PCC Page 32: Quickstep – are there difficulties changing course with 8 tentacles?

Valiantly verified 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 32nd, former CIPA President Alasdair Poore considers the option of amending a claim, and also provides a spot of nostalgia by mentioning the Routemaster buses which once roamed the streets of London. Now their dwindling herd is kept entirely in captivity.

"Just in time: Cautious’s patent attorney is taking quite some time preparing for the Case Management Conference in Cautious’s claim against IPOff for patent and design right infringement.  Just as he was contemplating whether an amendment to the statement of case was in order or would be hopeless in the “fast track” approach of the Court, out popped another judgment from the PCC to help him on his way.

First, however, I have to own up to some over-enthusiasm in my desire to get readers to think about security for costs.  Douglas Campbell has helpfully pointed out that security for costs against a foreign claimant is not as generous as it used to be – all in the interest of human rights.  If the claimant is in a civilized country like the USA, you may only get security for the extra burden of enforcing in the USA (and this could be a small sum, so it is more likely that an impecunious claimant will be able to pay it anyway – £5,000 was the extra sum for which security was considered (and awarded) in Nasser: see below).  In contrast, in a dodgy country (but aren’t some US States dodgy too), or where there are reasons to suppose enforcement may be made more difficult, it is reasonable to grant security for more.  Mance L.J’s words in Nasser v United Bank of Kuwait [2002] 1 WLR 1868 (para 62) illustrate some of the issues:

“In so far as impecuniosity may have a continuing relevance it is not on the ground that the claimant lacks apparent means to satisfy any judgment but on the ground (where this applies) that the effect of the impecuniosity would be either (i) to preclude or hinder or add to the burden of enforcement abroad against such assets as do exist abroad or (ii) as a practical matter, to make it more likely that the claimant would take advantage of any available opportunity to avoid or hinder such enforcement abroad” para 62

(White Book, para 25.13.6 -- which incidentally is published by the same publishers as the CIPA Black Book, so CIPA members should be encouraged to invest in it.) 

So some imagination is required here.

Turning then to amendment, there are a couple of issues which have come to light.  First, Cautious has realised that the person who created the original design, in relation to which Cautious is asserting design right infringement, was not employed by Cautious & Co at all, but was working at the time as a consultant.  Technically therefore, although Cautious owns the design right, which was created on commission for money’s worth, the route to ownership is not as set out tin the Statement of Case. Seeing as IPOff has put ownership in issue, Cautious's patent attorney wants to put this right.  Secondly, in talking to the consultant, Cautious’s patent attorney has identified that there are several other octopus-designs made by the consultant which were touted around the market at the time, and in which he sold the rights to Cautious when he joined Cautious's project.  Some of these have even greater similarity to the robot octopus than Cautious's marketed model, and it seems likely that IPOff might have copied these.

Coincidentally, in Temple Island Collection v New English Teas ([2011] EWPCC 19), Judge Birss QC was considering a very similar point.

Amendments to statements of case are addressed in the Civil Procedure Rules, in CPR17.  First, it is possible to amend generally before the statement of case has been served on any parties (CPR 17.1(1)) subject to the possibility that the Court may disallow it (CPR 17.2).  After it has been served it may only be amended with the consent of all the parties (but still possibly disallowed (CPR 17.2)) or with leave of the Court (CPR 17.1(2)).  Judge Birss held that, despite the arguments to the contrary in Temple Island (see para 24), the broad principle on amendments still applied: 

“Amendments will generally be allowed so that the real dispute between the parties can be adjudicated upon but subject to the proviso that any prejudice can be compensated for in costs and subject to the public interest in the administration of justice.  Case should be dealt with expeditiously but also fairly and that consideration tends to weigh in favour of allowing amendments.” (para 25)

 In exercising this discretion, the approach is the same as that of the High Court, but will be 

“conditioned by the particular nature and circumstances of the Patents County Court” (ibid).  “When considering an application to amend … in a regime with capped costs, [the] balancing exercise [between allowing the amendment and a consideration of the prejudice the amendment may cause] will include an assessment of whether the likely benefit of the amendment appears likely to justify the cost of taking and dealing with it.” (ibid, para 33).

 In Temple Island the issue arose in the context of pictures of red Routemaster buses in front grey Houses of Parliament and Big Ben, used on tins of tea bags.  A second image cropped up at a later stage, and the amendment was to seek to add a claim for infringement of this.  The judge conducted an analysis of whether there was any real prospect of the second image contributing to the case and concluded that it was, at best, small. 

In contrast, the issues of costs might not be small: proving copying of the second image would be much more problematic.  It was not clear how the defendant would have had access to it.  The claimant might have to rely on similarity, but this would not really work.  The difference between the two images alleged to have been copied was really just the position of the bus, and this was still not the same as the position in the defendant’s image.  On that basis he rejected the amendment, although technically it might possibly have been the winning point.  Bringing it in now, even if it could always have featured in the claim from the beginning, would be disproportionate.  Cautious’s patent attorney breathes a sigh of relief – that is clearly a different case from his, where, although there is another design to base the claim on, all the arguments on infringement will be essentially the same. 

Naturally, the amendment to the case in relation to the consultant who created the designs should be more straightforward – it could be crucial to winning the case and there is no reason to suppose (yet) that the evidence will be contested and that it will add to the costs.

There are some interesting thoughts on how the costs regime works in these cases. Judge Birss pointed out that amendment is still subject to the proviso that a party can be appropriately compensated in costs.  However, the costs cap regime does not mean that a party cannot be appropriately compensated in costs – compensation is often likely to be less than a party would have received in the High Court, but the mere existence of the costs cap system itself is unlikely to be a factor which would lead an otherwise proper amendment being refused (para 27).  I understand this to be saying, that if a case is appropriate for the PCC, then, then usually the costs awarded under the PCC regime will be regarded as appropriate (because the costs each party incurs should reflect the substance of the case). It also suggests that one course, saying that a party can amend their case, subject to meeting the other parties actual costs thrown away, is not currently on the table".