Balancing tool or escape clause? Proportionality in temporary relief proceedings before the Greek courts

Author: Nikos Prentoulis (Prentoulis Lawyers & Consultants)

Single-Member First Instance Court of Athens, Decision No 4209/2014

Journal of Intellectual Property Law & Practice (2014) doi: 10.1093/jiplp/jpu135, first published online: August 1, 2014

A recent judgment of the Athens First Instance Court in preliminary injunction proceedings over trade mark infringement illustrates how the principle of proportionality may be (mis-)used.

Legal context

Within a ‘classic’ likelihood of confusion and famous trade mark violation case, the interesting part of the judgment lies in the court's interpretation of Article 155 of Greek Law No 4072/2012 on Trade Marks, which subjects any corrective measures for trade mark infringement to the balancing ‘hand’ of the principle of proportionality, in conformity with Articles 3(2) and 10(3) of Directive 2004/48.

Proportionality is no stranger to European intellectual property law (see Article 20 of the ‘InfoSoc’ Directive 2001/29) and it also informs the application of Articles 692(1), 692(3), 731 and 732 of the Greek Code of Civil Procedure, setting out the powers of Greek judges in temporary relief proceedings to ‘provisionally regulate’ the disputed ‘situation’, without being bound by the particular demands of the litigants. However, the express inclusion of the principle of proportionality in the normative ethos of the recently revised Greek trade mark law, centralizes its role in trade mark adjudication.

Facts

Hard Rock initiated preliminary injunction proceedings against a Greek entity, based in Athens, trading in apparel, accessories and souvenirs on the well-known Paradise beach in the island of Mykonos. Hard Rock alleged unauthorized use of its Greek and Community HARD ROCK CAFE and Community ROCK SHOP trade marks for similar goods and services and on store signage. The action was accepted and the preliminary injunction request was granted, but the court dismissed the applicant's request to publish the decision either on the internet (in a web news portal) or in the press. According to the court, the defendant had ‘already’ (presumably at the time of the hearing in November 2013) ceased the unauthorized use of the marks. Accordingly, the orders for preliminary injunction and seizure of infringing items constituted ‘adequate’ corrective measures. Publication of the judgment was further specifically denied due to the ‘limited scope’ of the infringement, obviously as a result of the cessation of the infringement.

Analysis

One can reasonably question this particular part of the judgment. ‘Heralding’ that it has stopped the alleged infringement, after the end of the high-season in the Greek islands (May–September), the defendant should not have impressed anyone. The minimal commercial interest in the tourist market in the Greek islands after September is common knowledge in Greece; just ask any anti-counterfeiting manager responsible for the territory. Post-September trade mark infringement in the Greek islands could be of ‘limited scope’, but infringement between May and September is by definition severe. Significantly, Hard Rock filed the action in early July, which can only mean that the infringement subsisted within the high season.

Moreover, why would anyone who has ceased the use of the claimant's marks ever set foot in the courtroom (unless he is waiting for next May)? Conventional wisdom and IP practice in Greece state that taking down marks and then appearing in court to argue against an injunction is usually a sign that one does not particularly savour committing oneself to not repeating the use of the marks in the future.

One may argue that the qualities of the infringing behaviour should not inform the application of proportionality and render it a ‘punitive’, ‘outing’ mechanism. So, why does the judgment mention it?

But even if that were the case, publication of the judgment is per se a standard corrective measure of trade mark infringement, even in temporary relief proceedings. Considering that trade mark law undeniably also protects consumers' interests, publication has long been advocated and consistently granted as an effective remedy for IP infringement. Moreover, Greek trade mark law, via its recent revision in 2012, explicitly provides for publication of judgments as a civil remedy in trade mark infringement cases. In addition, privacy concerns cannot hinder publication since court judgments are a matter of public interest, subjected to the demand for transparency of the exercise of the judiciary powers within a democratic society.

Accordingly, publication of a preliminary injunction judgment can essentially be hindered when the case is a doubtful one or when the impact of the infringement has indeed been minimal. But non-publication cannot be justified by the defendant having ceased the use of the marks involved. Moreover, by all standards, the infringing use of a well-known mark both on goods and store signage in Mykonos in the summer is anything but minimal.

In addition, the order for the provisional seizure of infringing items and store signage, which had already been removed by the defendant, appears acutely incompatible with the court's own reasoning. The version of proportionality inferred from the particular judgment should direct the court against such (fruitless) seizure.

The court may very well have had good reasons for rejecting the publication request, but such reasons are not evident in its reasoning; nor can they even be inferred from it. The court makes no reference, for example, to a possible swift compliance to a cease and desist letter before legal action, or any fact or circumstance that could validate its reading of proportionality.

