Article 79(1)(3)(b) of the Copyright Act allows a rights holder to demand double the amount of damages for an infringement or, if the infringement was culpable, three times the amount of appropriate remuneration. This regulation is now being heavily criticised. It was partly invalidated by the Constitutional Tribunal in mid-2015, and the European Court of Justice (ECJ) advocate general recently delivered an opinion that this provision may not agree with the EU IP Rights Enforcement Directive (2004/48/EC). If the ECJ confirms this position, this distinctive aspect of Polish copyright law is likely to disappear.
Article 79(1)(3)(b) of the Copyright Act has been considered controversial since its introduction in 1994. Under Polish law, punitive damages are rare and courts usually require a strict calculation of loss and proof of the relationship between the loss and a defendant's actions. Polish copyright law was meant to provide broad protection for authors and the legislature allowed them to seek compensation on general grounds and granted a special entitlement to demand a pre-determined sum of two or three times the appropriate remuneration for non-culpable or culpable copyright infringement, respectively.
This solution was often criticised as excessive. Many commentators argued that the possibility of seeking compensation unrelated to actual loss was not in line with the general rule of the restitution of suffered loss. It was also argued that authors should not be able to make more money from infringement than they would normally earn from a copyright. Further, Article 79(1)(3)(b) of the Copyright Act was sometimes used by copyright trolls that chase alleged infringers and intimidate them with high financial demands.
Constitutional Tribunal judgment
On June 23 2015 the Constitutional Tribunal decided that a provision allowing claims of three times the appropriate remuneration for culpable copyright infringement was contrary to the constitutional rule of equality. According to the tribunal, the assumption that authors need to be protected as the weaker party of a contractual relationship is unjustified. The tribunal noted that an exact calculation of loss may be difficult in the case of copyright infringement and the possibility of assessing damages according to a determined fee (eg, appropriate remuneration) is reasonable. However, the tribunal considered the possibility of demanding multiples of such fees as unfair, as it was detached from the loss suffered.
The complaint filed with the tribunal was limited to the possibility of claiming triple damage (ie, three times the amount of appropriate remuneration due to culpable copyright infringement). As a result, only part of Article 79(1)(3)(b) of the Copyright Act was invalidated and after the judgment the authors could still demand double damage, as the tribunal could not officially challenge this provision.
The Supreme Court decided to verify independently whether Article 79(1)(3)(b) of the Copyright Act was in line with the EU IP Rights Enforcement Directive. In May 2015 the court decided to turn to the ECJ for a preliminary ruling on this issue. On November 26 2016 the advocate general delivered its opinion.
The advocate suggested that the ECJ should find that the EU IP Rights Enforcement Directive precludes a national rule providing for the automatic payment of a determined sum to a rights holder in the case of an infringement that leaves judges without discretionary power to decide the amount of the sum. The advocate hinted that the directive requires a holder to justify a compensation award and does not entitle a rights holder whose copyright has been infringed to punitive damages.
If the ECJ heeds the advocate's suggestion, authors will lose their special entitlement provided under Article 79(1)(3)(b) of the Copyright Act. This could mean that in the case of an infringement, rights holders will have to seek compensation according to general rules, at least until another form of compensation claim is introduced. This will have a major impact on copyright enforcement in Poland and rights holders will have to adapt to the new regulation.
For further information on this topic please contact Szymon Gogulski or Mikolaj Skowronek at Soltysinski Kawecki & Szlezak by telephone (+48 22 608 7000) or email ([email protected] or [email protected]). The Soltysinski Kawecki & Szlezak website can be accessed at www.skslegal.pl.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.
