OPINION OF ADVOCATE GENERAL

PITRUZZELLA

delivered on 11 April 2019 ( 1 )

Case C‑688/17

Bayer Pharma AG

v

Richter Gedeon Vegyészeti Gyár Nyrt.,

Exeltis Magyarország Gyógyszerkereskedelmi Kft.

(Request for a preliminary ruling

from the Fővárosi Törvényszék (Budapest High Court, Hungary))

(Reference for a preliminary ruling — Intellectual property — Patents — Directive 2004/48/EC — Concept of appropriate compensation — Injury caused by provisional measures applied for to protect a patent that was subsequently declared invalid — Products placed on the market without waiting for a patent to be declared invalid)

1. The request for a preliminary ruling to which this Opinion relates concerns the interpretation of Article 9(7) of Directive 2004/48/EC. ( 2 )

2. This request has been made in proceedings between Bayer Pharma (‘Bayer’), on the one hand, and Richter Gedeon Vegyészeti Gyár Nyrt. (‘Richter’) and Exeltis Magyarország Gyógyszerkereskedelmi Kft. (‘Exeltis’), on the other, concerning the loss suffered by Richter and Exeltis as a result of a national court, at Bayer’s request, adopting injunctive measures against them which were subsequently revoked.

I. Legal context

A. The TRIPS Agreement

3. Article 50(7) of the Agreement on trade-related aspects of intellectual property (‘the TRIPS Agreement’), included in Annex 1 C of the Agreement establishing the World Trade Organisation (WTO), signed in Marrakesh on 15 April 1994 and approved, as part of the multilateral negotiations of the Uruguay Round, by Council Decision 94/800/EC ( 3 ) and concluded in the framework of the World Trade Organisation, provides as follows: ‘Where the provisional measures are revoked or where they lapse due to any act or omission by the applicant, or where it is subsequently found that there has been no infringement or threat of infringement of an intellectual property right, the judicial authorities shall have the authority to order the applicant, upon request of the defendant, to provide the defendant appropriate compensation for any injury caused by these measures.’

B. EU law

4. Recital 1 of Directive 2004/48 reads as follows: ‘The achievement of the internal market entails eliminating restrictions on freedom of movement and distortions of competition, while creating an environment conducive to innovation and investment. In this context, the protection of intellectual property is an essential element for the success of the internal market. The protection of intellectual property is important not only for promoting innovation and creativity, but also for developing employment and improving competitiveness.’

5. Recital 22 of Directive 2004/48 states as follows: ‘It is also essential to provide for provisional measures for the immediate termination of infringements, without awaiting a decision on the substance of the case, while observing the rights of the defence, ensuring the proportionality of the provisional measures as appropriate to the characteristics of the case in question and providing the guarantees needed to cover the costs and the injury caused to the defendant by an unjustified request. Such measures are particularly justified where any delay would cause irreparable harm to the holder of an intellectual property right.’

6. Article 3 of Directive 2004/48, ‘General obligation’, provides: ‘1. Member States shall provide for the measures, procedures and remedies necessary to ensure the enforcement of the intellectual property rights covered by this Directive. Those measures, procedures and remedies shall be fair and equitable and shall not be unnecessarily complicated or costly, or entail unreasonable time limits or unwarranted delays. 2. Those measures, procedures and remedies shall also be effective, proportionate and dissuasive and shall be applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse.’

7. Article 9(7) of Directive 2004/48, ‘Provisional and precautionary measures’, worded almost identically to Article 50(7) of the TRIPS Agreement, reads as follows: ‘Where the provisional measures are revoked or where they lapse due to any act or omission by the applicant, or where it is subsequently found that there has been no infringement or threat of infringement of an intellectual property right, the judicial authorities shall have the authority to order the applicant, upon request of the defendant, to provide the defendant appropriate compensation for any injury caused by those measures.’ ( 4 )

C. Hungarian law

8. Article 156(1) of the Hungarian Civil Procedure Code

(1952. évi III. törvény, Law III of 1952) provides as follows: ‘The court may order a provisional measure applied for in an application or counterclaim or an application for provisional measures, where such a measure is necessary to prevent imminent loss or to preserve the status quo of the matter in dispute, or to preserve a better right of the applicant, where the loss caused by the measure does not outweigh the expected benefit of the measure. The court may link the grant of provisional measures to the provision of guarantees. The applicant must demonstrate that the facts on which the application is based are plausible.’

9. Article 104(13) and (14) of the találmányok szabadalmi oltalmáról szóló 1995. évi XXXIII. törvény (Law No XXXIII of 1995 on the protection of inventions by means of patents, ‘the Patents Law’) provides as follows: ‘13 The court may link investigatory proceedings and — subject to paragraph (5)(c) and paragraph (6) — the grant of provisional measures to the provision of guarantees. 14 Where, in the situations to which paragraph (5)(c) and paragraphs (6) and (13) refer, a party entitled to payment under a guarantee has not taken steps to execute its request within 3 months from the date on which the decision or judgment terminating the effects of an order opening investigatory proceedings or adopting provisional measures (the decision finally closing the proceedings) has become final, the person who has provided the guarantee can apply to the court for its return.’

