Intellectual Property (Enforcement)

From Max-EuP 2012

by Christian Heinze

1. Definition and purpose

‘Indeed it is a vain thing to imagine a right without a remedy, for want of right and want of remedy are reciprocal’, these words by Chief Justice Holt (Ashby v White, 92 Eng Rep 126, 135 (1703) (KB)) express the conviction that any right requires effective remedies for its enforcement. For the enforcement of intellectual property rights, such remedies may include civil (Arts 41–50 TRIPS, Dir 2004/48), criminal (Art 61 TRIPS, COM(2006) 168 final) and administrative (Arts 51–60 TRIPS, Reg 1383/2003) sanctions for infringement. The purpose of the enforcement provisions is to ensure that the effects hoped to be gained from the creation of intellectual property rights (intellectual property), ie the encouragement of innovation and creativity and the stimulation of investment (see recital 3 Dir 2004/48), can be realized in practice. As a difference from corporeal rights, the enforcement of intellectual property rights poses particular problems as the protected subject matter may, due to its non-corporeal nature, be potentially ubiquitously used and proof of infringement often requires access to the sphere of the infringer or third parties.

2. The development of the law

Questions of enforcement have for a long time been a neglected area in international conventions on intellectual property law. Articles 13(3) and 16 of the Berne Convention and Arts 9 and 10 of the Paris Convention contained only a very limited guarantee of seizure of infringing copies, while the field of remedies at large—probably due to its close ties with general civil and civil procedure law—was left to the domestic law of the Union states. The neglect of enforcement started to change with the TRIPS Agreement in 1995 which lays down detailed rules on sanctions on an international level (Part III, Arts 41 ff TRIPS, see also Art 14 WIPO Copyright Treaty).

A similar development may be observed in EU law. Beginning in the late 1980s, the harmonization efforts of the Community centred for a long time on questions of substantive law, leaving the enforcement—with the exception of border measures—to the national law of the Member States. Even regulations that created uniform rights such as the Community trade mark, the Community design or the Community plant variety protection did not create a conclusive set of uniform sanctions and referred, for the most part, to national law instead (Art 101(2) Reg 207/ 2009; Art 88(2) Reg 6/2002; Art 97 Reg 2100/94). A fundamental change was achieved with Dir 2004/48 which, building on the model of TRIPS, established a European minimum standard for ‘measures, procedures and remedies’ for an infringement of intellectual property rights (Art 2(1) Dir 2004/48). The most recent steps towards supra-national harmonization of sanctions are the (possible) adoption of an Anti-Counterfeiting Trade Agreement (ACTA) on the international level as well as plans to reform Dir 2004/48 (see COM(2010) 779 final, pp 6 ff; SEC(2010) 1589 final) at the European level. In light of these developments and the positive evaluation of Dir 2004/48 (COM(2010) 779 final, p 4: ‘substantial and positive effect’), it seems likely that the europeanisation of intellectual property enforcement will continue in the future (see also the work of the new ‘European Observatory on Counterfeiting and Piracy’).

The increased attention on questions of enforcement may be explained by a general tendency towards an expansion of intellectual property protection in the 1990s, but also by the massive increase of product piracy and counterfeiting which benefitted from technological progress and a globalization of trade. According to a—controversial—study by the OECD, the volume of international trade in counterfeit products (excluding domestic trade and digital piracy) was estimated in 2007 in the region of up to US$200 billion (The Economic Impact of Counterfeiting and Piracy: Executive Summary, 15 ff, <http://www.oecd.org/dataoecd/13/12/38707619.pdf>). In view of these numbers, courts and legislatures face the challenge of developing the sanctions for the infringement of intellectual property rights in a manner which, on the one hand, permits effectively combating counterfeiting, but, on the other hand, does not lead to an ‘over-deterrence’ of law-abiding competitors and the public at large who might refrain from certain behaviour in fear that it might be considered as infringing an intellectual property right, thus incurring draconian sanctions. However, it may be added that, in an ideal world, the appropriate balance between intellectual property protection and the public domain ought to be struck by defining the protectable subject matter, the scope and the limitations of intellectual property rights in a way that does not make any correction through the back-door of sanctions necessary, unless specific considerations of procedure require such corrections.

