Who pays for a representative in litigation?
An important issue for litigants is the question of the litigation economy. It concerns not only the amounts awarded for damages but also the reimbursement of costs to a successful party by a losing party. In this respect, a large, and perhaps the largest, part of the costs of proceedings is the remuneration of attorneys. Recently, the Court of Justice of the European Union expressed its opinion on the issue of legitimate charging of the losing party with attorney’s fees, interpreting Articles 14 and 3 of Directive 2004/48/EC on the enforcement of intellectual property rights.
The judgment is also worth mentioning in the context of reimbursement of attorney’s fees awarded in proceedings before Polish courts in intellectual property cases. The sums awarded in Poland can usually be regarded as symbolic, which certainly contradicts the objectives and provisions of the above-mentioned Directive and weakens IP enforcement in Poland.
Judgment of the Court of 28 April 2022 in case C-531/20
The proceedings in Germany concerned an infringement by NovaText of EU trademarks of the University of Heidelberg. The dispute ended with a court settlement in favor of the University and the other party was ordered to pay the costs. The court set the amount to be reimbursed at €10,000, almost half of which, i.e. €4800, for patent attorney’s fees. Interestingly, the plaintiff’s main attorney was an attorney at law who contacted the client and agreed on the next steps of cooperation and not the patent attorney. The argued, however, that the patent attorney took an active part in the proceedings and his knowledge contributed to a positive outcome of the entire dispute. The defendant argued that the presence of the patent attorney in the proceedings was not necessary and it should not incur additional costs.
The defendant appealed against the order of the court of the first instance awarding the costs of the proceedings for the above amount. In the second instance, the court dismissed the appeal and argued that the German regulations and their interpretation prevented the court from examining whether the presence of the patent attorney in the case was necessary for its resolution. The defendant, however, cited that this examination is crucial when there is “superfluity” of an additional attorney.
The defendant then appealed to the Bundesgerichtshof (Federal Court of Justice), again arguing that the German law and its interpretation by the court of the second instance are inconsistent with Directive 2004/48/EC on the enforcement of intellectual property rights. The German court thus asked the CJEU about the relationship between national regulations and EU regulations.
According to Article 14 of the aforementioned Directive, reasonable and proportionate legal costs and other expenses incurred by the prevailing party shall be borne by the losing party. The CJEU, therefore, focused on the interpretation of these general clauses and, in the context of the facts of the case, concluded that the national court must be able to assess, in each case and taking into account the facts of the case, whether the court costs incurred by the successful party are reasonable and proportionate. National legislation must not prevent that assessment from being made and must not provide for automaticity. That assessment of the CJEU should be fully agreed upon.
One should also agree with the Court’s assessment that excessive attorneys’ fees may be regarded as contrary to law and principles of equity. Under Article 3 of the above-mentioned Directive, measures necessary to enforce intellectual property rights must not be excessively complicated and costly. However, as the Court itself has pointed out, the provisions on reimbursement of attorney’s fees cannot be interpreted to the detriment of right holders, so as not to discourage them from enforcing their rights. The measures introduced by the Member States must also have a deterrent effect on potential infringers. The infringer should bear the full consequences of its actions (Judgment of the CJEU of 18 October 2011, C-406/09). National regulations may introduce certain lump-sum payments. However, the reimbursement must be reasonable and the maximum amounts that can be claimed as lump sums must not be too low (CJEU judgment of 28 July 2016, C-757/15).
In Poland, in administrative and civil proceedings, fixed fees are depending on the value of the object of litigation or for certain types of cases. For example, in patent, trade mark or design infringement cases, the minimum amount of legal representation costs is 1680 PLN (approx. EUR 400). It can be awarded up to six times the amount if the case is complex. However, courts rarely award a significant multiple of the minimum amount, and the reimbursement of lawyers’ fees in the minimum amount mentioned above is a symbolic reimbursement. As a result, the cost of proceedings in cases of infringement of intellectual property rights are a significant burden for the right holders, which is contrary to the principles adopted in the Directive. It also results in the fact that infringers do not enter into settlements and decide to litigate, as they are aware that they will not be burdened with significant costs of court proceedings.
Although Polish regulations of intellectual property law are subject to amendments and, as a rule, are harmonized with EU regulations, it is hard to find regulations that would adequately regulate the above-mentioned issues. Changes in Polish law concerning reimbursement of attorney’s fees by infringers of intellectual property rights are necessary to increase the effectiveness of protection of these rights.
 1) Regulation of the Minister of Justice of 22 October 2015 on fees for legal advisers’ activities – issued under Article 225(2) and (3) of the Act of 6 July 1982 on legal advisers;
2) Ordinance of the Minister of Justice of 22 October 2015 on fees for advocates’ activities – issued based on Article 16(2) and (3) of the Act of 26 May 1982. – Law on Advocates.
3) Ordinance of the Minister of Justice of 28 April 2017 on fees for patent attorneys’ activities.
4) Act of July 28, 2005 on court costs in civil cases.
5) Act of 11 April 2001 on patent attorneys.
On 18 January 2024, the CJEU handed down its judgment in Case C-367/21 on request for a preliminary ruling from the Warsaw Regional Court. In its judgment, the Court indicated the possibility of reversing the burden of proof in case of exhaustion of EU trademark...
On 6 February 2024, the Adjudicating Body of the Polish Patent Office handed down its decision on a motion to cancel the protection right for a figurative mark depicting the building of the Palace of Culture and Science in Warsaw: The Palace was built in the 1950s,...
The Ideas Powered for Business SME Fund is back in 2024, offering grants to SMEs to protect their intellectual property rights
Great news for SMEs in the EU! The Ideas Powered for Business SME Fund is back in 2024, offering grants to small and medium-sized enterprises to protect their intellectual property rights. With over €20 million allocated, the Fund will be active from January 22nd,...