🇦🇹 Austria

2 AUSTRIA

2.1 LEGAL FRAMEWORK

The quality and speed of justice provided by the Austrian courts – especially those competent for Intellectual Property (IP) – is very high indeed. Austria provides an excellent venue for IP litigation by providing fast, efficient and reliable courts with comparatively low litigation costs. Also it is not without good reason that Austrian courts are the ones referring – especially in relation to the size of Austria – the most IP-, Information Technology (IT)- and unfair competition matters to the ECJ for guidance[1]. Especially due to the fast proceedings on preliminary injunctions up to the Austrian Supreme Court, the Supreme Court has in many cases issued the first world wide decisions by a supreme court related to “new” issues in the field of IP and IT, eg non-registered community designs[2], domain names[3], keyword advertising[4], etc. So in general, Austrian courts perform well in handling IP (infringement) cases. This also applies with regard to the duration of proceedings: Interlocutory proceedings are carried out very quickly, usually within a few weeks and in exceptional cases within a few days. Proceedings on the merits will add one to two years in the 1st instance. It is worth mentioning that the average duration of civil proceedings before the Austrian Supreme Court in 2012 was only 98 days[5].

Like in most European countries many areas of Austrian substantive and procedural law have been harmonized through various EC Directives, also or even especially in the field of IP and related matters. In general, the Austrian legislator is – especially in the field of IP-laws – implementing the EU law with high accuracy. In this context it is worth mentioning that the organization of the courts and most areas of civil procedure are still fully subject to national legislation – in Austria falling into the competence of the Federal State (Bundesstaat) and not into the competence of each State of the Federal State (Bundesländer).

2.2 MAIN PRINCIPLES

First of all it is worth mentioning that the Austria procedural laws have tight rules relating to jurisdiction and therefore eg the issue of forum shopping does not pose major problems in Austria. Exclusive jurisdiction in IP (infringement) matters lies solely with the Commercial Court Vienna (Handelsgericht Wien) in 1st instance, in 2nd instance with the Higher Regional Court of Vienna (Oberlandesgericht Wien) and in 3rd and last instance with the Austrian Supreme Court (ObersterGerichtshof). The conduct of criminal IP matters is under the exclusive jurisdiction of the Vienna Regional Court for Criminal Matters (LandesgerichtfürStrafsachen Wien) in 1st instance and then with the above courts in 2nd and 3rd instance. In IT matters no special competence is stipulated by law, so generally the court of the defendant is competent.

The language in IP-proceedings is exclusively German[6]. Generally, all documents filed have to be in German or at least translated into the German language. [7] In case of parties, witnesses etc not being able to give their statements in German, the court generally makes use of certified translators. There is no choice of language.

According to the rules of the Austrian Civil Procedure Code (“ZPO”), which are applicable (also) in IP (infringement) proceedings before court, all parties have to be represented by an attorney at law authorised to practice in Austria. It is worth mentioning that Austrian attorneys at law can represent their clients all over Austria and also in all instances.

All IP rights in Austria grant exclusive rights. In the context of those exclusive rights in general the following claims are admissible:

In case of an infringement irrespective of any fault civil claims regarding cease and desist (permanent injunction), removal (if not interfering with third party rights), publication of the judgment, appropriate compensation, rendering of accounts, receiving information on provenance/channel of distribution of the goods;
In case of infringement with fault: damages and surrender of profits;
Irrespective of default in case of an infringement temporary / preliminary injunctions – also in respect of threatened infringement of IP rights; it is worth mentioning that such injunctions may have the effect of a recall-order as the obliged party has to stop the infringement with immediate effect to the best of his / her possibilities, meaning the take products of the market that are infringing and are under (legal) control of the infringer;
Action for a declaration of non-infringement;
Action for a declaration of invalidity of (registered) IP rights;
In case of intentional IP right infringements the initiation of private criminal actions;
Applications for customs action pursuant to the Austrian law on counterfeiting (border measures).

