What is the purpose of punitive damages

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Ingo Beckendorf

Claims for punitive damages arising from foreign judgments can, under certain circumstances, be brought before Italian courts. According to press reports, this has been determined by the large chamber of the Italian Court of Cassation (Corte Suprema di Cassazione, Sezioni Unite) in a landmark decision (Cass. Civ., SS.UU., 5.7.2017, No. 16601).

In Anglo-American law, what is known as “punitive damages” is understood to mean compensation that is awarded to a plaintiff in civil proceedings beyond the actual damage suffered. In Germany, the term “punitive damages” has become established for this purpose, while in the Anglo-Saxon legal area one speaks of “exemplary damages”. The purpose of these punitive damages is to punish the defendant for his behavior, to prevent him from repeating this illegal behavior, and also to prevent others from doing so. Punitive damages are generally only awarded for exceptionally grossly culpable, specifically deliberate behavior, not in the case of mere negligence. There is no comparable legal institution in German and Austrian law.

 

The current judgment represents a departure from previous jurisprudence in Italy. In the opinion of the Judge the nature of civil liability also leaves room for elements of criminality and deterrence.

 

The claim had originally been awarded to the injured person in a motorcycle accident in the USA through three judgments in Florida and was directed against the manufacturer and distributor of a motorcycle helmet. Although the decision was not primarily concerned with IP claims ("intellectual property") for the protection of intellectual property and the enforcement directive (Directive 2004/48 / EC), the judgment could have far-reaching consequences for claims in this legal field. Because whoever intentionally violates intellectual property rights must expect - in addition to legal and court costs - in the end "at least" (cf. Art. 13 Para. 1 Clause 2 lit. b Directive 2004/48 / EC), but in in practice often only has to pay what a fictitious licensee would have had to pay. As a result, a brand and product pirate is no worse off than a proper licensee. In addition, the courts of intellectual property law regularly treat negligently acting infringers when assessing damages as they do deliberately acting brand pirates.

 

According to the Judge of the Court of Cassation the legal form of punitive damages is generally compatible with the Italian legal system, but the assertion of such a claim depends on various conditions. First of all, the principle of legality must be maintained, i.e. the claim arising abroad must be based on the law and the relevant regulations applicable there. In addition, the entitlement in the respective country must be a typical consequence of the previous situation and be within a fixed financial framework. Finally, the claim must be in accordance with the provisions of the Italian Constitution and the principle of proportionality must be respected.

 

The German legislators did not want to allow any punitive damages as it exists in American law. The reason for this are the general evaluations of German law, what the BGH Established in a judgment in 1992 (U. v. 4.6.1992 - IX ZR 149/91). According to this, the modern German civil law system provides only compensation for damages as the legal consequence of an unlawful act (§§ 249 ff. BGB), but not an enrichment of the injured party. According to the Federal judge regardless of whether the claim for compensation is asserted before the civil court or in the annex proceedings before the criminal court (§§ 403 ff. StPO). The punishment and - within the framework of guilt-appropriate - deterrence are possible goals of the criminal penalty (§§ 46 f. StGB), which flows as a fine to the state, not of civil law.

 

According to a recent judgment of the ECJ (MMR 2017, 387) can no longer be maintained, at least with regard to the enforcement guideline. The ECJ makes it clear in its judgment that this directive only sets a minimum standard for the enforcement of intellectual property rights. This does not prevent the Member States from adopting more protective measures. It is true that the Enforcement Directive is not intended to introduce an obligation to pay damages as a penalty. The fact that the Enforcement Directive does not oblige the Member States to provide for punitive damages cannot be interpreted as meaning that the introduction of such a measure is prohibited.

Ass. Iur. Ingo Beckendorf is a research fellow at the Institute for European Media Law (EMR), Saarbrücken / Brussels.