Is the Czech regime of liability of the claimant for damage caused to the defendant by an interim measure in intellectual property disputes really a strict liability regime? The reasoning of the Advocate General of the Court of Justice of the European Union in Case C-473/22 Mylan versus Gilead Sciences seeks to challenge this certainty and opens up a new area of defence against claims for damages.
Under Czech procedural law, a claimant on whose application a court has granted an interim measure which has subsequently been extinguished otherwise than by its success on the merits (e.g. it has been annulled by an appellate court or extinguished by the final dismissal of the action) is liable to the person who has been damaged by that interim measure for that damage, irrespective of its fault. This is a case of strict liability, which the claimant may only be exempted from if it proves that the damage would have occurred even if the interim measure had been ordered (and subsequently extinguished). There is still no uncertainty as to the interpretation of the relevant provision of the Code of Civil Procedure and the case law of the Czech courts applying this principle is stable.
However, the situation may soon change in the area of intellectual property disputes, i.e. it is no longer possible to rely on the Czech courts to continue to decide on compensation for such damages according to the principle of strict liability, regardless of the fault of the claimant of the defunct interim measure and without taking into account any other specific circumstances. This is due to the need for a Euroconform interpretation of the Czech Civil Procedure Code, in accordance with Article 9(7) of Directive 2004/48/EC of the European Parliament and of the Council on the enforcement of intellectual property rights, and how this provision of the Directive will be interpreted by the Court of Justice in Case C-473/22 Mylan versus Gilead Sciences. Advocate General Maciej Szpunar has already issued his opinion in this case three weeks ago, and if the Court takes his reasoning at face value, the principle of strict liability in the adjudication of IPR disputes will have to be abandoned by the Czech courts.
The preliminary questions referred to the Court by the Finnish Commercial Court concern the interpretation of the Finnish legislation on compensation for damage caused by an interim measure ordered and subsequently annulled, which, like the Czech legislation, is based on the principle of strict liability of the applicant for an interim measure. The facts of the present case concern an interim measure ordered by a Finnish court on the application of Gilead against Mylan. The interim order was based on alleged infringement of Gilead’s supplementary protection certificate for its patent by Mylan, as the manufacturer of the generic medicine allegedly infringing Gilead’s supplementary certificate. That SPC was revoked during the course of the litigation and, as a consequence, the interim measure ordered was also revoked. Subsequently, Mylan brought an action against Gilead for damages for the harm caused by the annulled interim measure. The Finnish court hearing the action had doubts as to the compatibility of the Finnish strict liability regime of the applicant for the interim measure with Article 9(7) of the IPR Directive and therefore asked the Court of Justice to rule on a number of preliminary questions.
Advocate General Maciej Szpunar now asks the Court to answer the preliminary questions referred by him by stating that Article 9(7) of the Directive must be interpreted as precluding national legislation which establishes the liability of the applicant for interim measures in such a way as to prevent the court hearing an action for compensation for damage caused by those measures from taking into account the relevant circumstances of the case in order to assess whether it is reasonable to award compensation. In his view, the court hearing an action for damages must take into account, in addition to the prerequisites for such liability set out in that provision, the other relevant circumstances of the case, both before and after the application for interim measures in question, which enable it to assess whether that application is justified in view of the risk of irreparable harm to the applicant if those measures are not adopted.
This view of Advocate General Szpunar therefore excludes the principle of strict liability on which the current Czech procedural rules are based.
Particularly in situations where an intellectual property right is registered in the public register on the date of the interim measure and only subsequently ceases to exist (e.g. through the cancellation of a patent or utility model, the cancellation of a trade mark or its invalidation), the courts would, in this view, have to examine in detail a number of relevant circumstances before they could conclude whether the debtor is entitled to compensation for the damage caused by the interim measure thus ordered and subsequently extinguished.
Although the Court’s conclusion in Case C-473/22 Mylan versus Gilead Sciences cannot yet be predicted with certainty, the risk (or, on the other hand, the advantage) of a change in the current approach of the Czech courts to claims for damages as a result of extinguished interim measures should already be taken into account when considering the IP litigation strategy.
