Anyone who loses a patent case before a Dutch court, the Court of Appeal or the Supreme Court, as of 1 September 2020, does not (always) have to pay the full litigation costs of the other party anymore. As of 1 September 2020, the so-called indicative rates (indicatietarieven) will (also) apply in patent cases. These are rates that limit the compensation for the winning party. This is in line with the existing Dutch regulations regarding reimbursement of costs in intellectual property (IP) cases. In these regulation however xeplicitly excluded costs for patent litigation (despite the fact that patents do fall under IP law).

Reimbursement of litigation costs

The basic rule regarding litigation costs in Dutch civil law cases is that the losing party must pay a fixed lump sum reimbursement to the winning party, which is based on a so-called lump-sum rate (liquidatietarief). Often this amount only covers a fraction of the party’s actual costs for conducting legal proceedings. The rationale behind the lump-sum rate is that a high financial risk in case of losing a court proceeding, would create a unwanted barrier for parties to enforce their rights in court.

For IP cases (including patent cases) the basic rule formulated above is deviated from. Since the implementation of the Directive on the enforcement of intellectual property rights, the special provision of Article 1019h of the Dutch Code of Civil Procedure applies in IP related cases. This provision allows the competent court to order the losing party to pay all “reasonable and proportionate” legal costs incurred by the winning party. Often these costst are many times higher than the lump-sum rates mentioned above. The rationale behind this rule is that it would lower the threshold for rightsholders to take action against infringers. In addition, infringers would be deterred by potentially high litigation costs in infringement cases. In practice, however, the risk of high costs in litigation also proved to have a deterrent effect on IP rightsholders. By means of indicative fees, the legislator tries to give IP rightsholders some more certainty regarding potential costs.

Reasonable and proportionate costs

What are these indicative rates actually? Indicative rates set the maximum total fee which is considered “reasonable and proportionate” in different types of cases. In principle, these rates limit the costs that can reasonably be redeemed by the winning party from the losing party. The aim is to increase the predictability of litigation costs for all litigants involved, thus facilitating better access to justice.

Indicative rates for IP cases have been in place in the Netherlands since 2008, but patent cases were excluded. In order to create certainty for litigants in patent cases, indicative fees for patent cases will be implemented as of 1 September 2020.

Hight of indicative rates

The maximum rates have been set according to the complexity and nature of the procedure. In the table below we have made an overview of the current rates:

The indicative rates exclusively apply for activities of the lawyer, including extrajudicial lawyer’s fees, but do not include the costs of experts engaged. The indicative rates are also exclusive of disbursements, court fees and VAT.

Other requirements

In order to be eligible for this reimbursement, the attorney at law must submit a specification of the litigation costs. This specification must in any case include the hourly rate of the attorney(s), the number of hours spent and the work performed by the lawyer. In case price arrangements have been made, for example about ‘success fees’, these must be stated as well. Furthermore, the judge applies the Lump-sum rate, when not requested for higher reimbursement by the litigating parties. An attorney should therefore always actively request higher reimbursement in IP cases.

Unless otherwise stipulated by the court, the statement of costs must be submitted within the same period of time as the submission of the last evidence documentation in proceedings.

Sometimes proceedings only partly concern intellectual property. In such cases, higher compensation for legal costs can be requested for that part of the case that involves IP.

Costs of intellectual property proceedings

The rates mentioned above remain indicative rates. In cases where the IP proceedings are cheaper, only the actual (incurred) costs are eligible for reimbursement. Higher amounts – i.e. above the maximum indicative rate of the applicable category – will only be awarded in special cases on the basis of the specific characteristics of the case.

As the table above shows, estimating the cost of intellectual property litigation is not easy. The costs differ depending on the type of case and should therefore be assessed on a case by case basis.

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