10. Article 4(4) of the Hungarian Civil Code (1959. évi IV. törvény, Law IV of 1959) provides: ‘Unless this law imposes stricter requirements, it is necessary to act in civil law relations as would generally be expected in the circumstances in question. No one shall benefit from their own undue actions. No person who does not act as would generally be expected can rely on the actions of the other party.’

11. Article 339(1) of the Hungarian Civil Code reads as follows: ‘Any person who unlawfully causes harm to another must provide a remedy for that harm. A person is relieved of that obligation if it is demonstrated that the person concerned acted as would generally be expected in the circumstances in question.’

12. Article 340(1) of the Hungarian Civil Code provides as follows: ‘The injured party must act as would generally be expected in the circumstances in question in order to avoid or mitigate the loss. A party shall not be compensated for loss resulting from the injured party’s failure to comply with that obligation.’

II. The main proceedings and the questions referred for a preliminary ruling

13. On 8 August 2000, Bayer filed a patent application with the Szellemi Tulajdon Nemzeti Hivatal (National Intellectual Property Office, Hungary, ‘the Office’) relating to a pharmaceutical product containing a contraceptive active ingredient. The Office published the patent application on 28 October 2002. Under Article 18(1) and (2) of the Patents Act, the protection conferred by a patent commences, on a provisional basis, on publication of the application and its effects are retroactive to the date of the application. On 4 October 2010, the Office granted patent No 227207 for the invention in question (‘the Patent’).

14. Richter, in November 2009 and August 2010, and Exeltis, in October 2010, began marketing in Hungary products that, according to Bayer, infringed its patent (‘the Products’).

15. On 8 November 2010, Richter applied to the Office for a declaration of non-infringement, seeking to establish that its products did not infringe the applicant’s patent. On 8 December 2010, Richter and Exeltis also submitted an application for the patent to be revoked.

16. On 9 November 2010, Bayer applied to the referring court for provisional measures to prevent Richter and Exeltis from placing the Products on the market. That application was dismissed because it did not demonstrate a credible infringement. On 11 August 2011, Bayer also brought infringement proceedings before the referring court against Richter and Exeltis. Those proceedings were suspended pending a final decision being made in the proceedings for the declaration of the invalidity of the patent.

17. Pursuant to fresh applications submitted by Bayer, by enforceable orders of 11 July 2011, which came into force on 8 August 2011, the referring court, by means of provisional measures, prohibited Richter and Exeltis from placing their Products on the market, and required guarantees in connection with those provisional measures. The companies subject to the injunction complied with their obligations voluntarily and withdrew their products from the market.

18. In appeals brought by Richter and Exeltis, the Fővárosi Ítélőtábla (Budapest Regional Court of Appeal, Hungary), by orders of 29 September 2011 and 4 October 2011, set aside the 11 July 2011 orders on grounds of procedural defects and referred the case back to the referring court. By orders of 23 and 30 January 2012, made in the new proceedings, the referring court dismissed Bayer’s applications for provisional measures, taking the view that, having regard in particular to the advanced phase of the proceedings for a declaration of invalidity and revocation of a patent equivalent to a European patent, granting those measures could no longer be seen as proportionate in terms of the public interest. The Fővárosi Ítélőtábla (Budapest Regional Court of Appeal) confirmed those orders.

19. The provisional measures were therefore in force, in so far as concerns Richter, from 8 August 2011 to 4 October 2011 and, in so far as concerns Exeltis, from 8 August 2011 to 29 September 2011.

20. By decision of 13 September 2012, the Office revoked the patent in its entirety. After setting aside that decision and amending an earlier decision of the Office that partially revoked the patent, the referring court, in turn, declared the patent to be invalid in its entirety, by order of 9 September 2014. The Fővárosi Ítélőtábla (Budapest Regional Court of Appeal) confirmed that order by order of 20 September 2016.

21. By a counterclaim submitted on 22 February 2012 and an application submitted on 6 July 2017 respectively (that were joined in the main proceedings), Richter and Exeltis both applied that Bayer be ordered to compensate loss caused by the provisional measures. They are seeking reimbursement of the sales income lost as a result of the provisional measures, the promotional expenses relating to the launch of the Products on the market, compensation for non-material damage and interest on the foregoing sums. Since Hungarian law contains no substantive rules that relate explicitly to the situations under Article 9(7) of Directive 2004/48, they base those claims on a series of procedural rules, that is to say, Article 156(1) of the Hungarian Civil Procedure Code and Article 104(13) and (14) of the Patents Act.

