PCC Page 44: The Maze Before Trial

Thanks to the support of 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 44th, former CIPA President Alasdair Poore (ably aided by some outstanding proof-reading by Vicki Salmon) brings us further complications -- and a message of brotherly love for all small litigants:

"Readers will recollect that when the robot octopus became invisible – because Cautious's patent attorney was so working hard on the case for his client, the claimant – and we had got as far as a spat about disclosure and privilege.
 Cautious’s dispute centres on a claim that IPOff has infringed Cautious's patent and unregistered design right by making and supplying a robot octopus which could be used to predict football results.  At the Case Management Conference (CMC) there was an order for specific disclosure, limited expert evidence (on patent issues only) and exchange of witness statements.  In addition the Court ordered provision of a process description (to be limited by agreement at that stage to the expert), that Cautious can rely on the sample IPOff Robot Octopus, Cautious's original design of an octopus toy, and a sample of the current Cautious octopus.  

A useful sample of this sort of order can be seen in the Annex to the judgment on Ifejika v Ifejika [2011] EWPCC 28, previously mentioned here, which helpfully suggests how the issues may be identified as well as the elements for proof of the issues.  It's worth keeping at hand as a guide to preparing for a CMC. Readers will recollect previous reference to this case, and may also be interested in reading what is almost the conclusion to the sorry saga, reported on 23 November 2011, at [2011] EWPCC 31.  In that judgment, Judge Birss QC ordered that the damages in respect of one of the infringements be assessed at £10 (para 191), although the other was to be referred to an inquiry (para 192).  He concluded with the observation: 

“I cannot end without expressing the hope that the parties now take the time and effort to settle what remains of this bitter dispute once and for all. In the biblical story of Esau and Jacob, Jacob steals his brother's birthright. It leads to a bitter dispute which lasts for many years but even then the brothers are finally reconciled (Genesis 33:1-20). Victor and Charles Ifejika should now strive to do the same.”  

This is an opportune moment to mention the upcoming small claims jurisdiction of the PCC again: I have been told that small claims cases will come before district judges and recorders, rather than before Judge Birss QC.

Cautious would not be caught in a case which progressed in such a manner (described by Judge Birss as “a fraternal dispute ranging over many years”).  However, as preparations are clearly underway, Cautious’s patent attorney expects some more turbulence in the proceedings; and has received just the sort of letter that he knew would start arriving as detailed preparations were being made.  

IPOff’s solicitor has been doing a little bit more homework, and has realized that the independent design argument was not going very far on the material his client had provided.  Now IPOff has dug up some “prior art” in the form of pictures in a text book on octopuses.  I can now reveal that the design of the octopus is indeed based on the rare “tiger octopus” – characteristics of which will be revealed in due course.  This text book details key features of the tiger octopus and IPOff’s solicitor has provided some photographs from the book, as well as live photographs of tiger octopuses.  Cautious's patent attorney suspects that these were taken on his holiday last Christmas and is not at all clear why it should have taken so long for these to have emerged into the proceedings.  

IPOff has asked that Cautious consent to amendment of the statements of case to reflect this new angle that he has discovered, saying that it is really necessary to involve an expert now in order to explain why this is material which would, at the relevant time, have been known to interested circles and why Cautious's designs do not create a different overall impression from these pictures. 

At the same time, Cautious’s expert has been doing his work.  He has now spoken to Cautious’s patent attorney to explain some problems.  As instructed he has not prepared a report on this aspect at this stage. He has been provided with the process description and the source code of the IPOff Robot Octopus engine.  This is confidential and was not provided to Cautious’s patent attorney, by agreement at the CMC.  On reviewing this and comparing it with the operation of the robot octopus, he finds that the robot octopus does not operate as he would expect, based on these descriptions.  The descriptions would indeed mean that the robot octopus was not infringing, but they do not, in his view, correspond with reality. 

Cautious's patent attorney is considering what steps should be taken, and also whether this is deliberate or accidental.  In order to demonstrate the position, Cautious may have to carry out experiments nothing in the CMC order about that, and it looks as though it could start racking up the costs.  

Cautious’s patent attorney is pondering each of these issues, and will be reporting on them shortly. 

