Indicative rates are rates that cap the winning party's compensation. This is in line with existing regulations on litigation costs in intellectual property (IP) cases.

Litigation Fee

The basic rule for litigation costs in civil cases is that the losing party must pay a fixed fee (a standard amount) to the winning party, known as the liquidation rate. This amount often covers only a small portion of the actual costs incurred by a party in conducting legal proceedings. The underlying idea is that a large (litigation) risk in the event of losing a lawsuit would create too high a threshold for parties to enforce their rights in court.

For IP cases (including patent cases) the basic rule is deviated from. In IP cases, since the implementation of the Enforcement Directive, the special litigation cost provision of Section 1019h Rv applies. This provision allows the court to order the losing party to pay all "reasonable and proportionate" litigation costs incurred by the winning party. These costs are often many times higher than the liquidation fees. The rationale behind this rule is that it would lower the threshold for right holders to take action against infringers. In addition, infringers would be deterred by potential high litigation costs in infringement cases. In practice, however, the cost risk also proved to have a deterrent effect on IP rights owners. By setting indicative rates, the legislature seeks to provide more guidance in IP litigation.

Reasonable and proportionate costs

What exactly are these indicator rates? Indicative rates set the maximum fees that the court sees as "reasonable and proportionate." In principle, these rates cap the costs reasonably recoverable by the winning party from the losing party. This is intended to increase the predictability of litigation costs for all litigants involved and thereby promote access to justice.

Indicative rates for IP cases have been in place since 2008, but this excluded patent cases. In order to create certain certainty for litigants in patent cases as well, indication fees for patent cases will also apply as of September 1, 2020.

Height of indication rates

The maximum rates are set according to the complexity and nature of the proceedings. In the table below we have listed the current rates (as of August 6, 2020). The rates may be adjusted periodically (please consult the website of rechtspraak.nl via the link provided above).

The indicative rates relate exclusively to the work of the lawyer including extrajudicial lawyer's fees, but not the costs of experts engaged. Also, the indicative rates are exclusive of disbursements, court fees and VAT.

Other requirements

The court does not apply the actual procedural costs allowance of Section 1019h Rv ex officio. Litigants will have to request it. To be eligible for this reimbursement, the lawyer must submit a specification of his expenses. This specification must in any case include the amount of the hourly rate used, the number of hours spent and the activities performed by the lawyer. If price agreements have been made, such as "success fees," these should also be stated.

Unless the court has determined otherwise, the statement of costs must be submitted within the same time limit that applies to the submission of the last exhibits in a proceeding. Thereafter, the statement of costs may be supplemented with a detailed breakdown of the costs incurred since then and those yet to be incurred up to 24 hours before the hearing.

Sometimes proceedings only partially concern intellectual property. In such a case, full court cost orders can be requested for that portion of the claim only, in accordance with the indicative rates.

Cost of intellectual property litigation

The above rates remain indicative rates. In cases where IP proceedings are cheaper, at most the actual costs are eligible for reimbursement. Higher amounts - that is, above the maximum indicative rate of the applicable category - will be awarded only in special cases.

As the table above shows, estimating the costs of intellectual property litigation is not easy. Each case will have to be assessed what costs should be taken into account.

Do you have an (imminent) IP dispute and would you like an estimate of the possible costs of such a dispute? Please contact Ernst-Jan Louwers or Frank Rutgers for an estimate of the expected costs.