Case C-481/14, Jørn Hansson – Daisy! Daisy! Give me eight answers do! [judgment 2016, ECLI:EU:C:2016:419]

Strains of plants can be protected by a type of EU IP law known as the Community plant right. Consequently, if a company sells a plant that is protected by a Community plant right, then it will need to pay money to the right holder. In this case, a company has not done so and it has been held liable for infringing the plant variety right on a Cape Daisy. The problem is: how should the compensation be worked out?

Background
Jørn Hansson is claiming eight years of compensation against a company that has been liable for infringing its plant variety right on a particular type of Cape Daisy (an osteospermum).

Determining the appropriate amount of compensation, however, depends on identifying the relevant facts and circumstances that need to be taken into account; and in turn, that depends on the correct interpretation being given to two pieces of EU legislation: Council Regulation (EC) No 2100/94 of 27 July 1994 on Community plant variety rights, OJ [1994] L227/1); and Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights, OJ [2004] L157/45.

For ease, Article 94 of the Regulation governs ‘Infringement’, and states boldly:

1. Whosoever: (a) effects one of the acts set out in Article 13 (2) without being entitled to do so, in respect of a variety for which a Community plant variety right has been granted; or (b) omits the correct usage of a variety denomination as referred to in Article 17 (1) or omits the relevant information as referred to in Article 17 (2); or (c) contrary to Article 18 (3) uses the variety denomination of a variety for which a Community plant variety right has been granted or a designation that may be confused with it; may be sued by the holder to enjoin such infringement or to pay reasonable compensation or both.

2. Whosoever acts intentionally or negligently shall moreover be liable to compensate the holder for any further damage resulting from the act in question. In cases of slight negligence, such claims may be reduced according to the degree of such slight negligence, but not however to the extent that they are less than the advantage derived therefrom by the person who committed the infringement.

Equally, Article 13(1) of the IP enforcement Directive governs ‘Damages and legal costs’ and provides:

Damages
1. Member States shall ensure that the competent judicial authorities, on application of the injured party, order the infringer who knowingly, or with reasonable grounds to know, engaged in an infringing activity, to pay the rightholder damages appropriate to the actual prejudice suffered by him as a result of the infringement.

When the judicial authorities set the damages:
(a) they shall take into account all appropriate aspects, such as the negative economic consequences, including lost profits, which the injured party has suffered, any unfair profits made by the infringer and, in appropriate cases, elements other than economic factors, such as the moral prejudice caused to the rightholder by the infringement;
or
(b) as an alternative to (a), they may, in appropriate cases, set the damages as a lump sum on the basis of elements such as at least the amount of royalties or fees which would have been due if the infringer had requested authorisation to use the intellectual property right in question.
…

However, in light of these planks of EU legislation, a raft of German case law, plus the CJEU’s ruling in C-509/10, Geistbeck ECLI:EU:C:2012:416, the Oberlandesgericht in Düsseldorf could not work out how to apply EU law. Consequently, it decided to make a preliminary reference to the CJEU.

Questions Referred
According to the Curia website, the Oberlandesgericht in Düsseldorf has asked:

1. In the determination of the ‘reasonable compensation’ which an infringer must pay to the holder of a Community plant variety right pursuant to Article 94(1)(a) of [Regulation (EC) No 2100/94] […] because he has effected the acts set out in Article 13(2) of that regulation without being entitled to do so, must, in addition to the normal market fee charged in the same sector for a licence to effect the acts specified in Article 13(2) of that regulation, a specific ‘infringer supplement’ also be applied on a flat-rate basis in every case? Does this follow from the second sentence of Article 13(1) of [Directive 2004/48/EC]? […]

2. In the determination of the ‘reasonable compensation’ which an infringer must pay to the holder of a Community plant variety right pursuant to Article 94(1)(a) of Regulation (EC) No 2100/94 because he has effected the acts set out in Article 13(2) of that regulation without being entitled to do so, must, in addition to the normal market fee charged in the same sector for a licence to effect the acts specified in Article 13(2) of that regulation, account also be taken in an individual case of the following considerations or circumstances as factors that increase the compensation payable:

(a) In the determination of the market licence fee by reference to licence agreements concluded and accounts settled for the variety in relation to which rights were infringed, the fact that, in the relevant period, as a result of special characteristics, the variety in question had a unique market position?

If consideration may be given to this factor in an individual case:
May the compensation be increased only if the characteristics giving rise to the variety’s unique position are included the description of the variety for the purposes of the plant variety right?

(b) In the determination of the market licence fee by reference to licence agreements concluded and accounts settled for the variety in relation to which rights were infringed, the fact that, at the time when the infringing variety was introduced, the variety in relation to which rights were infringed had been very successfully marketed and, as a result, the infringer saved on the costs of introducing itself the infringing variety on to the market?

