Preliminary Injunctions and Defendant Compensation: Toward Balanced and Predictable Safeguards (Q296)

The 2025 AIPPI Study Question on Preliminary Injunctions (PIs) addresses a crucial issue in the enforcement of intellectual property (IP) rights: under which circumstances should an applicant be held liable for damages suffered by a defendant, if a PI is later lifted or reversed? Based on detailed responses from 43 national and regional Groups, the Summary Report offers valuable insights into liability regimes, the balancing of parties’ rights, and prospects for harmonisation. The findings highlight both convergence and divergence across jurisdictions.

Broad Support for Liability and Its Policy Foundations

There is near-unanimous agreement that the applicant should be held liable for damages if the PI is overturned. This near consensus reflects a broad understanding that PIs, as exceptional measures granted before final adjudication, carry inherent risks of potential unjustified harm to defendants. Courts must weigh those risks and ensure that appropriate remedies are available when an injunction proves to have been wrongly granted.

Most Groups emphasized general principles of fairness, justice, and equity as the rationale for liability, noting the need to deter abusive or speculative use of preliminary injunctions. While acknowledging that PIs can play a vital role in the effective enforcement of IP rights, several Groups also warned of their potential misuse—to disrupt competitors, hinder lawful market activity, or pressure settlements. Ensuring that defendants can seek compensation is thus essential to maintaining the legitimacy and balance of IP enforcement systems.

Debate Over the Nature and Scope of Liability

While the principle of liability enjoys strong support, the nature and scope of that liability remains contentious. Nearly half the Groups support a strict liability model, in which the applicant is liable irrespective of intent or negligence, while others advocate for nuanced models that also take into account the applicant’s good faith, the conduct of the defendant, or the broader circumstances of the case. Taken together, approximately 60% of Groups endorse a framework that ensures compensation while allowing flexibility.

Conversely, approximately one-third of the Groups favour a fault-based approach, requiring proof of negligence, recklessness or intent to harm.

Regardless of the model, almost all Groups stress the importance of a causal link between the PI and the damages claimed. Most also believe the defendant’s own conducts should be factored into any assessment of liability or damages. Courts are thus encouraged to adopt a balanced and fact-sensitive approach, particularly when damages involve lost profits, legal costs, or reputational harm.

Timing and Extent of Damage Claims

Interestingly, while all Groups agree that the defendant must initiate the request for compensation (i.e., courts should not issue liability findings automatically), there is no clear consensus on the timing of such claims. Views vary between requiring immediate action once the PI is lifted, to permitting claims only after final judgment, to allowing claims at any time within the applicable statute of limitations. This procedural diversity underscores the need for flexibility and clarity in national procedural rules.

Additionally, while most Groups support limitations on recoverable damages—often limited to actual loss and sometimes legal fees—there is also recognition that damages should be proportionate and tailored to the harm suffered, rather than restricted by arbitrary caps.

Security Requirements and Bonds

A key aspect of PI-related liability involves the use of bonds or security mechanisms to ensure compensation. Around 70% of Groups believe specific standards or requirements should guide courts in ordering bonds. However, many also caution against removing judicial discretion, particularly where requiring high-value bonds may adversely affect legitimate enforcement actions.

There is strong support for courts to accept “counter-guarantees” from defendants to suspend a PI, though opinions differ on the applicable criteria and whether such mechanisms should be automatic or discretionary. Most Groups agree that applicant’s consent should not be required for counter-guarantees, and that courts should retain discretion.

Harmonisation: Aspirations and Reservations

Three-quarters of the Groups support harmonisation in this area, noting that clear and predictable rules would benefit international litigation strategies and reduce compliance costs for multinational right holders. However, many also warn against excessive harmonisation, stressing that PI procedures are deeply rooted in national legal traditions and depend on judicial discretion. There is a shared understanding that flexibility is key and that overly rigid models may not be feasible.

It is in any event worth noting that two-thirds of the Groups do not believe that there should be any special or particular rules applicable to particular cases, such as SEP/FRAND litigation or pharmaceutical/biotech disputes.

Conclusion

The Study reveals strong support over AIPPI’s work on trying to harmonize at least some aspects of this subject matter. The Reports also show a robust consensus around core principles—compensation for wrongful PIs, the need for balance, and procedural safeguards—while also capturing significant divergences in implementation. The discussions reflect a shared ambition to refine and, where feasible, harmonise the law, without compromising the ability of courts to tailor solutions to the facts of each case. These findings will serve as a valuable basis for the future AIPPI Resolution on this important topic and contribute meaningfully to the ongoing evolution of global IP enforcement standards.