22. Bayer argues that those claims should be rejected. It asserts that Richter and Exeltis themselves caused the loss that they incurred and are not entitled, under the Hungarian rules on civil liability, to be compensated for that loss. According to Bayer, those companies in fact intentionally and unlawfully placed infringing products on the market long before the patent was declared invalid. As medicine manufacturers, they were aware that the applicant possessed a patent and therefore, in order to prevent the loss, they should have first attacked the patent, and waited before marketing the products, at least until the first instance court had ruled on in the invalidity proceedings. Bayer believes that argument to be in line with Hungarian case-law and adduces in that respect a judgment of the referring court in which this court held that the party seeking compensation was also liable for the loss and ordered the party that had applied for the provisional measures to reimburse only the loss arising between publication of the decision at first instance declaring the patent to be invalid and the time those measures were set aside.

23. The referring court wishes to know, first, whether Article 9(7) of Directive 2004/48 merely guarantees the defendant’s right to compensation or whether it also defines the content of that right, precluding application of the Member States’ general civil law rules on liability and compensation for loss. Secondly, it asks whether Article 9(7) of Directive 2004/48 precludes the national court, applying a provision of the civil law of a Member State, from examining the defendant’s role in the loss occurring and, in particular, whether the defendant acted ‘as would generally be expected in the circumstances in question’.

24. Against that background, by a decision of 9 November 2017, the Fővárosi Törvényszék (Budapest High Court) stayed the proceedings pending before it and referred the following questions for a preliminary ruling: ‘(1) Should the expression “provide … appropriate compensation” referred to in Article 9(7) of Directive [2004/48] be interpreted to mean that Member States must establish the substantive rules of law on the liability of parties and the amount and method of compensation, by virtue of which the courts of the Member States can order applicants to compensate defendants for losses caused by measures which the court subsequently revoked or which subsequently lapsed due to an act or omission by the applicant, or in cases in which the court has subsequently found that there was no infringement or threat of infringement of an intellectual property right? (2) If the answer to the first question referred for a preliminary ruling is in the affirmative, does Article 9(7) of Directive [2004/48] preclude opposition to the legislation of a Member State by virtue of which the rules to be applied to the compensation referred to in that provision of the Directive are the general rules of that Member State on civil liability and compensation according to which the court cannot oblige the applicant to provide compensation for losses caused by a provisional measure which was subsequently held to be unfounded due to the invalidity of the patent, and which were incurred as a result of the defendant’s failure to act as would generally be expected in the circumstances in question, or losses for which the defendant is responsible for that same reason, provided that, when requesting the provisional measure, the applicant acted as would generally be expected in those circumstances?’

III. Proceedings before the Court of Justice

25. Bayer, Richter, Exeltis and the European Commission submitted written observations to the Court under Article 23 of the Statute of the Court of Justice of the European Union. Those interested persons were heard at the hearing held on 9 January 2019.

IV. Analysis

A. The first question referred for a preliminary ruling

26. By its first question, the referring court asks the Court of Justice in essence whether Article 9(7) of Directive 2004/48 must be interpreted as meaning that it guarantees only the defendant’s right to compensation, but does not exhaustively determine its content, and leaves it to the Member States to define the conditions and methods for exercising that right and the extent of the compensation.

27. The referring court states that the parties in the main proceedings disagree on that point. According to Richter and Exeltis, Article 9(7) of Directive 2004/48 contains a rule of objective compensation and the expression ‘appropriate compensation’ implies liability for the whole amount of the loss suffered and the costs incurred, with no question of examining the factors that might be relevant under the national rules on civil liability. Bayer Pharma, in contrast, interprets the words ‘appropriate compensation’ as manifesting a degree of abstraction that gives the Member States a wide framework in which to rule on a defendant’s claim for compensation having regard for all the circumstances of the case.

28. Article 9(7) of Directive 2004/48 is intended to implement at EU level Article 50(7) of the TRIPS Agreement, which is binding on all the Member States and on the European Union as regards matters within its competence. According to settled case-law, EU legislation must, so far as possible, be interpreted in a manner that is consistent with international law, in particular where its provisions are intended specifically to give effect to an international agreement concluded by the European Union. ( 5 ) As the Court of Justice expressly confirmed in the judgment of 25 January 2017, Stowarzyszenie Oławska Telewizja Kablowa (C‑367/15, EU:C:2017:36, paragraph 24), in accordance with recitals 5 and 6 and Article 2(3)(b) of Directive 2004/48, it is necessary, for the purpose of interpreting the directive’s provisions, to take account of obligations on the Member States resulting from international agreements, including the TRIPS Agreement, which could apply to the dispute in the main proceedings.

