On 12 January 2015, the Civil Chamber of the Spanish Supreme Court issued an Order (hereinafter, the "Order") presenting a question for preliminary ruling before the Court of Justice of the European Union (hereinafter, the "CJEU") regarding the correct interpretation of Article 13.1 of Directive 2004/48/CE of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights (hereinafter, "Directive 2004/48/CE"). The plaintiff, Christian Liffers, is the director, screenwriter and producer of an award-winning documentary film "Dos patrias, Cuba y la noche", excerpts of which were later included in another documentary produced by Producciones Mandarina, S.L. without Mr. Liffers' consent, and subsequently broadcast by the Spanish audiovisual services provider Gestevisión Telecinco, S.A.. Mr. Liffers filed a claim before Spanish courts against Producciones Mandarina, S.L. and Gestevisión Telecinco, S.A. (hereinafter, the "Defendants") alleging infringement of his intellectual property rights, and an initial ruling by Commercial Court Num. 6 of Madrid found in favor of Mr. Liffers granting him €3,370 in damages for infringement of his exploitation rights (calculated using rates charged by local collecting societies) and €10,000 in moral damages. However, upon appeal, despite finding that Mr. Liffers' intellectual property rights had been infringed, the Regional High Court of Madrid reduced the amount granted as compensation for damages from €3,370 to €962 and annulled the compensation for moral prejudice granted in first instance, declaring that, as per Directive 2004/48/CE and its transposition to Spanish Law, compensation for moral prejudice was incompatible with the criteria for calculating damages chosen by Mr. Liffers, which was based on the value of a "hypothetical license" to use the copyright in question. Mr. Liffers then proceeded to appeal the Regional High Court's decision before the Spanish Supreme Court insofar as it annulled the damages granted as compensation for moral prejudice. Article 140.2 of the Intellectual Property Act, passed by Royal Legislative Decree 1/1996, dated 12 April 1996, (hereinafter, the "IPA"), which stipulates how damages should be set when a court finds that there has been an infringement of intellectual property rights, was amended in order to comply with Article 13 of Directive 2004/48/CE which stipulates that: When the judicial authorities set the damages: a) they shall take into account all appropriate aspects, such as the negative economic consequences, including lost profits, which the injured party has suffered, any unfair profits made by the infringer and, in appropriate cases, elements other than economic factors, such as the moral prejudice caused to the rightholder by the infringement; or b) as an alternative to (a), they may, in appropriate cases, set the damages as a lump sum on the basis of elements such as at least the amount of royalties or fees which would have been due if the infringer had requested authorization to use the intellectual property right in question. The Spanish Supreme Court has doubts as to whether the two methods for setting damages are 2 mutually exclusive or whether Article 13.1(b) simply offers an alternate criteria for calculating material damages, therefore allowing for compensation for moral damages regardless of the criteria chosen for setting damages. In its Order, the Supreme Court goes on to state that its interpretive doubts are further compounded by the fact that Member States have adopted different criteria regarding compensation for moral prejudice, and countries like France, Germany and Italy allow for parties to accumulate actions requesting compensation for moral prejudice regardless of the criteria used to calculate economic damages. Given that the tenth consideration of Directive 2004/48/CE establishes that its objective is to "approximate legislative systems so as to ensure a high, equivalent and homogeneous level of protection in the internal market", the Spanish Supreme Court understands that an interpretation of Article 13.1 of Directive 2004/48/CE, which differs from the interpretation used in other Member States and provides significantly less protection, could jeopardize that goal. Therefore the Civil Chamber of the Spanish Supreme Court has proceeded to submit the following question for a preliminary ruling before the CJEU: Can Article 13.1 of Directive 2004/48/CE be interpreted in such a way that the victim of an intellectual property infringement who files an action for compensation for economic losses based on the amounts that would have been paid in royalties or fees which would have been due if the infringer had requested authorization to use the intellectual property rights in question cannot also request compensation for moral damages. For more information, please contact Michael Fonseca.