Martin Partington: Spotlight on the Justice System

The UK economy depends heavily on innovation – in products, design, brands. All these key economic activities are underpinned by intellectual property rights. It is essential that those who create, research and design new things and ideas are able to protect the intellectual property they have created.

There is a lot of law which is designed to do just that. But the effect of the law is undermined if those who want to assert their intellectual property rights against those who want to deny them their rights cannot do so effectively.

Of course the traditional forum for the assertion of such rights is the Court. But as is well known, going to court is an extremely expensive business. Individuals and small and medium businesses may just not be able to afford to litigate, however meritorious their case and however unmeritorious their opponents might be.

Some years ago, a first attempt to make some forms of IP litigation more affordable was put in place with the introduction in 1990 of the Patents County Court (PCC). It had a ‘special jurisdiction’ to hear proceedings related to patents and registered designs, and the ‘ordinary jurisdiction’of a County Court to hear tortious actions, such as copyright infringement, trade mark infringement, and passing off claims (though initially not all IP matters, such as certain trade mark and designs issues),

But it never worked particularly effectively and did not attract much business.In particular, the PCC was perceived as featuring a number of major ‘procedural shortcomings’ which affected its ability to hear low value claims:

• The PCC ‘lacked any mechanisms for controlling what parties filed in a case or for keeping cases moving’
• The PCC lacked the ability to place limits on the value of a case brought before it.
• From 1999 onwards, the Civil Procedure Rules applied equally to the PCC and the High Court.

The cumulative effect of these three shortcomings was that litigation could be under­taken at the PCC and the High Court with the same procedures and at the same price. This was perceived as blurring the lines between the types of cases heard at the PCC and the High Court which did little to encourage SMEs to enforce their IP rights at the court.

• Procedural change,with  the introduction of active case management (ACM), early identification of the issues by the judge,and a limit on the time to be taken at trial;
• Cap on recoverable costs: set at £50,000;
• Cap of £500,000 damages recoverable in cases before the PCC;
• The introduction of a small claims track to hear copyright, trade marks and passing off, databases, breach of confidence, and unregistered designs matters, but not cases concerning patents, registered designs and plant variety rights.

Finally, in October 2013, the Intellectual Property Enterprise court (IPEC) was created as a specialist court operating within the Chancery Division of the High Court of England and Wales. In accordance with CPR part 63 and Practice Direction (PD) 63 the IPEC can hear cases concerning patents, designs (registered/unregistered, UK/Community), trade marks (UK/Community),passing off, copyright, database right, other rights conferred by the Copyright Designs and Patents Act 1988 and actions for breach of confidence. It took over the work of the Patents County Court, which was abolished.

A recent research report suggests that these changes – particular on the control of costs and the increase in case management – have been effective in encouraging more SMEs to bring cases to the IPEC and have also increased the willingness of parties to proceedings to negotiate settlements to their disputes.

The researchers found:

the cumulative effect of the IPEC reforms 2010-2013 has been highly significant – in addition to an increase in the numbers of filed cases at the IPEC, the creation of the streamlined IPEC MT and SCT for litigating disputes has led to an overall increase in the amount of IP disputes that occur more generally i.e. pre-filing. In other

words, now that IP holders have the ability to utilize the IPEC – a litigation forum that caps costs and damages, and makes use of ACM (and includes the SCT option) – IP holders are more confident about entering into disputes with potential infringers, where previously they would have not felt confident enough to do so.