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Hertslet Wolfer & Heintz

hw&hAvocats & Rechtsanwälte

EFFECTIVE USE OF THE FRENCH AND GERMAN LEGAL PROCEDURES WITH

REGARD TO IP INFRINGEMENT

Christophe CHAPOULLIEAvocat Associé

AIPPI 7TH AND 8TH NOVEMBER 2013



Two different kinds of IP infringements:

Counterfeits: obvious infringement (“Brand protection”): Criminal proceeding

Infringement : questionable infringement : Civil Litigation

Two parts (disproportionate):

1 - Criminal proceeding 2 - Civil proceeding

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I. Criminal proceeding

Advantages:

Police authorities and Customs watch any possible infringement.

Particularly, the rights holders can request customs services to watch and to hold all potential infringements of their IP rights coming from abroad (Airports, harbors, premises…).

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Mechanism:

1 - Customs inform the IP rights holders that they discovered products presume to be infringing goods.

2 - The rights holders have 10 days to confirm the infringement and to request the release of the professional secrecy concerning the (i) origin of the products (ii) their destination (iii) the quantities.

3 - In the same 10 days dead line, with such information, the rights holders have to file a claim before the Public Prosecutor.

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Consequences The Customs seize the products which are not

going to be released. The Public prosecutor decides to (i) press

charges or not and to (a) order further investigations (b) to refer the matter to the Criminal Court.

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Advantages Very effective to stop and seize counterfeit products. Inexpensive Daily used for trade-marks and designs holders to stop counterfeit import.

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Disadvantages

No control of the right holders on the proceedings: The schedule, the next steps, the investigations, legal proceedings…

Especially, no control on the time-line.

The hearing before the Criminal Court often takes place often more a year after the seizure.

The Customs act only if the products come from abroad (imported products).

The Criminal courts allow low damages.

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Positive side effect: No need to introduce a legal proceeding, even if

the law states that it must be done… Even if the Public prosecutor decides to close

the case (no criminal proceedings) the Customs maintain the seizure of counterfeit products which could even be destroyed with the agreement of their owner.

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II. Civil Proceedings

The practice has been largely influenced by the French Act, October 29th, 2007 which has implemented the European Directive April 3rd, 2004.

Different steps: infringement seizure, competence of the Courts, damages granting, information rights.

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1. Pre-litigation: Cease & desist letter

Increasingly used Type of demands :

cessation written acknowledgement of rights possible compensation

Effective when the infringement is obvious

Limit : seldom obtained: more than the cease of the infringement acts Written commitment from the infringer

Not to comply with the cease & desist letter does not have direct consequence before the judge

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hw&hAvocats & RechtsanwälteGermany

Necessary step before introducing a litigation (exception only in case of emergency).

The infringer is asked to give an undertaking to cease enforced by penalty for each case of breach of the undertaking.

Not to comply with a Cease & desist letter puts you at risk of an exparte injunction, which can be obtained in few days.

The whole procedure is often based on this demand for a Cease & desist letter.

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A – Evidence : pre-requisite

Essential requirement of all proceedings

Principle: freedom of evidence, by any means

In practice:

• search of written evidence

• oral statements are not trustworthy

2. Litigation



1) Bailiff’s purchase report

without any judicial proceedings by a bailiff

Advantages flexible and quick no validity time-limit

Inconveniences the bailiff can only witness, without any

intervention, the bailiff cannot enter private

properties(company, store), only with regard to the acts of infringement (ie but

not with regard to the extent/origin of counterfeited goods).

Has become almost essential before requesting seizure for counterfeiting

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Germany:

- No purchase report by bailiff, who don’t have such attribution

- A test purchase test can be done by any third party or even by the rights holder.

- The prove of this test purchase can be made by written statement or/and testimony; the product can be brought before court as a proof.

- The court where the product has been delivered will have territorial jurisdiction.

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2) Bailiff’s report on the internet

without any judicial proceeding, by a bailiff.

