SHORT INTRODUCTION OF ENFORCEMENT OF PATENT AND TRADEMARK RIGHTS IN CIVIL CASES IN LITHUANIA

 

by Edita Ivanauskienė, Attorney at law, patent attorney EiiP

 

Everybody is aware that intellectual property rights are „monopoly“ rights and possesion of exclusive rights to intellectual property, including patent and trademarks rights, enables the rightholders to legally limit his competitors, reduce the competition and increase their sales.

 

As these rights are of territorial nature, in order to use this tool in Lithuania a protection through registration or through applicable international or regional procedures must be safeguardeded in the territory of Lithuania.

 

This article aims to show that protecting and enforcing the rights in Lithuania is not complicated and is not expensive therefore worth protecting Lithuanian market.

 

THEN WHY LITHUANIA?

First of all, Lithuania is the most attractive market from all the Baltic states as it has the largest population (3 mln. inhabitants) in comparison to Latvia (1.9 million[1]) and Estonia (1.1 million).[2]

Further, the statistics shows that foreign subjects show interest in protecting the industrial rights into their products in Lithuania. As announced by the State Patent Bureau (the SPB)[3] , in 2017 patent applications filed by foreign owners have represented 38% of total number of applications filed by patent applicants in Lithuania.

Second, the costs of registration of industrial property objects are quite low in Lithuania. Due to the high competition the professional fees for preparing and filing an application are almost the same as state fees. For instance, the minimal state fee for application and registration of a national trademark in one class amounts to 139 EUR, the professional fees for these actions generally amount from 100 to 150 EUR . The minimal state fee for the extension of validity of national trademark registration for 10 years is appr. 69 EUR, the professional fee is appr. from 70 to 100 EUR.

Third, the EU regulations and directives governing protection and enforcement of IP rights are implemented into the Lithuanian IP legislation. The Lithuanian State patent bureau and Lithuanian courts follow the case law of the ECJ, therefore, their decisions become more and more predictable.

 

The so called the 2004 Enforcement Directive governing the civil enforcement measures is implemented into the Law on Trademarks and the Law on Patents since 28 July 2006 and into the Copyright Law since 31 October 2006. Within 12 years case law on application of new IP enforcement provisions has been developed.

 

Forth, civil adjudication of trademark and patent infringement cases has been always concentrated in higher courts of our capital Vilnius (Vilnius County Court as the first instance court, Lithuanian Appeal Court as the appeal instance and the Lithuanian Supreme Court as the cassation instance), change of judges is minor, what allows judges to maintain experience on these cases. For the sake of the truth, our judges’ experience in patent cases is not significant, as during our 25 years of independence there were initiated about 15 patent cases and a half of them was regarding missed terms to extend the validity of the patent. Administrative and criminal adjudication is spread through all Lithuania, i.e. the place of the first instance court depends on the place where the infringement occured.

 

WHAT IS IMPORTANT TO THE RIGHTHOLDERS ?

 

Generally, the rightholders wish to make as much profit as possible from the protected product.

One of the way how to reach this is to combat with the competitors distributing the products infringing your rights. What is important for the rightholders in this combat is, first, to stop the infringement, to receive a preliminary injuction immediately to preserve the status quo until a pending ruling or outcome.

Second, the rightholders wish to receive profit lost due to these illegal actions and all other expenses incurred (i.e. litigation expenses). Sometimes the claims for damages is only the hidden way to threaten a competitor and force him to settle under the terms desired by the rightholder, or the way to weaken his position and even push him out from the market.

Third, the rightholders are also happy when the infringer is sanctioned by criminal or administrative fines. Application of such sanctions generally act preventively therefore, the rightholders are also keen to invest in these cases.

 

CIVIL ENFORCEMENT MEASURES AFTER THE ENFORCEMENT DIRECTIVE2004/48/EC

 

The Enforcement Directive2004/48/EC governs only civil enforcement measures. In order to implement this Directive the changes to all laws governing intellectual property protection, including the Law on Trademarks and the Law on Patents have been made, which entered in force on 28 June 2006.

 

New provisions on application of provisional measures enabled the rightholders’ easier to receive favorable decisions as regards preliminary injunctions. Before the application of provisional measureas was governed solely by the Civil Procedure Code and the judges always refused to apply preliminary injunctions arguing that if the preliminary injunction concides with the claim requirement (permanent injunction), temporal stopping of infringement would be equal to satisfaction of the claim on the merits; satisfaction of such claim would also infringe the principle of judge’s impartiality.

