Tuesday, 7 August 2012

Transferring a revocation action to a junior court: ERT

Environmental Recycling Technologies plc v Stillwell, Rodlsburger and Upcycle Holdings Ltd is a decision of Mr Justice Warren (Patents Court, England and Wales) of 13 July which has not really hit the headlines (the full text is not on BAILII, though this is hardly surprising since the judgment was extempore). Fortunately the decision was briefly noted on the Lawtel subscription-only service.  Despite its relative obscurity, this decision reflects on when it is appropriate to transfer an action for revocation of a patent from the [more formal and expensive] Patents Court to the [cheaper and more cheerful] Patents County Court (PCC) on account of (i) the parties' financial positions, (ii) the simplicity of the case and (iii) the low value of the dispute.

Essentially, Stillwell and Rodlsburger owned a patent for a process for moulding plastic articles. ERT issued proceedings in the Patents Court for revocation. Stillwell and Rodlsburger assigned the patent to a company, Upcycle, which ERT joined to the proceedings. After some delay, Stillwell and Rodlsburger applied to transfer proceedings to the PCC. ERT was not enthusiastic about this. But what did the court say? Granting both the applications sought, Warren J noted that, while the financial position of the parties was an important factor to take into account it didn't determine by itself whether to transfer the action to the PCC -- and the mere fact that a party could afford to pay any High Court costs that might arise didn't mean that the action had to heard in the High Court.

He also noted that there were often competing and irreconcilable matters in relation to costs. In court cases the winner got their costs -- and in tribunal hearings each party had to bear its own. Although cost-capping in the PCC was the middle ground between the two approaches, it was no more right or wrong than shifting the costs to one party or another.

In Warren J's view, access to justice did not mean that it was right to keep a case in the Patents Court because one party felt that it would be denied justice due to on account of costs-capping in the PCC. Regardless of whether Stillwell and Rodlsburger had transferred the patent to Upcycle for the purpose of tax avoidance was neither here nor there: their actions had not been unlawful and the case could not be retained in the Patents Court on that basis.

Ultimately, in the judge's opinion, neither Stillwell nor Rodlsburger could afford High Court costs -- despite the loans made and overseas properties which ERT demonstrated to exist -- and it should be appreciated that an application to transfer a patent revocation dispute from a more costly forum to a cheaper one was not intended to be a trial of the parties' assets.

In reality, held Warren J, this case was not a complex one; the only issue to be decided was revocation, and in light of the case management conference that had already taken place, the need for lengthy discussion was questionable and the PCC would likely deal with the case in two days. The value of the claim was low, being valued at £10,000, which also pointed to a PCC trial.

Significantly, the applicants had to accept that the costs to date would have to be on the higher High Court scale and that their application for transfer should have been made more promptly.

Finally, there was no reason for  Stillwell and Rodlsburger to remain party to the action. Since they had passed the patent on to its new owner, Upcycle, no relief was actually being sought against them -- though, in the event that ERT won the trial and became entitled to costs, it could apply to join Stillwell and Rodlsburger at that stage.

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