Austria: The Right Place for Effective IP Enforcement

This article has previously been published in Legal Week.

In a global economy where IP right infringements rarely respect national borders, the choice of the best jurisdiction to stop infringements is ever more important. Although relatively small in size and population, Austria's economy is strong. Its experience and efficacy in protecting IP rights is also strong, making Austria a perfect place for tackling infringements.

There are some interesting trends in IP enforcement in Austria.

New trademark opposition procedure

Through recent amendments to the Austrian Trademark Act, Austria follows the international trend of trademark opposition procedures. The new procedure will take effect from July 2010.

Presently, in the course of the trademark application procedure, the Austrian Patent and Trademark Office (PTO) does not examine whether the trademark applied for is in conflict with existing trademarks. Only absolute grounds for refusal (e.g. lack of distinctiveness, descriptiveness, etc.) are examined. It is up to the owner of an older trademark to actively challenge a younger conflicting trademark registration. Under the current legal regime, younger conflicting trademarks can only be challenged in regular cancellation proceedings. In practice, such proceedings tend to take rather long with a senate consisting of three representatives of the PTO deciding after an oral hearing has been held.

The new opposition procedure is intended to provide for a faster resolution of trademark conflicts immediately after a younger trademark has been registered. The opposition period is three months from the date of publication of the younger trademark. The opposition can be based on older registrations and applications (subject to later registration), and identity of trademarks and goods/services or likelihood of confusion may be asserted. The proceedings are conducted and a decision is taken by an appointed person of the PTO, subject to appeal. An oral hearing is not mandatory and is foreseen only for exceptional cases.

It can be expected that the opposition procedure will be used in particular by the owners of global brands, who are experienced with opposition procedures in other jurisdictions and who use regular trademark watching services that screen for publication of potentially conflicting younger trademarks.

Effective patent litigation

With the end to pan-European injunctions through the ECJ cases GAT v LuK (C-4/03) and Roche v Primus (C-539/03), speed and quality of adjudication of the national forums return to the centre of attention of litigants in multi-jurisdictional disputes also in patent cases.

Patent litigation in Austria is characterised by a centralised court which handles civil patent disputes, the Vienna Commercial Court (Handelsgericht Wien). Criminal patent litigation is handled exclusively by the Vienna Regional Court for Criminal Matters (Landesgericht für Strafsachen Wien). This is particularly important as patent infringements may be pursued in Austria by way of a private criminal action (see below).

Civil patent matters are handled by three specialised departments in panels of three judges. One of the judges is a lay judge, typically a patent agent ensuring technical know-how. The panels have jurisdiction both for preliminary injunction proceedings and main proceedings. Depending on the complexity of the matter and the material submitted, the timeframe for a final decision on a preliminary injunction request in patent matters is between 12 and 18 months. As it is possible to reach the Supreme Court even in the preliminary injunction phase, the decision on the preliminary injunction is highly persuasive for the main proceedings and often encourages a commercial solution.

Proceedings on the merits will add one to two years in the first instance. Austria adheres to a dual system, i.e. patent validity is handled by the Patent Office. Such separate nullity proceedings will add one to three years. However, cases are only stayed in the main proceedings, not in the preliminary injunction phase.

Finally, Austria has, of course, implemented the EU Enforcement Directive (2004/48/EC), granting IP right owners possibilities to gather and preserve evidence.

Until a pan-European system is enacted, Austria provides an ideal venue for patent litigation by providing fast, efficient and reliable courts with comparatively low litigation costs.

Criminal proceedings driven by the IP right holder – an Austrian speciality

An intentional infringement of IP rights is a crime in Austria. It can be sanctioned with monetary fines of up to 360 daily rates and, for commercial crimes, can even lead to two years imprisonment. Every year several dozen persons are convicted of infringing IP rights.

What makes criminal proceedings particularly attractive in Austria is the fact that the right holder, not the public prosecutor, has to prosecute infringers himself. As the personal interest of the right holder in defending his rights outweighs the public interest in prosecuting counterfeiters, the legislator decided that only the right holder should have competence for filing an indictment. Even if this seems to be an additional burden for right holders it actually gives them much more control over the proceeding. They can decide whether to initiate proceedings, file applications (e.g. for house searches or destruction of counterfeit goods) or terminate the proceeding, which would not be the case in criminal proceedings initiated ex-officio.

This is an advantage which cannot be overestimated as infringers often suddenly agree to pay damages when standing before the judge in a criminal court. And damages - the threat of losing the profit earned through the sale of counterfeits – is the most efficient deterrent for infringers as it hurts them more than the risk of a comparably moderate fine or even some weeks of imprisonment.

Efficient seizures of counterfeit goods

Even if the EC Product Piracy Regulation 1383/2003 provides for a standardised customs seizure procedure of counterfeits, there is still no common practice in the 27 EU member states. Such procedures are very restrictive in some countries, but not in Austria. It has implemented the optional simplified procedure, which allows for the destruction of goods suspected of infringing IP rights even without a court order.

Further, Austrian customs interprets the rules in such a way so as to provide maximum protection of IP rights. Customs discloses the available details of the sender and recipient of detained shipments upon a simple e-mail request of the right holder or his representative. Furthermore, the simplified procedure can be applied when the recipient or owner of detained goods does not timely oppose the seizure; his approval of destruction is presumed in such cases.

Finally, goods in transit are detained. This allows right holders to take legal measures and clarify in regular court proceedings whether his rights have been infringed.

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