In the meantime, he has also heard sad news.  The excitement of a proposed European Unified Patent Court is overshadowed by the fact that this may make the PCC irrelevant in patent cases.  The CIPA Briefing paper is here.  Readers should know that it is proposed that the Court will have exclusive jurisdiction not only in relation to the proposed European Unitary Patent but also, after a transitional period of only five years, in relation to patents granted under the existing EPC.  This appears to mean that all this effort Cautious’s patent attorney has gone to, to learn about the PCC and to persuade SME clients that the PCC will transform the value of their patents, will go to waste.  This is something which is made all the more frustrating by the complete absence of public information on the debates over the subject (see IPKat, “Further work is still needed”)".

PCC Page 43: Vanishing fish, small claims and fast tracks

Encouragingly elaborated 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 43rd, former CIPA President Alasdair Poore casts his net over some new fish in the sea: the proposed small claims service and some fast-tracking too:

In the final week before the robot octopus returns to action on his (her?) own account, there are a couple of events which particularly caught his attention.  Both relate to the use of the “small claims track”.  This is intended for simple, low value cases where, bluntly, the amount in issue does not really justify legal representation.  For that reason, usually the Court will not award any costs of lawyers (although court fees will be recoverable).  The relevance for attorneys is pretty evident: where it applies, their winning clients will not be able to recover the costs of attorney representation. First is something which could be of major significance for many individual designers, copyright owners and trade mark holders.  The Government has now confirmed (New intellectual property court processes will boost business) that it will introduce a small claims track for litigation in the Patents County Court where the amount in issue is less than £5,000 (It's interesting that the Department for Business, Innovation and Skills refers to the “intellectual property court”.  The writer had heard suggestions that the Government did not think it was justified at present to change the PCC’s name to that!).  The details are still to be worked out but it is expected to be on the blocks in the course of next year – ideally by “this time next year”!  A consultation is apparently planned in the New Year on implementation. Just as a reminder, the proposal made in the Jackson Review of civil litigation costs was for a small claims and fast track procedure for copyright and designs claims (Recommendation 6, page 257 – actually not restricted to any specific form of IP).  The Government confirmed that it would look at it in its response to the Hargreaves Review (Response 9, page 11, and Recommendation 8, page 17 (which talks of introduction in Autumn 2011!), for introduction of a small claims track for copyright, designs and possibly trade marks).  It has now given the go-ahead to the small claims track, although there will be work to be done to see how this fits in with the current rules.  There is no mention of a fast claims track, and this seems to have fallen off the radar, although maybe there is a feeling that the PCC procedure already looks fast enough. 

 The current general small claims procedure or small claims track is referred to in the Civil Procedure Rules, CPR 27.  The most important provision here is on costs, CPR 27.14, which provides that essentially no costs are recoverable other than court fees, or where a party has behaved unreasonably.  Otherwise the procedure looks like an informal version of the PCC, with the exception that there is no preliminary hearing unless there is a need to make special directions (CPR 27.6 and 27.4) The guts of the small claims procedure are set out in CPR 27.8.  This provides for an informal hearing, often referred to as arbitration:

(1) The court may adopt any method of proceeding at a hearing that it considers to be fair.(2) Hearings will be informal.(3) The strict rules of evidence do not apply.(4) The court need not take evidence on oath.(5) The court may limit cross-examination.(6) The court must give reasons for its decision.

