Wednesday, 11 November 2009

"The Future of Patent Litigation": this year's IBIL seminar

This afternoon University College London's Law Faculty hosted the second annual seminar on "The Future of Patent Litigation", under the auspices of the Institute of Brand and Innovation Law (IBIL) which was founded in 2007 by the late Professor Sir Hugh Laddie. Chaired by Professor Lionel Bently (University of Cambridge) the seminar was packed to the rafters as a capacity crowd received in rapt reverence the papers of Lord Justice Jackson (Litigation Costs), the Patents Court's Mr Justice Arnold (The Patents County Court) and Professor Adrian Zuckerman, University of Oxford (Civil Procedure as it Affects Patent Law).

Lord Justice Jackson (right) issued a broad disclaimer: he was not an IP lawyer and was only speaking because of his involvement in the forthcoming report on civil litigation costs; he couldn't say anything about the report's contents since they were confidential -- and he couldn't even listen to what others had to say, since his consultation period had ended.Nor was he an authority on costs. However, having been asked by Master Rolls to undertake his review, he felt that as the most junior Lord Justice of Appeal he couldn't say no.

Speaking without notes, Lord Justice Jackson gave a fascinating account of the methodology of the process leading to his report, as well as the pressure of a tight schedule. He had been given just one calendar year, which he divided into three phases: (i) the initial fact-finding; (ii)consultation, (iii) drafting the report. He did not however have to work alone; assisted by a panel of seven assessors meeting monthly, he had a sounding board for discussion of intractable problems.

In Phase (i), encouraged by Dame Hazel Genn, he set about gathering costs from all the judges. Conceding that this was just one part of the picture since most cases settle before they reach a judge, he explained that a trawl was made of all costs cases over the period of one month. Added to this, he obtained data from insurance companies relating to out-of-court settlements in which they had been involved. A literature review was conducted, as well as outline studies of how overseas jurisdictions deal with costs. Adrian Zuckerman had recommended Germany: an effective fixed costs regime operated there, with software to enable the user to discover recoverable costs in every case. Also examined was the United States, where there is no cost regime, subject to certain exceptions.

While intellectual property constituted just one fifth of one chapter out of the 64 in his report, Lord Justice Jackson stated that IP litigation was still a very important topic: IP was the only area in the civil justice system where users on both sides of fence were pressing for a fixed costs regime in addition to fast-track litigation. It was also mentioned that the UK's IP courts are to some extent in competition with those of continental Europe.

In Phase (ii) he attended a large number of meetings with user groups and sectoral interests. Four large seminars were organised by the Master of the Rolls' office, plus other seminars on legal aid, conditional fee arrangements (CFAs) etc. He sought to gather the views of lawyers, court users and the Federation of Small Businesses as well as reading thousands of pages of submissions by the cut-off stage of Phase (ii), 31 July 2009.

Phase (iii) has been a period of working steadily on the report, with the assistance of a solicitor from Lovells and an accountant from Deloittes. Big issues included whether and, if so, how to fix costs; what to do about CFAs; is it right for a litigant to increase the risk of cost to the other side via a contract he makes with his lawyer? Strong views have been expressed on each side of these issues, which means that the report will be heartily condemned whatever it says.

“Costs are a sore point”, said his Lordship, in what must have been the understatement of the evening. Other issues were also sore, though. One interesting question is whether contingency fees should be a percentage of the damages awarded. Should we follow the Ontario route, allowing the successful litigant to recover just his conventional costs but to pay the rest out of his own pocket? In the field of personal injury litigation, a successful plaintiff might lose around 5% of the awarded damages on this basis.

What do we do about disclosure, “a massive driver of costs”, he asked. Masses of emails and other documentary material are now recorded electronically, and costs with regard to their disclosure can become astronomic. New rules to control electronic disclosure will come in next year anyway. In contrast, in continental Europe there is little or no disclosure. Perhaps we should order standard disclosure less often, or make it more specific as is the case under IBA arbitration rules. A range of view has been expressed on these issues, but no consensus has emerged.

Lord Justice Jackson concluded that the Review had to be delivered by the end of December, and that a couple of early copies would be submitted then. However, it was unlikely to be publicly available before mid-January 2010, when it would emerge in both hard copy and online versions.

Speaking next, Mr Justice Arnold spoke of the great efforts that have been made by the Intellectual Property Court Users' Group Working Committee to enhance the performance of the Patents County Court and to make it swifter, cheaper and more accessible to small and medium-sized entities (readers may recall that this theme was the subject of his lecture to the CIPA Congress earlier this year: see PatLit here). He reminded the audience that patent lawyers are expensive and that SMEs can be priced out of the system.

The objective of the Working Group was to focus on low-cost, less complex claims. Its proposals, submitted just in time for consideration by the Jackson Review on 31 July, did not address Patents Court costs or litigation at all.

The most welcome part of Mr Justice Arnold's talk for this member of the audience came when he addressed the role of the case management conference. He emphasized that the judge has important role, since the case management conference is not “mere directions hearing”. It is for the judge to make firm decisions with regard to potentially expensive issues such as the extent to which disclosure should be ordered and the need for experiments, further factual evidence, expert evidence, cross-examination and further written arguments. The judge should only order them if they’re (i) related to specific identified issues and (ii) proportional in terms of costs.

Addressing civil procedural issues, Professor Zuckerman followed Lord Justice Jackson's precedent and declared himself not to be an IP expert; he did however recognise the role of specialist intellectual property courts as a means of providing the necessary degree of expertise and of bringing specialist knowledge to bear. In this vein he discussed the problems that arise when IP litigation leaves the specialist courts and re-enters the mainstream. By way of example he related the case of Doncaster Pharmaceuticals v Bolton Pharmaceutical 100 Ltd (click here for criticism of this decision by the IPKat), in which a Court of Appeal consisting of non-IP experts substituted their own opinion for that of an IP judge as to whether a case could be disposed of by summary judgment or go to full trial: Mummery LJ expressed the view that specialist knowledge was simply not needed in such cases.

There were however times when it was arguably better for the specialists not to be able to resolve issues among themselves, the paradigm case being that of 'reverse payments' made by patent owners to the would-be manufacturers of generic drugs in order to settle pharmaceutical
disputes by keeping their cheaper competitors off the market. This sort of practice, common in the United States where the Wax-Hatchman Act prevailed, was not apparently prevalent in Europe -- though the Commission is keeping watchful eye on the pharma sector.

[At this point I had to leave. If I receive further information concerning the seminar, I shall be happy to post it with due attribution].

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