On 28 July 2016, the Court of Justice of the European Union (the
"ECJ") issued an important judgment on the recovery of
legal fees. In particular, the ruling relates to national rules
capping the amount that can be recovered in IP cases (Case C-57/15
United Video Properties Inc. v. Telenet NV).
The question was referred to the ECJ by the Court of Appeal of
Antwerp in a dispute between Belgian internet service provider
Telenet and United Video Properties Inc., an American company
specialised in digital entertainment technology. Telenet had
challenged the conformity of the Belgian system which limits the
amount of lawyers' fees that can be recovered (i.e.,
Article 1022 of the Judicial Code (Gerechtelijk
Wetboek/Code Judiciaire) with Article 14 of Directive
2004/48 of 29 April 2004 on the enforcement of intellectual
property rights (the "Enforcement Directive"). The latter
provision allows for the recovery of reasonable and proportionate
legal costs and other expenses incurred by the party prevailing in
an IP lawsuit. Telenet also questioned whether this provision would
be infringed by case-law of the Belgian Supreme Court (Hof van
Cassatie/Cour de Cassation) stating that fees paid to agents
specialised in the fields of patents (i.e., other
expenses) could only be recovered where the party prevailing can
show (i) that the other party acted wrongfully and (ii) that the
fees of the patent expert were a necessary consequence of the
action initiated by the other party (See VBB on Belgian
Business Law, Volume 2015, No. 3, p. 11 and 12,available
In these proceedings, the Court of Appeal of Antwerp submitted a
question to the ECJ for a preliminary ruling. The ECJ first stated
that Article 14 of the Enforcement Directive does not prohibit
systems of capped recovery of legal costs per se.
Nevertheless, the ECJ held that Article 14 of the Enforcement
Directive precludes any cap or limitation which does not allow the
prevailing party to recover "a significant and appropriate
part of the reasonable costs incurred by the successful
party". As a consequence, national laws imposing a cap
significantly below the average fees actually charged for the
services of a lawyer in that Member State will be deemed
In addition, such legislation will be incompatible with Article
3(2) of the Enforcement Directive as it diminishes the dissuasive
effect of any action for infringement since the infringer would
only be ordered to reimburse a small part of the reasonable
lawyer's fees incurred by the injured right holder. Article
3(2) of the Enforcement Directive states that IP enforcement
"procedures and remedies shall also be effective,
proportionate and dissuasive". The ECJ explained that
legislation which imposes an unreasonably low cap is incompatible
with this provision and with the aim pursued by the Enforcement
Directive (recital 10) which is to ensure a high level of
protection of intellectual property rights in the internal
The ECJ furthermore ruled that Article 14 of the Enforcement
Directive precludes any Member State legislation requiring a fault
on the part of the other party for the costs of a technical adviser
incurred by the prevailing party to be reimbursed. The ECJ
clarified that the concept of 'other expenses' within the
meaning of Article 14 of the Enforcement Directive must be
interpreted narrowly as only those costs that are directly and
closely related to the judicial proceedings.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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