On the level of legal doctrine, the sometimes pointillist legislation of the EU in intellectual property law, combined with a somewhat inconsistent jurisprudence of the European Court of Justice (ECJ), leads to an increasing fragmentation of the field creating a growing need for coordination of the different instruments, not only within intellectual property law, but also in relation to neighbouring fields such as data protection, civil procedure or competition law. For example, it is not immediately understandable why the mere transit of goods is not regarded as a trademark infringement under the Trade Mark Directive 89/104 (now Dir 2008/95, ECJ Case C-281/05 – Diesel [2006] ECR I-10881 paras 37–40), but may be sufficient to render applicable the provisions of Reg 1383/2003 permitting a temporary detention of such goods (ECJ Case C‑60/02 – X [2004] ECR I-651 para 54; see also pending Cases C-446/09 and C-495/09 – Philips and Nokia). By the same token, it seems not fully consistent to, on the one hand, define the scope of the Enforcement Directive 2004/48 ‘as widely as possible’ (recital 13 Dir 2004/48) and include injunctions against intermediaries (Art 9(1)(a), 11 Dir 2004/48), but, on the other hand, to reserve the application of particular provisions for the enforcement of rights in the domain of copyright and related rights (recital 16 Dir 2004/48) which are less specific than the general Enforcement Directive 2004/48 and could have easily been included in the framework of the more general instrument.

In the future, the European legislature should strive to achieve a consolidation of the whole law of sanctions for IP infringements into a single instrument, thereby explicitly clarifying the relationship to neighbouring areas such as data protection and thus correcting European Court of Justice jurisprudence which delegated the most intricate question, namely how to strike the ‘fair balance between the various fundamental rights protected by the Community legal order’, back to national courts and legislatures (ECJ Case C-275/06 – Promusicae [2008] ECR I-271 para 70). In this context, the legislature should also consider amending the at times very open and uncertain wording of Dir 2004/48 in order to make it clearer for which questions the directive shall be regarded as a conclusive minimum harmonization in favour of right holders (see Art 2(1) Dir 2004/48) and for which questions the Member States are given some leeway to enact further (procedural) requirements restricting the availability of measures under the directive.

3. Contours of European and international law

a) General provisions

Except for a few isolated provisions (Art 7 Dir 2009/24; Art 8 Dir 2001/29; Art 102(1) Reg 207/2009; Art 89(1) Reg 6/2002; see also Arts 34a ff of the Draft Agreement on a Unified Patent Court, Council Document 11533/11), the civil law remedies for the infringement of intellectual property rights in Europe are found in Dir 2004/48 on the enforcement of intellectual property rights and its model, Arts 41–50 TRIPS. Both Dir 2004/48 and the provisions of TRIPS pursue a concept of minimum harmonization for all intellectual property rights, permitting national deviations if these are favourable for the right holders (Art 2(1) Dir 2004/48; Art 1(1)2; Art 1(2) TRIPS). The term ‘intellectual property rights’ is defined by a statement by the Commission (2005/295/EC) as encompassing ‘at least’ (see recital 13 Dir 2004/48) ‘copyright, rights related to copyright, sui generis rights of a database maker, rights of the creator of the topographies of a semiconductor product, trademark rights, design rights, patent rights, including rights derived from supplementary protection certificates, geographical indications, utility model rights, plant variety rights and trade names insofar as these are protected as exclusive property rights in the national law concerned’. Under TRIPS, ‘intellectual property’ refers also to the protection of undisclosed information (Arts 1(2), 39 TRIPS).

In substance, both TRIPS and Dir 2004/48 start off with a general provision (Art 3 Dir 2004/48; Art 41(1), 2 TRIPS; see also Art 6 ACTA). This requires the Member States to provide for, on the one hand, ‘effective, proportionate and dissuasive’, ‘fair and equitable’, ‘not … unnecessarily complicated or costly’ remedies which do not ‘entail unreasonable time-limits or unwarranted delays’, and, on the other hand, to apply these remedies in a manner ‘as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse’. Article 3 Dir 2004/48 and Art 41 TRIPS encapsulate in a nutshell the tension between effectiveness of sanctions for the right holder and the observation of competitive freedom and standards of fair trial (see Art 41(3), (4), 42 TRIPS) for the alleged infringer. Thus, even if both instruments aim in principle at a minimum harmonization in favour of the right holder, Art 3 Dir 2004/48 and Art 41 TRIPS, in connection with general standards of fair trial (Art 6 ECHR, Art 47 EU Charter of Fundamental Rights), may also be invoked on the side of the alleged infringer if a specific remedy disregards general standards of fairness or might create barriers to legitimate trade.

