Injunctions and Damages for Patent Infringement under the Upca in Light of the Principle of Proportionality—part I: Injunctions

On an international level, provisions addressing injunctive relief for patent infringements are rare. Part III of the TRIPS Agreement is dedicated to the enforcement of IP rights. Although in many cases the agreement is quite general, it clearly requires its members to provide for injunctive relief (cf Article 44(1) TRIPS). On a more general level, according to Article 41(1), TRIPS members shall ensure that enforcement procedures as specified in Part III of the agreement are available under their law so as to permit ‘effective action’ against any act of infringement of IP rights covered by this agreement, including ‘expeditious remedies’ to prevent infringements and remedies which constitute a ‘deterrent’ to further infringements. At the same time, the TRIPS Agreement recognizes potential limits to injunctive relief (cf Article 44(2) TRIPS; Article 31(h) TRIPS; Article 41(1) TRIPS).

Against this background, the question is whether the TRIPS agreement allows or even demands its member states to adopt a discretionary approach to the award of injunctive relief.

As TRIPS sets minimum standards (cf Article 1(1) TRIPS), the starting point is that injunctive relief has to be available in each member state. More precisely, the WTO panel interpreted the wording ‘judicial authorities shall have the authority’ not as an obligation to exercise the authority but as a requirement to equip national courts with the power to do so.² It is only required that the authority to award injunctive relief as such exists. Consequently, in line with the prevailing view, TRIPS does not require member states to award injunctions in all cases.³ Quite the contrary, the function of the words ‘shall have the authority’ in Article 44(1) TRIPS is to address the issue of judicial discretion.⁴ Also, because there have been few harmonizing efforts at the ‘enforcement level’ so far, there remains significant room for the different legal traditions of different legal systems.⁵ Article 41(5) TRIPS underscores that the provisions on remedies do not create any obligation to put in place a judicial system for the enforcement of IP rights distinct from that for the enforcement of law in general. According to Article 41(1) TRIPS, remedies have to constitute a deterrent to further infringements. However, this can be understood in the sense that the interplay of all remedial provisions must have such a deterrent effect.⁶ If adequate compensation is available, at the outset, compliance with this provision is given.

Moreover, TRIPS also sets a ‘ceiling’ for the standards possible (cf Article 1(1) TRIPS: ‘provided that such protection does not contravene the provisions of this Agreement’).⁷ Arguably, excessive enforcement can be beyond the framework established.⁸ Disproportionate enforcement has the potential to ‘contravene’ the TRIPS agreement.⁹ Whereas Article 41(1) TRIPS demands ‘effective action against any act of infringement’, including ‘expeditious remedies’ to prevent infringements and remedies which constitute a ‘deterrent to further infringements’, Article 41(1) TRIPS at the same time states that these procedures shall be applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse. Even if Article 41(1) TRIPS is interpreted only as a safeguard in procedural law,¹⁰ Article 8(2) TRIPS clarifies that the principle of the prohibition of the abuse of rights generally is anchored in international law. Based on this principle, some scholars indeed argue that the enforcement of patents constitutes an abuse of rights if the enforcement conflicts with the purpose of a patent.¹¹

All in all, two indications can be identified according to which TRIPS prohibits disproportionate remedies. First, Article 41(1) TRIPS (as well as Article 8(2) TRIPS) proves that TRIPS is sensitive to overenforcement. Second, TRIPS understands IP rights as a means to foster innovation. At the same time, IP rights shall not restrict other legitimate interests (cf Article 7 TRIPS; Article 8(2) TRIPS).¹²

Some scholars, however, suggest that any dilution of injunctive relief is in conflict with Article 30 and Article 31 TRIPS.¹³ It is argued that these provisions exclusively govern all limitations of patents. Admittedly, according to the prevailing view, Article 31 TRIPS does not bar discretionary approaches within the framework of remedies.¹⁴ This is obvious, as otherwise leading jurisdictions like the USA, which adopt a flexible approach towards remedies (see below, Section 2.d), would not comply with TRIPS.¹⁵

On the merits, it should be noted that the balancing of the various interests must not only be carried out at the level of exceptions and limitations or provisions on compulsory licenses, but that interests can be weighed up at all available dogmatic levels.¹⁶ That is, eg business methods cannot be patented (level of scope of protection) is just as much as part of the trade-off between IP and the public domain as constraints within the framework of remedies (level of enforcement). From a doctrinal point of view, remedies do not curtail the exclusive right as such, but restrict its enforcement.¹⁷ The differences between the different ‘levels of constraints’ are more than that of academic relevance: whereas, eg, a compulsory license transfers a right to the licensee to use the patent, a temporary suspension of an injunction does not render the infringement legal.¹⁸ Consequently, damages remain available (see Part 2). Thus, a proportionality test within remedial law does not fall within the scope of Article 30 or Article 31 TRIPS.¹⁹ Notably, Article 30 (‘exceptions to rights conferred’—emphasis added) correlates with Article 28 (‘rights conferred’—emphasis added), but not with remedies.²⁰ As substantive law in a narrow sense has to be distinguished from remedies, it is no contradiction that a court ascertains an infringement but does not grant, eg, an injunction.²¹ Even a ‘right to prevent’ is not necessarily enforced with an injunction.²² Of course, on the level of remedies, only ‘fine-tuning’ is possible.²³ In principle, a patent has to be enforceable, although this can be different depending on the facts of an individual case.

In Europe, infringements of IP rights are governed by the Enforcement Directive (Directive 2004/48/EC—IPRED).²⁴ In principle, the directive sets out minimum standards.²⁵ On an abstract level, Article 3(1) IPRED obliges member states to provide the measures, procedures and remedies necessary to ensure the enforcement of the IP rights covered by this Directive. Those measures, procedures and remedies shall be ‘fair and equitable’ and shall ‘not be unnecessarily complicated or costly, or entail unreasonable time-limits or unwarranted delays.’ Article 3(2) IPRED adds that those measures, procedures and remedies shall also be ‘effective, proportionate and dissuasive’ and shall be applied in such a manner as to ‘avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse’.²⁶

More specifically, Article 11 IPRED requires member states to ensure that, in the event of a judicial decision finding an infringement an intellectual property right, the judicial authorities may issue against the infringer an injunction aimed at prohibiting the continuation of the infringement. Pursuant to Article 12 IPRED, alternative measures are possible—however, this is an optional provision.

The IPRED is in compliance with TRIPS (cf Article 2(3)(b) IPRED).²⁷ As the European Union (EU) is a member of TRIPS, EU law has to be interpreted in the light of TRIPS.²⁸ As outlined earlier (Section I.1.b), TRIPS does not require its members to provide for absolute injunctive relief; more likely, it actually prohibits an enforcement system without any flexibility. This in itself is already an argument that flexibility in enforcement is also inherent in the IPRED.

Besides, like the provision on injunctions in the TRIPS agreement, Article 11 IPRED only obliges member states to provide injunctions in principle. Courts must have the authority to grant an injunction where appropriate. However, injunctions must not be granted in all cases.²⁹ Admittedly, courts have a certain degree of discretion whether to grant or curtail an injunction.³⁰ Not only the wording (‘may issue’) but also a comparative analysis endorses this view. Former member states whose remedial system is built on common law would hardly have accepted automatic injunctive relief. Nothing can be found which suggests the opposite. In other words: injunctive relief must only exist in principle; any further details of injunctive relief are not specified in Article 11 IPRED.

In addition to the finding that injunctive relief is not mandatory in all cases, the Enforcement...