29. The concept of ‘appropriate compensation’ in Article 9(7) of Directive 2004/48 must, therefore, be interpreted in accordance with Article 50(7) of the TRIPS Agreement. The jurisdiction of the Court of Justice to give preliminary rulings interpreting that article, and the TRIPS Agreement in general, was established for the first time in the judgment of 14 December 2000, Dior and Others (C‑300/98 and C‑392/98, EU:C:2000:688, paragraphs 32 to 40) and has subsequently been confirmed by consistent case-law. ( 6 )

30. Article 50 of the TRIPS Agreement is one of the provisions on the ‘enforcement of Intellectual Property Rights’ in Part III of that agreement.

31. According to Article 41(1) of the TRIPS Agreement, those provisions have two fundamental aims: first, to ensure that effective procedures to enforce intellectual property rights are available to right holders and, secondly, to ensure that those procedures are applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse. Striking a balance between those two objectives is — as borne out by the first paragraph of the preamble of that agreement ( 7 ) — one of the main concerns of the drafters of the TRIPS Agreement, which should be borne in mind when interpreting its provisions, in particular those on enforcement. ( 8 )

32. As the Court of Justice stated in the judgment of 15 November 2012, Bericap Záródástechnikai (C‑180/11, EU:C:2012:717, paragraphs 68 and 69), it is apparent from the provisions of Article 41(1) and (2) of the TRIPS Agreement, read together, that the States which are parties to that agreement are to ensure that ‘procedures with specific characteristics’ are available under their law to enforce intellectual property rights, thereby implying that they have a duty to legislate ‘by introducing, into their national law, measures relating to the enforcement of intellectual property rights in accordance with what is specified in those provisions.’

33. However, due in particular to the wide differences in national laws, the provisions of Part III of the TRIPS Agreement do not attempt to harmonise the rules on the enforcement of intellectual property rights, and merely establish general standards that the States parties to the agreement must transpose into their national law in accordance with Article 1 of the TRIPS Agreement. ( 9 )

34. The third sentence of Article 1(1) provides that the States that are parties to the TRIPS Agreement are free to determine ‘the appropriate method of implementing the provisions of this Agreement within their own legal system and practice.’ That clarification means, first, that the TRIPS Agreement contains no express rule on whether its provisions have ‘direct effect’ and, secondly, that, as a general rule, it gives the signatory States a degree of flexibility in transposing those provisions into national law, ( 10 ) meaning that they can, in compliance with the protection standards that the agreement lays down, adapt that transposition to the legislation and practice of each legal system.

35. In common with several provisions of Part III of the TRIPS Agreement, Article 50(7) of the TRIPS Agreement does not define an obligation in minute detail, but rather sets out an objective to be achieved, leaving the signatory States wide leeway when implementing the article in national law. ( 11 ) The signatory States are accordingly required to ensure that the courts ‘have the authority’ to order compensation for defendants that request it, but that authority does not necessarily require those courts, automatically and in all circumstances, to grant that request. ( 12 ) Similarly, whilst it is for the signatory States to the TRIPS Agreement to provide that procedures will be put in place to compensate defendants in the situations listed in Article 50(7) of that agreement, nothing prevents them from using the existing normative framework, either as regards defining the substantive rules governing the applicant’s liability or as regards the procedural rules for exercising the right to compensation.

36. The terminology used in the wording of Article 50(7) of the TRIPS Agreement furthermore testifies to the fact that the drafters of the TRIPS Agreement favoured a case-by-case approach. In the expression ‘appropriate compensation’, the choice of the adjective ‘appropriate’, which in everyday language means ‘in line with’, ‘particular to’, ‘proportionate to’, suggests that there should be a case-by-case analysis. Whether or not the compensation is ‘appropriate’ must, therefore, be assessed by the courts that have ‘authority’ to order such compensation in the light of all the relevant circumstances of the case. ( 13 ) In that assessment they must also have regard for the objective of the provisions of the part of the TRIPS Agreement given over to enforcement, which is, according to Article 41(1) of that agreement, to ensure that the interests of the holders of those rights are protected, whilst avoiding the creation of unjustified barriers to legitimate trade or abuse of the procedures established for the purposes of that enforcement.

37. On the basis of the foregoing it has been possible to define the extent of the obligation on the signatory States to the TRIPS Agreement under Article 50(7) of that agreement. It is now necessary to look at Article 9(7) of Directive 2004/48.

