Intellectual property litigation in the UK: an attractive option for business

January 2017  |  SPECIAL REPORT: INTELLECTUAL PROPERTY

Financier Worldwide Magazine

January 2017 Issue

January 2017 Issue


Massive changes in the UK courts over recent years, including the streamlining of processes and procedures in the traditional High Court, as well as the offering of a new range of alternative forums in which to litigate, has made outdated the historic view that the UK courts have been a more cumbersome and expensive forum in which to bring intellectual property (IP) litigation than equivalent systems around Europe.

For IP litigation in particular, the UK courts provide an affordable and accessible option for litigants, providing quick and reliable decisions which still retain their world renowned high quality and where there is far greater control of the costs than in the past.

The High Court

The Chancery Division of the High Court is the traditional forum for bringing IP disputes. Cases are either heard in the Patents Court (where technical cases are ranked according to their perceived difficulty and assigned to a suitably specialist judge) or by the judges of the Chancery Division itself. A High Court action is particularly suitable for large, complex, fact and evidence heavy cases.

A benefit of bringing a High Court action is that there is no limit on the amount of damages that the wronged party can seek. Complex matters are ensured proper ‘air’ time before the courts, with no limit (within reason) on the number of days in trial. The usual cost provisions that the loser pays a proportion of the winner’s costs, applies. However, as part of the court’s proactive approach to costs management, unless the damages in the action are greater than £10m, the parties must prepare and exchange costs budgets at the commencement of proceedings for the court’s approval.

The court will not allow the parties to depart from the agreed budget unless satisfied that there is a good reason. On assessment of costs (at the conclusion of proceedings), the court will take into account the budget in assessing the reasonableness and proportionality of any costs claimed. Each party therefore effectively knows from the outset of the action both the extent of its own costs and what its maximum costs exposure to the other side may be.

A party commencing an IP related claim in the High Court can expect a short trial to be heard in around nine to 12 months’ after commencement of proceedings and a longer trial to be heard in about 12 to 18 months.

In recognition of the fact that not all cases are suitable for the High Court, the UK legal system provides the following more economical and streamlined alternatives.

The Intellectual Property Enterprise Court

The Intellectual Property Enterprise Court (IPEC) (formerly known as the Patents County Court) was created as a specialist list within the Chancery Division of the High Court. It deals with all kinds of IP cases, including patents, designs (registered and unregistered, EU and UK), trademarks (EU and UK), passing off, copyright, database right and actions for breach of confidence.

The primary aim of the IPEC is to encourage SMEs and private individuals to protect and safeguard their IP rights, by providing a venue where court proceedings are quicker, less complex and less expensive than a traditional High Court action. Trials in the IPEC will not normally last more than two days and, as a result, a case issued in the IPEC ought to come to trial within nine to 12 months. The claimant is required to set out the full details of its case at the outset (which can lead to increased initial costs than in a traditional High Court matter) and cases are held to a strict court timetable with clear guidance and limitations on evidence and disclosure.

There are two alternative routes for bringing a claim in the IPEC – the multi-track and the small claims track.

The multi-track procedure can hear any IP related cause of action. There is a £500,000 limit on any damages sought. Costs orders (i.e., the amount the losing party is required to pay out to the winning side) are subject to a cap of no more than £50,000. The multi-track offers all of the remedies available in the High Court. Cases are heard by the dedicated IPEC judge or another intellectual property specialist.

The small claims track hears less complex disputes relating to copyright, trademarks, passing off and unregistered designs with a value of less than £10,000. In consideration of the relatively low value of the claim, costs orders are highly restricted. This track is therefore suited to simple actions only.

High Court Shorter Trials Scheme

Where cases are not appropriate for the IPEC – for example, because the damages value is greater than £500,000 – but not so complex to require a High Court action, a claimant may consider the High Court Shorter Trials Scheme (STS).

The STS came into force on 1 October 2015 and will run as a pilot scheme for three years. Its aim is to minimise costs and improve efficiency in litigation. The STS is available to all business focused disputes (not just IP) but as its procedures are relatively similar to that of the IPEC it has been well received as a familiar yet alternative forum by IP litigators.

A case in the STS is allocated a designated judge who takes responsibility for a matter throughout its court process – from its issue to trial. Trials in the STS are limited to a maximum of four days (longer than permitted in the IPEC) and aim to be heard within 10 months of the issue of proceedings. There is no cap on the amount of recoverable damages and while formal costs budgeting does not apply, costs are awarded in the usual way – the loser paying a percentage of the reasonable and proportionate costs of the winner. The STS is therefore an attractive option for a claimant with a focused case, but who seeks to recover a sizeable figure in damages or who does not want its recoverable costs to be overly limited as per the IPEC.

High Court Flexible Trials Scheme

The Flexible Trials Scheme (FTS) is an alternative to the STS. It allows parties to agree the shape and directions of the action, which the court will then adopt, provided they are reasonable. The approach is therefore more similar to arbitration than ‘normal’ litigation but with the benefit of a court based decision on conclusion.

Summary

With its IP experienced judiciary and a combination of established but focused procedures meeting innovative flexible systems, the UK stands out as a dynamic and business focused arena in which to protect IP and innovation.

The more streamlined procedures in particular assist SMEs and individuals to prevent the cost and sheer scale of more traditional litigation acting as an insurmountable hurdle to the access to justice. However, these procedures also assist businesses in general, allowing them to make tactical and strategic decisions as to where to commence court action, weighing up the pros and cons of front loaded focused STS and IPEC cases with quicker times to trial, versus potentially lengthier but, from a costs perspective, arguably more ‘threatening’ High Court action.

 

Olivia Gray is an associate and Ian Wood is head of intellectual property at Charles Russell Speechlys LLP. Ms Gray can be contacted on +44 (0)207 427 6532 or by email: olivia.gray@crsblaw.com. Mr Wood can be contacted on +44 (0)207 203 5124 or by email: ian.wood@crsblaw.com.

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