2.3 IMPORTANT MILESTONES OF THE TRIAL

Although it is – except in copyright matters regarding intermediaries (eg Internet providers) – not mandatory under Austrian law, enforcement cases are commonly initiated by a letter before action requesting what is provided to the right holder by law[8]. Giving notice of the potential claim before the issuance of proceedings is recommended also with regard to the award of costs, especially if the defendant admits liability and does not dispute the claim (Sec 45 ZPO).
Civil (IP) proceedings in the merits are initiated by a brief of action lodged by the plaintiff. Such brief is served upon the defendant by the court per recommended mail, who – within a period of four weeks – is ordered to file a reply with the court.

Before, at the same time with or even after the action the plaintiff can also file for a preliminary / interlocutory injunction for cease and desist and also for seizure of the infringing goods and collecting of evidence (“civil house search”). The defendant has to disagree to such application for an injunction as otherwise the injunction is granted. Generally the courts grant to the defendant a time period of eight days to file a brief to disagree. Generally after hearing the parties the court issues a decision on the application for a preliminary / interlocutory injunction, generally within some weeks.

In the main proceeding an oral hearing is set by the judge if the defendant has filed a reply to the action in due time. Generally such hearing takes place after some weeks after the reply was filed. The first hearing is generally used to try to settle the matter. If this is not possible the judge can immediately start the taking of evidence but generally the judge sets a new date. The hearings are extended until the judge is of the opinion that all necessary evidence has been taken – then the proceeding is closed without further statements of the parties etc.
Generally judgments have to be issued within four weeks after the closure of the proceeding. However, in practice the time period is generally longer.

Calendar:

Action (application for preliminary injunction) filed with the Commercial Court of Vienna by Claimant;
Action (application) is served to the Defendant by the court;
Defendant has to file reply within four weeks (has to disagree with the application of a preliminary injunction generally within eight days);
Court sets a date for an oral hearing;
Parties can file a “preparatory brief” until one week before the hearing;
First hearing is generally used to try to settle the matter and to speak about the further “program” of the proceeding, meaning, if court experts are needed etc;
Hearings take place until the judge is of the opinion that all necessary evidence has been taken;
Judge closes the proceeding and can issue an oral decision (in practice very uncommon) or can declare that the judgment will be made in writing;
Judgment has to be issued by the judge within four weeks; generally it takes longer.

2.4 FIRST INSTANCE PROCEDURE

IP litigation in Austria is characterised by a centralised court which handles civil IP disputes (both interlocutory and main proceedings), namely the Commercial Court of Vienna (Handelsgericht Wien): Patent (infringement) matters are handled by a senate of three judges, one of them being a “technical lay judge”, namely a patent attorney. Generally all other IP matters are handled by a single judge. Criminal litigation is handled exclusively by the Vienna Regional Court for Criminal Matters (LandesgerichtfürStrafsachen Wien).

Civil (IP) proceedings are initiated by a brief of action lodged by the plaintiff. Such brief is served upon the defendant, who – within a period of four weeks – is ordered to file a reply with the court. If no reply is filed by the defendant the plaintiff can request a default judgment. If a reply is filed, the judge sets a date for a first hearing. The parties can file another brief until one week before this hearing; further briefs can only be filed if ordered or if accepted in advance by the court.

Pursuant to the Austrian Civil Procedural Act in the first hearing the judge shall discuss the possibility of a settlement. However, if the parties declare that a settlement is not possible the judge can

immediately take evidence by reviewing filed or presented documents, including private experts’ opinions, and other evidence, by interrogating the parties and the witnesses. It is worth mentioning that the Austrian procedural law does not provide for a formalistic cross-interrogation, but the parties respectively their attorneys at law have the right to ask questions, generally after the judge has asked his / her questions. If considered necessary by the judge, court experts can be appointed by the court.

In the main proceedings plaintiff is held to prove high probability (not just on a balance of probability basis) of the infringement. In other words: The court has to be convinced that with a “legal certainty” the infringement took place. Upon completion of the process of taking evidence the judge closes the proceedings and should render a judgment in writing within four weeks – in practice it takes longer.

2.5 JUDGMENTS AND FURTHER APPEALS

Within four weeks after the judgment was served to the parties by the Commercial Court of Vienna, the decision can be appealed before the Higher Regional Court of Vienna (Oberlandesgericht Wien). The appeal postpones any effect of the judgment. The other party can file a reply to the appeal within four weeks after the service of the appeal by the court.

