Punitive Damages: Not Contrary to the Enforcement Directive

PUNITIVE DAMAGES: NOT CONTRARY TO THE ENFORCEMENT DIRECTIVE

The Court of Justice of the European Union (CJEU) has answered the question of whether the Enforcement Directive (2004/48) prevents Member States from providing in their national legislation the possibility of awarding punitive damages in IP cases.

Background

The Polish Regional Court had awarded damages for a much lower sum than that which was claimed by the claimant, noting that an award of punitive damages in respect of an infringed IP right would likely contravene Article 13 of the Enforcement Directive, despite having provision in Polish law.

Decision

Upon referral by the Polish Supreme Court, the CJEU answered the question in OTK vs SFP, C-367/15, of whether the Enforcement Directive prevents Member States from providing in their national legislation the possibility of awarding punitive damages in IP cases.

Citing Recital 26 of the Enforcement Directive, the CJEU noted that the wording of Article 13 should be interpreted as "not entailing an obligation on Member States to provide for 'punitive' damages" and not as a prohibition on introducing such a measure.

In an attempt to clarify the purpose of the Enforcement Directive, the CJEU further cited Recital 10 which states that "the objective of the Directive is to approximate legislative systems so as to ensure a high, equivalent and homogeneous level of protection in the internal market".

Conclusion

Despite providing good news for IP right holders, the CJEU Decision in C-367/15 potentially puts a question mark over the harmonising strength of the Enforcement Directive. This is mainly because the "homogenous" level of protection referred to in Recital 10 is, in fact, heterogeneous if each Member State has the ability to determine the level at which damages can be punishing on the defendant.