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Tuesday, 6 September 2011

Making an exhibition of oneself: trade fairs and injunctive relief

"Man bites apple" may not be much of a headline, but "Apple bites Samsung" has been doing the rounds of late.  Our visiting Kat Tom Carver has been busily musing over this theme and this is what he has to say:

"Apple may be having trouble in China, but it seems that, in jurisdictions where it can pick its forum, Apple is getting its way, The IPKat has previously reported on Samsung and Apple's spat back in August, here, and now Apple has scored another point.  Samsung has withdrawn its Galaxy Tab 7.7 from the Berlin IFA electronic fair (one of the world’s biggest electronics shows).  The tablet computer in question had been on display on Friday and part of Saturday according to Unwired, but was removed on Saturday.  The speed of the Dusseldorf court has been remarked on both by the author of that article, criticising the court for removing a product on the basis of little evidence, and rather more positively in Forbes (this article actually refers to the previous decision in August granting an injunction against the 10.1 model, but the sentiment remains the same), praising the speed and patent-friendly nature of the Dusseldorf court and comparing it to the district courts of Eastern Texas.  Which opinion you hold probably depends on which side of the innovator/me too fence you sit, but the use of injunctions at trade fairs brings matters into sharp focus.  Significantly, the August decision was given by the court based on faulty evidence.  One of the photos of the Samsung device was distorted and this apparently made it look more similar to the Apple design than it does ‘in the flesh’, and this together with the timing of the second injunction (i.e. during the trade fair) got me thinking. 

 Trade fairs are hugely important advertising windows and time is of the essence.  A wrongly-granted interim injunction will be hugely disruptive, preventing the manufacturer showcasing its new product and causing potentially enormous damage to sales.  If an interim injunction is wrongly withheld, the manufacturer can continue to showcase its product but later sales will, if right prevails, be restricted by an injunction granted following a hearing on the merits.  So at first blush, and sitting firmly on the fence between the innovator/me-too camps, it might appear that some leniency could be given to the alleged infringer, but let’s have a closer look at it.  In Germany the rights holder is liable for damage sustained by the alleged infringer if the rights holder enforces the judge’s decision (the injunction does not automatically take effect, it has to be executed by the claimant) and it is later held that the injunction was wrongly granted, so the risk of enforcement lies with the rights holder.  Similarly in the UK, a cross-undertaking for damages will be given by the rights holder to the infringer.  
But is this a good enough solution?  It is difficult for a wrongly accused infringer to prove how many sales it has lost, but it is easy for the rights holder to point to the number of sales made by an infringer.  The answer must lie in the process used to come to the decision to grant or deny the interim injunctions.  In the UK, the defendant is almost always allowed to put its case at an inter partes hearing and the various points should all have been considered as part of the American Cyanamid balance of convenience test.  The defendant would almost certainly argue that the coincidental timing of the trade fair should weigh in its favour.  In Germany a more subtle form of moral hazard is at play.  The judge hearing the interim injunction application (on an ex parte basis) will give due consideration to the defendant’s interests but ultimately will decide the case on the evidence in front of it.  The claimant then has the choice to enforce its injunction, or let it lapse if it doesn’t want to take the risk of it being overturned and being liable for potentially significant damages.  
Important at trade fairs is speed of action and the Apple/Samsung case has demonstrated that the Dusseldorf court can deliver that, with risk being laid firmly on the claimant.  I’d be interested to hear whether any readers’ jurisdictions have a different solution to trade fair infringement".

3 comments:

MaxDrei said...

Jeremy you mention:

"...the risk of it being overturned and being liable for potentially significant damages"

and I'm wondering how big that risk is. In particular:

1. how long will it take, and how much will it cost, for the aggrieved injunctee to get as far as an award of proportionate damages, and

2. by that time, will the injunctor be hurt at all by the damages award (having offset the anticipated amount of the award against tax, through all the intervening years).

Anybody got any info about how much it can cost a Claimant in Germany, to enforce a preliminary injunction, but then later to lose on the merits?

Anonymous said...

I'm very curious as to how a wrongly injuncted claimant's damages are quantified - in Germany and elsewhere.
Are there any judgments on this issue (in any jurisdiction) other than the Servier / Apotex UK judgment by Norris J (if I remember correctly)?

Michael Thesen said...

I remember to have read some rather disappointing numbers in a presentation (see page 21) by Peter Wiedemann (Hoffmann Eitle). He says that only in 3 out of 2000 cases of preliminary injunctions damages were claimed and that this was successful only in one case, wherin the amount granted was small. I think that the problem is indeed to provide sufficent evidence for the loss of sales due to the non-participation at the trade fair.

I do not know the source of these numbers but I am actually not aware of any case where substatial damages were awarded as a consequence of a non-justified PI.

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