Damages cap now in place

A cap to limit damage ...?

Many of PatLit's readers who have been following the fortunes of the Patents County Court for England and Wales will probably now know that the Patents County Court (Financial Limits) Order (No.2) 2011 came into force on Saturday.  According to an Intellectual Property Office media reliease, which was embargoed till one minute past midnight on Saturday morning:

"A new law comes into force ... that will give small and medium sized businesses easier access to justice to protect their copyright and trade marks. The Patents County Court (Financial Limits) Order (No.2) 2011 creates a clearer definition of which disputes involving copyright and trade mark claims should be heard in the Patents County Court (PCC) and which ones should go to the High Court. 

The change will encourage more businesses to protect their intellectual property and enforce their rights. ... 

A new damages cap of £500,000 for all claims in the PCC means small companies claiming damages up to that amount are less likely to face a potentially more expensive trip to the High Court. ...

Previously, a business with a legal case worth less than £500,000 could face litigation in either court with unknown levels of financial risk. An earlier Order, which came into force on 14 June 2011, had set the same limit in relation to patents and design cases. 

The change in law will ensure that lower value, less complex cases, which would typically involve small businesses, will automatically fall within the jurisdiction of the PCC which has a less costly and more streamlined process. Therefore the risk of expensive disputes over where the case should be heard will be reduced. 

In the past some companies were put off protecting their rights due to the uncertainty of how much it would cost. Supporting evidence to the Hargreaves Review of Intellectual Property and Growth highlighted that around one in five (17 per cent) of small and medium sized businesses had given up attempting to enforce their rights. 

Support for a limit was expressed by small and medium sized businesses during a full public consultation on the reform of the PCC. The effectiveness of the damages cap will be monitored with a formal review in 2014".

PatLit will be watching closely to see whether the damages cap actually affects the behaviour of small and medium-sized litigants and, if so, how. This blogger can think of few recent IP reforms that will be more closely monitored and looks forward to the results of the formal review in 2014.