In mid-2023, the last month's amendment to the provisions of the civil procedure will enter into force. Among the many changes provided for in this amending act, attention should be paid to those related to the proceedings to secure claims in intellectual property cases. They aim to strengthen the procedural position of the obligors, while also, to some extent, regulating the issues for which the adjudicating practice of intellectual property courts has, until now, served as the sole legal basis. This is the topic that will be discussed by Tomasz Gawliczek, PhD, of JWP Patent and Trademark Attorneys, a winner of the 3rd place in the Rising Stars Lawyers - Leaders of Tomorrow 2022 competition.
Under the Act of 9 March 2023 amending the Code of Civil Procedure and some other acts (Journal of Laws of 2023, item 614), nearly 150 provisions of the civil procedure will be amended. The vast majority of these changes will enter into force on 1 July 2023. From the perspective of civil law disputes over the broadly understood intellectual property rights, there is, in a sense, a symbolic meaning to the said date. It was exactly three years ago (2020) when, on the same day, the so-called intellectual property courts began their operation and special provisions regulating the separate proceedings in this type of cases were introduced in the Code of Civil Procedure. After this time, the legislator found that further amendments are needed that will not so much streamline these proceedings as render them more balanced (in terms of securing claims) from the point of view of both parties' interests. But will they really achieve these goals?
The amendments in the CCP in force from 1 July 2023 and their ratio legis
As a rule, any party or participant in the proceedings may request to secure a claim, provided that they substantiate the claim and their legal interest in obtaining a security (Article 7301(1) of the CCP). In order to make the interpretation of this provision uniform, a more precise definition of the concept of "legal interest" has been provided in the already published text of this Code of Civil Procedure Act. Namely, it was indicated that such exists when the lack of a security will prevent or seriously impede the enforcement of a decision made in the case or will otherwise prevent or seriously impede the achievement of the objective of the proceedings in the case. However, the legislator refrained from indicating how to understand "the substantiation of a claim", leaving to the court a certain degree of freedom in this regard.
The said prerequisite for obtaining a security in intellectual property cases will be soon be clarified. From 1 July 2023, when assessing whether a claim is substantiated, the court will take into account the likelihood of an exclusive right being invalidated in another pending proceedings. This circumstance will be determined on the basis of the information provided by the parties, unless it is known to the court ex officio (Article 7301(11) of the CCP). This will obviously apply only to industrial property rights, as (among the broadly understood intellectual property rights) they are the only ones subject to invalidation in a legally defined procedure.
The said amendment required clarification of the formal requirements to be met by a request to secure a claim. From the middle of this year, such a request – if it concerns intellectual property cases – will also need to include information on whether there are or were any pending proceedings to invalidate an exclusive right, or a statement of a party or participant in the proceedings about the lack of knowledge of such proceedings (Article 736(5) of the CCP).
Particular attention should be paid to the amendment to Article 755 of the CCP, which regulates the manner in which non-monetary claims are secured. As a rule, the court will grant a security after hearing the obligor, unless a decision on the request needs to be made immediately. This will not apply to the securities which are wholly enforceable by a bailiff or which consist in the establishment of a compulsory management over an enterprise or agricultural holding or an establishment belonging to an enterprise or part thereof or a part of an agricultural holding (Article 755(22) of the CCP).
It is worth noting here that of the mentioned normative changes, only the latter one has been justified in the grounds for the draft of this amending act. In this regard, it was emphasised that its aim is to eliminate the "unfavourable phenomenon consisting in the abuse of the institution of securing claims in disputes between entrepreneurs" concerning intellectual property matters. The draft initiator is of the opinion that "in many cases, the benefits of an unduly granted security outweigh the risk that a right holder would have incurred if the security had not been granted". For this reason, in the current legal status, we are dealing with an "overgrowth of protection in intellectual property cases", which – as emphasized in the grounds for the draft of the enacted Act of 9 March 2023 – "has a freezing effect".
The latest of the amendments to the provisions of the Code of Civil Procedure, which will enter into force on 1 July 2023 and relate directly to the proceedings in intellectual property cases, concerns the deadline by which a request to secure a claim should be submitted. In accordance with the new provision of Article 755(23) of the CCP, the court will dismiss such a request if it is submitted after 6 months from the date on which a party or participant in the proceedings became aware of the infringement of an exclusive right vested in them.
Will the changes in the security proceedings affect the strategies for the actions taken by the right holders?
The institution of securing claims plays a strategic role in disputes concerning the infringement of the broadly understood intellectual property rights due to the specific nature of these cases. The right holders, including especially the holders of exclusive rights granted in the course of the so-called research procedure, often request to secure their claims so as to prevent further infringements of these rights in the course of court proceedings (which often last several years). However, the greater the likelihood of a right holder's exclusive right being invalidated or expiring, the greater the caution with which a decision to initiate the security proceedings is made.
