Will it be harder to obtain interim relief in intellectual property cases from July 2023? | In Principle

New rules for interim relief in intellectual property cases in Poland entered into force on 1 July 2023. The changes are designed to address practical problems of businesses and eliminate earlier abuses of interim relief. But the amendment raises doubts and seems to heighten the procedural formalism.

The purpose of interim relief

Holders of intellectual property rights in Poland often seek interim relief to secure their claims against alleged infringers. This relief can be vital, as the proceedings on the merits in intellectual property infringement cases typically last two to three years at the first instance. If we add the time for hearing appeals (often another two years), the claimant may not obtain a final judgment banning the opponent from infringing its rights until four or five years after filing suit. Therefore, interim relief for the duration of the proceedings is intended to prevent the situation where the rightholder obtains protection too late, and is thus deprived of the economic benefit of its rights. In the worst case, the lack of interim relief, and continuation of the infringement throughout the proceedings, could dilute the rightholder’s protection and encourage other competitors to engage in similar infringement.

To request interim relief to secure an intellectual property claim, the rightholder must:

• Substantiate the claim, and
• Demonstrate that it has a legal interest in obtain security.

The amendment does not introduce exceptions to these grounds, but provides for additional conditions and rules for verifying fulfilment of these grounds which significantly change the existing rules.

The court examines whether rights are likely to be revoked

As of 1 July 2023, Art. 730¹ §1¹ of the Civil Procedure Code (introduced by the amending act of 9 March 2023) requires the intellectual property courts to examine the likelihood of revocation of an intellectual property right in other pending proceedings when evaluating the prerequisite of substantiating the claim.

These are intellectual property rights that require registration with the Polish Patent Office or the European Union Intellectual Property Office for their creation, such as trademarks, industrial designs, patents, and utility models. Copyright does not require registration and does not depend on issuance of any decision, and thus is not subject to revocation. Therefore, in copyright infringement cases the courts only examine whether the claimant has made a prima facie showing that it holds the asserted rights and that the subject of protection qualifies as a copyrightable work.

In the case of rights requiring prior registration with the Patent Office or EUIPO, the courts determine the legal standing and the substance of the right based on the information available in the registers. Before, the courts only examined whether the claimant was entitled to the right invoked, and whether, prima facie, the actions of the defendant fell within the scope of protection of the right. But from 1 July 2023, the courts must also examine whether a possible request for revocation of the right, asserted in other pending proceedings, is likely to be granted. If the court finds a high probability of revocation, it should deny the request for interim relief on the grounds that the prerequisite of substantiating the claim has not been met.

The proponents of the amendment clearly wanted the new requirement to balance the interests of rightholders and potential infringers. For some time, commentators have advocated the view that when examining the substantiation of the underlying claim, the courts should make a kind of forecast of the legal situation as of the end of the main case and (taking into account information available to the court in its official capacity and gleaned from the respondent’s position) assess whether it is likely that the right in question will still be in force when judgment is entered (see T. Targosz, “Interim relief in intellectual property law: Grounds and peculiarities of the proceedings,” Transformacje Prawa Prywatnego 2019 no. 1, pp. 99–142). But some courts have taken the position that as long as the right is in force and has not been revoked, even if the revocation proceedings are advanced and persuasive arguments for revocation have been asserted, there is no basis for denying interim relief so long as the rightholder has made a plausible allegation of infringement.

Under the amended provisions, in the request for interim relief the rightholder must declare whether proceedings to revoke the exclusive right are or were pending (Civil Procedure Code Art. 736 §5). Failure to include such a declaration will be treated as failure to comply with formal requirements for the application.

This may suggest that the parliament has carefully considered these issues. But the new regulation raises a number of doubts due to its inconsistency.

