"The purpose of this note is to provide some additional comments on the ideas outlined in my earlier note, especially taking into account numerous communications and discussions I have had since its original publication, including discussions with industry bodies and professional organisations, such as the IPLA. I also appreciate that the Plan would require a change of rules in the light of Nichia v Argos and Knight v Beyond.
The main assumption in my paper was that there was a substantial body of patent litigation which did not occur in the UK because companies could not afford it. This assumption is supported by my discussions. The problem of lack of access to justice lies not only with patent owners being unable to enforce their rights but also with companies which are forced to change their R&D and/or take licences when they do not consider the relevant patent to be valid but cannot afford to challenge it.
The crucial factor in deciding to litigate (after prospects of success) is the cost. There would be considerable more appetite for patent litigation in England if (1) it were cheaper and (2) the costs risk was more reliably predictable. The certainty of the maximum costs exposure at the outset is as important as the total amount. Litigants can negotiate some certainty about costs with their own chosen advisers, but the estimate and the assumptions on which costs are predicted or agreed often change because the course of litigation cannot be controlled or predicted. At present, it is almost impossible for one side to predict the likely exposure to the recoverable costs of the other side within a meaningful range.
The success of this proposal depends on there being a predetermined cap on the recovery of costs and the associated alternative cost-effective procedure which enables the cap to be met. These two related ideas provide the basis for assuring a litigant of the reliability and certainty of the overall costs exposure – not just one's own costs but especially the costs of the other side. The only way to deal reliably with the certainty of costs risk is to ensure that the recoverable costs of the other side are capped at a sensible fixed amount which is known before proceedings begin.
I have then sought to design a procedure which could be undertaken within that capped costs constraint. This procedure would then, in turn, enable the party commencing the litigation to agree a more certain costs position (perhaps on a fixed or capped costs basis), in advance, with its advisers. Advisers would be more readily able to do this if the procedure and time lines were clear, with minimal scope for variation. Time is critical to cost.
It would not achieve the objective to determine the costs cap after the litigation has been commenced. This involves too much uncertainty and risk as to future cost exposure. Industry feedback supports my belief. Such a provision would have little effect on providing access to justice in smaller cases. Companies will simply not take the risk of unquantified costs exposure.
The other main aspect of the proposal is to ensure procedural certainty and fairness. I do not consider it practical to prevent a party spending more than £100k on its case. However, any benefit obtained from the ability of one party to out-spend its rival should be restricted. The procedures and limits on the length of documents and submissions are designed to balance the parties' positions, irrespective of funding, as well as making the costs cap reasonable. While the precise details of the procedural steps under such a Plan might be different than that which I proposed, it is important that the procedure is clearly identified and restricted with these principles in mind.
As stated in the orginal proposal, the procedure should not be varied from case to case. Otherwise, it will affect the ability of the parties and their advisers to work within these costs constraints. There should seldom be a need for an application during the proceedings.
Certainty of costs exposure should be secured from the outset. This would enable a company considering litigation to budget for it and approve it on the basis of an ascertainable and reliable costs risk. It would be for the claimant to elect for the scheme to apply. There could be various safeguards built in, to ensure that the scheme would not be used inappropriately for more complex cases. For example the party commencing the case could certify it was appropriate; the issuing court could review the patent and perhaps a short one-page submission from the claimant as to why the scheme were appropriate before approving the application of the scheme. However, there may be occasions, on which a case may be removed from this scheme, especially by application of the Defendant; e.g. if it involved experiments.
I consider that these situations should be truly exceptional, but not impossible. Therefore, as a safeguard to the party commencing the proceedings, I propose that if a case is removed from the scheme, the claimant be given a short time in which to withdraw its case (i) on a without prejudice basis and (ii) without any payment of costs to the defendant. The claimant would suffer no estoppel from having brought and withdrawn a case, nor would it suffer any risk of paying costs to the other side. I believe the claimant would need this safeguard in order to be encouraged to use the scheme. The defendant could not be prevented from commencing proceedings; e.g. in the High Court, after the claimant's withdrawal.
The scheme I propose was always intended to be an alternative to mainstream patent litigation. It was not intended to be used for most of the cases currently heard by the Patents Court but could probably be used for most, if not all, cases heard by the Patents County Court. I initially proposed the scheme for use in the Patents County Court to allow a clear demarcation with the Patents Court and because it permits more flexible representation. However, there is no reason why it should not be used in the High Court. I did not anticipate that it would be used for complicated cases but the category of technology should not necessarily be a bar. For example, members of the BioIndustry Association (BIA) Intellectual Property Advisory Committee (IPAC), on which I sit, were very supportive of this scheme and did not want to be excluded from it. It might also be useful to introduce a system of Appointed Persons to hear these cases.
I proposed a novel procedure where the defendant's witnesses are cross-examined before the claimant's. On reflection, while I recommended the court time is limited and allocated equally between the parties, I suggest all cross-examination takes place on day 1 – shared equally with a maximum of 3 hours available to each party, perhaps after a short (30 minute) opening by the claimant with closing submissions on the second day (shared equally with a maximum of 3 hours each party, defendant first). The judge would pre-read the day before the trial and give judgment the day after trial.
I have received various suggestions that £100k, although a laudable objective, may be unrealistic and that recoverable costs should be capped at £150k (and index linked). The cap will apply to the total costs of all members of the relevant legal team (solicitors, barristers and patent attorneys), and the expert. It would include the costs of any counterclaim for invalidity or infringement.
I do not consider that any premium payable under a conditional fee agreement (CFA) should be recoverable from the losing party, especially if the total recovered would exceed the cap. However, that would not prevent a party agreeing a CFA with its adviser and paying a success fee. I also anticipate that the certainty of this scheme would make it easier, and more practical, to obtain insurance cover.
Some have commented that the position on costs recovery is unclear in my original paper. Time spent in detailed costs assessments and in arguing and negotiating costs is wasteful and disproportionate, especially with the amounts at stake under this scheme. I anticipate that the judge would make an overall assessment of costs recovery based on the issues on which both parties were successful. If, for example, the judge decided the winning party was successful overall on 65% of issues and had spent £100k, or more, on its legal advisers, then it would recover £65k without a detailed assessment. If it spent less than 100k, it would be entitled to recover 65% of its actual costs.
I have received suggestions that the remedies of the claimant should be restricted, and in particular injunctions and revocation should not be available. While I can see the force in having the remedies in cases brought under this scheme available only on an inter-parties basis, I can see problems in applying such limited relief in practice (e.g. to what extent should the outcome be transferable?) and compliance with international obligations.
Appeals on procedural points are difficult to envisage and should be exceptional (if at all). There should be corresponding limits on the length of substantive appeal documents, submissions and recoverable costs. The appeal should certainly take less than 1 day and recoverable costs should likewise be capped (e.g. 25% of the trial costs).