Practical significance

Proportionality is a tool. This is not a very nice word in the human rights vocabulary, from which proportionality originates but, in adjudication terms, it is a very accurate definition. As a tool, it allows the court of a statutory law jurisdiction to ‘maneouvre’ within the particular factual environment of the case in order to deliver a sound and fair judgment. But ‘fair’ does not mean ‘free-ride’ (at least not in cases where leniency is not warranted); proportionality is not a ‘forgive and forget’ mechanism.

And this is where the danger of an interpretation of proportionality along the lines of this judgment lies: in distorting its role as a balancing tool of overly strict corrective measures and subverting the clear pro-IP rights spirit of the Greek trade mark law.

One may argue that the concerns raised above are somewhat ‘disproportionate’ themselves; this may just be an isolated ‘over-leniency’ case. But one cannot stress enough the importance of not mistaking proportionality for a single-sentence escape mechanism when, right or wrong, any court considers certain remedies as overly austere.

In defence of Greek courts, it should be mentioned that in another recent judgment of the Single-Member First Instance Court of Athens in main proceedings (555/2014), proportionality was genuinely employed to limit publication of the operative part of the judgment in the press and not also on the internet. Publication on the internet might have been more effective. Still, this judgment illustrates the intended role of proportionality.

Assessing damages due under a cross-undertaking in damages—more of an art than a science?

Authors: Gary Moss and Emma Muncey (EIP Legal)

AstraZeneca AB & Another v KRKA, DD Novo Mesto & Another [2014] EWHC 84 (Pat), 24 January 2014, Patents Court, England and Wales

Journal of Intellectual Property Law & Practice (2014) doi: 10.1093/jiplp/jpu028, first published online: March 4, 2014

The Patents Court decided that krka would have had a substantial ‘first-mover’ advantage in relation to the launch of its branded generic pharmaceutical had it not been wrongfully prevented from doing so by an interim injunction and accordingly assessed damages due under the cross-undertaking. The decision once again highlights the difficulties which the court faces in trying to put a monetary value on hypothetical scenarios.

Legal context

The assessment of damages in patent cases is a notoriously difficult task. As Jacob J at 396 in Gerber Garment Technology Inc v Lectra Systems Ltd [1995] RPC 383 noted:

[Q]uantification of damage in a case such as the present [a patent infringement case] is a much harder, and less certain, task than I had hitherto thought. Although I have had to reach an answer I do not pretend it is an accurate measure of the damage, of what would have been. It is just the best assessment I can make!

In assessing such damages, the court is tasked with trying to work out what would have happened had there been no infringement or, as in the present case, no injunction, and then reflecting that in the amount of damages awarded. However, the position of the parties as to what would have happened had the event in question not occurred tends to vary considerably. This is not surprising; in the real world, commercial decisions are driven by a multitude of interlinking considerations whereas, for the purposes of assessing damages, the court is asked to consider only one, albeit an important one.

In the present case, Sales J used a hypothetical counterfactual scenario to estimate the advantage that Krka would have enjoyed had it not been wrongly subjected to an interim injunction. The judgment indicates that Sales J's decision was based more on his general impression, or ‘feeling’, of the evidence as a whole, rather than on the forensic expert evidence submitted by the parties, in particular AstraZeneca.

Facts

AstraZeneca held a European patent, effective in the UK, for its branded esomeprazole proton pump inhibitor (PPI), Nexium. Krka developed a branded generic esomeprazole PPI, Emozul, which it sought to launch in the UK. AstraZeneca began proceedings in the UK against Krka, asserting that Emozul infringed its patent rights in relation to Nexium. In October 2010, AstraZeneca successfully obtained an interim injunction to prevent Krka from launching Emozul in the UK. Also at this time, AstraZeneca's Nexium patent was being challenged by another generics company, Ranbaxy. In July 2011, Ranbaxy's product was found not to infringe the Nexium patent (Ranbaxy (UK) Limited v AstraZeneca AB [2011] EWHD 1831 (Pat)). Shortly after that judgment, AstraZeneca discharged the injunction against Krka.

Krka finally launched Emozul in the UK in September 2011. However, it claimed that by then it faced a very different market from the one which existed in October 2010, and that it had been deprived of the ‘first mover’ advantage. This was because, following the Ranbaxy ruling, several generic esomeprazole PPIs were launched in the UK. In particular, AstraZeneca launched its own generic product in July 2011, only two days after the Ranbaxy judgment. Ranbaxy then launched in September 2011, followed by Mylan in November 2011. Krka argued that this drove down the price for generic esomeprazole PPIs and had an impact on the success of its launch of Emozul in September 2011. By contrast, had Krka been able to launch in October 2010, it would have been the first and only alternative in the market, thus enabling it to capture a larger market share and command higher prices.