38. As the Court of Justice stated in the judgment of 16 July 2015, Diageo Brands (C‑681/13, EU:C:2015:471, paragraph 74), the legal remedies designed to ensure the protection of the intellectual property rights established by Directive 2004/48 are supplemented by actions for damages which are closely linked to them. Thus, whereas Article 9(1) of that directive provides for provisional measures intended, in particular, to prevent any imminent infringement of an intellectual property right, Article 9(7) provides, for its part, for measures enabling the defendant to claim compensation where it is subsequently found that there has been no such infringement or threat of infringement. As emerges from recital 22 of that directive, those compensation measures constitute guarantees that the EU legislature deemed necessary as a counterweight to the prompt and effective provisional measures for which it made provision. Proceedings, such as the main proceedings, seeking compensation for the loss caused by a provisional measure ordered by the courts of a Member State in order to prevent infringement of the exclusive rights conferred by a patent that those same courts subsequently declared invalid is the corollary to the action brought by the holder of that patent in order to obtain an immediately effective measure to protect its rights and therefore falls within the scope of Directive 2004/48, and Article 9(7) of that directive in particular. ( 14 )

39. That article requires the Member States to set up a mechanism under which defendants can bring court proceedings and obtain appropriate compensation for any injury suffered as the result of provisional measures in the situations to which that article refers.

40. In contrast, neither the wording nor the origin of that article gives any reason to believe that it also requires the Member States to opt for a specific regime governing liability. Nothing in that article suggests that it aims at a complete approximation of national provisions on applicants’ liability for loss caused as a result of the enforcement of provisional measures.

41. As I have already indicated above, the wording of Article 9(7) of Directive 2004/48 reproduces almost word for word the text of Article 50(7) of the TRIPS Agreement. That the EU legislature chose that wording is already, to my mind, a clear indication that it wished, first, not to push the harmonisation of the rules on the defendant’s right to compensation beyond what that agreement requires and, secondly, to leave the Member States a wide margin of discretion as regards specific implementation of the provisions governing the applicant’s liability. ( 15 )

42. More generally, by adopting Directive 2004/48, whose aim is precisely, as apparent from Article 1 thereof, to ensure the enforcement of intellectual property rights by means of the introduction, for that purpose, of various measures, procedures and remedies within the Member States, the European Union fulfilled its obligation under the TRIPS Agreement to ensure that intellectual property rights are enforced. ( 16 ) Although, as it states in recital 10, that directive seeks to approximate national legislation so as to ensure a high, equivalent and homogeneous level of protection for those rights, it does not however harmonise those rules completely, since it is not intended to govern all aspects of intellectual property rights but rather only those related, first, to the enforcement of those rights and, secondly, to their infringement, ‘by requiring there to be effective legal remedies designed to prevent, terminate or rectify any infringement of an existing intellectual property right’. ( 17 ) It furthermore enshrines a minimum standard concerning the enforcement of intellectual property rights and does not prevent the Member States from laying down measures that are more protective. ( 18 )

43. It is, admittedly, true that Article 9(7) of Directive 2004/48 makes no express reference to the law of the Member States for the purpose of determining the meaning and scope of the concepts it contains, and that therefore, according to settled case-law of the Court of Justice, those concepts must normally be given an autonomous and uniform interpretation throughout the European Union, which must take into account the context of that provision and the purpose of the legislation in question. ( 19 )

44. However, that circumstance does not mean that those concepts, or that article in its entirety, can be given a wider scope than that apparent from their wording and the intention of the EU legislature.

45. In particular, the concept of ‘appropriate compensation’ cannot be interpreted as meaning that it indicates any specific regime for applicants’ liability since, as I stated above, ( 20 ) that expression, in particular use of the adjective ‘appropriate’, merely requires an assessment of whether the compensation payable to the defendant is in line with the loss actually suffered and the circumstances of the case, in accordance with the principles set out in recital 17 of Directive 2004/48, according to which ‘the measures, procedures and remedies provided for in this Directive should be determined in each case in such a manner as to take due account of the specific characteristics of that case, including the specific features of each intellectual property right’.

46. This means, in my view, that it is for each Member State to determine the substantive rules that govern how the defendant should be compensated for the injury incurred as a result of adoption of provisional measures in the situations under Article 9(7) of Directive 2004/48, provided nevertheless that those rules make it possible to achieve the objective of that article, that is to say, that each national legal system should set up a regime of effective legal remedies enabling defendants to obtain appropriate compensation for any injury suffered. In other words, the inclusion of those rules in national law must reflect the spirit and the letter of that article, which is intended to ensure that compensation appropriate to each case is awarded, following a fitting and fair assessment within the framework of the national law on liability.

47. Furthermore, since the fundamental purpose of Directive 2004/48 is that the Member States should provide themselves with effective means of enforcing intellectual property rights, ( 21 ) those States must also ensure that the regime they set up in order to implement Article 9(7) of that directive does not discourage the holders of intellectual property rights from applying for the measures under Article 9(1) and (2).

48. On the basis of all the foregoing, the reply to the first question referred by the Fővárosi Törvényszék (Budapest High Court) should in my view be that Article 9(7) of Directive 2004/48 must be interpreted as meaning that it is for each Member State to determine the substantive rules governing a defendant’s right to compensation for loss incurred as a result of provisional measures being adopted in the situations under that article, and for the avoidance of doubt, those rules must, first, ensure that a regime of effective legal remedies is set up so that defendants can obtain appropriate compensation for any loss suffered and, second, not be such as to discourage the holders of intellectual property rights from applying for the measures under Article 9(1) and (2) of Directive 2004/48.