In addition, there are some other limitations: CPR 27.5 (No expert evidence without leave – not much different from the PCC), and CPR 27.2 (b) and (c) (No disclosure and inspection and the general CPR provisions on evidence are disapplied).
 Welcome though this is, it is not happening immediately – although it is quite possible that claimants could wait until the procedure is implemented.  When implemented it will mean two things for attorneys considering litigating in the PCC.  First, it opens up a real opportunity for clients in relation to really small disputes (concerning copyright, designs or trade marks); and secondly, in such cases the attorney needs to be aware that costs may be even more limited than in under the current PCC procedure.  As the octopus keeps reminding attorneys, the fact that there is a maximum level of recoverable costs in the PCC does NOT mean that the judge is going to award costs up to that maximum level, so the difference may not be as great as the difference between £50,000 and zero. The second is a warning to attorneys that, just because the small claims track is not available in the PCC yet, it does not mean that there may not be an impact. Deakin v Card Rax and Bees Knees Trading [2011] EWPCC 3 was heard in June 2010 and judgment was given this February 2011.  It is one of those apparently sorry pieces of litigation where it seems that the rational perspective of at least one person has been blurred by their feelings.  What looks to be a minor copyright claim between two “ladies” who run “SMEs”, and involving a “third lady” (who had money), has caught seven different parties in its web and involved five cases to adjudicate.  The issues were distilled from some 65 or so, to a mere 36 issues, which are set out conveniently for readers in the Annex.  As the judge observed (possibly like all too many IP disputes), “the action had in truth become a fight about its mountainous expenses and costs” (para 12, 13). The essence was a dispute about greetings cards – it seems this is a very litigious business judging by reported cases on greetings cards and the like. The case, heard by Judge Michael Fysh QC (under the old rules) is worth reading just for his analysis of the evidence given by the witnesses, and learning how the balance of such evidence may play out: not altogether in favour of the claimant, although the defendant’s evidence was also found to be wanting in places.  In all, the judgment runs to 330 paragraphs.  That gives an idea of the scale of the arguments. However, for the purposes of this note, paragraph 19 is the one of interest.  Counsel observed that “the case [at least one significant aspect of it] should have been cast as a County Court money claim arising from alleged breaches of contract - and fit for the small claims track at that”.  The argument was that this was essentially just about licence agreements and payments under them, not copyright infringement.  Although the judge found that this was indeed the case (since the licences had not been terminated) we are left not knowing in this judgment what the impact of that was on costs.  In other cases which should have been brought on the small claims track, but were not, the Court has penalized the relevant party seriously in costs (see for example Peakman v Linbrook Services [2008] EWCA Civ 1239 – although in that case one might have expected costs to be awarded against the judge, based on the Court of Appeals comments).  Readers' further information would be welcomed.

PCC Page 42: Octopus-watching continues: giant squid v small fry .. and the prospect of settlement

Incipiently inspired 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 42nd, former CIPA President Alasdair Poore returns from his grand tour of the United States and regales us with some thoughts on the prospect of settlement:

Cautious and Co are still keeping a watching brief on the Patents County Court while their claim moves gradually on.  A couple of cases, one unreported, illustrate smart and not-so-smart ways of using the Patents County Court.

Liversidge v Abbott Laboratories (or maybe Abbott Laboratories v Liversidge,  unreported), illustrates a smart approach: Be selective about the relief sought, and make the PCC an attractive forum for both parties.  The case involved Abbott’s best selling drug, Humira, used in injectible form for the treatment of rheumatoid arthritis.  Liversidge alleged that an injector used for administration of the drug infringed a patent which he had recently been granted (EP 2067496).  Abbott dispute this and sought revocation of the patent.  The case could have answered one of the questions posed earlier in the PCC pages: what happens if parallel cases are launched in the PCC and the Patents Court almost simultaneously? 

In this case Abbott issued proceedings in the Patents Court for revocation and Liversidge issued proceedings in the PCC for infringement.  The cases could not have got closer: they were commenced on the same day and had received consecutive claim numbers on issue – the claim in the PCC having been issued in the Royal Courts of Justice (Chancery Registry) (section 2.2 PCC Guide).  Liversidge said that he would not be able to contemplate proceedings in the High Court because, if he lost, he would be bankrupt.  On the other hand Abbott contended that proceedings relating to infringement of one of the world’s leading drugs were hardly appropriate to the PCC.  Initially the parties could not agree even on which forum should hear a transfer application; Judge Birss QC therefore invited an application for transfer in the PCC.

Before the hearing, however, the parties reached a very pragmatic decision:  Liversidge agreed with Abbott that he would not seek an injunction in relation to the infringement claim, and that damages should be awarded as a reasonable royalty, this being based on the value of the syringe component, without including the value of the drug in the syringe.  On this basis Abbott was willing to have the case heard in the PCC.  This seems to be a victory for common sense.

It might be noted that the case was started before the damages limit was introduced in the PCC, and such a solution might be more difficult now.  But a bit of imagination might be engaged to ensure that the damages limit does not present a practical barrier – by agreeing to waive the limit or possibly to agree an alternative limit or approach to calculation, or by settling for some damages being better than none.

