In Belgium, judges cannot freely determine the amount of the procedural indemnity (indemnité de procédure/rechtsplegingsvergoeding) to be granted to the successful party in court proceedings. Such party can only be granted a flat-rate reimbursement of the legal costs incurred by it within the scale of the procedural indemnity determined by the Royal Decree of 26 October 2007.
However, in most cases and especially in complex IP infringement cases, the capped procedural indemnity is not sufficient to cover all legal costs incurred by the successful party.
The Antwerp Court of Appeal has recently rendered a decision on this issue, following a preliminary ruling of the Court of Justice of the European Union (“CJEU”), in a patent infringement action brought by United Video Properties (“UVP”) against Telenet.
Proceedings before the Antwerp courts
UVP initiated a patent infringement action against Telenet seeking, in essence, injunctive relief and an order for Telenet to pay the legal costs. The Antwerp Commercial Court's decision dismissed the action and declared the patent at issue to be invalid. After having filed an appeal before the Antwerp Court of Appeal, UVP decided to drop the appeal. Telenet requested the reimbursement by UVP of the lawyers' fees and fees for the assistance provided by a patent attorney.
Telenet argued that the costs it had incurred were much higher than the scales determined by the Royal Decree. According to Telenet, the Belgian legislation is contrary to article 14 of Directive No. 2004/48/EC of 29 April 2004 on the enforcement of intellectual property rights (the "Enforcement Directive") which states that "Member States shall ensure that reasonable and proportionate legal costs and other expenses incurred by the successful party shall, as a general rule, be borne by the unsuccessful party, unless equity does not allow this".
The Antwerp Court of Appeal decided to stay the proceedings and to refer preliminary questions to the CJEU.
The CJEU issued its decision on 28 July 2016.
It declared that article 14 of the Enforcement Directive must be interpreted as not precluding national legislation which provides that the unsuccessful party is to be ordered to pay the legal costs incurred by the successful party, which offers the courts responsible for making that order the possibility of taking into account features specific to the case before it, and provides for a flat-rate scheme for the reimbursement of costs for the assistance of a lawyer, subject to the condition that those rates ensure that the costs to be borne by the unsuccessful party are reasonable, which is for the referring court to determine. However, article 14 of the Enforcement Directive precludes national legislation providing flat rates which, owing to the maximum amounts that it contains as being too low, do not ensure that, at the very least, a significant and appropriate part of the reasonable costs incurred by the successful party are borne by the unsuccessful party.
Secondly, the Court held that article 14 of the Enforcement Directive precludes national rules providing that reimbursement of the costs of a technical adviser are provided for only in the event of fault on the part of the unsuccessful party, given that those costs are directly and closely linked to a judicial action seeking to have such intellectual property right upheld.
Antwerp Court of Appeal
On 8 May 2017, the Antwerp Court of Appeal rendered its decision following the CJEU's preliminary ruling.
The Antwerp Court of Appeal has inferred from the CJEU's answer to the first preliminary question that article 14 of the Enforcement Directive does not preclude national legislation such as the Belgian legislation, provided that the system of flat-rate reimbursement of the lawyer's costs warrants that the costs to be borne by the unsuccessful party are reasonable. Article 14 of the Enforcement Directive does preclude a system of flat-rate reimbursement of the lawyer's costs incurred by the successful party which does not ensure that a significant and appropriate part of the reasonable costs are borne by the unsuccessful party.
However, according to the Antwerp Court of Appeal, this does not mean that the unsuccessful party can be ordered to pay more than the amounts determined by the Royal Decree.
Indeed, article 14 of the Enforcement Directive has no direct effect. The successful party is therefore not entitled to directly invoke article 14 of the Enforcement Directive to depart from the flat-rate amounts determined by the Royal Decree.
If national law should be interpreted as much as possible in line with the provisions of the Enforcement Directive, it does not mean that the national court can rule contra legem.
Moreover, article 1022 of the Judicial Code states that parties cannot be ordered to pay more than the amount of the procedural indemnity for the intervention of the other party's lawyer.
Even if it were considered that the amounts determined by the Royal Decree do not cover a significant and appropriate part of the lawyer's reasonable fees for the successful party, and based on the existing legal provisions, the unsuccessful party could not be ordered to pay more than the amounts determined by such Royal Decree.
Telenet could, if relevant, only claim rights towards the State if the latter has not transposed the directive within the prescribed period or has not transposed it correctly.
As a consequence, the Antwerp Court of Appeal cannot order UPV to pay more than the flat-rate amounts determined by the Royal Decree to cover the intervention of Telenet's lawyer.
In respect of the reimbursement of the costs of the patent attorney requested by Telenet, after having reiterated the CJEU's decision on this issue, the Antwerp Court of Appeal has confirmed that, in the case at stake, these costs had contributed to the solution of the dispute.
Moreover, the Court has stated that the legal framework does not preclude the reimbursement of these costs to be granted to the successful party.
The Court has dismissed UVP's defence, stating that these costs would fall under the Royal Decree, reiterating that the Royal Decree only relates to the lawyer's fees. As a consequence, the amount of reimbursement of the patent attorney's costs is not limited to the flat rates provided for in the Royal Decree.