In Belgium the successful party does not get full reimbursement of its costs, such as attorneys' fees, after judicial proceedings. The unsuccessful party has to pay flat rate compensation, called the procedural cost indemnity. In the context of intellectual property proceedings, the Court of Justice ruled, in a judgment of 28 July 2016, that Article 14 of Directive 2004/48/EC on the enforcement of intellectual property rights precludes national legislation from setting flat rates with maximum amounts which are too low and hence do not ensure that, at the very least, a significant and appropriate part of the reasonable costs incurred by the successful party are borne by the unsuccessful party.
An American holder of several patents, United Video Properties, brought an infringement action against Telenet in Belgium. Telenet in turn claimed revocation of the patent rights. The Antwerp Commercial Court eventually revoked one of the patents of United Video Properties and ordered United Video Properties to pay Telenet a procedural cost indemnity of EUR 11,000. United Video Properties lodged an appeal against that judgment, but ultimately decided to discontinue its appeal. Telenet, for its part, lodged an appeal for reimbursement of EUR 185,462.55 on account of attorneys' fees and EUR 44,400 of patent attorneys' fees.
Article 1017, paragraph 1 of the Judicial Code provides that every final decision should – even on the court's own initiative – order the unsuccessful party to pay the costs. According to article 1018, paragraph 1, 6° Judicial Code, the costs comprise, inter alia, the procedural cost indemnity. The procedural cost indemnity is a lump sum, the amounts of which are fixed by a Royal Decree of 26 October 2007 and actualised on the basis of the index. The maximum procedural cost indemnity for cases which cannot be valued in money currently amounts to EUR 12,000.
According to the case law of the Court of Cassation ("Hof van Cassatie"/"Cour de cassation") in intellectual property cases, one is not entitled to request reimbursement of fees paid to technical advisers unless it can be shown that the unsuccessful party was at fault in bringing its action or in continuing the proceedings, and that the costs of the adviser are a necessary consequence thereof.
Article 14 of Directive 2004/48/EC on the enforcement of intellectual property rights provides that Member States must ensure that reasonable and proportionate legal costs and other expenses incurred by the successful party will, as a general rule, be borne by the unsuccessful party, unless equity does not so allow. In the Telenet proceedings, the Antwerp Court of Appeal requested preliminary rulings from the Court of Justice in order to establish whether the Belgian system of procedural cost indemnities is compatible with Article 14 of Directive 2004/48 in the context of intellectual property proceedings.
In a judgment of 28 July 2016, the Court of Justice ruled that Article 14 does not always imply the reimbursement of all costs of the successful party (proportionality principle). A fixed amount of compensation, like the Belgian procedural cost indemnity, is therefore acceptable, provided that the rates are fixed with due consideration to the average rate actually charged for the services of an attorney in the Member State concerned. Furthermore, the rates must be reasonable, which implies that the actual costs should be taken into account. The successful party is therefore entitled to reimbursement of, at the very least, a significant and appropriate part of the reasonable costs actually incurred by that party. These considerations jeopardise the existing procedural cost indemnities in intellectual property rights cases, as, in many cases, these are not proportionate to the real costs borne.
With respect to the fees of technical advisers, the Court of Justice ruled that the term "other costs" in Article 14 of Directive 2004/48/EC should be interpreted narrowly in order to guarantee the practical effect of this provision. The fees of the technical advisers should therefore have a direct and close link to the judicial procedure concerned. Costs of research and identification (e.g. costs of general observation of the market) are therefore not included.
When it is certain that the fees are closely and directly linked to the judicial procedure concerned, the Court of Justice concludes that national legislation cannot make the payment of the fees conditional upon the existence of a fault – which is what the case law of the Court of Cassation nonetheless demands.
At the moment, the proceedings between United Video Properties and Telenet are still pending at the Belgian level. It remains to be seen whether the Antwerp Court of Appeal will declare the national legislation regarding procedural cost indemnities inapplicable and order United Video Properties to pay the real and reasonable fees for attorneys and patent attorneys.