PCC Page 29: Octopuses learn to live with each other – only getting half our cake … and costs.

If you only half win, do you deserve
to get more than half your costs?

Poignantly portrayed by the Chartered Institute of Patent Attorneys (CIPA), the PCC Pages seek to explain how litigation works in the recently-revamped Patents County Court (PCC) for England and Wales, taking as its theme a dispute between Cautious Co and IPOff Ltd as to whether IPOff has infringed the IP rights of Cautious in its robotic octopus. In this episode, the 29th, immediate past CIPA President Alasdair Poore continues last week's theme of costs, with a little embellishment.

"Octopuses, like buses, clearly come in bunches. Last week I reported on an interesting judgment given by Judge Birss QC in relation to costs, how the limits work, and how they add up at different stages. This week the same judge has given a further judgment which gives some insight into handling costs – and on what happens if you don’t completely win.

Redwood Tree Services v Warren Apsey (trading as Redwood Tree Surgeons) [2011] EWPCC 14 is worth reading in its own right. An interesting saga of small businesses trying to clobber one another for passing off, spending substantial parts of their annual revenue in doing so. The case started -- badly -- in the Basingstoke County Court where security for costs was ordered and the first attempt to sue was struck out because security was not provided. A fresh case was then started, before the change in PCC rules, in the PCC. That was stayed for quite a long time until the claimant managed to pay the defendant’s costs in the previous proceedings. It then progressed slowly.

The judge conducted a meticulous analysis of the evidence. The parties were two tree-related businesses with their metaphorical “branches” overlapping, and both using “Redwood” in their names. Some witnesses were good, some were relatively poor. The conclusion was that there was passing off, but only in a small area where the businesses had overlapped; and there was no evidence of any damage, although of course, in the nature of passing off cases, the claimant might now know of all cases of confusion.

On costs, the judge looked specifically at the Civil Procedure Rules, CPR 44.3(2), which provides a discretion. The general rule is the unsuccessful party will be ordered to pay the costs of the successful party, but the court may make a different order. CPR 44.3(4) provides that in deciding what order, if any, to make about costs the court must have regard to all the circumstances including (a) the conduct of all the parties, (b) whether a party has been successful in part of his case even if he has not been wholly successful, and (c) whether any payment into court or admissible offer for settlement has been made by a party which is drawn to the court's attention and which is not an offer to which the costs consequences under Part 36 apply.

The defendant submitted that, although the claimant had won an injunction, it was of very limited scope, and much more limited than the claim; they had really hardly won at all, and they should pay the defendant’s costs.

The claimant did not agree. Winning anything at all was winning, and costs should generally follow the winner. The claimant also pointed to the fact that the defendant had not made any offer to settle in any more limited terms (indeed neither party had made any offer to settle). Normally it might be argued that, if a defendant wishes to protect themselves from a judgement only in part, it is incumbent on them to make that as an offer.

The claimant had also relied (amongst other things) on the judgement of Mr Justice Falconer in Colgate Palmolive v Markwell Finance [1990] RPC 197 (claimant entitled to costs on liability phase in a passing off action although there had been a without prejudice offer including damages). In that case it was said that part of winning was just vindicating the intellectual property right. In the present case, Judge Birss QC decided that the claimant had won overall, but had not “vindicated” his intellectual property right. It was appropriate in the circumstances to order less than 100% costs. In fact he ordered that the defendant pay only 50% costs.

The case also illustrates the application of the rules on making an application for an interim payment of costs, pending assessment. In this case the claimant’s costs were about double the defendant’s. In the circumstances he was prepared to order an interim payment of 50% of the level of costs the defendant had incurred, as being “an irreducible minimum figure” that he could feel confident that the claimant would be likely to recover on assessment.

It is more usual for parties in intellectual property cases to receive only part of their costs, for example where items of prior art is relied up for invalidity, and that prior art does not render the patent invalid. As noted earlier, the maxima that the PCC applies are after any set-off (CPR 45.42(4)). Is it possible that the maxima will be applied after any such reduction as this? Answers please".