Polish Constitutional Tribunal changes the rules for claiming copyright infringement damages

• Poland

• Intellectual property - Briefing notes

20-07-2015

Less than a month ago there was an uproar in Polish copyright law due to the Polish Constitutional Tribunal’s judgment of 23 June 2015 (Case SK 32/14). In that ruling, based on a constitutional complaint by digital TV operator UPC, the Tribunal declared Art. 79(1)(3)(b) of the Polish Act on Copyright and Related Rights unconstitutional.

This regulation provided an alternative method to demand damages for culpable copyright infringements, alongside a claim for compensation on a general basis. A plaintiff could either claim damages in the amount of the loss—actual losses or lost profits (the value of which must be proved with evidence)—or seek damages as a multiple of the copyright licence fee the defendant would have paid if it had acted in compliance with the law and requested a licence to use the work.

In copyright infringement disputes, the latter method of claiming compensation was chosen most frequently, because it is much more friendly to copyright owners from the point of view of burden of proof. In order to obtain damages on a general basis it is necessary to prove:

• the defendant’s fault
   
• a causal link between the conduct of the defendant and the loss, and
   
• the exact amount of the loss.

However, under Art. 79(1)(3)(b), the necessity to prove the value of the loss was replaced by the requirement to determine how much the copyright licence for use of the work would have cost. The value of a hypothetical licence was estimated by taking into account the market prices of similar licences and previous licences granted by the plaintiff. Before the Tribunal’s decision, twice the amount of such estimated licence fee was awarded if the infringement was innocent, or three times that amount if the plaintiff also proved the defendant’s fault.

From the date of the Tribunal’s judgment, a plaintiff in civil proceedings for copyright infringement can no longer claim compensation in the form of the treble licence fee. The Tribunal held that this provision violated the right of ownership and the principle of equality under the law, by disproportionately burdening copyright infringers in relation to infringers of other rights. The Tribunal also found that it constituted an unjustified and too far-reaching preference for copyright owners. The provision of Polish law that has now been held unconstitutional was widely criticized in the legal commentaries as inconsistent with the EU’s IP Rights Enforcement Directive (2004/48/EC) because of its repressive nature.

The consequences of the Tribunal’s judgment for legal practice are serious.

Firstly, the Tribunal referred only to the unconstitutionality of Art. 79(1)(3)(b) of the Act on Copyright and Related Rights (treble licence fee for culpable infringement), leaving in force the very similar and even more questionable Art. 79(1)(3)(a) (double licence fee for innocent infringement). To make it even more interesting, all of the reasons that the Tribunal invoked are applicable to both subsections (3)(a) and (3)(b). There is a possibility that in the nearest future we will observe a flood of allegations by defendants asserting the unconstitutionality of subsection (3)(a) and repeating the Tribunal’s argumentation from that judgment. Moreover, judges considering such cases may also seek a ruling from the Tribunal on the constitutionality of subsection 3(a), which would protect them against ruling on the basis of such a doubtful provision.

Secondly, it should be noted that any final judgment issued within the last 5 years awarding the plaintiff compensation in the form of a treble licence fee may now be subject to reopening (pursuant to Art. 4011 of the Civil Procedure Code). The deadline for submitting such petitions is 1 October 2015.

Finally, pending cases originally based on a claim under Art. 79(1)(3)(b) should be supplemented with evidence to prove the value of the loss (as showing the appropriate licence fee is not sufficient) and a sufficient causal link. As previously mentioned, Polish civil law requires this proof from the plaintiff to be awarded damages under the general rules of the Civil Code (which after the Tribunal’s ruling is the only basis for obtaining damages for culpable copyright infringement). Proving the causal link between the defendant’s action and the loss (lost profits) in the claimed value is a tough issue. For the parties it generally means at least significant prolongation of the proceedings, and in some cases failure by the plaintiffs. Absurdly, as Art. 79(1)(3)(a) remains in force, for the time being it may be safer for plaintiffs to claim damages for unintentional infringement instead of risking allegations based on fault.

We will see how big an impact the Constitutional Tribunal’s judgment has on copyright infringement lawsuits in Poland.