No separate, specific rules for interim injunctions and preservation of evidence related to IP rights in Poland – does this conform with EU law?

BACKGROUND

The claim

The dispute which ended before the Court of Appeal in Warsaw with the judgment of December 13, 2013[1] was initiated by a company seeking an interlocutory injunction (the applicant) against the defendant, enabling the applicant to preserve evidence and freeze the defendant’s assets for the sake of a prospective lawsuit regarding infringement of the applicant’s IP rights by the defendant. The applicant had reason to believe that the defendant was unlawfully exploiting the applicant’s exclusive rights: a database of the applicant’s customers, copyright pertaining to  the image of particular goods offered by applicant (mostly household appliances) and trademarks borne by these goods. The applicant was concerned that initiation of court proceedings based on the facts of the case would be futile without such an injunction already being in place. Therefore, before submitting the initial, substantive claim against the defendant, the applicant decided to apply to the District Court in Warsaw for:

1)      Precautionary seizure of the defendant’s assets, including license fees which would have been payable to the applicant if the defendant had had permission from the applicant to exercise the exclusive rights in question (database, copyright, trademarks).

2)      Precautionary shut down of the defendant’s website with an online store through which IP rights were being infringed.

3)      Preservation of evidence in the possession of the defendant – goods furnished by infringed trademarks as well as data carriers with an unlawfully exploited database with details of the applicant’s customers.

The applicant’s position

The applicant supported its claim with the following facts and evidence.

The applicant was selling and distributing goods through online stores and a teleshopping system, including some bearing trademarks to which the applicant had exclusive rights under a license agreement covering both trademarks as such as well as copyright. The applicant  also had exclusive rights to a database containing details of the applicant’s customers, including some VIP customers who were particularly active in purchasing goods sold by the applicant.

The applicant had reason to believe that exclusive rights owned by the applicant had been infringed by the defendant. First of all, the applicant had started receiving complaints from its customers about purchased goods or services (purchased via the applicant’s hotline). These complaints concerned goods ordered from or sold by the defendant. These customers had been contacted before by former employees of the applicant who started working for the defendant. Customers were confused as to whom they bought the goods from, since the defendant was presumably giving the name of the online store of the applicant when introducing himself. This information stems from a recorded telephone call with the customers calling to lodge complaints. The applicant filed transcripts of these calls as the prima facie evidence that the defendant was illicitly exploiting the applicant’s database, supposedly stolen by former employees of the applicant.

Furthermore, it was apparent that the defendant was exploiting (a) trademark/s and copyright vested exclusively in the applicant. Goods bearing these trademarks and protected by this copyright were on sale on the defendant’s website (online store).The applicant filed notarized print-outs from the defendant’s website as the prima facie evidence for the infringement along with licenses granting exclusive rights to the trademarks and copyright on the goods sold by the defendant.

District Court reasoning

The District Court dismissed the motion. The court agreed that in general the applicant demonstrated the existence of the infringed exclusive rights (to trademarks and to copyright as well as to the database in question). The court dismissed claims regarding some products (trademarks and copyright) because the applicant did not file certified translations of the respective license agreements. Nevertheless, the court held (in general) that the documentation presented by the applicant evidenced prima facie that there were legal grounds for the applicant’s claim. However, the District Court dismissed the motion because in the court’s view the requirements set forth in article 730¹ of the Polish Code of Civil Procedure (CCP) had not been met. This article stipulates among other things that anyone whose claim is demonstrated and has a legal interest may demand provisional measures to secure their claim. According to this article in the CCP, a legal interest in having the claim secured exists if enforcement of a judgment would be prevented or severely hampered or achievement of the aim of the proceedings would otherwise be prevented or severely hampered if the claim were not secured. The Court held that the applicant had failed to demonstrate its legal interest in obtaining precautionary measures and preservation of evidence. The court concluded that the applicant had merely given a vague statement that there was a risk of outputting the assets by the Defendant. In the court’s view, the applicant did not explain how lack of precautionary measures could result in difficulty regarding enforcement of a future judgment. Furthermore, the court refused to preserve the evidence, saying that the requirements  stipulated in article 310 of the CCP in this regard had not been met. Under CCP  evidence can be secured in the course of or even before the proceedings are initiated if there is  concern that it will not be possible or would be too difficult to deliver the evidence in course of prospective lawsuit. The District Court stated that the applicant had not specified any circumstances justifying preservation of evidence, in particular that there was a risk that collection and delivery of evidence may be hampered if not preserved.