B. The second question referred for a preliminary ruling

49. By its second question, which it asks in case the answer to the first question is in the affirmative, the Fővárosi Törvényszék (Budapest High Court) asks the Court of Justice whether Article 9(7) of Directive 2004/48 precludes the application of the civil law rules of a Member State according to which a national court cannot oblige the applicant to provide compensation for loss caused by provisional measures which subsequently prove to be unfounded where the loss arose because the defendant failed to act ‘as would generally be expected in the circumstances in question’ or where, for the same reason, the defendant is responsible for the fact that the loss occurred.

50. Even though it is worded very broadly, it is apparent from the decision to refer that the second question is intended, in essence, to ask the Court of Justice whether an interpretation of the provisions on liability in the Hungarian Civil Code is compatible with Article 9(7) of Directive 2004/48 where, according to that interpretation, applicants do not have to provide compensation for loss caused by provisional measures that subsequently prove to be unjustified because the patent for whose protection they were adopted is found to be invalid in cases in which the defendant placed the products covered by those measures on the market without first disputing the validity of the patent or, where invalidity proceedings have been brought, without waiting for the patent to be declared invalid and for that finding of invalidity to be confirmed by, at least, a court of first instance.

51. It is apparent from the answer that I propose should be given to the first question referred that it is for each Member State to determine the substantive law rules governing the defendant’s right to compensation in the situations under Article 9(7) of Directive 2004/48, including, therefore, the rules on establishing a causal link between the measures adopted and the loss claimed.

52. It is also apparent from the arguments I developed when examining the first question referred that, when setting those rules, the Member States must comply with the provisions of Directive 2004/48 and have regard for the objectives of that directive and of the procedures and compensation it establishes.

53. An interpretation of Article 9(7) of Directive 2004/48 according to which the Member States can systematically exclude any right to compensation for a defendant where that defendant accessed the market in infringement of the patent for whose protection the provisional measures were adopted, ( 22 ) without first waiting for it to be found to be invalid is to my mind contrary to both the wording and the objectives of that article. ( 23 )

54. Indeed, first of all, the wording of Article 9(7) of that directive does not suggest that, in a situation in which ‘it is subsequently found that there has been no infringement or threat of infringement of an intellectual property right’, as occurs where a patent is found to be invalid after the provisional measures were adopted, compensation is only payable for loss occurring between that finding and the time those measures are revoked or cease to have effect. On the one hand, use of the adverb ‘subsequently’ militates against such an interpretation, implying as it does that the finding that there are no circumstances justifying adoption of the provisional measures — including that the intellectual property right in question is valid, at least where a declaration of its invalidity has retroactive effect — must necessarily be made at a time when those measures have already, at least in part, had their damaging effects on the basis of the situation as it appeared when they were adopted. On the other hand, a reading of Article 9(7) of Directive 2004/48 according to which part of the loss caused by provisional measures that subsequently proved to be unjustified cannot, as a matter of principle, be compensated would be incompatible with the explicit indication in that article that the right to compensation relates to ‘any injury caused by those measures’.

55. In the second place, as I have already stated above, the provisions of Directive 2004/48, like those of the TRIPS Agreement, seek a balance between two objectives, that is to say, protecting the interests of the holders of intellectual property rights, on the one hand, and preserving legitimate trade against any unjustified obstacle, on the other. Were it sufficient, in order for the applicant to escape its obligation to compensate loss caused by provisional measures adopted on the basis of an intellectual property right that was subsequently found to be invalid with retroactive effect, for the applicant to rely on the fact that the right in question was valid at the time those measures were adopted, neither of the two objectives referred to above would be served — neither that of protecting intellectual property, since there would never have been a valid right that justified its holder being given exclusivity, nor that of protecting legitimate trade, because no compensation would be awarded for an unjustified fetter.

56. In the third place, a reading of Article 9(7) of Directive 2004/48 according to which, in a situation such as that in the main proceedings, loss can be compensated only where it arises from the application of provisional measures executed after a court of first instance has retroactively found the intellectual property right to be invalid would, first, make it easy for the applicant to take risks independently of any objective assessment of its prospect of success in the event of its right being challenged and, secondly, could encourage abuse of provisional measures.

57. The foregoing does not however mean that, in a situation such as that in the main proceedings, the national court cannot have regard for the defendant’s behaviour — in particular the fact that it placed infringing products on the market without disputing the intellectual property right in question, either before or while doing so — when assessing whether the compensation to which the defendant is entitled in an action for compensation within the meaning of Article 9(7) of Directive 2004/48 is appropriate.

