ISRAEL Law and Practice Contributed by: David Gilat and Jacob Kasulin, Gilat, Bareket & Co, Reinhold Cohn Group
Damages for Revoked Injunctions If an interlocutory injunction is either revoked or lim ‑ ited in scope, the enjoined party can turn to the guar ‑ antees provided by the applicant – in rem and in per ‑ sonam both – to obtain compensation for damages sustained. The defendant may base its claim on the doctrine of the unjust enrichment made by the plaintiff due to its exclusive position in the market, during the preliminary injunction term. Procedurally, this can be done either by counterclaim ‑ ing (if the period to do so has not yet lapsed) or by filing a new independent claim. The defendant will need to prove their damages – usually, the profits they have lost during the period they were enjoined – on the basis of factors such as anticipated market share, anticipated sale price for the defendant’s product and average profit margin. The defendant may seek to dis ‑ gorge the plaintiff of those profits they obtained by virtue of any exclusivity afforded to them by the inter ‑ locutory injunction since revoked. Third parties are unable to seek damages over a revoked injunction, though they could theoretically attempt to seek disgorgement if they were charged a premium as a result of the plaintiff’s de facto exclusiv ‑ ity mentioned above. 5.5 Legal Costs Under Chapter 18 of the CPR (Regulations 151–157), the prevailing party is entitled to recover its actual legal costs, with consideration being given to the results of the proceedings, the resources required, and the conduct of the parties. As a result, Israeli courts are instructed to adjudicate fair and reason ‑ able legal costs at the conclusion of the proceedings unless they have found that there are extraordinary reasons not to do so. Where attorney’s fees are concerned, the courts are instructed not to go below the minimum rates set by the Israeli Bar Association (unless there are extraor ‑ dinary reasons to do so), and to take into account: • the proportion between the remedy actually adjudi ‑ cated and the remedy originally requested; • the manner in which the parties conducted them ‑ selves;
The Patents Law further empowers the court to order the infringer to provide accounts on the basis of which calculation of damage may be effected. If such an order is made, it is possible that a supplementary judgment would be issued, in which only the issue of the damages is addressed. Otherwise, the claim for damages would be heard as part of the main claim. In addition, Section 183 (c) of the Patents Law pro ‑ vides that if an infringement was committed after the patentee or its exclusive licensee warned the infringer, the court may order the infringer to pay punitive dam ‑ ages in an amount that will not exceed the damages adjudicated by the court, thus enabling the adjudica ‑ tion of double damages. In cases involving multinational groups, transfer pric ‑ ing may affect the damages calculation, particularly when intra-group sales do not reflect arm’s length pricing. In general, damages accrue from the time when the infringement commenced. However, Section 179 of the Patents Law provides that damages may only be adjudicated from the time the patent application was published under Section 16A of the Patents Law (namely, 18 months from the priority date), with such damages being capped at reasonable royalties until the application was published for oppositions, from which the regular rate of damages provided for in Section 183 of the Patents Law shall apply. How ‑ ever, those reasonable royalties shall not be awarded unless the court finds that the exploitation in question constitutes an infringement of the patent as granted and that the invention claimed in the patent stage is substantively identical to the invention claimed in the application published under Section 16A. The court may add interest and linkage to any sum it adjudicates as damages, from any date it deems fit (but not earlier than when the cause of action came to be) until the date on which the damages are to be paid (usually within 30 days of the judgment). If the damages are not timely paid, a much higher and compounding arrears interest will apply.
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