Appeal Court judgment

The applicant appealed against the District Court’s ruling to the Appeal Court in Warsaw. The applicant demanded that the ruling of the court of first instance be re-examined and that the injunction be granted.

In the applicant’s view, the District Court’s judgment was a violation of  article 80 section 1 of the Polish Copyright Act (CA), article 286¹ section 1 of the Polish Act on Industrial Property (IPA), and article 11a section 1 of the Polish Database Protection Act (DPA)in conjunction with EU legislation implemented by that Polish legislation, namely article 6 section 1, article 7 section 1 and article 9 section 1 of Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property (the “Enforcement Directive”). The applicant pointed out that the District Court should not had applied article 730¹ of the CCP, as the CA, IPA and DPA set forth provisions which are lex specialis in relation to article 730¹ of the CCP. As such CA, IPA and DPA provide autonomous rules for precautionary protection of IP rights, which do not require that  legal interest be demonstrated as defined in article 730¹ of the CCP. The applicant argued that the conditions for protection stipulated in those provisions of law had been met and protection should have been granted. Generally speaking, under provisions governing particular IP rights (copyright: CA, trademark: IPA, database: DPA) it is also possible to seek precautionary measures, including preservation of evidence, for anyone who has a legal interest. These provisions do not give a definition of the term “legal interest”, as opposed to article 730¹ of the CCP, but the applicant argued that this is a different legal interest to that regulated by article 730¹ of the CCP, as the CA, IPA and DPA establish a different precautionary measures regime to that of general character according to the CCP. According to the applicant , taking into account the invoked provisions of Directive 2004/48, in the case of infringement of IP rights the sole prerequisite for granting a precautionary measure is to demonstrate the IP rights to be protected for the duration of the dispute. The concept of “legal interest” in terms of IP rights, as the applicant claimed, should not be identified with the concept of “legal interest” in the meaning of article 730¹ of the CCP. There were also some other arguments raised by the applicant against the judgment of the District Court, but the authors of this article will focus solely on the main and the most interesting issue mentioned above.

The court of  second instance did not agree with the appeal and dismissed it. The Court of Appeal agreed with the reasoning of the District Court. It pointed out that under article 730¹ of the CCP the claim may be secured if legal interest is demonstrated as defined in that provision of law. This means that the legal interest exists if the absence of precautionary measure would prevent or severely hamper the enforcement of a judgment or otherwise prevent or severely hamper achievement of the aim of the proceedings. As the Court of Appeal emphasized this is a general principle that applies to all kinds of claims, including infringement of IP rights. The court disagreed that article 80 section 1 of the CA, article 286¹ section 1 of the IPA, and Article 11a Section 1 of the DPA set out separate (specific) rules. In the court’s view, also in this regard fulfilment of general premises as stipulated in the CCP is necessary to seek precautionary measures, so the legal interest in the meaning of article 730¹ of the CCP needs to be demonstrated. As the court stated, the CA, IPA and DPA provide for different rules regarding selected aspects of interim protection of IP rights  in particular precautionary measures and deadlines, but they do not provide for an exception to the general requirement to demonstrate the legal interest in the meaning of article 730¹ of the CCP. This legal interest was not demonstrated by the applicant, so the dismissal of the application in question was lawful. In terms of preservation of evidence, the Court of Appeal agreed with the District Court and held that requirements set forth in article 310 of the CCP were not met in this case, and stated specifically that the applicant had not demonstrated that it would not be possible to or would be too difficult to deliver evidence without preservation thereof. The court also held  that it was questionable whether the applicant had demonstrated sufficiently it held the IP rights it sought protection for, and had certain other objections not covered here.

COMMENTARY

…in the right place?