The provisions currently being introduced in the Code of Civil Procedure are undoubtedly aimed at strengthening the obligors' position in the security proceedings. This is evidenced by all three systemic changes provided for in the Act of 9 March 2023. The court mandatorily assessing the likelihood of an exclusive right being invalidated in another pending proceedings is a fully positive development. In the new legal status, it is the stability of the exclusive right referred to by a right holder that will serve as the basis for a decision to grant temporary protection for the duration of the court proceedings. Consequently, these exclusive rights, which are subject to stricter legal requirements in the course of the proceedings to grant them (e.g. patents, utility models), will then constitute a much more secure legal basis not only for pursuing claims on their basis, but also for securing those claims for the duration of the dispute. From this perspective, the courts should show a "preferential" attitude both to the said exclusive rights and to those which were previously challenged in opposition proceedings, but were eventually upheld.
Although until now the intellectual property courts has had the option of verifying ex officio whether the exclusive rights on which a request to secure a claim is based were or are the subject of a dispute before the competent industrial property office, from 1 July 2023 doing so will become a normative obligation that will influence the decisions issued in this regard. In practice, the circumstances relating to an exclusive right have been, until now, fully taken into account only at the stage of examining a complaint against the court of first instance's decision concerning a security.
As a side note, it is worth noting that from a European perspective, the changes currently being introduced in the Polish civil procedure, which make a procedural decision to secure claims in intellectual property cases conditional on the assessed stability of the exclusive right subject to enforcement, are not a pioneering solution. In Germany, for example, the standard in this regard was for a long time much stricter, as, in accordance with the practice in place there, it was possible to obtain security for claims only if the validity of an exclusive right had been previously confirmed by another decision (e.g. a decision in opposition proceedings or a court decision). However, this was met with a negative assessment by the Court of Justice of the European Union, which in its ruling of 28 April 2022 (ref. C-44/21) made it clear that such an adjudicating practice establishes a requirement which renders Article 9(1)(a) of Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights null (effet utile). As a consequence, the Court has confirmed that as long as an exclusive right remains formally in force, it should enjoy the full scope of the protection guaranteed, in particular, by the said directive.
In light of the above, the solution in the Polish civil procedure does meet the standard set by the EU jurisprudence. The court, at the stage of deciding whether to grant a security, is only to take into account the likelihood of an exclusive right being invalidated, and not to rely in this regard, in each case, on a different (previous) decision.
However, a more critical view can be taken of the procedural changes that transform the security proceedings in intellectual property cases into inter partes proceedings. The obligation to hear the obligor could lead to a situation in which a discussion on the legitimacy of the claims raised is initiated already during the security proceedings, although at this stage it is sufficient only to substantiate the claims. A much better measure ensuring that, should a dispute arise and a corresponding request to secure a claim be submitted, a right holder is able to present their arguments would be to regulate the long-discussed protective letters. So far, they do exist in practice, but because they lack legal grounding in the provisions of the civil procedure, there is much variety in the way the individual intellectual property courts deal with such pre-trial letters.
Moreover, the position expressed in the grounds for the draft of the Act of 9 March 2023 pointing to the "overgrowth of protection" in intellectual property cases can also be deemed questionable. In this regard, it is worth recalling that the essence of rights in intangible assets is to create a certain market monopoly to the benefit of the right holder which has real (economic) significance only if it can be effectively enforced. Therefore, the mere fact that holders of the broadly understood intellectual property rights pursue claims, and thus their use of the institution of securing claims, should not warrant a negative evaluation. On the contrary, the increase in the number of proceedings in intellectual property cases can be read as both the outcome of more decisive actions being taken by the right holders and the result of a general increase in awareness when it comes to the protection of exclusive rights. However, what remains relevant is the question about the practical scope of application of the procedural measures that balance the interests of the parties to the security proceedings (Articles 743(3) and 746(1) of the CCP).
Finally, it should be noted that introducing the six-month deadline for submitting a request to secure a claim from the date on which a party or participant in the proceedings became aware of the infringement of an exclusive right vested in them constitutes a de facto confirmation of the existing adjudicating practice of the intellectual property courts. For a long time, the courts have indicated in their decisions that if a right holder submits a request at a later date, they cannot effectively demonstrate their legal interest in the protective proceedings. And this is not the only case where, from the point of view of pursuing claims in intellectual property cases, time is of the essence. Hence, the right holders should bear in mind that the Roman proverb festina lente (although true) has no application in this area of law.
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.