It was agreed between the parties that the injunction did have the effect of depriving Krka of ‘first mover’ advantage. However, there was a significant difference between the parties as to the value of that advantage: AstraZeneca assessed the damage to Krka as £6 million whereas Krka's estimate was that it had lost over £30 million.

Analysis

Assessment of damages

Sales J's judgment highlights the complexities involved in making an assessment of such a hypothetical counterfactual scenario. The court heard evidence from representatives of both parties, Medicine Managers, experts on the pharmaceutical market and expert accountants and economists. (Medicine Managers are experienced pharmacists employed by Primary Care Trusts (in England and Wales) and heath boards (in Scotland and Northern Ireland) to provide guidance and assistance to GPs to encourage them to prescribe the cheapest relevant drugs to their patients, in order to minimise the costs for the NHS.) Sales J used this evidence to build a picture of the scenario had Krka not been subject to an interim injunction and launched Emozul in the UK in October 2010.

Evidence

AstraZeneca endeavoured to counteract the Medicine Managers' assessment of what they would have done in the counterfactual scenario by adducing evidence from an expert economist to the effect that there is a well-established tendency of witnesses to exaggerate the impact of monetary incentives in relation to hypothetical scenarios. However, Sales J was not impressed. He held that this was not a matter for expert evidence, and that it was not appropriate for the court to rely on academic studies in making an assessment of the evidence given by witnesses of fact. In fact, he found the evidence of the Medicine Managers to be a good representative cross-sample of the different Primary Care Trusts (ie differing populations, size, social conditions etc) and the evidence to be credible overall. In short, he preferred to rely on his own assessment of this evidence rather than on academic studies as to that evidence's credibility.

There was another significant issue on which AstraZeneca did not succeed. It sought to argue that, in the hypothetical scenario under consideration, if Krka had captured 20 per cent of the market, it would have dropped the price of Nexium by 10–15 per cent. This would have had two consequences. First, it would have enabled AstraZeneca to hold onto a greater share of the market, thereby reducing the amount of the market captured by Krka. Secondly, it would have reduced the price which Krka could charge, even with its first mover status. However, it emerged during the course of cross-examination that decisions by AstraZeneca as to reducing the price of a product were not taken solely with regard to competition in the UK but with regard to other factors including what effect a reduction in the UK price would have on prices in other markets. Unfortunately for AstraZeneca, it failed to call any evidence as to how those factors were likely to play out in this particular context. Accordingly, Sales J considered that he had no option other than to ignore that factor altogether and assess the counterfactual scenario on the basis that AstraZeneca would not have dropped the price for Nexium.

Asserting the difficulties in assessing loss

In setting out the legal framework surrounding the assessment of damages due under cross-undertakings in damages, Sales J made reference to Mann J's judgment in Smithkline Beecham v Apotex [2006] EWCA Civ 658 in relation to the relative difficulty of assessing each party's loss. In doing so, he reiterated that it does not lie in the mouth of the claimant to submit at the interim inunction stage that it is going to be easier to assess the defendant's loss than its own, only to submit at the damages stage that in fact the defendant's damages are very difficult to assess, that the onus in proving damages lies on the defendant and that, accordingly, the court should only take into account that which the defendant can establish with an element of certainty.

Outcome

Sales J concluded that a substantial percentage of the Primary Care Trusts, health boards and dispensing doctors would have switched to Emozul if Krka had been able to launch in October 2010, largely accepting the switching figures submitted by Krka with a cut-off date in 2015. Since the number of prescriptions made is published, this calculation could easily be made. Sales J thus left the final damages calculation to be agreed between the parties' experts. It seems likely that the final figure will be more towards Krka's value than AstraZeneca's.

Practical significance

The main point that comes across in Sales J's judgment is the difficulty in making an assessment of the damages due under a cross-undertaking in damages in relation to the launch of a pharmaceutical, or any other, product. Building a picture of the hypothetical counterfactual scenario had an injunction not been imposed is a complicated and detailed task. Given those scenarios, it would appear that the court tends to be more comfortable in relying on the evidence of those people who are familiar with the field and what goes on in practice rather than on expert forensic evidence. In this instance, Sales J placed significant reliance on the evidence of the Medicine Managers and his own assessment of that evidence and was not prepared to accept the theoretical suggestions that that evidence had a tendency to be overstated.