IP: the call of the south

After widespread reform in late 2010, the Patents County Court (“PCC”) is increasingly becoming a court of choice in IP matters, particularly for SMEs. It is now suited to handling smaller, less complex, lower value actions, and its procedural rules are targeted to cases of that kind. The result? Shorter, cheaper, quicker litigation better suited to SMEs and private individuals looking to protect and assert their IP rights.

While the PCC routinely sits in London, it is an option worth considering for potential Scottish litigants as a cheaper, quicker alternative to the UK’s higher courts, including the Court of Session.

The PCC “revamp”

The PCC was originally created in 1990 to offer a less expensive forum in which to litigate IP patent matters. However, burdensome procedural rules meant it was largely unsuccessful in achieving that goal.

By 1999, reforms to the Civil Procedure Rules (the rules that govern the courts of England & Wales) resulted in the application of the same procedural rules to the PCC as the High Court, and a new judge was appointed to oversee the former court. The PCC was more successful after the turn of the century as a result, but was still not being used to its full capacity.

In 2009 a working group recommended that in order to reduce the high costs of litigating IP in the PCC, its procedural rules should be simplified and designed to attract lower value, less complex IP cases. A new set of procedural rules was implemented in October 2010 to achieve this aim, greatly increasing the appeal of the PCC.

What claims can be brought?

The PCC has jurisdiction to hear all IP matters (patents, designs, trade marks, passing off, copyright, database rights and others). A more appropriate name for it may be the IP County Court, and a proposal for the name change is currently being considered.

It can hear actions relating to infringement, threats of infringement, declarations of non-infringement, revocation/validity, amendment, employee rights etc. The remedies available to the parties are the same as in the High Court of England & Wales, and include preliminary and final injunctions (interdicts), search and seizure and asset freezing orders, damages (subject to a new cap: see below), accounts of profits, and delivery up.

Scottish litigants

Jurisdiction to determine validity

Registered IP rights are UK-wide rights. A number of the courts across the UK, including the PCC, have the ability to hear and decide cases relating to the validity of various IP rights registered in the UK. Scottish litigants therefore have the ability to bring proceedings challenging the validity of various registered IP rights in the PCC – which could be viewed as a cheaper, quicker alternative to the Court of Session.

Jurisdiction to determine infringement

In matters relating to infringement of IP rights, a party can be sued in the courts of the place where the harmful event, i.e. the infringement, occurred or may occur. This may be through one of a variety of acts, such as manufacture or offer for sale (particularly in today’s online environment), in England or Wales. Provided a Scottish IP right owner can establish such an act, it may bring infringement proceedings in the PCC.

PCC characteristics

Previously, IP litigation was limited to relatively large claims in the higher UK courts. Particularly in the case of patent litigation, complicated questions of law and technical fact ensured the need for experts and specialised lawyers. Many SMEs and private individuals were priced out of enforcing or defending their IP rights. The reforms to the PCC have created a cheaper, streamlined process by which they can assert their rights. Its key features are as follows:

• Case management in the new PCC is proactive and flexible. There is one full time IP specialist judge, HH Judge Colin Birss QC, who conducts his own case management, resulting in increased continuity throughout the stages of a claim.
• Statements of case (pleadings) in the PCC must be concise but must also set out all of the facts on which the parties intend to rely. This departs from usual High Court practice for IP claims, and means that the parties’ positions are clear from a very early stage. It is a requirement that statements of case are signed by the parties themselves (as opposed to their solicitors), so that they can stand as evidence in the case.
• Shortly after statements of case have been filed, the judge will call an early case management conference (CMC), at which the course of the whole action is set, including all deadlines and even the date of judgment (which is generally handed down within a few weeks of trial). The deadlines set at the CMC are strict, and cannot be extended by the agreement of the parties, but only by court order and for good reason.
• Applications may be made at the CMC for the disclosure of specific documents, further evidence or cross-examination that the parties believe are necessary. In determining whether any will be allowed, the court applies a stringent cost-benefit analysis. All applications to be brought in the action should also be heard at the CMC (others may later be considered on paper or by telephone, with the judge’s permission).
• There is no standard disclosure under the new procedure, nor is there provision for exchange of evidence (over and above the statements of case), experiments, surveys or skeleton arguments as standard. (Although some, limited, experiments can be conducted in patent cases in the PCC, cases involving complex experiments should be brought elsewhere.)
• Trials last a maximum of two days. They are heard on the basis of the statements of case, advocates’ oral submissions and any written evidence which has been permitted only: cross-examination of witnesses or experts is not standard, and if allowed will be strictly limited.