 

The other provisions, which have also eased the rightholder’s possibility to receive the damages was the changes of provisions governing damages. The Laws clarified what the courts should take into account when calculating the real damages or lost profit or infringer’s received benefit. The Laws also introduced the possibility, instead of damages, to require a licence fee and up to a double licence fee in case of infringer’s intent or gross negligence.

 

New provisions for our law system was also the publication of court rulings which is recognized as a good preventive measures and is now quite often requested by the rightholders in Lithuania. The publication of court rulings is applied at the claimant’s request and at the expense of the defendant. The decision or its part may be announced in the mass media or by any other means only after it comes into force. The advance payment from the infringer may be also requested.

 

WHEN MAY THE RIGHTS INFRINGEMENT BE TEMPORALLY STOPPED?

 

If in short, under the current Lithuanian legislation and case law the infringement during the trial proceedings may be stopped when based on the evidence provided the judge prima facie evaluates that there is a high likelihood that a requesting party will succeed on the merits of the civil action and application of such measures would not contradict with the principle of proportionality and such measures are needed to prevent imminent infringing activities, to promptly terminate infringing activities and to enforce a final decision of the court.

 

Provisional measures may be applied without the defendant having been notified or heard, in particular where any delay would cause irreparable harm to the applicant. Where provisional measures are applied without the defendant having been notified and heard, the defendant must be given notice without delay, i.e. after the execution of such measures at the latest. Generally, during the past several years particularly in patent cases the courts avoid to apply the preliminary injunctions without hearing the other party and provide some time (e.g. 7 days) for the other party to respond to such the requests for preliminary injunctions in Lithuania.

If not satisfied the requests for preliminary injunctions may be applied repeatedly provided relevant factual circumstances have changed. The court order on application or non-application of preliminary injunctions may be appealed to the Lithuanian Appeal Court and it takes about 6 months to receive a decision of the Appeal Court on this subject matter.

 

Trademark cases

 

 The case law shows that the courtsapply preliminary injunctions in trademark infringement cases with a due care. For instance, in BAKUGAN cases the court decided to arrest and to prohibit transfering, using or otherwise disposing the toys, bearing the identical trademarks Bakugan, Bakugan Brawlers BATTLE, similar signs BAKOOGUN, Battle Brawlers, as the court considered it would not be possible to execute the judgement if taken in the applicant’s favour (besides the requirement for permanent injunction and damages the applicant requested destruction of the goods – if the goods are sold or transferred, it will not be possible to execute the decision as regards the destruction) (Decision of LAC of 14 December 2009 „Spin Master“ Ltd. v. „Rududu ir Co“ bei „MV Trading“, Decision of 21 January 21 2010 in civ. case No. 2-50/2010 UAB „Magas” v. „Rududu ir Co“ bei „MV Trading“(BAKOOGUN cases).

 

In two domain name cases the courts satisfied the applicants’ requests to apply provisional measures even before filing the claim and hearing the other party: arrest of a domain name and its use in the defendant’s commercial activities. The courts admit that an infirnging domain name may be easily and quickly transferred to third persons and due to that the requesting person may be involved in new disputes and incur additional time and monetary expenses, therefore, such requests are generally satisfied. (Decision of LAC of 18 August 2011 in civ. case No. 2-1745/2011, SILENCEAGENCY.COM case; Decision of LAC of 8 March 2012 in civ. case No. 2-222/2012, (bms.lt, bmssexpress.lt bei megapolis.lt case)

 

However, the court has not satisfied the claimant’s request to forbit transferring or otherwise disposing the trademarks in the trademark invalidation case as the transfer of the infringing trademark to other person does not pose any threat to execution of the final decision on the merits. In the opinion of the court if the trademark is invalidated, it will be invalid ab intio and no other person will be able to use a trademark, the registration of which will be declared invalid. (Decision of LAC of 8 March 2012 in civ. case No. 2-222/2012 (bms.lt, bmssexpress.lt bei megapolis.lt case), see also, the same conclusion in Decision of LAC of 9 September 2009 in civ. case No. 2-888/2009, Red Bull GmbH v. „SMS-Eligita“, „Natūralios sultys“(Red Bear Energy Drink case)

 