The second example, Martin Moore v Mark Plant Ltd [2011] EWPCC 25, was not such a happy case.  It involved alleged infringement of a Community registered design for a door knob (000908272-0001).  An incidental part of the decision is what is (or in this case, is not) behaving “unreasonably” such that the court should make an order for costs at the conclusion of the hearing.  Such an order would mean that those costs would be outside the scope of the cap on costs.  The case also illustrates the desirability of putting an explicit time limit on settlement offers or at least monitoring them to ensure that an offer is formally withdrawn when it should not longer be applicable – otherwise you could end up in a seemingly pointless hearing on whether a settlement has been reached.

The background was that the defendant made an offer of settlement on 3 May 2011.  Given that they had apparently dealt in only 88 knobs, and were happy to undertake not to deal in them in the future, this seemed rather sensible.  That offer was continually declined over a few weeks.  Then, on 19 May 2011, the defendants, having found some critical prior art, filed a defence and counterclaim, and telephoned the claimant’s solicitors to say (among other things): “If his client did not discontinue the proceedings forthwith, our client would be forced to incur significant costs, which our client would seek to recover from the Claimant on an indemnity basis.”

A week later, on 26 May 2011, the claimant’s solicitors purported to accept the offer.  A hearing was necessary on this.  Judge Birss rejected the argument that the settlement offer was still open to settlement, saying:

“it is absolutely plain that by 26th May circumstances had changed. … In my judgment the correct approach is to take an objective construction of what was going on.  To an objective party in the position of the Claimants, seeing what was emanating from the Defendants over the series of events from 16th, 17th and 19th, but in particular the 16th and 17th, it would have been clear that the Defendants had by then withdrawn the offer that they were making to settle these proceedings on the previous basis.”

In a final twist, the defendants applied for costs under CPR 63.26.  Readers will recollect that this provides that “Where a party has behaved unreasonably the court will make an order for costs at the conclusion of the hearing”; and that such costs are not counted in the capped costs for the proceedings as a whole (CPR 45.43).  To the frustration of the defendants Judge Birss QC decided that the fact that an objective (reasonable) party would have concluded that the offer had been withdrawn (and therefore that there was no settlement) did not mean that it was unreasonable to argue the point.  CPR 63.26(2)

“is concerned with the behaviour of the parties in terms of the behaviour of the process of the court, and that is different from making assessment in relation to the objective construction of the parties' intentions”. 

Presumably it would be necessary to show something like no reasonable party would have concluded that such an argument could succeed.

The decision, illustrating that the jurisdiction to award “off scale costs” will be exercised only when there is behaviour in the proceedings which is unreasonable, is welcome.  However, it is all too easy to see that this could be a recipe for cost wasting activities which are “just arguable”.  However, if such conduct happens repeatedly in a case, perhaps it is then possible to argue that such conduct is an abuse on the basis that it is contrary to the overriding objective (CPR 1.1(2)(b) and (c)): costs in such a case will clearly cease to be proportionate.

PCC Page 41: Liimiting damages and “family” disputes

Regally regaled 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 41st, former CIPA President Alasdair Poore detaches himself from his beloved topics of disclosure and privilege and faces up to the harsh realities of damage limitation exercises where both parties are in pretty bad shape.

Over the last few months Cautious’s octopus has spent too much time focusing on the tentacles in his own case, and has taken his eye off the ball -- not a good thing for a football results predictor.   Meanwhile, stories unfold in the PCC which deserve some mention. The case of Victor Ifejika v Charles Ifejika shows that stranger events can call on the skills of His Honour Judge Colin Birss QC.  More on that in a moment. First, one year has passed since the PCC was first swept by the new broom.  The Report Card indicates that substantial progress is being made in the PCC.  The Judge reported at the CIPA Congress that the number of cases issued in the PCC has been increasingly steadily, with over 100 new cases in the last year.  Users are gaining confidence in the forum.  The Judge’s track record is dealing with cases in a sensible, robust and proportionate way – as illustrated in Ifejika v Ifejika.  