In preliminary proceedings the decision on the application of a preliminary injunction can be appealed before the Higher Regional Court of Vienna within two weeks. A granted preliminary injunction is generally not affected by such appeal. The other party can file a reply to the appeal within two weeks after the service of the appeal by the court.

Whereas the first instance considers both the facts and the law completely, the Higher Regional Court of Vienna, in generally, only considers whether the first instance has evaluated the facts and the law correctly. Accordingly, new facts can generally not be submitted in the appeal proceeding.

The Higher Regional Court of Vienna always decides in a senate of three judges. In patent matter the senate includes a “technical lay judge”, namely a patent attorney.

2.6 REVISION (SUPREME COURT)

Only if important questions of law are present can an appeal can be filed against the decision of the Higher Regional Court of Vienna to the Austrian Supreme Court. In any case the appeal has to be filed within four weeks after the decision was served. Generally, the other party can file a reply to the appeal within four weeks after the service of the appeal by the court.

In preliminary proceedings the decision of the second instance can generally in all IP matters be appeal before the Austrian Supreme Court within two weeks after the decision was served. Generally, the other party can file a reply to the appeal within two weeks after the service of the appeal by the court.

The Austrian Supreme Court decides in senates. In patent matters the senate can decide to include a “technical lay judge”, namely a patent attorney.

In practice, only a small percentage of the cases reach the Austrian Supreme Court, but in IP matters the percentage seems to be much higher than in other fields of law.

2.7 THE PRELIMINARY RULING QUESTION BEFORE THE EUROPEAN COURT OF JUSTICE

As mentioned above the Austrian judges are not at all hesitant to ask preliminary ruling questions to the European Court of Justice (ECJ). The highest instance is even obliged to ask the ECJ if questions of European law remain unclear. As long as the ECJ handles the matter the Austrian proceeding is stayed.

2.8 COSTS AND FEES

Generally, infringement proceedings are expensive. This is in principle also true for Austria. Right holders typically must invest substantial sums to (i) detect an infringement and identify the infringer; (ii) gather evidence of infringement; (iii) secure seizure, storage and ultimately destruction of infringing goods and (iv) finally, litigate a civil infringement action. Although IP litigation in Austria leads to comparatively low litigation costs, the costs depend on various factors.

First of all, with respect to the legal costs under Austrian procedural law, a distinction must be made between (a) court fees (“Gerichtsgebühren”), (b) attorneys’ fees (“Rechtsanwaltsgebühren”) and (c) cash expenditure (“Barauslagen”) including costs for interpreters, the translation of documents, travel expenses for witnesses or experts’ costs.

The amounts required to pursue even the smallest infringers often run well over EUR 10,000. Recovery of costs is therefore a crucial point in the enforcement of IP rights for every right holder. At a rough estimate, 50 – 70 % of the actual legal costs expended by the right holder are typically recovered in successful Austrian civil IP cases. In simple cases it might even be possible to obtain 100% reimbursement of the legal costs based on the “loser pays principle”, meaning that the losing party not only bears its own costs but is also obliged to reimburse all procedural costs incurred by its prevailing opponent. Infringement proceedings thus harbour considerable cost risks for the parties.

Lawyers’ fees and fees of technical counsel (patent attorneys) are refundable (“loser pays principle”), if they accrued for appropriate legal measures, however, “only” according to the Code of Lawyer’s Tariff: Depending on the agreement with the lawyer and on the complexity of the case, the actual lawyer’s fees might therefore exceed the refundable costs pursuant to the Code of Lawyer’s Tariff. The general freedom to agree on a certain fee arrangement is substantially restricted as inter alia conditional fees (pacte de quota litis) are prohibited under Austrian laws.

2.9 PRELIMINARY INJUNCTION PROCEEDINGS

In all IP fields, one finds injunctive procedures, which permits, without the necessity of any urgency, to obtain within a few weeks cease and desist orders or orders for seizure. In Austria requests for preliminary injunctions in civil proceedings are often filed together with the full claim; however a separate filing is admissible, even after the full claim was filed.