58. Accessing a market covered by a patent, particularly in the pharmaceutical sector, normally involves preparative work that can sometimes take years, as a result in particular of the need to obtain marketing authorisations. During that period an undertaking that intends to launch such a product is free to bring invalidity proceedings against the patent or simply to alert the patent holder to its intention so that the patent holder can react and litigation relating to the validity of the patent can be commenced and, potentially, defined before the generic products are placed on the market.

59. Although, for the reasons I have just described, the fact that the defendant did not proceed in that way, choosing instead a ‘high-risk’ market launch, ( 24 ) is not a factor that can of itself rule out the defendant’s right to appropriate compensation within the meaning of Article 9(7) of Directive 2004/48, the national court can nevertheless take such behaviour into account, together with other relevant circumstances — such as, for example, the characteristics of the patent and of the market — when determining the compensation to be awarded to the defendant which must, under Article 3 of that directive, be effective, fair and equitable.

60. Having regard to all the foregoing, I believe the answer to the second question referred for a preliminary ruling by the Fővárosi Törvényszék (Budapest High Court) should be that Article 9(7) of Directive 2004/48 does not preclude application, in an action for compensation brought by the defendant against the applicant for the provisional measures under Article 9(1) and (2), of a civil law rule of a Member State according to which no compensation should be awarded to a party for the loss it suffered as the result of failure to comply with that party’s obligation to act as would generally be expected in the circumstances in question in order to avoid or mitigate the loss. Article 9(7) of Directive 2004/48 does nevertheless preclude application of a rule that applicants do not have to provide compensation for loss caused by provisional measures that subsequently prove to be unfounded because the patent for whose protection they were adopted is found to be invalid, where the defendant placed the products covered by those measures on the market without first disputing the validity of the patent or, where invalidity proceedings have been brought, without waiting for the patent to be declared invalid and for that finding of invalidity to be confirmed by, at least, a court of first instance.’

V. Conclusion

61. In the light of all the foregoing, I propose that the Court of Justice should answer the questions referred by the Fővárosi Törvényszék (Budapest High Court, Hungary) for a preliminary ruling as follows: ‘(1) Article 9(7) of Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights must be interpreted as meaning that it is for each Member State to determine the substantive rules governing a defendant’s right to compensation for loss incurred as a result of provisional measures being adopted in the situations under that article, and, for the avoidance of doubt, those rules must, first ensure that a regime of effective legal remedies is set up so that defendants can obtain appropriate compensation for any loss suffered and, secondly, must not discourage the holders of intellectual property rights from applying for the measures under Article 9(1) and (2) of Directive 2004/48. (2) Article 9(7) of Directive 2004/48 does not preclude application, in an action for compensation brought by the defendant against the applicant for the provisional measures under Article 9(1) and (2), of a civil law rule of a Member State according to which no compensation should be awarded to a party for the loss it suffered as the result of failure to comply with that party’s obligation to act as would generally be expected in the circumstances in question in order to avoid or mitigate the loss. Article 9(7) of Directive 2004/48 does nevertheless preclude application of a rule that applicants do not have to provide compensation for loss caused by provisional measures that subsequently prove to be unfounded because the patent for whose protection they were adopted is found to be invalid, where the defendant placed the products covered by those measures on the market without first disputing the validity of the patent or, where invalidity proceedings have been brought, without waiting for the patent to be declared invalid and for that finding of invalidity to be confirmed by, at least, a court of first instance.’

( 1 ) Original language: French.

( 2 ) Directive of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights (OJ 2004 L 157, p. 45).

( 3 ) Council Decision of 22 December 1994 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986-1994) (OJ 1994 L 336, p. 1).

( 4 ) In its reference for a preliminary ruling, the Fővárosi Törvényszék (Budapest High Court, Hungary) observes that the correct Hungarian translation of the expression ‘appropriate compensation’ that appears in Article 9(7) of Directive 2004/48 should be ‘megfelelő kártalanítás’, whereas the expression in the official Hungarian version of that directive is ‘megfelelő kártérítés’. The referring court states on that point that in Hungarian legal language the term ‘kártalanítás’ is used when referring to a remedy for loss caused by lawful conduct, and the term ‘kártérítés’ where the loss is caused by unlawful conduct. In their written observations to the Court of Justice Richter and Exeltis draw attention to an application by the Hungarian Ministry of Justice to the Secretariat General of the Council of the European Union to amend the Hungarian language version of Article 9(7) of Directive 2004/48.

( 5 ) See, most recently, judgment of 19 December 2018, Syed (C‑572/17, EU:C:2018:1033, paragraph 20).