The further provisions of the general part of Dir 2004/48 concern a presumption of authorship or ownership (Art 5 Dir 2004/48, building partly on Art 15 Berne Convention) and a definition of the persons entitled to apply for the application of the measures, procedures and remedies (Art 4 Dir 2004/48). Article 4(a) limits standing to the right holder. An extension to licensees, collective rights-management bodies or professional organizations depends on the provisions of the applicable national law (Art 4(b)–(d) Dir 2004/48).

In comparing Dir 2004/48 and TRIPS, it may be observed that the European instrument builds on the conception of TRIPS but goes beyond its guarantees in certain respects (‘TRIPS-plus’). As an example, the right of information which is only optional in Art 47 TRIPS has been made mandatory for EU Member States (Art 8 Dir 2004/48; see also Art 11 ACTA). Other examples where Dir 2004/48 goes beyond the guarantees of TRIPS are the guarantee of a precautionary seizure of the movable and immovable property of the alleged infringer (Arts 6(2), 9(2) Dir 2004/ 48) and, to a certain extent, the corrective measures (Art 10 Dir 2004/48; see also Art 10 ACTA). In order to balance this extension, recital 14 Dir 2004/48 restricts the far-reaching remedies of Art 6(2), Art 8(1) and Art 9(2) Dir 2004/48 to ‘acts carried out on a commercial scale’, an unclear term defined by recital 14 Dir 2004/48 as acts ‘carried out for direct or indirect economic or commercial advantage’, ‘normally’ excluding acts carried out by end-consumers acting in good faith. This more extensive protection seems to be compatible with the duties following from the accession of the EU to TRIPS (Decision 94/800) because members of the WTO may provide for a protection of the right holder in their domestic laws which goes beyond the standards of TRIPS (Art 1(1)2 TRIPS). However, this protection may not contravene the provisions of the TRIPS Agreement (Art 1(1)2 TRIPS). In order to ensure conformity with the provisions of TRIPS, it may seem appropriate to give effect to the guarantees in TRIPS which may also protect (alleged) infringers (Arts 41, 42, 48 TRIPS) via the general provision of Art 3 Dir 2004/48, at least if there is no explicit provision in the Directive which mirrors the guarantees of TRIPS.

The individual remedies guaranteed by Dir 2004/48 and TRIPS address questions of evidence (Arts 6, 7 Dir 2004/48; Arts 43, 50(1)(b) TRIPS), the right of information (Art 8 Dir 2004/ 48, only optional in Art 47 TRIPS), provisional and precautionary measures (Art 9 Dir 2004/48, Art 50 TRIPS, provisional measures), corrective measures (Art 10 Dir 2004/48, Art 46 TRIPS), (permanent) injunctions (Art 11 Dir 2004/48, Art 44 TRIPS) orders for damages and legal costs (Arts 13, 14 Dir 2004/48, Art 45 TRIPS) and a right to publication of the judgment (Art 15 Dir 2004/48). As a result of Dir 2004/48, the Member States had to make more or less extensive amendments to their national law of remedies for intellectual property infringement (for details see the implementation legislation, Austria: 81. and 96. Bundesgesetz 2006; England: The Intellectual Property (Enforcement, etc) Regulations 2006, SI 2006/1028 and Civil Procedure Rules, 41st update; France: Loi n° 2007-1544 de lutte contre la contrefaçon; Germany: Gesetz zur Verbesserung der Durchsetzung der Rechte des geistigen Eigentums; Italy: Decreto legislativo 16 marzo 2006, n 140; Spain: Ley 19/2006).