It is worth mentioning that the “urgency issue in preliminary proceedings”, eg existing under German law, meaning that the application for a preliminary injunction has to be filed within the

shortest possible time after the right holder has become of the infringement, does not exist under Austrian laws. Under Austrian law, time limits are treated as a matter of substantive law and the fact that a claim has become time barred is not addressed by court on its own motion, but has to be brought forward by the defendant. The limitation period for IP infringements is generally three years, which begins to run on the day on which the right holder obtains positive knowledge of both the infringement and the infringing party.

In the majority of cases, the application for an injunction will be served on the defendant (Art. 6 ECHR), but the court may also grant ex parte injunctions if it can be established by the claimant that giving notice may defeat the purpose of the application. The court will form its view about the likely outcome of the definitive proceeding on the question of infringement and render its decision accordingly within a few weeks on the basis of legal opinions filed by the parties.

Other than the main proceedings the preliminary proceedings is a “summary proceeding”, meaning that no full proof but merely prima facie evidence is needed. On the other hand this prima facie evidence has to be presented to the court in the given, short time frame. When applying for a preliminary injunction the validity of registered IP rights has to be evidenced. The validity of registered IP rights is a rebuttable presumption in preliminary proceedings and may be contested by the defendant. Such contest however has to be substantiated. It is then the rights owner’s obligation to furnish prima facie evidence regarding the validity of the IP right.

The court may tie the issuance of a preliminary injunction to the provision of security.

If the preliminary injunction is – at the end of the day – considered to have been issued without substance, the defendant has the right to request full compensation by the injunction-requesting party.

As preliminary and definitive injunctions are in Austrian practice the most common and therefore most important claims in IP matters it is worth briefly showing how such injunctions are enforced: A petition can be filed with the court of enforcement (Exekutionsgericht) in

respect of each act of non-compliance following the enforceability of the claim, ie in case of a preliminary injunction immediately after its service. The petition has to be served by the enforcing party to the obliged party. Based on the petition and the alleged infringement the court can impose a fine up to EUR 100,000. For each further act of non-compliance with an injunction a further petition can be filed and a new fine can be imposed. Although the petition must include a concrete and conclusive allegation of the act of non-compliance it is not required to file any evidence of the non-compliance. However, the obliged party may initiate a (separate) proceeding in which the enforcing party is obliged to evidence the infringement. Preliminary and definitive injunctions are not effective against third parties, esp. against suppliers or customers of the infringing party, as those third parties have not been party of the proceedings. If those third parties can be sued by the IP right holder has to be evaluated based on the general requirements.

2.10 CRIMINAL PROCEEDINGS

An intentional infringement of IP rights is a penal crime in Austria, that can be generally sanctioned with monetary fines and, for commercial crimes, can even lead up to imprisonment.

The conduct of criminal IP matters is under the exclusive jurisdiction of the Vienna Regional Court for Criminal Matters (LandesgerichtfürStrafsachen Wien) in 1st instance.

What makes criminal proceedings particularly attractive in Austria is the fact that the right holder, not the public prosecutor, can 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 is an additional burden for right holders, it 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.

[1] A detailed report on the references for a preliminary ruling from Austrian courts between 2009 and 2012 can be found under https://www.ris.bka.gv.at/Dokumente/Ebmj/ERL_07_000_20120109_001_15116EU_1_EU_12/07_20120109_15116EU1EU12_01.pdf (German only).

[2] Austrian Supreme Court on 13.02.2007, 4Ob246/06i.

[3] Austrian Supreme Court on 24. 2. 1998, 4 Ob 36/98t.

[4] Austrian Supreme Court on 19.12.2005, 4 Ob 194/05s.

[5] http://www.AustrianSupremeCourt.gv.at/files/documents/taetigkeitsberichte/taetigkeitsbericht2012.pdf (in German only).

[6] Austrian Supreme Court on 22.2.2007, 3 Ob 253/06m.

[7] Austrian Supreme Court on 9.8.2006, 4 Ob 138/06g.

[8] Unjustified warning letters may be lead to (counter) actions based on the Austrian Unfair Competition Act and to cost reimbursement claims based on Austrian tort law.

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