Paris Court of Appeal, October 16, 2024, PIAGGIO & C S.p.A v. SAS Peugeot Motocycles, no. 21/18176
While French courts apply a proportionality test when deciding on a preliminary injunction, they have traditionally granted permanent injunctions automatically upon finding patent infringement. However, a recent decision by the Paris Court of Appeal has challenged this approach, denying a permanent injunction on grounds of disproportionality.
1. Ruling of the Paris Court of Appeal
Piaggio brought a lawsuit against Peugeot before the Paris Court, alleging infringement of several IPRs, including patent EP 1 561 612 (EP’612) – Anti-rolling device for vehicles – by Peugeot’s Metropolis three-wheeled scooter, a direct competitor of Piaggio’s successful MP3 model.
In September 2021, the Paris court of first instance found that Peugeot’s Metropolis infringed EP’612, ordering a permanent injunction and awarding EUR 1.5 million in damages, while rejecting Piaggio’s claim for recall measures. Before the Paris Court of Appeal, Peugeot, who had not complied with the enforceable injunction ordered by the Paris First Instance Court, contested the injunction and the recall measures, pointing out in particular that they were neither justified nor proportionate. Peugeot argued, as a main claim, that the patent-in-suit related only to a detail in the implementation of the anti-rolling system, that Piaggio’s sales and market shares were only slightly affected by the low sales of its Metropolis scooters, and that the patent-in-suit was due to expire within 3 months of the decision. As an alternative claim, Peugeot argued that a financial compensation could replace an injunction. Piaggio countered that the measures sought remained proportionate to the interests at stake, and that the imminent expiry of its patent could not obscure the infringement acts in which the defendant had been engaged for more than 10 years.
The Paris Court of Appeal, considering the imminent expiry of the patent, the limited number of infringing Peugeot Metropolis scooters, and their declining market share since 2021, held that “an injunction would entail for the infringer, but also for bona fide third parties, an excessive hardship not justified by the right of exclusivity”. Instead, the Court ordered Peugeot to pay an additional EUR 150.000 in damages, considering Peugeot Metropolis sales made between the first-instance and appeal decisions in violation of the injunction by the Paris court of first instance, as well as projected future sales before the patent’s expiry.
2. Take-aways
In doing so, the Paris Court of Appeal seems to have taken a step closer towards the application of the proportionality principle notably provided for by Article 52 of the EU Charter of Fundamental Rights as well as Articles 3 § 2 and 10 § 3 of the Enforcement Directive 2004/48/EC, and regularly restated by the European Court of Justice (e.g. July 12, 2011, L'Oréal, C-324/09,para. 144; July 7, 2016, Tommy Hilfiger, C-494/15, para. 34).
However, by putting an end to the French practice of automatically granting a permanent injunction where infringement is found, this decision raises several issues.
From a legal perspective, by taking into account the limited number of infringing Peugeot Metropolis scooters and their decreasing market share since 2021, as well as the imminent expiry of the patent-in-suit in order to deny a permanent injunction, the Court arguably discriminates between patent holders granting greater rights to some than to others. This raises the question as to how the principle of proportionality aligns with the principles of equality, as enshrined in Article 20 of the EU Charter of Fundamental Rights.
From a practical perspective, by considering the limited number of infringing Peugeot Metropolis scooters and their declining market share since 2021 to deny a permanent injunction, the Paris Court of Appeal has set a precedent that could lead to the denial of permanent injunctions for patent holders facing only small-scale infringements. This suggests that small-scale infringements may result merely in financial compensation rather than injunctive relief.
Furthermore, by considering the imminent expiry of the patent-in-suit as a factor in denying a permanent injunction, the Court appears to suggest that an “older” patent grants weaker rights than a “younger” one. This approach undermines the threat and bargaining power of a patent portfolio in its later stages, particularly in licensing negotiations. This is all the more true given that the Court seems to consider that the date of initiation of the infringement action is irrelevant – the patent-in-suit was only ten years old when Piaggio filed the action in May 2015 – and that only the date of the decision on the merits matters.
It remains to be seen whether the decision at hand will establish a new trend in French case law or remain an isolated decision. In any case, it would seem that the Unified Patent Court intends to apply the principle of proportionality (CFI LD Düsseldorf, UPC_CFI_373/2023, decision dated October 31, 2024, para 6.2), which may further encourage French courts to follow a similar approach[1].
Key take-away:
While French courts used to automatically grant a permanent injunction upon finding infringement, the Paris Court of Appeal may have put a stop to this, thus giving rise to a potential disproportionally defense against permanent injunctions in national patent litigation. The main factors on which the Court relied in this case to deny a permanent injunction on the basis of disproportionality are (i) the imminent expiry of the patent-in-suit, (ii) the low number of infringing goods and their decreasing market shares.
[1] In this respect, see our IP Insights: “Are UPC injunctions subject to proportionality considerations?”.