b) Evidence

The catalogue of remedies in Dir 2004/48 starts off with provisions on evidence underlining their importance for effective enforcement of intellectual property rights. Following the model of Art 43(1) TRIPS, Art 6(1)1 Dir 2004/48 provides that a court may order specified evidence to be disclosed if the other party has presented reasonably available evidence sufficient to support its claims, and has, in substantiating those claims, specified further evidence to be disclosed. In the case of an infringement committed on a commercial scale (ie ‘carried out for direct or indirect economic or commercial advantage’; ‘normally’ excluding ‘acts carried out by end-consumers acting in good faith’, recital 14 Dir 2004/48), the right of disclosure is extended to the communication of banking, financial or commercial documents under the control of the opposing party (Art 6(2) Dir 2004/48) in order to identify the economic beneficiaries of IP infringement. Article 6 Dir 2004/48 does not explicitly address the sanction for non-compliance with a disclosure order. In order to ensure the effectiveness of such an order and in view of the fact that the European legislature has not copied the optional provision of Art 43(2) TRIPS, it seems that Art 6 Dir 2004/48 requires a direct enforceability of the order, not limiting the right holder to the sanction of a mere poena confessi (see Art 43(2) TRIPS), as the poena confessi might not be enough to draft a sufficiently precise injunction against further infringement.

Article 7(1) Dir 2004/48 supplements the disclosure order to obtain evidence during ongoing proceedings with the possibility of preserving relevant evidence even before the commencement of the proceedings by ordering prompt and effective provisional measures, under the condition that the applicant has presented reasonably available evidence of an infringement of intellectual property rights. The inspiration for Art 7(1) Dir 2004/48 was found not only in Art 50(1)(b) TRIPS but also in the French saisie-contrefaçon and the English Anton Piller (Search) Order. A provisional measure to preserve evidence may consist of a detailed description, the taking of samples or the physical seizure of the infringing goods and, in appropriate cases, of materials, implements or documents relating thereto. It may be taken even without the other party having been heard, in particular where, as it may often be the case, there is a demonstrable risk of evidence being destroyed (Art 7(1)2, 3 Dir 2004/48). Both Art 6 and Art 7 are ‘subject to the protection of confidential information’ (Art 6(1)1, Art 7(1)(1) Dir 2004/48), a concept which may draw inspiration from other areas of Union law (see ECJ Case C-450/06 – Varec [2008] ECR I-581 paras 47, 53 ff; see also Art 4 ACTA).

c) Right of information

Following the provisions on evidence, Art 8 Dir 2004/48 provides for a right of information on the origin and distribution networks of infringing goods or services as against the infringer and any other person who was found, on a commercial scale, in (a) possession of infringing goods, (b) to be using infringing services, (c) to be providing services used in infringing activities or was indicated by any person referred to in (a), (b) or (c) as being involved in the production, manufacture or distribution of the goods or the provision of the services. The information is to be ordered ‘in the context of proceedings concerning an infringement of an intellectual property right’ and ‘in response to a justified and proportionate request of the claimant’. It is uncertain how the words ‘in the context of proceedings concerning an infringement of an intellectual property right’ are to be understood in cases in which the identity of the infringer is yet to be determined from the information obtained from third-party non-infringers. It is equally uncertain how the right of information may be squared with data protection law which is not to be affected by the right of information under Art 8 Dir 2004/48 (Art 2(3)(a) and Art 8(3)(e) Dir 2004/48). The ECJ avoided a clear answer to this question, holding that the Member States should rely on an interpretation of the directives which allows for a fair balance to be struck between the competing fundamental rights (Arts 17(2), 47 ChFR on the side of the right holder vs Arts 7, 8 ChFR on the side of the alleged infringer) protected by the European legal order (ECJ Case C-275/06 – Promusicae [2008] ECR I-271 paras 53 ff, 58 ff, 68; see also pending Case C-461/10 – Bonnier Audio).

