Damages for infringement of copyright in the amount of twice of the hypothetical royalty normally due is compatible with EU law

The Court of Justice of the European Union in its judgment of 25 January 2017 answered a question referred for a preliminary ruling by the Polish Supreme Court concerning the compatibility of the Article 79(1) of the Act on the Law on copyright and related rights of February 1994 providing for possibility of claiming compensation for copyright infringement in the amount of twice the appropriate payment that would be due for giving a permission to use a particular work (“the hypothetical royalty”) with the article 13 of the Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights. According to the provision of the Directive it is the Court that decides on the amount of the damages for the infringement of rights taking into account all the circumstances of the damage.

In the case heard by the Supreme Court, the dispute arose between Stowarzyszenie Filmowcow Polskich (Polish Filmmakers Association) (SFP) as an organization collectively managing copyright in relation to the termination of the licensing agreement setting out the rules on payment between SFP and Stowarzyszenie “Olawska Telewizja Kablowa” (Olawska Cable TV Association) (OTK). OTK continued to use the copyrighted works, therefore SFP sought the payment in the sum of twice the hypothetical royalty that would be due for giving a permission to use a particular work.

While hearing the case the Court stressed that measures for protection of intellectual property provided by Member States shall be effective, proportionate and dissuasive while also stating that regulations provided for in the mentioned Directive shall be used without prejudice to the measures provided for in national legislation even though the objective of the Directive is to ensure the same level of protection of intellectual property in the internal market. The Directive 2004/48/EC lays down a minimum standard and does not prevent Member States from laying down measures more protective.

Next, the Court confirmed that even though the compensation is not precisely proportional to the loss actually suffered, the Court found it to be consistent with Article 13(1)(b) of the Directive 2004/48/EC since it is an inherent characteristic of any lump-sum compensation.

As a consequence, the Court held that the holder of intellectual property right that has been infringed may seek compensation for the damage caused by payment of a sum corresponding to twice the amount of a hypothetical royalty. It is not necessary to prove the actual loss since compensation is a lump-sum.

  • Judgment of the Court of Justice of the European Union of 25 January 2017, case C-367/15

 

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