Belgian flat-rate procedural indemnity system upheld for attorneys’ fees in patent litigation

In a decision of 8 May
2017, the Antwerp Court of Appeal decided that the unsuccessful party in a
patent litigation is not obliged to reimburse the attorneys’ fees of the
winning party in full. This decision must be situated in a long-standing
discussion in the Belgian IP community on whether European legislation imposes
reimbursement of attorneys’ fees exceeding the Belgian flat-rate procedural
indemnity for attorney’s fees(1) to the winning party. This decision follows up
on the preliminary ruling of 28 July 2016 of the Court of Justice of the
European Union (CJEU) on which we reported earlier(2).

Due to its complexity, IP litigation – and in
particular patent litigation – most often entails considerable procedural costs
as to attorneys’ fees and technical advisers (mostly patent attorneys).
According to Belgian law, only a minimal part of these is granted to the
winning party, leaving the latter to bear most of the procedural costs. Indeed,
article 1022 of the Belgian Judicial Code provides that the procedural
indemnity is to be determined in function of the nature of the case and the
significance of the dispute, but may never exceed the flat rates set forth in
the Royal Decree of 26 October 2007. The
Belgian Supreme Court  further established(2) that the fees paid to
technical advisers may only be recovered by the successful party if the latter
demonstrates that the unsuccessful party was at fault in bringing its action or
in the continuance of the proceedings, and that the costs of such a technical
adviser are a necessary consequence thereof.

In its preliminary ruling of 28 July 2016, the CJEU
pointed out that a national flat-rate system setting a cap for the
reimbursement of attorneys’ fees must at least ensure that the unsuccessful
party bears a significant and appropriate part of the reasonable costs actually
incurred by the successful party in IP proceedings. The CJEU further observed
that the reimbursement of the fees paid to technical advisors may not be made
conditional on a fault committed by the unsuccessful party, but only on the
existence of a direct and close link between these costs and the judicial
action seeking to have intellectual property rights upheld.

After the CJEU ruling, Telenet – being the winning
party – unsurprisingly argued before the Antwerp Court that even the maximum
amount of the Belgian procedural indemnity applicable to the case at hand did
not represent a significant and appropriate part of the reasonable costs it had
actually incurred in the proceedings as attorneys’ fees and fees for technical
advisers. Nevertheless, the Antwerp Court of Appeal decided not to grant a
procedural indemnity exceeding the flat-rate. The Court motivated this decision
by observing that European directives, such as Enforcement Directive 2004/48/EC, do
not have direct effect in horizontal conflicts (i.e. conflicts between
individuals, as was the case here). This implies that Telenet could not rely on
Article 14 of the Enforcement Directive to obtain for reimbursement of its
reasonable procedural costs. There was also no room for interpreting Article
1022 of the Belgian Judicial Code, which provides that the procedural indemnity
may never exceed the cap set forth in the Royal Decree of 26 October 2007, in
any other way than that it imposes a cap on the procedural indemnity.

On the other hand, the Antwerp Court of Appeal decided that fees for technical advisers were not
included in the flat-rate procedural indemnity. Since it was undisputed between
the parties that the claimed patent attorney’s fees were directly and closely
linked to Telenet’s judicial action, the Court decided to fully grant the
reimbursement of these fees to Telenet as compensation for fees paid to
technical advisers.

The decision of the Antwerp Court of Appeal is very
much in line with the actual practice of the Belgian courts and less
ground-breaking than had some hoped it would be. That being said, the judgment is
still open to an appeal with the Belgian Supreme Court.

(1) rechtsplegingsvergoeding – indemnité de
procedure

(2) Case C-57/15, United Video
Properties Inc. v. Telenet NV

(3) See Cass. 5 May 2006, C.03.0069.F, www.cass.be and Cass. 2 September 2004, C.01.0186.F, www.cass.be.