d) Provisional and precautionary measures

Next to the provisional measures for securing evidence guaranteed by Art 7 Dir 2004/48, Art 9 Dir 2004/48 (see also Art 50(1) TRIPS; Art 12 (1), (3) ACTA) mentions three further forms of provisional measures, namely interlocutory injunctions to prevent an infringement from occurring or continuing (Art 9(1)(a) Dir 2004/48), orders to seize or deliver up ‘goods suspected of infringing an intellectual property right so as to prevent their entry into or movement within the channels of commerce’ (Art 9(1)(b) Dir 2004/48) and—modelled on the Mareva or freezing injunction of English law—orders to seize movable and immovable property of the alleged infringer if the infringement was committed on a commercial scale and the recovery of damages is likely to be endangered (Art 9(2) Dir 2004/48). The provisional measures under Art 9 require a sufficient degree of certainty that the applicant is the right holder (or otherwise entitled to apply for such an order, Art 4 Dir 2004/48) and that the applicant’s right is being infringed, or that such infringement is imminent (Art 9(3) Dir 2004/48). In addition, the principle of proportionality, the wording of recital 22 Dir 2004/48 and the distinction between provisional and final injunctions in Art 9(1)(a) and Art 11 Dir 2004/48 suggest that Member States may require urgency as a further precondition for the grant of preliminary measures even if this additional requirement is not explicitly mentioned in the directive.

An interlocutory injunction under Art 9(1)(a) Dir 2004/48 (as well as a final injunction under Art 11 Dir 2004/48 or an injunction under Art 8(3) Dir 2001/29; see also Arts 8(1), 12(1)(a) ACTA) may be issued not only against the alleged infringer, but also ‘against an intermediary whose services are being used by a third party to infringe an intellectual property right’, with the ‘conditions and procedures relating to such injunctions [being] left to the national law of the Member States’ (recital 23 Dir 2004/48). While these provisions suggest that injunctions against intermediaries do not depend on their primary liability for infringement, the usefulness of this ‘semi-harmonization’ of injunctions against intermediaries (which may include carriers of goods, internet service providers, online market places or search engines) is yet to be tested in a number of pending references to the Court of Justice (see pending Cases C-324/09 – L’Oréal; C-70/10 – Scarlet Extended and C-360/10 – SABAM; see also ECJ Joined Cases C-236/08 to C-238/08 – Google France paras 114 ff). For the time being, it cannot come as a surprise that the vague legislative text has led to uncertainty and ambiguity in the Member States which significantly reduces the harmonization effects in this important area of the law.

e) Measures resulting from a decision on the merits

As for measures resulting from a decision on the merits, the directive distinguishes between corrective measures (Art 10 Dir 2004/48) and (final) injunctions (Art 11 Dir 2004/48). The corrective measures (see also Art 46 TRIPS; Art 10 ACTA) aim to dispel the effects of the infringement, without prejudice to a claim for damages for the infringement and, in general, at the expense of the infringer without any compensation to be paid by the right holder. The corrective measures include a recall or definitive removal of infringing goods from the channels of commerce and their destruction (Art 10(1)(a)–(c) Dir 2004/48). The measures do not depend on the fault of the infringer. However, in considering a request for corrective measures, the court shall take into account ‘the need for proportionality between the seriousness of the infringement and the remedies ordered as well as the interests of third parties’ (Art 10(3), recital 24 Dir 2004/48). This caveat may hinder removal, recall or destruction if third party property is affected or if the infringing goods are no longer in the possession of the infringer.

Another measure resulting from a decision on the merits can be an injunction aimed at prohibiting the continuation of the infringement, possibly supported by the obligation to pay a recurring penalty payment in case of non-compliance (Art 11 Dir 2004/48). In contrast to common law tradition (for US law eBay v MercExchange 547 US 388 (2006)), European law grants injunctive relief as a general remedy (see also Art 44(1) TRIPS; Art 8(1) ACTA), subject only to the general caveat of proportionality (Art 3 Dir 2004/48) and the (merely optional) limitation of Art 12 Dir 2004/48 which permits the Member States to introduce pecuniary compensation as an alternative to the measures of Arts 10 and 11 Dir 2004/48 if the infringer acted unintentionally and without negligence (see also ECJ Case C-316/05 – Nokia [2006] ECR I-12083 para 53; ECJ Case C-235/09 – DHL paras 53 ff, 58 on injunctive relief in the Community Trade Mark Regulation 207/ 2009).

