Case C-57/15, United Video Properties – denying reasonable and proportionate legal costs [judgment 2016, ECLI:EU:C:2016:611]

In countries like Belgium the costs of general litigation are governed by national statutes that set flat-rates for lawyers’ fees. However, the EU’s ‘IP-rights Enforcement’ Directive 2004/48 is different: it requires the losing party in IP law to pay the winning party’s ‘reasonable and proportionate legal costs’. Does the EU’s IP legislation trump Belgium’s laws governing costs?

Background
United Video Properties held the rights on a European Patent that was directed to storing data on servers in a media-on-demand system.

Believing that its rights in patent law were being infringed in Belgium by the Belgian telecoms company, Telenet; United Video Properties sued them in interim proceedings in 2011.

Telenet denied any liability. It thought that the Belgian part of the European Patent was void for lack of novelty. In 2012, the District Commercial Court in Antwerp agreed with the Belgian telecoms company. United Video Proceedings decided to mount an appeal in the Belgian courts.

While the appeal was pending in the Antwerp Court of Appeal, United Video Properties set to work pursuing parallel litigation in the United Kingdom in respect of the English part of its European Patent which it thought was being infringed by a company based in the UK.
Unfortunately for United Video Properties, it lost that litigation in the High Court of England and Wales. By Belgian standards, the English court gave extremely detailed reasoning as to why it thought that the patent was void for lack of inventive step (the judgment has this neutral citation: [2014] EWHC 2301 (Pat)).

Such was the detailed nature of the judgment from the High Court in London, it affected the Belgian litigation which was still pending before the Antwerp Court of Appeal. Indeed, United Video Properties decided to abandon its appeal in the Belgian courts.

While the abandonment of the litigation against it must have been welcome news for Telenet, the Belgian company then petitioned the Antwerp Court of Appeal to be awarded nearly 200 000 euro for the legal costs which it had incurred while defending itself in an action brought on the basis of a now void patent.

United Video Properties refused to pay that amount. It placed great reliance on Belgian costs law, which caps fees and sets variable flat-rates for the amounts that any winning party can recover from a losing party.

In that context, United Video Properties recalled that when the judge at first instance in the Commercial Court in Antwerp had voided their patent, they had only been ordered to pay 11 000 euro to Telenet. It was an amount which even the judge noted had not been contested by either party. Thus, United Video Properties took the view that there was simply no basis in Belgian statutory costs legislation or Belgian case law for Telenet to be awarded the sum of 200 000 euro in respect of legal costs.

Telenet disagreed and pointed out that Belgian costs law was not relevant here. The dispute had been created by a company seeking to enforce intellectual property rights. Accordingly, the applicable legislation was the EU’s ‘enforcement’ Directive 2004/48/EC on the enforcement of intellectual property rights (OJ [2004] L157/45).

The relevant provision of the Directive is Article 14, which provides:

Legal costs
Member States shall ensure that reasonable and proportionate legal costs and other expenses incurred by the successful party shall, as a general rule, be borne by the unsuccessful party, unless equity does not allow this.

It was not clear to the Antwerp Court of Appeal whether Belgian costs legislation was applicable, and so it decided to make a preliminary reference to the CJEU.

Questions Referred
According to the website of the UK’s Intellectual Property Office, the Antwerp Court of Appeal has asked:

1. Do the terms ‘reasonable and proportionate legal costs and other expenses’ in Article 14 of Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights (‘the Enforcement Directive’) preclude the Belgian legislation which offers courts the possibility of taking into account certain well-defined features specific to the case and which provides for a system of varying flat rates in respect of costs for the assistance of a lawyer?

2. Do the terms ‘reasonable and proportionate legal costs and other expenses’ in Article 14 of the Enforcement Directive preclude the case-law which states that the costs of a technical adviser are recoverable only in the event of fault (contractual or extra-contractual)?