[Guest post] Polish Constitutional Tribunal rules that rightholders can claim damages amounting to twice a hypothetical licence fee in copyright infringement cases

Damages for copyright infringement: how much can be claimed? In this guest post, Katfriend Bohdan Widła (Barta & Kalinski sp.j. and Jagiellonian University) provides an update on recent developments in Poland.

Here's what Bohdan writes:

Polish Constitutional Tribunal rules that rightholders can claim damages amounting to twice a hypothetical licence fee in copyright infringement cases

Request for punitive damages

On November 20th, the Polish Constitutional Tribunal was expected to issue a long-awaited ruling concerning the compatibility of remedies for copyright infringement with the Polish Constitution. It did not, because about two weeks earlier, another ruling of the same Constitutional Tribunal concerning exactly the same issue was published. 

Background 

Article 79 of the Polish Act on copyright and related rights originally envisioned a rightholder-friendly remedy, i.e. a right to demand a sum of money corresponding to a double licence fee, or, in the event of a culpable infringement, triple licence fee. 

The remedy is older than the Enforcement Directive, since it first appeared in 1994. Originally it served as an alternative to the right to recover benefits obtained by the infringer. When the Enforcement Directive was implemented in Poland in 2007, the claim for triple/double licence fee remained in the statute, although it became a particular form of a claim for damages. 

Some voices of concern were raised, especially with regard to the proportionality of this measure. According to the critics, it was similar to punitive damages, which traditionally are not allowed under Polish private law. The prevailing tort law theory in Poland assumes that the right to claim damages has primarily compensatory purposes. Those who defended the remedy argued instead that copyright law should be treated as a more autonomous legal regime. Accordingly, without a right to claim damages calculated as a lump sum, rightholders would be practically prevented from obtaining any compensation at all. 

Eventually, the compatibility of the remedy with the Polish Constitution was also questioned. The issue was resolved only partially in 2015, when the Constitutional Tribunal ruled that the right to demand a triple licence fee was excessive. The double licence fee was not examined, since it was not covered by the constitutional complaint and the Tribunal is not allowed to act ex officio. 

In spite of the ruling, the act has not been amended. The double licence fee remedy lingered on, although it was argued that it was not constitutional either. 

However, for a couple of years no new cases concerning Article 79 were decided by the Constitutional Tribunal. 

This led to a number of possible interpretations. For example, one could argue that:

• since constitutional issues with double and triple licence fee remedy are essentially the same, the former should not be applied by the courts despite the lack of any formal ruling of the Constitutional Tribunal,
• rightholders may request a double licence fee regardless of whether the infringement was culpable or innocent,
• the double licence fee remedy should be interpreted more strictly, in light of the constitutional requirements, so that rightholders who claim damages equal to more than a single licence fee should demonstrate that the infringement was culpable and that they actually suffered damage. 

Arguably every option appeared in at least one court judgment. 

A new wave of cases concerning remedies for infringement eventually reached the Polish Supreme Court. Although according to the judgment of the Court of Justice of the EU in C-367/15 (Oławska) the double licence fee remedy is in principle compatible with Article 13 of the Enforcement Directive, questions about its constitutionality remained. For example, when the Supreme Court returned to the Oławska case in November 2017, it ruled that the remedy in question was excessive, so the court chose the third interpretation. However, this judgment was not binding authority and less than a month later, when another Supreme Court case was decided, an award of a double licence fee was permitted. 

Two cases, one ruling

It seemed that this year the Constitutional Tribunal would eventually have the opportunity to finish what it started. A case concerning the double licence fee remedy was initiated through a complaint filed in 2017. The ruling was supposed to be announced on November 20th. Curiously, among the judges who were to decide the case was judge Piotr Tuleja – the rapporteur in the 2015 case. However, the announcement was cancelled and the case will probably be discontinued, because two weeks earlier, another case concerning the same issue was decided. 

It was initiated by the Supreme Court in April 2019. While the full judgment has not yet been published, according to the press release the Constitutional Tribunal essentially followed the rightholder-friendly line of reasoning. The right to demand double licence fee was deemed to be a proportional measure. According to the Tribunal, although infringers may occasionally be ordered to pay more than the amount of damages actually suffered by the rightholder, the latter usually has to bear additional costs (e.g. to identify the infringer). Moreover, proving the precise amount of damages may be difficult if possible at all. Thus, the remedy in question levels the playing field. This conclusion is in line with what the parliament (Sejm) and the Public Prosecutor General argued during the proceedings. 

Comment 

It is difficult to find a rational justification for fast-tracking the case initiated by the Supreme Court when a decision in an earlier case was ready. It starts to make sense only if we take into account the constitutional crisis in Poland. The authority and efficiency of the Constitutional Tribunal were considerably damaged. Accusations against the current President of the Constitutional Tribunal concerning interference with judicial activities have been brought by both the veteran judges and those appointed thanks to votes of the current parliamentary majority. In other words, weird things sometimes happen these days. 

Despite this context, the question referred by the Supreme Court made perfect sense. From a practical standpoint, the judgment of the Constitutional Tribunal will probably end the discrepancies between the courts, which itself can be regarded as a positive outcome. Yet the situation remains imperfect. The original regime, while harsh, was at least internally consistent. After the rulings of the Constitutional Tribunal, copyright law gives little room for manoeuvre with regard to the lump sum remedy and makes it difficult to differentiate between innocent and culpable infringements. 

Last but not least, the Polish copyright law has got a big what-if, since we will probably never know what the ‘cancelled’ judgment of November 20th would have said.