Bringing IP lawsuits in the UK: the system works

IP rights have a range of benefits, e.g. in terms of marketing, negotiations and obtaining funding, but sometimes it is necessary to enforce them. Having confidence in the court system is therefore key.

Following a long period of consultation and a proposed package of reforms, on 1 October 2010 the Patents County Court for England and Wales (PCC), which dealt with claims relating to intellectual property, saw some fundamental changes in order to widen access to justice for small and medium-sized enterprises and private individuals in intellectual property disputes. At the same time a dynamic new judge, HH Judge Birss QC, took over the reins.

Overall, the reforms were aimed at providing a more streamlined, cheaper forum for a wide range of IP disputes. They introduced more active case management by the court, capped the costs that can be recovered and, importantly, limited a party’s exposure to its opponent’s costs.

In October 2012, the PCC also introduced a special “Small Claims Track” for IP claims valued at under £10,000. This covered trade mark, passing off, copyright and unregistered design right cases.

The PCC witnessed further changes in October 2013 when it was reformed as the Intellectual Property Enterprise Court (IPEC), preserving the procedures of the PCC, but now part of the High Court and with a new name that more accurately reflects its workload. A new judge, HH Judge Hacon, has taken over the reins.

Now this new look court is up and running – but how is it performing?

A survey from IP practitioners who have conducted litigation before the court has been recently published, providing a look into how the IPEC’s new regime works in practice and the extent to which the policy objectives of the reform have been achieved.

Despite its inherent frugality, the Court has proved itself a competent, accessible and forward-thinking forum for resolution of IP disputes.  Whilst there is a £500,000 cap on damages for claims made in the IPEC, businesses – typically smaller ones – seeking damages up to that amount no longer need to resort to the High Court, which could prove vastly more costly.

The cap regime, which limits the total recoverable at £50,000 for the final determination of liability and at £25,000 for enquiries as to damages or accounts of profits, is also helpful for SMEs, for whom certainty of exposure to costs can be critical for business.  It is much easier to litigate knowing what your maximum liability for costs is, should you not succeed, rather than facing an open-ended liability as in the High Court proper.  A separate, smaller, costs cap applies for each stage of the proceedings, which means that it is possible to gauge your liability to costs as an action progresses. This actually means that the maximum £50,000 cap is only likely to apply to hard-fought cases taken to trial, and rarely even in that case.  Of course, the parties have the option to spend more than the cap, but they do so in the knowledge that they will not be able to recover the excess, or indeed anything that the judge considers to have been disproportionally incurred.

Generally, both measures have been applied consistently; in this regard having a single judge hearing the vast majority of cases over an extended period of time has contributed to the predictability of the Court. A sample of cases analysed found that the average costs award was under £34,000 for the liability trial; the average damages award was under £250,000.

The new system also limits the trial process to one or at most two days. For example, the case of BOS v Cobra [2012] proved that is possible to fit even a full patent case – with validity and infringement issues and evidence from experts – into a two day trial. Even Xena Systems Ltd v Cantideck [2013], which involved the Court in a patent damages inquiry and claim for an account of profits, and Environmental Recycling Technologies plc v Upcycle Holdings Ltd [2013], which concerned consideration of added matter and omnibus claims, were still disposed of by the Court within two days.

There has also been an improvement in the length of time for cases to come to trial; typically, this is around a year from issuing proceedings.

The Intellectual Property Enterprise Court relies much more heavily on written evidence submitted in advance of the trial rather than on oral evidence at the trial itself.  This also makes a big difference to the cost and length of a trial compared with the High Court, where the trial can last for weeks. The evidence that can be submitted in a litigation action before the IPEC is also very constrained.

For example, Bocacina Ltd v Boca Cafes Ltd [2010] illustrates the different approach adopted by IPEC compared to the more traditional High Court. The case involved a passing off claim. One of the requisite elements of a passing off claim is evidence of confusion in the mind of the customer and the claimants had put forward a number of examples of consumer confusion. While the High Court would ordinarily allow for cross-examination of each of these individuals to ascertain whether or not there had been confusion, the IPEC suggested that such an approach was disproportionate to the dispute in question and did not order any cross-examination or request any further information from them.

The introduction of the small claims track also reduces the risks associated with litigation still further. Costs orders on the small claims track are highly restricted – the general rule that the unsuccessful party will pay the legal costs of the successful party does not apply. This benefits individuals and SMEs who may otherwise lack the financial resources to pursue a claim. The uptake of the small claims track has also been encouraging: 16 cases were issued in 2012 and 28 as of July 2013.  Typical cases include copyright disputes involving unauthorised use of photographs.

Statistics also reveal that just one case was transferred from the IPEC to the High Court, whereas well over 10 were transferred to the IPEC from other courts. The overwhelming majority of the IPEC’s caseload originated and remained there. For example, in Environmental Recycling Technologies plc v Upcycle Holdings Ltd [2012] a patent revocation action concerning a process for moulding plastic articles was started in the High Court; following the assignment of the patent to a holding company in Ireland the patentees applied to amend the patent and the action was subsequently transferred to the IPEC.

A considerable number of cases heard by the IPEC involve SMEs and private individuals. Around 63 judgments published by the law service BAILII (between November 2010 and 11 September 2013) involved an SME or private individual as a party. The variety of issues tackled by the Court in 2013 is impressive. As well as a trade mark and passing off cases, there have been a wide range of copyright, patent disputes and designs cases.

The IPEC provides an important route for SMEs and individuals to enforce their intellectual property rights, and for larger companies where the amount in dispute does not justify the costs of full High Court proceedings. The case management and the cost-benefit approaches of the IPEC are effective in streamlining issues and reducing complexities and cost.

If you have any potential disputes based on IP and are interested in finding out more about whether the IPEC could be a cost effective way of resolving the dispute, please contact your usual Barker Brettell attorney.