First, when examining fulfilment of the prerequisite of substantiation of the claim, the court will be obliged to examine exclusively the possibility of revocation of the right (unieważnienie). But in the case of trademarks, two remedies exist (under the umbrella term “cancellation”) that can deprive the holder of the protection arising from registration of the mark, and thus lead to denial of a claim for infringement: revocation of the mark and declaration of invalidity of the mark (stwierdzenie wygaśnięcia). When introducing the new provision, the parliament overlooked the second remedy altogether.

Second, the court is to examine the likelihood of revoking the right in other pending proceedings. But in the request for interim relief, the rightholder must inform the court not only whether proceedings are “pending” but also whether proceedings for revocation of the right “were pending.” It is difficult to find a rational justification for requiring the rightholder to inform the court of all proceedings for revocation of the right that have taken place in the past. This can be particularly difficult in the case of an EU trademark or a Community design, where compliance with this obligation can be understood to mean that the rightholder must provide information on whether revocation proceedings for the mark or design were ever brought before other European courts, even in counterclaims. Conversely, past denials of claims for revocation of the right should constitute a serious argument for the court to find that the likelihood of revocation in parallel pending proceedings is low and the right itself is strong. Therefore, it seems that providing information on historical proceedings that have ended successfully is beneficial to the rightholder and should increase the chances of obtaining interim relief.

Third, under the new provisions, the rightholder must only indicate whether revocation proceedings are or were pending. The claimant does not have to provide the court with the case files of the revocation proceedings. But examining the grounds for the revocation request and the soundness of the request seems most relevant for assessing the likelihood of revocation of the right. While claimants may on their own enclose copies of earlier requests for revocation and present their views on revocation, the mere obligation to inform the court of the pending proceedings seems insufficient for the court to make a factual assessment of the likelihood of revocation of a right.

Fourth, it cannot be overlooked that, at the stage of interim relief proceedings, the examination is only a preliminary (prima facie) assessment of whether the rightholder has a valid claim. Burdening the court with the duty to examine the possibility of revocation of the right, while at the same time abandoning the model of conducting interim relief proceedings ex parte (without participation of the respondent, as discussed below), may lead to a situation where the rightholder obtains protection much later than before, due to the need to conduct thorough proceedings concerning not only substantiation of the claim, but also the likelihood of revocation of the right, even though as of the date of the request for revocation the right was validly granted and effective against the whole world.

Fifth, it is difficult to avoid the impression that as a result of the new provisions, infringers may file groundless requests for revocation to reduce the likelihood of the rightholder being granted interim relief. Indeed, the fees for a revocation request are modest, at PLN 1,000 for Polish rights or, before the EUIPO, EUR 630 for an EU trademark or EUR 350 for a Community design.

Sixth, while in the case of a trademark or industrial design, ruling on the invalidity of the right lies within the competence of both the common courts (provided that the defendant has filed a counterclaim to revoke the trademark or design) and the Patent Office, cases involving patents or utility models are reserved to the exclusive competence of the Patent Office. This exclusivity, and the inability to file a counterclaim in these cases, does not result from an oversight by the parliament, but reflects that granting a patent for an invention, and subsequent assessment of the grounds for patentability in revocation proceedings, requires expertise. Depending on the type of invention, this may include knowledge in the field of pharmaceuticals, medicine, mechanics, physics, electrical engineering, etc. Given the complexity of patent cases, assisting the judge in this regard with the opinion of an expert in these specialties seems insufficient to rule on the validity of the right. Thus it is even more surprising to entrust the court with assessing the likelihood of patent revocation in incidental proceedings such as requests for interim relief, where the court does not have the opportunity to rely on an expert’s opinion even as an alternative.

Finally, reflecting on the consequences of the new obligation, it is hard to avoid the impression that the intellectual property courts have been assigned the role of a kind of pre-court considering the validity of revocation requests before the Patent Office or EUIPO. Hopefully these offices will not be particularly swayed by any potential conclusions reached by the court at the stage of interim relief proceedings.

