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German copyright holders could now be able to seek punitive damages from infringers that are double or even triple the cost of licensing fees based on a ruling of the European Court of Justice.
The court upheld a Polish statute that allows copyright holders to sue copyright infringers for punitive damages that are two or three times the cost of licensing fees. This could upend the established compensatory precedent for copyright infringement in Germany.
The Jan. 25 ruling came at the request of the Polish Supreme Court for a clarification of EU law. The CJEU ruling is only on the Polish law, but its logic can be applied in other EU countries.
The CJEU argued that reimbursement based upon licensing fees and royalties alone doesn’t fully account for damages, so the Polish law doesn’t violate European guidelines for determining reimbursement for copyright infringement.
“It’s a kind of punishment,” Arno Lampmann, an attorney and partner specializing in intellectual property and commercial rights with Lampmann, Haberkamm & Rosenbaum in Cologne, told Bloomberg BNA. “And that’s problematic, because it violates that premise of German damage controls that say that you cannot normally exceed damages.”
However, the CJEU ruling comes at a time when those on all sides of the bench are questioning the ethics of awarding only the original licensing fee to claimants whose copyright has been seriously infringed in Germany, he said.
“In the worst case, you only pay as much as the original license fee,” he said of the German system. “And if you think that through, even judges who don’t really do a lot of copyright law say that that can’t be right.”
“This is the argument for Pandora’s box opening in a way,” said Lampmann. “There is more at stake than just the pure license fee that should have been paid—there are always factors that inflict damage on the copyright holder that he’s not able to put in numbers.”
However, it is still likely to be an uphill battle in Germany.
In Germany, the concept of awarding double the original licensing fee to a claimant is only used in very specific circumstances, such as when an author’s name was knowingly omitted from a reproduced text. Normally, compensation doesn’t exceed actual damages, attorneys say.
“It’s usually very hard to demonstrate the type of damage you have suffered,” Ulrike Grubler, an attorney and partner specializing in trademark and intellectual property with DLA Piper in Hamburg, told Bloomberg BNA. Punitive damages rarely apply to IP cases in Germany, and even then, only in very serious cases of infringement, she said.
“I’m reluctant to say that it’s opening the door for punitive damages,” she added. “We don’t know the concept in the way other jurisdictions do.”
The CJEU’s preliminary ruling stems from a decades-long legal battle between Stowarzyszenie Filmowcow Polskich (SFP), an organization managing audiovisual content licensed in Poland, and local cable television broadcaster Olawska Telewizja Kablowa (OTK).
SFP issued notice in 1998 to terminate their rights agreement with OTK for rebroadcasting their materials. According to court documents from the CJEU, OTK continued to make use of the materials for years while their request to renew the licensing agreement was processed by Poland’s Copyright Commission.
SFP ultimately won their case, but were only awarded a percentage of the original damages they had sued for. As a result, both parties appealed the case, which has bounced back and forth between national and regional courts in Poland since 2011.
The case has been heard by the Polish Supreme Court three separate times, the last of which had the court seeking clarification of a national precedent that allows claimants to ask for double, or even triple, the original licensing fee based on perceived damages, attorneys told Bloomberg BNA.
The CJEU upheld the Polish precedent, which could open the floodgates for rightsholders in other member states seeking a similar ruling on damages.
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The CJEU's statement available at http://src.bna.com/lSv.
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