 Secondly, readers will already be aware of the implementation of the damages limit in relation to the remaining all proceedings in the PCC.  This came into effect on 1 October 2011, under the provisions of the Patents County Court (Financial Limits) Order 2011 (reported on the PatLit Blog here). The list is still shown as part of the Patents Court Diary's Pending matters – see the section at the end under the heading Patents County Court (note that the information on the Patents County Court page is still wildly out of date; can the Ministry of Justice please sort this out?) shows that there has been at least one full trial on a patent case issued under the new regime in Mastermailer v Horler (judgment awaited).  It is time for the court to get its teeth into more patent cases, and for patent attorneys to show their clients (or perhaps more accurately, their clients’ competitors) that the PCC means business. The Judge (and this octopus) calls for more patent attorneys to get their tentacles into the PCC.  

Thirdly, the court has moved to The Rolls Building (Court 20 – is this the final destination) Meanwhile, what of Ifejika v Ifejika?  Reported on 6 October 2011 at [2011] EWPCC 38 from the The Rolls Building, one notices something is immediately amiss with the name of the case.  Claimants and defendants with the same name are usually confined to family disputes.  You will not be disappointed to discover that this is the case here too. 

 This case was started in 2008, in the High Court, before the new PCC regime was in place.  It originates in a dispute between two brothers about registered designs and unregistered design rights in the “Hot House” contact lens cleaning device.  The case has already been up to the Court of Appeal [2010] EWCA (Civ) 563 (while it was being heard in the High Court, ironically by Judge Fysh QC, the former PCC judge, but sitting as a Deputy Judge in the Chancery Division).  Following this it was transferred to the PCC in early 2011.  It has all the appearance of an unfolding tragedy (in the dramatic sense). 

 The case has now been before Judge Birss on three occasions.  On the first, he made some enquiries about how much was at stake.  The response was that, in relation to one of the designs the amount was only £35!  Estimates for the other design ranged from £25,000 to £500,000. (see para 2 of the most recent judgment, at [2011] EWPCC 38).  This illustrates a very practical approach to making parties think about how valuable a case is.  In IP cases, where typically the prayer is for an inquiry into damages, the defendant should use this to press for further information, so that one can be sure that the case is being addressed in a proportionate manner. At the second hearing, case management directions were made.  They are usefully appended to the end of the judgment at [2011] EWPCC 38, in the Annex. The third hearing was about a further development – and shows a practical application of the “proportionate approach” to be used in the PCC.  The trial was scheduled for 19 October.  At the case management conference the judge, it was ordered that three witnesses were to be heard.  One of these, the only independent witness in the case, had reportedly stated in emails in the past: "I cannot believe that Victor is still trying to lay claim to your invention just because he provided financial support to the project".  Despite his now saying that his recollection of events quarter of a century ago might not be too reliable, Charles Ifejika regarded him as a crucial witness.  Unfortunately, this witness had serious family issues, including dealing with the death of his father.  These issues meant that he would be out of the country and could not any longer be present at the hearing.  The application was to reschedule the hearing. 

 Victor Ifejika opposed the adjournment of the hearing.  He was in serious financial difficulties – caused partly by his previous solicitors claiming costs of the hearing before Judge Fysh QC.  This money claim would take place before any new PCC hearing date (on the substantive dispute).  The only lifeline was Victor’s application for costs in the Court of Appeal (in which he was successful), but this had been adjourned until after the PCC hearing! 

 Judge Birss QC looked at this difficult family tragedy in a practical way.  The case had been going on far too long already.  It was important to keep it proportionate.  Charles Ifejika’s witness had given a witness statement which could be relied upon.  It was right that, in normal circumstances the witness should be open to cross examination, and this inability to do this would affect the weight to be placed on the evidence. However, the risk was that, if the hearing was delayed there would be no hearing, because of Victor’s financial position – brought about at least in part by the long running dispute.  Balancing these risks and applying a sensible approach, Judge Birss QC decided (para 20) that the original hearing date should be retained. Score (an octopus view): Birss 1 Dickens 0".

PCC Page 40: IPOff in privileged company

Providentially proffered 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 40th, former CIPA President Alasdair Poore continues his review of the seemingly endless issues caused by privilege ...