Rigid 6-month period for filing a request for interim relief

The second revolutionary change in interim relief proceedings is introduction of the rule that the rightholder loses its legal interest in obtaining relief if it delays filing a request for more than 6 months from the date it learned of the infringement of its right. The newly added Art. 755 §2³ of the Civil Procedure Code provides that in such a situation, the court shall deny the request for security. The wording of the provision is categorical, and the court is not left any latitude to make a different ruling.

Indeed, in an effort to balance the interests of rightholders and potential infringers, the IP court should examine the timing of the rightholder’s response to the infringement. A too-long reaction time by the rightholder, and too-long tolerance of infringement, can and should lead to a finding of no legal interest in obtaining interim relief (Art. 730 §2), and thus preclude the need for granting temporary protection. Therefore, introduction of a clear (6-month) time limit for the rightholder to take action could be considered an advantage, providing relative certainty in commerce and predictability of the court’s ruling.

But such a rigid regulation, which does not allow any margin for judicial discretion and consideration of the circumstances of the case, raises serious doubts.

In assessing the legal interest in obtaining security, including the time of the rightholder’s reaction, before the amendment the courts were quite adept at taking into account the specific circumstances of the case, relying on the abuse-of-rights clause or the principle of estoppel (venire contra factum proprium, under which the court will not grant relief contradicted by the claimant’s own actions). Wisely employed by the IP court, these instruments effectively prevented potential abuse of the institution of interim relief to secure claims. Therefore, it would make more sense to introduce a flexible mechanism allowing the court to assess the rightholder’s response time, taking into account the circumstances of the case. For example, such a mechanism could give the court the option of denying the request after 6 months, rather than requiring the court to deny the request.

Responding to infringement of intellectual property rights is a complicated process—and the more difficult and less obvious the infringement is, the longer it takes. Longer preparation before filing a request for interim relief may be required in patent, plant variety or software cases. Response by the rightholder requires organisational and financial resources. The rightholder must have time to establish certain facts, monitor the behaviour of the suspected infringer, assess the effects of the infringement, evaluate the validity of the actions taken, gather evidence, or attempt to resolve the case amicably, which in itself can be very time-consuming. The nature of the industry and its characteristic economic conditions should also be taken into account. The new regulation ignores that in a particular case, a rightholder’s longer response time may be entirely justified, and each case should be examined individually.

Additionally, when introducing this provision, the parliament committed some inconsistencies. They will create uncertainty for litigants, which is after all what the amendment was intended to avoid.

First, the wording of the provision may cause disputes over when the time limit for filing the request for interim relief began to run. The code states that the time limit begins to run at the time when the rightholder “learned of the infringement.” Knowledge of the infringement and identification of the infringer are two different issues, often impossible to determine at the same time. Usually, the rightholder learns first of the infringement itself, and only investigative steps lead to identification of the infringer. Thus, it seems that the legislative intent was that the 6-month period runs from the time when the rightholder becomes aware of both the infringement and the infringer. After all, it is only then that the rightholder is in a position to request interim relief, and that is how this provision should be interpreted. At the same time, it would also have to be assumed that when referring to “learning of the infringement,” the parliament had in mind the time when the rightholder has confirmed the infringing nature of the respondent’s actions (e.g. obtained the results of laboratory tests on a plant variety).

Second, the provision indicates that the 6-month time limit for filing a request for interim relief applies to cases under Art. 479⁸⁹ of the Civil Procedure Code, i.e. all cases assigned to the IP courts for hearing. At the same time, it refers to learning of the infringement of “exclusive rights.” This raises the question of whether the 6-month time limit should apply in all intellectual property cases, or it should be excluded in cases of infringing the Unfair Competition Act and defamation, as indicated by its literal wording. The practice will show how the provision is applied.

Proceedings for interim relief should be adversarial—the rule

Until November 2019, the rule was that requests for interim relief were heard in closed session, pursuant to Art. 735 §1 of the Civil Procedure Code in force at that time. It provided for ex parte proceedings, i.e. without hearing the respondent. This provision was eliminated by the amending act of 4 July 2019. In practice, this resulted in discrepancies in the approaches of the various IP courts to hearing the respondent. Some IP courts continued to hear requests for interim relief ex parte, while others scheduled a hearing by default.