Taken together, these features result in a cheaper, more streamlined process. They ensure that cases adhere to the strictly controlled timetable, proceeding rapidly to trial (the first few cases under the new procedures have come to trial in approximately four months) and being heard within the PCC’s limit of two days.

The PCC Guide notes that, on application, the PCC can sit out of London to save time and costs. It remains to be seen in what circumstances the court might agree to such a request under its new procedures.

Costs cap

Legal advisers are becoming ever more used to giving costs estimates, even in litigation matters. However, it is a well known risk of litigation that the losing party will be required to pay the winning party’s costs (or the majority of them). This can be very difficult for a company contemplating litigation to quantify and budget for appropriately.

Under the new PCC procedure, a cap on recoverable costs has been introduced. The costs that can be recovered by a winning party from a losing party are now limited to £50,000 (and, where necessary, an additional £25,000 for a subsequent damages/accounts of profits inquiry). Of course, the parties are at liberty to spend more than this on their own legal fees, but they do so with greater certainty of the costs implications should they ultimately be successful or unsuccessful in the litigation.

The PCC also now has a recoverable cost scale. Ultimately, the scale provides a maximum that any party may receive for each stage of an action. Assuming that their costs meet or exceed the figure identified in the scale, that party will only be able to recover the limit. The sum of all limits is £50,000; however, the nature of PCC case management is that, in any one case, not all stages will be necessary.

The parties are obviously free to exceed this costs cap on their own legal fees, but are provided the certainty of knowing that (were they to lose) they would, at most, be liable for the capped costs of the other side for each stage of the proceedings, which amounts to a possible maximum of £50,000.

Damages cap

The PCC is designed for and attracts lower value IP cases. A cap on recoverable damages of £500,000 has now been introduced. Cases where the claimant has a cause of action for more may be brought in the PCC, but the excess will be abandoned.

Future changes

At present, rules are being drafted for a new small claims track for copyright, trade mark and unregistered design cases in the PCC. It will apply where the value of the claim is not more than £5,000. This will provide further assistance to SMEs and private individuals looking to protect their rights quickly and in a low cost forum. One point to note is that interim injunctions will not be available in the small claims track. The small claims track scheme is expected to come into force in October 2012.

Enforcement of PCC judgments in Scotland

A party who wishes to secure the enforcement of a PCC judgment in Scotland may apply for a certificate (in the case of money provisions) or a certified copy of the relevant judgment (in the case of non-money provisions). The party can then apply for the certificate or judgment to be registered in court. The registered certificate/judgment will then have, for the purposes of its enforcement, the same force and effect as if the judgment had been given in the Scottish court.

The reasonable costs or expenses of and incidental to the process of obtaining and registering the relevant documents (and interest thereon) are recoverable.

As a firm which has specialised in IP dispute resolution since the 1830s, Bristows has followed the recent PCC developments with much interest. We firmly believe that the new procedures will increase access to justice in IP matters for SMEs. This is very good news as, to date, many SMEs have found it exceedingly difficult – given the costs and uncertainty involved – to take steps to defend their IP in the courts. This has been very frustrating for SMEs (and their shareholders) as substantial funds may have been spent on IP protection, and indeed IP is increasingly the main asset of many of these companies.