(c) The fact that, in terms of time and having regard to the number of plants sold, the magnitude of the rights infringement in relation to the applicant’s variety was greater than average?

(d) The consideration that the infringer, unlike a licensee, does not face the risk of having to pay a licence fee (that cannot be returned) in relation to the variety in question although the plant variety right for such variety is subject to legal challenge and may subsequently be declared null and void?

(e) The fact that the infringer, unlike the usual situation in the case of licensees, was not required to account for sales on a quarterly basis?

(f) The consideration that the holder of the plant variety right bears the risk in relation to inflation, which is of significance because of the significant period involved in pursuing legal action?

(g) The consideration that, as a result of having to pursue legal action, the holder of the plant variety right, unlike the situation in which he obtains income through the granting of licences in relation to the variety in question, cannot plan the income to be obtained through this variety?

(h) The consideration that, where rights relating to the variety in issue are infringed, the holder of those rights bears both the general risks associated with litigation and, ultimately, the risk that judgment may not be enforceable against the infringer?

(i) The consideration that, in the case of an infringement of plant variety rights resulting from the unauthorised actions of the infringer, the holder of those rights is deprived of the freedom to determine whether the infringer may be allowed to use the variety in respect of which the holder holds the rights?

3. In the determination of the ‘reasonable compensation’ which an infringer must pay to the holder of a Community plant variety right pursuant to Article 94(1)(a) of Regulation (EC) No 2100/94 because he has effected the acts set out in Article 13(2) of that regulation without being entitled to do so, must account also be taken of interest payable at a usual rate of default interest on the annual compensation amount if it is to be presumed that contracting parties acting reasonably would have provided for the payment of interest of that kind?

4. In the calculation of ‘further damage resulting from the act in question’ for which an infringer must compensate the holder of a Community plant variety right pursuant to the first sentence of Article 94(2) of Regulation (EC) No 2100/94 because he has effected the acts set out in Article 13(2) of that regulation without being entitled to do so, must the market licence fee normally charged in the same sector for the acts specified in Article 13(2) of that regulation be taken as the basis for that calculation?

5. If Question 4 is answered in the affirmative:
(a) In the calculation of the ‘further damage’ pursuant to the first sentence of Article 94(2) of Regulation (EC) No 2100/94 on the basis of a market licence, must account be taken in an individual case of the considerations and circumstances set out in Question 2(a) to (i) and/or of the fact that, by reason of having to pursue legal action, the holder of the plant variety right is required personally to spend a commensurate amount of time in identifying the infringement and dealing with the matter and to carry out investigations regarding the infringement of the plant variety right to the extent to which this is usual in infringement cases of this kind such as to justify a premium over and above the market licence fee?

(b) In the calculation of ‘further damage’ pursuant to the first sentence of Article 94(2) of Regulation (EC) No 2100/94 on the basis of a market licence, must a specific ‘infringer supplement’ be applied on a flat-rate basis in every case? Does this follow from the second sentence of Article 13(1) of Directive 2004/48?

(c) In the calculation of ‘further damage’ pursuant to the first sentence of Article 94(2) of Regulation (EC) No 2100/94 on the basis of a market licence, must account be taken of interest payable at a usual rate of default interest on the annual compensation amount if it is to be presumed that contracting parties acting reasonably would have provided for the payment of interest of that kind?

6. Must the first sentence of Article 94(2) of Regulation (EC) No 2100/94 be interpreted to mean that the infringer’s profit constitutes ‘further damage’ within the meaning of that provision which can be claimed in addition to reasonable compensation pursuant to Article 94(1) of that regulation or, in the event that the wrongdoing was intentional or negligent, can the infringer’s profit be claimed under the first sentence of Article 94(2) only as an alternative to reasonable compensation pursuant to Article 94(1)?

7. Is the right to compensation for damage specified in Article 94(2) of Regulation (EC) No 2100/94 precluded by national legislation according to which the holder of the plant variety right ordered by decision having the force of law to pay the costs of interlocutory proceedings in which a temporary injunction was sought on the basis of an infringement of plant variety rights cannot claim reimbursement of those costs on the basis of arguments of substantive law even if, in the main proceedings relating to the same plant variety right infringement, his action is successful?

8. Is the right to compensation for damage specified in Article 94(2) of Regulation (EC) No 2100/94 precluded by national legislation according to which an injured party, outside of the strict framework of an action for costs, cannot claim for his own time spent in the extra-judicial and judicial pursuit of a compensation claim if the time spent does not exceed what is normal in the circumstances?