[Guest Post] Fighting for your IP rights in Denmark – it’s expensive, but now maybe less so?

With thanks to Hanne Kirk and her team at Gorrissen Federspiel (Denmark):

“Something is rotten in the state of Denmark” - so were the words of Marcellus in Shakespeare’s Hamlet. He could have very well been speaking about the Danish court system in 2019. This may be stretching the point a bit, but the fact remains, nevertheless, that Danish companies are increasingly turning their backs on the legal system. From 2010 until now, the number of lawsuits filed before the Danish district courts has been reduced by half.

A (partial) explanation for the trend away from civil lawsuits may be found in the limited level of costs recovery granted to the winning party. In Denmark, the losing party in a lawsuit is required only to reimburse the winner for costs “which have been necessary for the adequate conduct of the case” – and this assessment is left to the court’s discretion. Costs awards are therefore generally granted for amounts far less than the actual costs incurred.

With a new decision issued on 29 August 2019 by the Danish Eastern High Court (Danish only), the tides may now be turning. A new precedent may just have been set for the recovery of a party’s costs incurred by the use of experts, including European Patent Attorneys, and not least for legal costs recovery in general in Danish patent disputes. European Patent Attorneys, in particular, are often brought as expert witnesses by the parties, and their statements and testimonies (although admitted as evidence of a party rather than as impartial expert statements) tend to be regarded as highly persuasive.

The case concerned the companies Gilead and Sandoz who had been in a legal dispute over a potential infringement of Gilead’s patent for the products “Emtricitabin and Tenofovirdisoproxil (as fumerat)”. Gilead was granted a preliminary injunction, which Sandoz appealed. While the appeal was underway, Gilead’s patent was declared invalid in a separate case against a third party. Sandoz therefore brought a separate motion before the Maritime and Commercial High Court (MCHC) to lift the preliminary injunction.

Sandoz won the motion. In litigating the motion, Sandoz incurred actual documented costs of DKK 754,265 (approx. EUR 100,000), the majority of which were legal fees, while the rest were costs incurred by expert statements, including from European Patent Attorneys. The MCHC granted Sandoz a costs award of DKK 60,300. In other words, Sandoz, as the winner of the lawsuit, was able to recover less than 8% (!) of its actual costs.

Sandoz appealed the judgment on costs recovery to the Danish Eastern High Court. The appeal included an assessment of the total recovery of costs incurred in the connected suits between Sandoz and Gilead, including the appeal before the High Court.

The High Court held that the losing party, Gilead, should reimburse Sandoz for 49.5% of its legal costs and 100% of the costs spent on European Patent Attorneys.

Sandoz yesterday (artist’s impression)

In an earlier (unpublished) decision issued by the Eastern High Court on 31 August 2016 regarding legal costs in a patent dispute, the High Court held that the losing party, Morten Lundvig ApS, should reimburse the winning party, Simpson Strong-Tie A/S, in full for the costs spent on a European Patent Attorney. With regard to the remaining legal costs, however, the High Court granted Simpson Strong-Tie A/S a modest cost award of just below 11% of the actual legal costs.

In light of this earlier 2016 decision, the new 2019 decision issued by the Eastern High Court in the case of Sandoz vs. Gilead is likely to set a new precedent in Denmark for the recovery of legal costs and European Patent Attorneys’ fees in particular. Prior to these two decisions, costs incurred by a party’s use of European Patent Attorneys as expert advisers were considered recoverable only to the extent the costs had been“necessary for the adequate conduct of the case”.

In the recent 2019 decision, the High Court considered article 14 of Directive 2004/48 on the enforcement of intellectual property rights in light of the CJEU’s recent decision in Case C-57/15, United Video Properties Inc., and found that all European Patent Attorneys’ fees should be refunded 1:1. In doing so, it seems that theHigh Court is moving towards full recovery of patent attorneys’ fees 1:1, without performing a discretionary “necessary for the adequate conduct of the case” assessment.

The case is a step in the right direction for the recovery of European Patent Attorneys’ fees in Denmark. What’s more, the award of actual legal costs incurred was set at 49.5% of the documented legal costs. This is a high level of costs recovery compared to most cases – and potentially the beginning of a general trend towards higher costs awards. However – and more likely – it may also just underline the point that the level of costs awards granted by Danish courts is too low, and that this may have lead companies to turn their backs on the Danish court system. Indeed, the Danish recovery rate has long seemed to be much lower than in comparable jurisdictions such as Norway and Sweden. In these neighboring Nordic countries, the winning party is generally awarded full costs, unless it is apparent that a full award is not merited (e.g. where the winning party’s legal costs are exceedingly and unnecessarily high compared to the costs spent by the losing party).

Danish policymakers have started to look into the trend away from civil lawsuits in Denmark. We will have to wait and see if any political action is taken. This GuestKat is hopeful that an increase of the costs recovery level awaits ahead. For now, at least, it is a welcome sight that European Patent Attorneys’ fees are ostensibly fully recoverable.
[Guest Post] Fighting for your IP rights in Denmark – it’s expensive, but now maybe less so? [Guest Post] Fighting for your IP rights in Denmark – it’s expensive, but now maybe less so? Reviewed by Alex Woolgar on Sunday, October 13, 2019 Rating: 5

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