"In some areas of civil litigation costs are disproportionate and impede access to justice. I therefore propose a coherent package of interlocking reforms, designed to control costs and promote access to justice".What does it say about patent litigation? The following pointers may be of initial assistance here.
"5.1 Intellectual property litigation (chapter 24). The creation and use of intellectual property (“IP”) rights play a crucial role in economic activity and the owners of IP rights must be able to assert or defend them in the courts. The cost to SMEs (and larger enterprises) of resolving IP disputes can be significant. To reduce the costs of IP litigation, and particularly the cost to SMEs, I recommend that the Patents County Court (the “PCC”), which deals with lower value IP disputes, be reformed to provide a cost-effective environment for IP disputes. These reforms include (i) allowing costs to be recovered from opponents according to cost scales; and (ii) capping total recoverable costs to £50,000 in contested actions for patent infringement, and £25,000 for all other cases. I also recommend that there be a fast track and a small claims track in the PCC".
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"[p. 12] In the space of just 12 months, there have been major developments in relation to civil litigation costs", footnoting " ... "For example, ... the consultation exercise by the IP Court Users Committee on proposals for reform of the Patents County Court; the introduction of the new Practice Direction – Pre-Action Conduct in April 2009".
"[p.170] 2.4 The majority of respondents oppose any fixing of costs in the multi-track. Both the Law Society and the Bar Council oppose any extension of the fixed costs regime above the fast track. The Bar Council writes:
"[p. 12] In the space of just 12 months, there have been major developments in relation to civil litigation costs", footnoting " ... "For example, ... the consultation exercise by the IP Court Users Committee on proposals for reform of the Patents County Court; the introduction of the new Practice Direction – Pre-Action Conduct in April 2009".
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"[p.24] 8. INTELLECTUAL PROPERTY CASES
8.1 Appendix 3. The data in appendix 3 to this report include a sample of 15 large intellectual property cases settled or taken to first instance trial by a leading IP department from a City law firm in the period from 1999 to 2007. Of these 15 cases, the firm acted for the claimant in ten cases and the defendant in five cases. The cases covered disputes over patents, trademarks, design and copyright. Of the 15 cases, three settled and 12 went to trial.
8.2 The adjusted costs incurred on these cases up to first instance judgment or settlement range from £196,957 to £1,540,933, with an average cost incurred per case of £696,742. The costs have been adjusted from actual costs to current costs by reference to the hours spent on the case at current hourly rates.
8.3 The data show the total costs incurred (profit costs and disbursements) up to various standardised stages in the litigation process (service of claim, defence, disclosure, witness statements, trial etc). This assists the law firm to estimate potential costs for clients up to various stages of the litigation process. The costs incurred up to a particular stage are cumulative, including the costs for all work up to that stage, not merely the costs incurred on performing tasks for that stage.
8.4 The data also include the number of weeks each case took to reach the various stages outlined above. The cases ranged between 36 weeks and 111 weeks from start to first instance judgement or settlement, with the average length being 66 weeks.
8.5 The law firm is also able to calculate the average monthly cost of the IP cases. The cases in the sample incurred average monthly costs ranging from £18,376 to £104,615, with the average being £45,542.
8.6 The costs incurred from the start of trial to judgment or settlement averaged nearly 20% of the total costs of the cases. The trial costs were a large proportion of the total costs due to the cross examination of the expert witnesses".
"[p.24] 8. INTELLECTUAL PROPERTY CASES
8.1 Appendix 3. The data in appendix 3 to this report include a sample of 15 large intellectual property cases settled or taken to first instance trial by a leading IP department from a City law firm in the period from 1999 to 2007. Of these 15 cases, the firm acted for the claimant in ten cases and the defendant in five cases. The cases covered disputes over patents, trademarks, design and copyright. Of the 15 cases, three settled and 12 went to trial.
8.2 The adjusted costs incurred on these cases up to first instance judgment or settlement range from £196,957 to £1,540,933, with an average cost incurred per case of £696,742. The costs have been adjusted from actual costs to current costs by reference to the hours spent on the case at current hourly rates.
8.3 The data show the total costs incurred (profit costs and disbursements) up to various standardised stages in the litigation process (service of claim, defence, disclosure, witness statements, trial etc). This assists the law firm to estimate potential costs for clients up to various stages of the litigation process. The costs incurred up to a particular stage are cumulative, including the costs for all work up to that stage, not merely the costs incurred on performing tasks for that stage.
8.4 The data also include the number of weeks each case took to reach the various stages outlined above. The cases ranged between 36 weeks and 111 weeks from start to first instance judgement or settlement, with the average length being 66 weeks.