Preliminary injunctions are also not applied if it would essentally limit the possibility to carry out the defendant‘s commercial activities and would have the same effect as the execution of the court decision on the merits. For instance, the court refused to prohibit the use of a legal name during the trial proceedings as the defendant would have to change its name in order to further continue its commercial activities. In the opinion of the court such measure would not be proportionate(Decision of the Lithuanian Apeal Court of 11 November 2010 in civ. case No. 2-1384/2010 UADBB „Balto Link“&UADBB „NT draudimas“v. UADBB „LT DRAUDIMAS“)

 

Patent cases

 

As regards recent patent infringement cases preliminary injunctions are also seldom applied. One example when the preliminary injuction has been applied is AstraZeneca case: the claimant AstraZeneca AB filed a preventive claim against the defendant Krka, d.d. to cease “any commercial activities” as regards the medicinal product “ESCADRA” until the end of the term of validity of their patent. The claimant has also requested the court to apply preliminary injunction – to cease the same defendant’s activities until the decision takes effect in this case. The claimant argued that it would be impossible to execute the court decision if the preliminary injunction is not applied as the actions would be further carried out for avoidance of which the preventive claim was filed.

 

The court agreed with the claimant’s argumentation and taking into account the fact that the infringing product has not been yet released into Lithuanian market and that the defendant has not provided any evidence proving non-infringement decided to apply preliminary injunction measures.

 

Recent case law shows that other claimants were not so successful. For instance, the requested preliminary injunction by Bayer against UAB “Ladee Pharma Baltics” has been refused as the validity of the claim raised doubts due to initiated invalidation proceedings of the European patents on which the claim is based before the Lithuanian courts and the EPO’, that an analogue of one of these patents has already been revoked in the Czech Republic, and, according to the specialist conclusions the patents registered by the plaintiff do not meet the conditions for patentability.

 

Therefore, the patent and trademark case law shows that for provisional injunctions to be applied in patent and trademark infringement cases in Lithuania, the right holders should have “strong” trademarks and patents and also must provide sufficient evidence on the validity of the claim when filing such claim.

 

WHAT DAMAGES?

 

According to the current legislation the rightholders may seek:

(i)                Actual damage. When assessing the amount of the actual damage (losses), the amount of the inflicted damage, lost income, incurred expenses, and other important circumstances must be taken into account by the court. Profit made by the infringer may, at the request of the rightholders, be recognized as losses.

(ii)             Lost income is determined by taking into account the amount of income which would have been made if the trade mark protected under this Law had been used legally (i.e. taking account of the royalties which are usually paid for the legal use of the trade mark), as well as the concrete circumstances which might have created conditions for making income (works performed by the right holders, implements used, negotiations for conclusion of contracts concerning the use of the trade mark, etc.).

(iii)           Profit made by the infringer (A total that the infringer has saved and/or made by infringing the rights). When ascertaining the profit made by the infringer, the right holder must provide only the evidence that would confirm the gross income received by the infringer; the amount of net profit of the infringer (after deducting the expenses) must be proved by the infringer.

(iv)           Licence fee (instead of damages) – the payment which would have been due if the infringer had used the trade mark legally (i.e. had acquired permission), and where the infringement has been committed intentionally or through gross negligence – the rightholders may claim up to twice the amount of such payment.

Following our recent case law generally applicants seek lost income or profit made by the infringer. As there is no clear court guidelines as regards whether the lost profit may be calculated based on the quantity of the illegal products multiplying by the price of an original product, the safest way is to seek profit made by infringers as this is the easiest way to prove damages in our courts. To prove infringer’s profit you must only provide evidence on the gross profit of the infringer (e.g. price of infringing product and quantity of sold illegal products). However, the amount is reduced when the defendant provides evidence on his expenses in relation to this product.

 

The incurred litigation expenses are adjudged for the winning party. Generally the attorney fees for trademark and patent cases for three court instances are about EUR 5000 (higher fees may be incurred if large law firms are hired). It should be noted that the amounts of attorney fees in Lithuania are governed by the Recommendation approved by the Minister of Justice which sets the recommended amounts of attorney fees which may be adjudged by the court.


Should you need any further information, please do not hesitate to contact me at edita.ivanauskiene@eiip.lt

 


[1] http://en.wikipedia.org/wiki/Latvia#cite_note-4, visited on 29 08 2018

[2] http://en.wikipedia.org/wiki/Estonians, visited 29 08 2018

[3] http://www.vpb.gov.lt/files/701.pdf, Statistics of the year 2017 on the legal protection of industrial property in the Republic of Lithuania, visited on 29 08 2018