Litigation costs orders and access to the courts in IP cases
On I February 2018, at 15.00 hrs, Charlotte Vrendenbarg will defend her PhD dissertation ‘Proceskostenveroordeling en toegang tot de rechter in IE-zaken. Regelingen over proceskosten getoetst aan het EU-recht’ (Litigation costs orders and access to the courts in IP cases. A comparison of litigation costs schemes with EU law) at the Academy Building of Leiden University. The research was supervised by Professor H.J. Snijders and Professor D.J.G. Visser.
Proceedings dealing with intellectual property rights can be costly. Disputes concerning infringements of IP rights are often transboundary and complex, both from a factual and a legal point of view. The investigation of infringers, the collection of evidence of infringement, the assessment of the scope of protection of the IP right in question and the investigation of the prior art of the so-called Umfeld are examples of specific, time-consuming activities in IP cases. The fees for the assistance of a specialist lawyer can be very high.
On the grounds of the general rules that apply in civil proceedings, only a minor, fixed amount of the lawyer’s fees can be claimed from the opposing party. The fixed remuneration fee system is based on the notion that the risk of being ordered to pay substantial costs would form a serious obstruction to access to the courts. In proceedings concerning the enforcement of IP rights, since the implementation of the Enforcement Guidelines the special condition on litigation costs of Article 1019h of the Dutch Code of Civil Procedure (CCP) applies. This provision enables an order for the winning party in the actual, reasonable and proportional costs. The article, which forms the broad implementation of Article 14 of the Enforcement Guidelines, is based on the notion that the prospect of realistic remuneration would increase access to the courts for IP title-holders. In addition, the risk of an order to pay substantial costs would act as a deterrent to potential infringers. The order to pay extensive costs, perhaps even the entire cost, of proceedings and the choices that are made concerning the implementation and interpretation of the provision in the Dutch context have consequences for the accessibility to courts in IP cases.
The central question in the dissertation is to what extent the implementation, interpretation and application of Article 14 of the Enforcement Guidelines in the Netherlands is consistent with EU law. To review conformity with EU law, first the assessment framework to be met by the national rules on litigation costs was outlined. On the basis of extensive literature and case law study it was examined how the litigation costs rule of Article 1019h CCP is interpreted and applied in practice in Dutch IP cases. In addition, the effects and possible effects of Article 1019h CCP on parties’ conduct during proceedings and when settling in IP disputes is highlighted. For that purpose, on the basis of comparative law and legal economic research, insights acquired were linked to anecdotal evidence of the operation of Article 1019h CCP in practice. In the last stage of the research, conformity of the implementation, interpretation and application of the litigation costs rule in relation to EU law was studied and specific recommendations were made to advance a litigation cost rule that is better in conformity with EU law in IP cases. Finally, the outcomes of the research were applied to analyse EU conformity of the fixed remuneration fee in civil proceedings in general.
On the basis of the research, the main conclusion is that an extensive or full order to pay costs of proceedings in IP cases appears not to have had the desired effect. There are strong indications that the prospect of an unpredictable and high order to pay litigation costs can have a discouraging effect. It also appears that IP title-holders will not go to the courts if they are unable to carry the financial risk of losing the case, which is particularly relevant if they are facing a wealthy counterparty. Under these circumstances, infringement practices will not be halted. It has been demonstrated that an order to pay costs on the basis of strictly applicable (maximum) fees is not only more consistent with the Guidelines, but is also more in line with the general provisions and principles of EU law.
Professor H.J. Snijders and Professor D.J.G. Visser on Charlotte Vrendenbarg
“In the past decade the full order to pay costs played an important role in practice concerning proceedings that deal with intellectual property cases. Charlotte’s dissertation clearly fulfils a need for information on and research into the background of this issue. At the same time, the research provides insights into the impact of this issue, partly in light of the fundamental importance of ‘access to the courts’.”