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ECJ rules on extent of IP Enforcement Directive cost provision in cross border disputes

European member states should make sure that legal costs incurred by the successful party in a cross-border intellectual property dispute should be paid by the unsuccessful party, the European Court of Justice (ECJ) has ruled.20 Jul 2015

The Supreme Court of the Netherlands had referred questions to the ECJ based on an action for damages brought by Simiramida, a Bulgarian parallel importer whose goods were seized on entry to Bulgaria at the request of the trade mark owner, Diageo Brands.

Parallel importers import products from another country without the permission of the intellectual property owner. Simiramida was importing a container holding 12,096 bottles of Johnny Walker whisky from Georgia. 

Diageo owned registered trade marks which provided protection for Johnny Walker in Bulgaria, and worked with a local exclusive importer in that country. Relying on its registered trade marks, it requested that Bulgarian customs seize the container destined for Simiramida.

Simiramida argued that the goods had first been placed on the market outside the EU, with the consent of Diageo and as such Diageo could not stop the parallel import. The Bulgarian court agreed, deciding  that Simiramida had  not infringed Diageo's trademarks in Bulgaria, and lifting the seizure order.

Simiramida then sued Diageo in the Netherlands, where Diageo has its registered office, for damages arising from the seizure. Simiramida assessed the value of the damages at over €10 million.

The claim was dismissed at first, on the grounds that the Bulgarian court's ruling had been contrary to EU law, but then overturned at the Dutch court of appeal which said the Bulgarian judgment must be recognised.

After hearing a further appeal, the Netherlands Supreme Court referred questions to the ECJ. One of these questions was about Article 14 of the IP Enforcement Directive, which requires EU member states to make sure that the legal costs incurred by the successful party in an intellectual property infringement proceeding should be paid by the unsuccessful party.

The Supreme Court asked whether this is also applicable if the damages in one member state relate to seizures made and notices served in another member state.

The court said that Article 14 does not limit the type of procedure where the rules can apply.  Article 14 is intended to strengthen the level of protection of intellectual property and the compensation of Simiramida for damages for the unjustified seizure of goods followed from  this. 

The Court went onto say that Article 14 must be interpreted as applying to the legal costs incurred by the parties in the context of an action for damages, to compensate for the injury caused as a result of an unjustified seizure.