DAMAGES FOR CTM INFRINGEMENT: A PROVISIONAL ANSWER

Yesterday the IPKat blogged a couple of questions (DAMAGES FOR CTM INFRINGEMENT: DOES ANYONE KNOW?) and begged for a response. Today he has received this from Aurelio Lopez-Tarruella Martinez. Aurelio writes:

"I'm assistant in Private international law in the University of Alicante and I teach in the Magister Lvcentinus. I would like to give this answer:

1. Traditionally in Private international law, disputes concerning national IP rights are governed by the lex loci protectionis. That is the law of the country where protection is sought. Where there is an infringement, this law coincides which the law of the country where the acts of infringement were committed.

This conflict-of-law rule is based on the territoriality principle, which implies that a IP rights are only valid and can only be infringed within the territory of the State having granted them. Futhermore, this conflict-of-law rule is founded in the several public policy objective embedded in national IP systems: lex loci protectionis ensures the application of a State IP law when the IP rights are exploited in the territory of that State. The bad consequence of lex loci protectionis is that, in cases of a multi-state infringement, a judge cannot applies the law of only one country. This conflict-of-law rule implies the application of each of the laws of the countries where the infringement was committed. This is very inefficient:

(a) the judge must apply several foreign laws to reach a final judgement;

(b) the claimant must ground his complaint in several laws;

(c) in certain Member States (such as Spain), the claimant must provide evidence of the content of all the foreign laws on which the complaint is founded.

Scholars have argued the need of certain degree of flexibility when applying the lex loci protectionis (that is to say: one law should be applicable to the whole multi-state infringement) but Member States judges are very reluctant to accept this line of thinking (see, for instance, in a software copyright infringement case, Judgement of the Cour de Cass. 5 March 2002, Rev. Crit. Droit Int. Privé, vol. 92, 2003, pp. 440 – 446).

2. When talking about community industrial property rights, things are a little bit different. Art. 98(2) does not establish the application of the lex loci protectionis. This would be incoherent in so far as the Community IP right is granted by the EC and the territoriality principle is related to the whole EC territory (the CTM is valid and is protected in the whole Community territory). The lex loci protectionis would imply the application to a CTM infringement of the EC Law. It is possible to argue that Art. 98(2) establishes the application of the lex loci delicti commissi. This is the general conflict-of-law applicable to non-contractual obligations: the law of the country where the infringement occurred. This is important because the lex loci delicti commissi does not follow the strict interpretation of the lex loci protectionis. As such, in multi-state CTM infringements, national judges are not obliged to apply each and every law of the Member States where the infringement occurred. They have more flexibility in deciding whether all the laws involved must be applied or not. For this reason, although I have not read the German Home Depot case, it seems to me that the decision should be welcome for the sake of efficiency.

In any case, there are still questions to be answered:

* which of the national laws should be preferred?

* which criteria should be applied to decide on this?

* is this solution valid for all the question excluded from the scope of the Regulation?

*what is the meaning of "including the private international law" in Art.98(2) in fine?

Many thanks, Aurelio, for this. Meanwhile, the IPKat has also received this from Phillip Johnson (DTI, recently appointed as Review Editor of JIPLP):

"On your CTM questions, I have two clarifications, which may help.

The easy one first [IPKat's note: that's the second question]. It is true that England treats foreign law as matters of fact. Thus if a party does not prove that a foreign law is different to English law it is presumed to be the same. However, this approach is not followed in other countries. Germany, for example, requires the judge to determine the foreign law of his own motion (the only exception is where the parties agree the law applicable, but even this has restraints). Interestingly the European Parliament in its report on Rome II (which deals with applicable law in IP cases) suggests that the ex officio approach (of Germany) becomes a requirement of Community Law.

The second, more difficult point. The normal rules of private international law are that the quantum of damages is a procedural matter and so should be determined by the lex fori (i.e. the court seized). However, some courts (including English courts) considers that matters of remoteness (etc) are substantive and so should be determined under the applicable law (and not the lex fori, unless that law is actually applicable). This being the case it would appear to be correct for damages to quantified under the lex fori. Thus, the German court should apply German law to the entirety of the quantum claim and not divide it up between member States".

Thank you too, Phill.