( 6 ) The Court stated that ‘the provisions of the TRIPS Agreement now form an integral part of the European Union legal order and, within the framework of that legal order, the Court has jurisdiction to give preliminary rulings concerning the interpretation of that agreement’, see, amongst others, judgments of 11 September 2007, Merck Genéricos — Produtos Farmacêuticos, C‑431/05, EU:C:2007:496, paragraph 31, and of 15 November 2012, Bericap Záródástechnikai (C‑180/11, EU:C:2012:717, paragraph 67).

( 7 ) The first paragraph of the preamble of the TRIPS Agreement reads as follows: ‘Desiring to reduce distortions and impediments to international trade, and taking into account the need to promote effective and adequate protection of intellectual property rights, and to ensure that measures and procedures to enforce intellectual property rights do not themselves become barriers to legitimate trade’.

( 8 ) See, to that effect, Opinion of Advocate General Jacobs in Schieving-Nijstad and Others (C‑89/99, EU:C:2001:98, points 11 to 16).

( 9 ) See, to that effect, UNCTAD-ICTSD, Resource Book on TRIPS and Development, Cambridge, 2005, p. 575; Gervais, D., The TRIPS Agreement, Drafting History and Analysis, London, 2012, p. 564; Dreier, T., TRIPs and the Enforcement of Intellectual Property Rights, in IIC Studies, From GATT to TRIPs, The Agreement on Trade-Related Aspects of Intellectual Property Rights, Munich 1996, p. 248, in particular p. 276; Seuba, X., Le context and les obligations générales concernant les moyens de faire respecter les droits de propriété intellectuelle, in Le droit international de la propriété intellectuelle lié au commerce: l’accord sur les ADPIC, bilan and perspectives, 2017, in particular pp. 325 and 331. See also subparagraph (c) of the second paragraph of the TRIPS Agreement, according to which effective and appropriate means for the enforcement of trade-related intellectual property rights must be drawn up taking into account differences in national legal systems.

( 10 ) UNCTAD-ICTSD, op. cit., p. 17 and p. 21. See also Gervais, D., op. cit., p. 175.

( 11 ) UNCTAD-ICTSD, op. cit., p. 576.

( 12 ) See Gervais, D., op. cit., p. 573 and p. 609, which emphasises that only a systematic refusal by the courts to use their power could amount to an infringement of Article 50(7) of the TRIPS Agreement.

( 13 ) To that effect, see Gervais, D., op. cit., p. 579, which draws attention to the fact that during the travaux préparatoires, the adjective ‘adequate’, in Article 50(7) of the TRIPS Agreement, was replaced with the adjective ‘appropriate’, which is more commonly used in intellectual property law.

( 14 ) See, to that effect, judgment of 16 July 2015, Diageo Brands (C‑681/13, EU:C:2015:471, paragraph 74).

( 15 ) I note in that respect that, during the travaux préparatoires for Directive 2004/48, the text that the Commission initially proposed for Article 9(7) of Directive 2004/48 was amended [in the French version] and the expression ‘les autorités judiciaires doivent être habilitées’ [in English, literally, ‘the courts must be empowered’] was nuanced, being replaced by the expression ‘les autorités judiciaires sont habilitées’ [in English, literally, ‘the courts are empowered’] (my italics).

( 16 ) See judgment of 15 November 2012, Bericap Záródástechnikai (C‑180/11, EU:C:2012:717, paragraph 72).

( 17 ) See judgment of 15 November 2012, Bericap Záródástechnikai (C‑180/11, EU:C:2012:717, paragraph 75).

( 18 ) See judgments of of 9 June 2016, Hansson, (C‑481/14, EU:C:2016:419, paragraphs 36 and 40), and of 25 January 2017, Stowarzyszenie Oławska Telewizja Kablowa (C‑367/15, EU:C:2017:36, paragraph 23).

( 19 ) See, by way of illustration, judgment of 30 April 2014, Kásler and Káslerné Rábai (C‑26/13, EU:C:2014:282, paragraph 37 and the case-law cited).

( 20 ) See point 36 above.

( 21 ) See in particular recital 3 of Directive 2004/48.

( 22 ) I am referring only to the situation where the defendant accesses the market with products that infringe the patent subsequently found to be invalid.

( 23 ) In the early 2000s, the British and Irish courts developed a test, similar to that on which Bayer relies in the main proceedings, for assessing whether it is appropriate to grant the holder of a pharmaceutical patent provisional measures against a generic manufacturer that is launching infringing products. The fact that the generic manufacturer did not inform the patent holder of its intention to access the market with an infringing product, thereby giving it an opportunity to commence pre-emptive litigation, or that it did not first bring proceedings to have the patent found to be invalid or apply for a declaration of non-infringement was considered to be a factor tipping the balance in favour of granting provisional measures (‘the clearing the way principle’, set out for the first time in the Smithkline Beecham plc v. Generics (UK) Ltd (2001) judgment).

( 24 ) Thereby, depending on the circumstances, giving it the advantage of being the first to launch a generic product on the market.