8.5 The law firm is also able to calculate the average monthly cost of the IP cases. The cases in the sample incurred average monthly costs ranging from £18,376 to £104,615, with the average being £45,542.
8.6 The costs incurred from the start of trial to judgment or settlement averaged nearly 20% of the total costs of the cases. The trial costs were a large proportion of the total costs due to the cross examination of the expert witnesses".
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"[p.170] 2.4 The majority of respondents oppose any fixing of costs in the multi-track. Both the Law Society and the Bar Council oppose any extension of the fixed costs regime above the fast track. The Bar Council writes:
“Save in relation to the Patents Court, we cannot see any justification for the implementation of a fixed costs regime in cases in the Chancery Division, Commercial Court or TCC48 depending on the value of the claim or the size or turnover of one or both claimants.”2.5 In relation to intellectual property (“IP”) litigation, it is generally recognised that there is a case for limiting or fixing recoverable costs in respect of claims up to about £500,000. There is a groundswell of support amongst IP practitioners and court users for reforms along these lines: see chapter 24 below".
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Part 5 of the Report, dealing with specific types of ligitation, gives 10 pages to IP (pages 248 to 257) and recommends as follows:
------------------------------------------------------------------Part 5 of the Report, dealing with specific types of ligitation, gives 10 pages to IP (pages 248 to 257) and recommends as follows:
"(i) Consideration should be given by the Patents Court judges and the IPCUC [Intellectual Property Court Users' Committee] to the question whether the Guide should be amended to include any of the proposals set out in paragraph 2.5 above [These relate to more robust case management].
(ii) The proposals in the IPCUC Working Group’s final report for reforming the PCC should be implemented [on which see PatLit here].
(iii) After reformation of the PCC, the Guide should be amended to give clear guidance on the requirements for statements of case, illustrated by model pleadings annexed to the Guide.
(iv) There should be a small claims track in the PCC for IP claims with a monetary
value of less than £5,000 and a fast track for IP claims with a monetary value of between £5,000 and £25,000.
(v) One or more district judges, deputy district judges or recorders with specialist
patent experience should be available to sit in the PCC, in order to deal with small claims and fast track cases.
(vi) There should be consultation with court users, practitioners and judges, in
order to ascertain whether there is support either for (a) an IP pre-action protocol or (b) the Guide to give guidance regarding pre-action conduct [i.e. as to whether there should be reform of the law currently governing groundless threats, which has implications for, inter alia, the drafting of letters before action]".
On appeals, at p.337, the Review touches on the special position of IP disputes:
" ...the Intellectual Property Court Users’ Committee (the “IPCUC”) in its final report dated 31st July 2009 has proposed making radical reforms to the Patents County Court (the “PCC”). These reforms include imposing a cap upon recoverable costs, in order that SMEs should not be deterred from litigating by the fear of indeterminate liability for adverse costs. In relation to costs on appeal the IPCUC states:
" ...the Intellectual Property Court Users’ Committee (the “IPCUC”) in its final report dated 31st July 2009 has proposed making radical reforms to the Patents County Court (the “PCC”). These reforms include imposing a cap upon recoverable costs, in order that SMEs should not be deterred from litigating by the fear of indeterminate liability for adverse costs. In relation to costs on appeal the IPCUC states:
“…we are confident that the Court of Appeal would be sensitive to the question of costs on appeal from the reformed PCC, and would be unlikely to award more by way of appeal costs than the first instance costs.”There is an important issue here as to whether (a) this is a matter which should be left to the general discretion of the Court of Appeal or (b) the rules should make special provision for costs on appeals from the (reformed) PCC".
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Disclosure is mentioned at p.370: "3.9 After referring to the limited disclosure regime in patent cases, CLAN [the Commercial Litigation Association] looks at disclosure more widely. It states:
“... perhaps the default position should be that parties would disclose only those documents upon which a party wished to rely, but that it was open to either party to seek more general disclosure if appropriate. This was the approach adopted when the modern form of the county courts was being introduced in the 19th century.”
PatLit is sure that there will be much discussion and welcomes readers' comments, both from at home and from abroad.
1 comment:
The review refers to an IP Pre-Action protocol, and states that an earlier attempt to create one "ended in failure". That is not really fair - considerable work was put into creating one which can be found at http://www.reedsmith.com/_db/_documents/code_of_practice_booklet.pdf The "failure", if there was one, was on the part of the CPR Rules Committee to agree to adopt it as a formal protocol, because at that time it was thought that a proliferation of protocols was not desirable.
Even if the old protocol is not perfect, those considering the issue should find it a useful starting point if one is to be adopted following the Jackson review.
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