Since 1 July 2023, this state of affairs has changed, which should be viewed positively. Pursuant to the newly added Art. 755 §2², granting by the court of interim relief in intellectual property cases will, as a rule, be possible only after hearing the party against whom such a measure is to be taken. Therefore, such proceedings will generally be adversarial.

But the parliament allowed certain exceptions to the adversarial principle, providing that interim relief proceedings will be conducted ex parte:

• If it is necessary to make an immediate ruling on the rightholder’s claim. This exception allows the court to take into account the circumstances of the case, including the specifics of the infringement, the market conditions, and the industry.
• When the interim relief is fully enforceable by the bailiff. The bailiff’s seizure of potentially infringing goods is a typical method of securing claims in IP cases. Usually the seizure is carried out at the respondent’s headquarters or warehouse. By definition, ruling on such relief must exclude participation of the respondent, as, knowing of the pending proceedings, the infringer could try to thwart enforcement of the injunction (e.g. by concealing, destroying or disposing of the goods).

The change introduced by the amendment should eliminate the aforementioned dualism of the IP courts’ approach and the unpredictability caused by it for both sides of a dispute. The new provision brings the Polish regulation closer to the law in other European countries, which only in exceptional cases provides for ex parte relief. This solution seems to balance the demand for speed and the purpose of interim relief proceedings, with the demand for an opportunity for the alleged infringer to be heard (see P. Mańke, “Defence of the obligor in interim injunction proceedings under the Civil Procedure Code (in particular Art. 741 §3),” Palestra 2021 no. 12). Undoubtedly, this meets the needs of businesses. Importantly, the solution provides for exceptions to the adversarial principle, which are necessary to realise the purpose of providing interim relief. But the most important thing is how the provisions are interpreted and applied by the IP courts, as the wording leaves room for interpretation.

First, the proceedings are to take place ex parte if the security is “fully” enforceable by the bailiff. Certainly, the wording of the provision will test the current practice of filing requests for interim relief in IP cases. So far, before initiating the main proceedings, rightholders have usually applied in the same request for two typical forms of relief in IP cases:

• A ban on taking specific actions
• Seizure of items by the bailiff.

Under the new provisions, the first type of relief is subject to hearing in adversarial proceedings, and the second in ex parte proceedings. Therefore, including them in a single request may nullify the element of surprise (essential in the case of seizure by the bailiff) if the court serves the entire request on the respondent. A solution could be, for example, to include a request that the demands be heard in a certain order, or to submit two separate requests for different types of relief. But that would create complications for the court and the parties, if only for technical and organisational reasons, with duplication of evidence or, as a result of granting of two court orders, different starting dates for filing a statement of claim on the merits. Therefore, it seems likely that the practice will evolve in the direction that in the request for interim relief, before filing a statement of claim rightholders will exclusively request the seizure of infringing goods, and only later, in the case on the merits, request an interim injunction including a ban on the alleged infringing activity.

Second, it is unclear how the “necessity for an immediate ruling” will be interpreted, i.e. what circumstances will have to exist for the IP courts to hear a request ex parte. With an overly strict and formal approach, this part of the code may prove a dead letter.

Summary

The new provisions, introduced less than three years after the reform creating specialised IP courts, which was eagerly awaited by practitioners and businesses, are imprecise, and at least initially their application will be subject to some uncertainty. But hopefully in the course of time the case law and practice will develop a pattern of action that reconciles the interests of both rightholders and potential infringers. Indeed, an overly strict and literal application of the new provisions could unduly favour potential infringers and make the possibility of securing claims in intellectual property cases illusory.

Lena Marcinoska-Boulangé, adwokat, Ewa Nagy, attorney-at-law, Intellectual Property practice, Wardyński & Partners