Protection of IPR and limits of contractual relationships: AG Opinion in Case C-103/11 P

Last 15 Movember 2012, Advocate General Cruz Villalon delivered his Opinion in case in Case C-103/11 P Commission v Systran SA and Systran Luxembourg SA, where he endorsed the position of the European Commission whereby intellectual property related disputes that arise in the broader context of a contractual relationship between rights-holder and infringer are a matter of contractual liability--and, consequently, remain outside the jurisdiction of the EU Courts.

The dispute derived from the disclosure of proprietary Systran know how and other IPR protected data by the European Commission to a third party in the context of the maintenance and linguistic enhancement of a machine translation system initially developed by Systran. Systran brought the case to the General Court and, in 2010 (T-19/07), it held that the dispute could not be considered to be contractual in nature and that it did not therefore lack jurisdiction to adjudicate upon it. It imposed a lump sum payment of €12mn to compensate Systran for the loss of value of its IPR. The Commission appealed.

According to AG Cruz Villalon,  the dispute in question must primarily be examined by the competent national courts, in accordance with the agreements in question and the laws applicable to them.  According to the AG, the General Court made an error in law in its examination of the relationships which were established, in a very marked contractual context, between the Commission and the various companies in the Systran group which have developed or contributed  to the development of the various versions of the Systran software. Therefore, the General Court wrongly declared itself as having jurisdiction to hear and determine the action for compensation for the damage allegedly caused to Systran by the Commission’s conduct. 

The final decision by the CJEU in this case will be of major relevance, since it will deal with the complicated issue (which does not seem to receive homogeneous treatment across the EU) of the vis attractiva of contracts when the parties engage in subsequent tortious behavior. Therefore, the final Judgment in case C-103/11 may have large consequences for the Contract Law of Member States, which leaves me with the question whether the adjudication of this case may not in itself run against the allocation of competences in private law matters that seem to have a weak connection with the internal market (mainly, concerning art 114 TFEU). Definitely, a case to follow with interest and area where some well-meditated research seems required.