), based on intellectual property (IP) rights that are subsequently found invalid, is consistent with the Directive on the enforcement of IP rights (2004/48/EC). (C‑473/22, Mylan v Gilead, 21 September 2023.)
Background
The opinion concerns a case originating from the Market Court of Finland. Mylan requested Gilead to pay approx. 2.3M€ as damages for losses caused by a PI sought by Gilead against Mylan, based on a supplementary protection certificate that was subsequently found invalid.
Mylan argued that the PI had been sought unnecessarily which would expose Gilead to strict liability under well-established Finnish case law. This provides that a person who obtains a PI is strictly liable for compensation if the IP right on which the PI was granted is subsequently found invalid.
Gilead argued that such a liability regime was contrary to the Enforcement Directive following the CJEU’s earlier ruling in Bayer Pharma (C‑688/17, 12 September 2019). The CJEU ruled in this case that the mere fact of repealing the PI should not allow national courts to automatically and in any event order the PI applicant to compensate the defendant for any loss suffered.
Opinion of Advocate General Szpunar
The Market Court referred the case to CJEU asking if the strict liability regime of Finnish law was compliant with the Enforcement Directive.
The AG first explained the approach taken by the CJEU in Bayer Pharma, as well as the characteristics of strict liability regimes in most countries. He stated that the automatic nature of strict liability regimes, that are independent of the circumstances of the case and based only on the status of the person concerned, is precisely what is precluded by Article 9(7) of the Enforcement Directive which states:
Where the 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 AG also noted that the specific characteristics of a particular strict liability regime did not really matter if the actual principle of liability was still maintained. Consequently, he concluded that the Finnish system, which allows the conduct of the defendant to be considered when determining the amount of damages was insufficient. Reducing the amount of damages did not mean that the courts would be taking into account all the circumstances when assessing whether or not it was appropriate to award compensation, as required by Bayer Pharma.
In further explaining the principles of the Enforcement Directive and the questions of the Market Court, the AG also emphasised that the circumstances of the case concerned should always be considered when assessing if the PI was justified. These include factors prevailing at the time of applying for the PI, and arising after the grant and enforcement of the PI. In particular, the risk of irreparable harm to the applicant in the absence of seeking a PI should be considered.
Key takeaways
If the above opinion is followed by the CJEU, it will significantly affect the ways in which compensation may be ordered for losses caused by PIs based on IP rights that are later revoked.
As mentioned above, the strict liability regime has been a well-established principle of Finnish law that has also been considered when assessing the merits of a PI application. In Finland the strict liability of the applicant has traditionally been assessed when balancing the interests of the parties in the event that the requested PI is granted. It is considered to be a factor that normally favours the granting of the PI, as the applicant is strict liability to the defendant if the PI is later cancelled.
We will be watching closely for the upcoming ruling of the CJEU and whether it follows the AG’s opinion and affects the way in which PI applications are assessed under Finnish law in the future.