f) Damages and legal costs

Article 13(1) Dir 2004/48 establishes a right to ‘damages appropriate to the actual prejudice suffered … as a result of the infringement’ against an infringer who knowingly, or with reasonable grounds to know, engaged in an infringing activity. The amount may be determined either by taking into account ‘all appropriate aspects such as the negative economic consequences, including lost profits, … any unfair profits made by the infringer and … elements other than economic factors, such as the moral prejudice caused … by the infringement’ (Art 13(1)(a) Dir 2004/48) or by setting the ‘damages as a lump sum on the basis of elements such as at least the amount of royalties or fees which would have been due if the infringer had requested authorization to use the intellectual property right in question’ (Art 13(1)(b) Dir 2004/48). Article 13(2) Dir 2004/ 48 gives the Member States the additional option to order the recovery of profits or the payment of pre-established damages for cases where the infringer did not knowingly, or with reasonable grounds to know, engage in infringing activity. After several heated debates, the European legislature decided against a form of punitive damages (recital 26 Dir 2004/48), requiring national legislatures, however, to compensate the ‘actual prejudice’ (including expenses of the right holder for identification and research) that may be measured with a view to ‘any unfair profits’ of the infringer (Art 13(1)(a) Dir 2004/48) or set as a lump sum of ‘at least’ the amount of royalties for prior authorization. This compromise has not silenced the debate, as proposals have been made to skim off the infringer’s profits (Art 9(2) ACTA), to compensate for other economic and moral consequences of the infringement, to introduce pre-established damages, additional damages or presumptions for determining the amount of damages (Art 9(3) ACTA) and even to introduce personal liability of a company’s managing directors for a legal person’s infringements of intellectual property rights. Article 14 Dir 2004/48 (Art 45(2) TRIPS; Art 9(5) ACTA) adds a provision on the recovery of ‘reasonable and proportionate legal costs and other expenses incurred by the successful party’, while Art 15 Dir 2004/48 provides for a right of publication of judicial decisions.

Literature

Annette Kur, ‘The Enforcement Directive—Rough Start, Happy Landing?’ (2004) 35 IIC 821; UNCTAD-ICTS, Resource Book on TRIPS and Development (2005); Carlos Correa, Trade Related Aspects of Intellectual Property Rights—A Commentary on the TRIPS Agreement (2007); Thomas Cottier and Pierre Véron (eds), Concise International and European IP Law—TRIPS, Paris Convention, European Enforcement and Transfer of Technology (2008); George Cumming, Mirjam Freudenthal and Ruth Janal, Enforcement of Intellectual Property Rights in Dutch, English and German Civil Courts (2008); Daniel Gervais, The TRIPS Agreement: Drafting History and Analysis (3rd edn, 2008); Thomas Jaeger, Reto M Hilty and Volker Kitz (eds), Geistiges Eigentum—Herausforderung Durchsetzung (2008); Arnaud Nuyts (ed), International Litigation in Intellectual Property and Information Technology (2008); Peter-Tobias Stoll, Jan Busche and Katrin Arend (eds), Max Planck Commentaries on World Trade Law, WTO—Trade-Related Aspects of Intellectual Property Rights (2009); Christian Heinze, ‘Die Durchsetzung geistigen Eigentums in Europa—Zur Umsetzung der Richtlinie 2004/48/EG in Deutschland, England und Frankreich’ (2009) ZEuP 282; Ansgar Ohly, ‘Three principles of European IP enforcement law: Effectiveness, proportionality, dissuasiveness’ in Josef Drexl and others (eds), Technology and Competition: Contributions in Honour of Hanns Ulrich (2009) 257; Michel Walter and Silke von Lewinski (eds), European Copyright Law—A Commentary (2010); Axel Metzger and others, ‘Opinion of European Academics on Anti-Counterfeiting Trade Agreement’ [2011] JIPITEC 65 (see also Commission Services Working Paper of 27 April 2011, ‘Comments on the “Opinion of European Academics on Anti-Counterfeiting Trade Agreement”’); see also the studies by the European Observatory on Counterfeiting and Piracy <http://ec.europa.eu/internal_market/iprenforcement/observatory/index_en.htm#conf>

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Retrieved from Intellectual Property (Enforcement) – Max-EuP 2012 on 19 May 2022.

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