The judgment is worth commenting on because it concerns interesting issue under Polish law, namely the prerequisites for precautionary measures and preservation of assets to be granted. First of all a little bit of historic context needs to be provided. Article 730¹ of the CCP, which is a general provision governing securing of claims, pre-date article 80 section 1 of the CA, article 286¹ section 1 of the IPA and article 11a section 1 of the DPA. The same applies to article 310 of the CCP, providing conditions for preservation of assets. The  provisions mentioned above, of the CA, IPA and DPA, were enacted later, in order to implement the Enforcement Directive. The first thing that comes to mind is that these provisions must have introduced something very new, but let’s compare the wording of particular provisions of articles 310 and 730¹ of the CCP with article 80 of the CA (the IPA and DPA contain provisions worded in the same way):

• Article 310 of the CCP. “Prior to the initiation of proceedings, at the request of the applicant or by the court ex officio, the evidence can be secured if it is feared it will be impossible or too difficult to deliver the evidence in future, or there is some other reason for which they need to be secured”.
• Article 730¹ of the CCP. Section 1. “A party or participant in the proceedings may request that its claim be secured if the claim is demonstrated (probable) and it has legal interest in having its claim secured.” Section 2. “Interest in being granted injunctive relief exists when enforcement of a judgment would be prevented or severely hampered or achievement of the objective of the proceedings  would otherwise be prevented or severely hampered if the injunctive relief was not granted.”
• Article 80 section 1 of the CA. “The court having jurisdiction to hear cases concerning infringement of copyright in the place in which the infringing party has its place of business or has assets, also before initiation of the proceedings concerning the substantive issues in the case, reviews, no later than 3 days from the date of filing with the court, the request of the person having a legal interest for (…) securing evidence and securing related claims.”

Past rulings have stated that article 80 section 1 of the CA is a special provision in relation to the general rules set forth in the CCP.[2] Article 80 of the CA (and article 286¹ section 1 of the IPA and article 11a section 1 of the DPA respectively) was amended in the act of May 9, 2007, implementing the Enforcement Directive and it seems (the Court of Appeal did not elaborate on this) it is indeed a lex specialis to articles 310 and 730¹ of the CCP. Should that not be the case, the question arises as to the reason for them to exist (except for technical reasons, as the Court of Appeal stated). The Court of Appeal stated that articles 310 and 730¹ of the CCP provide for certain conditions to secure claims and evidence, even for IP cases. So what is the point of keeping the discussed provisions in the CA, IPA and DPA if the interim injunction in IP cases is entirely covered by the general provisions of the CCP?

Presumably, the answer to this question lies in the Enforcement Directive which article 80 section 1 of the CA, section 1, article 286¹ section 1 of the IPA, and article 11a section 1 of the DPA are intended to implement into the Polish legal system. It is reasonable to say that for certain reasons the Polish legislature decided that the general provisions of the CCP were insufficient to fulfil the objectives of the Enforcement Directive and put in place the provisions described above of the respective IP laws. This is the a crucial point, as it is indisputable that every domestic court is required to interpret domestic law in a manner that maintains its compatibility with EU law. In this case the Court of Appeal had to interpret and put into practice regulations governing securing of claims and evidence in line with the Enforcement Directive. Even Polish legal commentators state that injunctions related to copyright law no longer show autonomy compared to the rules under the CCP.[3]

The Enforcement Directive requires every EU Member State to introduce quick and effective mechanisms for protecting IP rightholders . This objective should be achieved inter alia by preservation of evidence (articles 6 and 7 of the Enforcement Directive) and provisional/precautionary measures (article 9 of the Enforcement Directive). It needs to be underlined that the Enforcement Directive is quite clear on the conditions for granting preservation of evidence. According to article 7 section 1 of the Enforcement Directive, a person who wants to have evidence preserved in their case must provide “reasonably available evidence to support his/her claims that his/her intellectual property right has been infringed or is about to be infringed”. There are no additional conditions for having preservation of evidence granted by the court, in particular that there is a fear or risk that it will not be possible to deliver evidence to the court in future. The same applies to the securing of the claim by the court – the Enforcement Directive is clear in this respect as well. Pursuant to article 9 section 3 of the Enforcement Directive, the court granting provisional/precautionary measures in order to secure the claim has the right “to require the applicant to provide any reasonably available evidence in order to satisfy themselves with a sufficient degree of certainty that the applicant is the rightholder and that the applicant’s right is being infringed, or that such infringement is imminent.” It is apparent that the Enforcement Directive does not require it to be demonstrated that enforcement of a judgment would be prevented or severely hampered or achievement of the aim of the proceedings would otherwise be prevented or severely hampered if the claim were not secured.

