Compensation of legal costs in intellectual property cases

In Litigation law the general rule is that the losing party has to compensate the successful party for the legal costs (lawyers fee, expert costs, court fee). The Court will, however, never award the real costs but always according a fixed rate. This fixed rate rarely covers the actual costs of the litigation. But in cases where the infringement of Intellectual Property rights are at stake, the legal costs have to be fully compensated. Intellectual Property lawyer Wang Chan explains.

Intellectual Property Law

In accordance with a European Directive, the so-called Enforcement Directive, all EU-members must ensure that in IP-cases the losing party fully covers the fair and equitable legal costs made by the successful party. This EU-directive is also implemented by the State and thereby an exemption on the general rule on compensation of legal costs was created.

The Indicative Standards for IP-cases

In order for parties facing litigation to better estimate the potential cost risk, the Judiciary has drawn up Indicative Standards for IP-cases. These standards also provide guidelines for judges on whom costs are considered fair and equitable. For example, a maximum of € 6.000 is set for fairly simple injunction procedures and a maximum of € 25.000 for an extensive proceedings on the merits.

Litigation lawyers

The Indicative Standards do not affect the EU rule that the actual legal costs have to be compensated. A judge is free to award higher or lower damages. The party claiming an amount higher than the maximum set in the Indicative Standards, needs to provide a clear substantiation of these costs though. Legal costs can only be awarded if a party explicitly demands them. The claim always has to be accompanied by a detailed breakdown of the costs. If the other party, however, does not dispute the claimed costs, the judge will generally award the claim in full even if not substantiated properly or if it is higher than the Indicative Standards. Lastly, the Indicative Standards do only apply in cases in first instance, not in appeal cases.