Essential to prove facts on the internet

Mere paper prints not admissible

Advantagejustify territorial jurisdictionreport in Paris Paris’ Court

InconvenientFormalism must be followed by the bailiff

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hw&hAvocats & Rechtsanwälte3) Seizure for counterfeiting

Specific procedure, only for IPSame procedure since the Act of October 29th, 2007 for all IP rights Granted on application, ex parte proceedingsRight owners may obtain the authorization to mandate from the President of the District Court :

► a bailiff, eventually assisted by experts (no lawyer), computer engineer, locksmith and law enforcement authorities : With no previous warning, on private premises, to obtain evidence concerning:

acts of infringement origin extent of the infringement

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To grant the authorization, Judges require evidence of the alleged infringing acts (ie : bailiff report).

Exception : commercial fairs and exhibitions, due to the short time to proceed.

the most efficient evidence proceeding

Possibility to search evidence at the infringer’s premises,

the distrainee cannot oppose to seizure,

all evidence may be seized (invoices, purchase order …),

taking samples. 17



Usually detailed descriptive records, but physical seizure may be implemented as well

requirements of physical seizure:

obvious infringing character, products are likely to disappear.

Inconvenient : the judge may require :

payment of the distrainee’s stocks (which may seem ironic),

payment of financial guarantees18



Counterparts

Formal proceedings should be introduced within:

20 working days 30 days

otherwise automatic nullity of the seizure for counterfeiting will occur.

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B - Litigation principles

1. Jurisdiction over the matter Exclusively : 10 District Courts of First Instance

Paris: Patents, CTM and Community designs.

Exclusive jurisdiction as well as related actions regarding unfair competition and parasitism acts.

Relatively new : before 2007, Commercial Courts were competent for designs and copyrights.

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Advantage :

Specialization of Courts

Caution : Length of courts’ procedures when the action

is not brought in Paris,

for instance, Lyon (2 to 4 years …) or Lille (2 years).

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hw&hAvocats & Rechtsanwälte2, Adversarial principle

a. Principle :

No ex parte procedure in France.

Judges are reluctant to render a binding decision based on the claims made by a sole party, without the defendant’s hearing.

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b. Exception :

Theoretically, since the Act of 2007, measures for the cease of the infringing acts could be ordered ex parte.

Limited to obvious and very serious acts in order to prevent their extension. This possibility has been implemented to fight against organized crime networks.

But criminal proceedings are more adapted for these cases.

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Difficulties :

Provide the necessary upstream evidence before the judge regarding the gravity and the importance of the facts at stake and that “any delay would cause irreparable harm to the applicant”.

Judge reluctant to grant such measures without adversarial debate.

In practice rarely applied.



3. Litigation’s goals (from the right holders’ point of view)

Cease of the infringing acts, under financial penalties, eventually withdrawal of the market,

compensation for the damages suffered,

publication of the decision (in particular if the infringement has been advertised),

fees reimbursement.

Most of them have evolved since the Act of October 29th, 2007 which implemented the Directive of April.

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Choice of the procedure, according to:

the seriousness of the infringement,

the “strength” of the right at stake,

the quantitative importance/the number of products involved,

the emergency,

the fact that the litigious products have already been on the market for a long time.

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B. Different kinds of proceeding

1. Injunction proceedings Oral procedure : Statements can be addedAdversarial principle

Demands : Cessation of the acts, with financial penalties, Withdrawal (serious cases), Damages : relatively new (Act of 2007).

Duration 3 weeks to 2 months, Serious emergency : “Référé d’Heure à Heure”.

AdvantageDecision immediately enforceable notwithstanding appeal.

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Limits :

Jurisdiction over the evidence : if a serious legal difficulty arises the Judge will reject the claim.

One formal brief.

Proceeding does not allow validating seizure for counterfeiting.

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2. Plenary proceedings

Duration: 15 to 18 months (Paris)Written procedure:

all arguments must be brought to the other parties in writing,

no testimony, no expert’s hearings.