Under the Enforcement Directive a person requesting that a claim and evidence be secured needs to demonstrate an infringement (actual or imminent). Therefore, the court ruling on the injunction in question should scrutinize this person’s title to the particular IP rights that are to be protected and whether the alleged infringing party has taken (or is about to take) any action that may be qualified as infringement of these IP rights. In the view of the authors of this text, this is not compatible with articles 310 and 730¹ of the CCP, which set out different (general) conditions for preservation of evidence and securing of claims. It is fair to assume that this was the reason that article 80 section 1 of the CA, section 1, article 286¹, section 1 of the IPA, and article 11a section 1 of the DPA were introduced into Polish law, in addition to articles 310 and 730¹ of the CCP. These provisions are intended to implement the Enforcement Directive. First of all, they must be interpreted as special provisions (lex specialis), separate from articles 310 and 730¹ of the CCP. The discussed provisions of the CA, IPA and DPA do not impose any other conditions for having a claim and evidence secured besides the legal interest demonstrated, while there is no definition of the term “legal interest”, as opposed to article 730¹ of the CCP. Therefore, this legal interest should be understood in the traditional way and as being compatible with the Enforcement Directive, as entitlement stemming from substantive law for interim protection of IP rights (in terms of evidence and claims) to which a person who seeks protection has legal title. This interpretation of article 80 section 1 of the CA, section 1, article 286¹ section 1 of the IPA and article 11a section 1 of the DPA takes account of the Enforcement Directive. In terms of IP rights, imposing a requirement to meet conditions set forth in articles 310 and 730¹ of the CCP should be qualified as a breach of EU law.

Incidentally it is worth mentioning that before May 3, 2012, there was a provision in the CCP requiring only demonstration of prima facie evidence of the existence of entitlement in order to obtain an interim injection for pecuniary IP claims (article 753¹ section 1 subsections 6 and 7). Under that provision the claimant only had  to convince the court that the entitlement (stemming from substantive law) was probable. This regulation was repealed as it was being abused. Apparently it afforded the party seeking the injunction excessive protection. It was also incompatible with the Enforcement Directive, as EU law requires a certain degree of certainty that the person seeking the injunction is the actual rightholder of the entitlement (claim) to be protected.

Apart from the incompatibility between the regimes of interim protection stemming from the Enforcement Directive and current wording of the CCP, there are also some practicalities that we want to underline in the context of the judgment under discussion. The application of general rules as provided for in articles 310 and 730¹ of the CCP would be counterproductive bearing in mind the specific nature of IP rights and the way they are and can be infringed, due to their nature. The nature of IP rights is stated in the Enforcement Directive (and domestic provisions implementing it), as opposed to articles 310 and 730¹ of the CCP. In cases of infringement of IP rights the requirement of fulfilment of articles 310 and 730¹ of the CCP makes the whole interim protection a mere illusion. In most IP disputes the rightholder is primarily interested in stopping the infringement for the duration of the court proceedings. It is impossible to achieve this objective in many cases if the rightholder is required to demonstrate first that enforcement of a future judgment would be prevented or severely hampered if the interim injunction was not granted. Furthermore, in most cases regarding infringement of IP rights there is extreme asymmetry of information between the rightholder and the infringing party. Unlike in many other disputes, in IP cases it is quite easy for the most crucial evidence to be destroyed or concealed. For instance, an illicit database can be deleted the moment the infringing party receives copy of the rightholder’s submission initiating the proceedings. Requiring the rightholder to demonstrate it will not be possible or too difficult to deliver the evidence (article 310 of the CCP) seems to be pointless in most cases concerning IP rights. That is why the Enforcement Directive is based on a different approach, less “traditional” than in the case of articles 310 and 730¹ of the CCP. That is also why article 80 section 1 of the CA, section 1, article 286¹ section 1 of the IPA, and article 11a section 1 of the DPA should be applied separately and independently from articles 310 and 730¹ of the CCP.

* Janusz Piotr Kolczyński is Managing Attorney-at-Law and Przemysław Dominik Antas Attorney-at law trainee at C.R.O.P.A. the TMT and IP law Firm in Warsaw. The authors wish to thank Jon Tappenden for his great help in preparing the text of the article.