Is a mere distributor entitled to file a patent infringement lawsuit? The Italian Supreme Court says yes
Even the mere distributor of a patented product is entitled to file a lawsuit for infringement of the relevant patent in a competent court: so it was ruled by the Italian Court of Cassation, thus taking a stance in a very controversial matter, in judgment no. 15350/2014.
The holder of a patent on a medical device, the exclusive licensee and the distributor of the patented product jointly filed a patent infringement and damages lawsuit against a retailer of the allegedly infringing product and, later on, the manufacturer. In the second instance proceedings, both defendants were declared jointly and severally responsible for the infringement and ordered to pay damages in favour of the plaintiffs.
The manufacturer of the allegedly infringing product filed an appeal on multiple grounds before the Court of Cassation. One of the grounds of appeal was that the distributor of the patented products had been recognised as having standing in an infringement action and, accordingly, was entitled to damages.
The Court dismissed the ground of appeal, firstly by recalling its consistent endorsement of the standing of exclusive licensees in patent infringement lawsuits, which it stated was in abidance with the rule codified in Article 100 of the Civil Procedure Code, wherein to file a lawsuit or counter the same in court it is necessary to have an appreciable interest in the matter. According to the Court, the same principle imposed the recognition of the standing of other subjects “… who have their own interest in the (patent infringement) lawsuit as they suffer the adverse effects of the infringement,” of which the distributor was one.
This conclusion, in the Court’s view, was further supported by Article 4 of Directive 2004/48/EC (the so-called Enforcement Directive), providing that Member States shall recognise as persons entitled to seek application of IP enforcement measures, procedures and remedies (besides the IPRs holders) all other persons authorised to use those rights, in particular licensees, insofar as permitted by and in accordance with the provisions of the applicable law. The Court took this provision to mean that the list of persons entitled to file lawsuits includes, but is not limited to, licensees, and argued that distributors, being “necessarily authorised to distribute the products”, would fall within the category.
The reasoning of the Supreme Court is not, in this writer’s opinion, immune to criticism. First of all, it seems to confuse two distinct requirements that any person must possess in the Italian legal system to be a proper party to a lawsuit, namely legitimatio ad causam, which is dependent on the ownership or use of the right in suit, and interest to sue, which is related to the usefulness of the remedy sought. A similar misunderstanding seems to affect the statement that a distributor is “necessarily authorised” to distribute the product, and that such an “authorisation” is comparable to the authorisation to use the relevant right. In fact, on the one hand, the patent holder’s control of the distribution of the products covered by the patent ends with the first act of sale in the EC or EEA (principle of exhaustion), therefore a distributor that has legitimately purchased the products does not need any authorisation to resell the same. On the other hand, mere distributors, by definition, are not authorised to use IP rights, but rather hold property rights over the material goods they market, and have contractual rights arising from the distribution agreement.
Nevertheless, the ruling discussed here constitutes a precedent that national courts and professionals will have to take into due consideration