The judges: do not request the evidence before the main

hearing, rarely acknowledge the content of the brief

before the main hearing, are not necessarily interventionists during the

debates.29



Germany

The written elements of evidence must be attached to the complaint : the judge have them at their disposal since the beginning of the proceeding.

In plenary proceedings, judges often incite the parties to find a settlement agreement.

Injunction proceedings are frequently used, plenary proceedings rather rare in these matters.

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Debates are conducted as follows : procedure’s validity,

IP’s right validity, which is

very often contested, almost automatically contested for patents.

infringing acts,

unfair competition,

damages evaluation.

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hw&hAvocats & RechtsanwälteGermany

Important difference:

The validity of the IP right for lack of protectability (esp. distinctiveness) cannot be submitted to the same Court (this can only be made before the German and Trade mark Office – DPMA). Only « relative » grounds of invalidity (priority, cancellation for non use …).

If the defendant contests the validity of the IP right before the Office, the court can suspend the proceeding in order to avoid contrary decisions.

Unfair competition rules are subsidiary. 32



Paris : the number of briefs exchanged between the parties is theoretically limited.

But in practice, judges take into account the case’s difficulties.

Provisional execution of the judgment, at least with regard to prohibitive measures, unless some doubts remain.

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3. Emergency formal procedure : procédure “à jour fixe”

Requirements : serious emergency, number of products involved, Judge’s authorization must first be obtained

on ex-parte request.

Advantages: date of the hearings scheduled within 2 to 3

months, judgment within 3 to 4 months.

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Disadvantages

the defendant may submit a brief before court until the date of the hearing,

the applicant may not reply by writing but only orally.

Conclusion: may be very efficient, but :

the IP’s rights must not be open to serious question (nullity, cancellation …),

the case must be well prepared.

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C. Damages calculationNew : Act of October 29th, 2007

1. Remedies :a) shortfall from the right ownerb) profits made by the infringerc) moral prejudice caused to the right

owner

2. Alternative: royalties

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Consequences:

Relative increase of damages awarded since the law enforcement.

Recurrent topic : Right owners complain about low damages, Judges complain about unprepared cases.

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D. Right to information

Objective:

improving damages compensation.

Request the Judge to order the defendant to provide information about the (i) origin, (ii) volume and (iii) destination, of the alleged infringing facts,

Difficulties in applying, a lot of denial:

Judges dislike order binding enforceable measures before having stated on infringing acts.

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hw&hAvocats & RechtsanwälteE. Practical solution:

Combination of plenary proceeding and right to information (droit à information)Request the Tribunal at the stage of the plenary proceeding to:

Qualify as an infringement the alleged facts, Order prohibition measure and allocation of

estimated damages, Grant the right to information (droit à l’information)

and request the Court to order the defendant to produce an affidavit accountant and/ or auditor to provide (i) the number of bought and sold counterfeit products, (ii) of turnover, (iii) of profit margin.

The Courts normally award this request if : - the infringement is admitted and - the defendant does not provides any figures.

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F. Request withdrawal from the market

Rarely granted in view of the extremely inconvenient , expensive and vexatious nature of the measure.

Practical difficulties because products are often already sold (semi-wholesalers, retailers).

Consequences: This measure is only ordered in the event of product piracy, rarely between competitors, except if the infringement is obvious.

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G. Publication of the decision

The Courts often order the publication of the decision provided that :

it has been asked by the right owner, infringement is obvious and/has been

advertised

Advantage : Important to restaure the image

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H. FeesJudges usually do not allow the full fee’s reimbursement.

The amounts awarded are more important if:

evidence of the amount of fees is given,

expenses incurred by the proceeding are substantial

Different in Germany: Fees for lawyers and patent attorneys must be paid by the underlying party on the basis of the legal rates.

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Thanks for your attention

Ch 43

Christophe CHAPOULLIEAvocat Associé

hertslet wolfer & heintz hw & h avocats & rechtsanwälte christophe chapoullie avocat...

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