Last week Cautious was considering an application for disclosure of IPOff’s instructions to their “independent” design agency, Fishy Designs.  No punches were going to be pulled on the application.  However, before putting pen to paper, IPOff’s solicitor sent a revised list with a bunch of documents.  These include IPOff’s instructions to the design agency.  Frustratingly these have large parts redacted, with heavy black lines crossing through the relevant text.  The accompanying letter explains that the missing passages reflect legal advice provided to IPOff by its solicitor and have therefore been redacted as they are privileged.  The rest of the document says nothing of any interest at all. 

 Cautious’ patent attorney is considering his options. 

 As noted last week, the antiquated world of privilege was thrown into disarray by Three Rivers (No 5) [2003] EWCA Civ 474.  This case arose from the BCCI litigation in the following way.  As part of the process of preparing for the inquiry into the collapse of BCCI, the Bank of England had set up a special team to coordinate.  This team instructed and obtained advice from the Bank of England’s lawyers.  So far so good.  The instructions provided to the lawyers and advice from them to members of the team was privileged as legal advice (Legal Advice Privilege).  Note that the documents did not benefit from litigation privilege, which is potentially wider, as the enquiry did not qualify as “litigation”. 

 In order to instruct their lawyers, members of the special team in the Bank requested and collected information from other employees of the Bank.  It was argued that the information, documents recording it etc., that the other employees provided was for the purpose of the Bank obtaining legal advice and, being thus privileged, did not have to be disclosed.  The claimants did not agree, and made an application to the Court.  Somewhat to the surprise of many observers, the Court of Appeal held that legal advice privilege only applied to information provided by and advice given to the select team whose job it was to coordinate and take advice from the outside lawyers.  In particular a communication from an employee of the Bank who was not a member of the select team, to a member of the team, in order to enable a member of the team to send that information on to the outside lawyers, and so to enable the lawyers to give advice was not privileged.  Nor was a communication of legal advice from the outside lawyers to someone in the Bank who was not a member of the team (para 31). 

 Leave to appeal to the House of Lords was refused.  When a later opportunity arose for the Lords to express a view, all that some of them said was that it would have to be reviewed in the future -- not a very convenient outcome, and one which has lead to a flurry of concerned arrangements being put in place for ensuring that, when necessary, legal advice benefits from privilege, such as house rules on who should seek and receive advice.  Sticking to the rules,
 Cautious’ patent attorney rather naturally thought that that must mean that advice originating with IPOff’s solicitor and ending up in the hands of a third party – not even an employee of IPOff – must surely not be privileged.  After a bit of research he has found he is wrong, although wrong in the good company of Anthony Watson QC. 

This argument was tested in USP Strategies Plc v Unicorn Strategies LLC [2004] EWHC 373 (Ch), an interesting case shortly after Three Rivers (No 5), showing that copyright really can be used to commercial advantage to protect business schemes, in this case a warranty scheme.  The argument was over advice which had been provided by Isle of Man lawyers and which had been incorporated into documents passed on to the party to whom this warranty scheme was being offered.  Mr Justice Mann dismissed Watson QC’s argument (see paras 16– 26).  Three Rivers was not only consistent with, but supported the position that, since the original advice (from the Isle of Man lawyers to their client) was privileged as legal advice, so too was anything which evidenced it.  So a copy of the advice sent on to the third party, or a summary of it, or indeed oral testimony, would not be admissible or discoverable.  This would not apply if privilege was waived, or the document had ceased to be confidential as might be the case if it were just passed to any third party.  And if a subsequent document which was disclosed included the advice or evidence of it, it could be redacted in a manner which excluded the advice.  This was summarised in Style & Hollander on Documentary Evidence (now Hollander (Sweet & Maxwell)): 

"If A shows a privileged document to his six best friends, he will not be able to assert privilege if one of the friends sues him because the document is not confidential as between him and the friend. But the fact six other people have seen it does not prevent him claiming privilege as against the rest of the world." 

 So Cautious will be disappointed in its desire to see exactly what instructions IPOff gave to its design agency. 

 In passing, it is interesting to look at this in the context of patent attorney advice on patent filing and prosecution.  One might be concerned that an effect of Three Rivers (No 5) is that certain communications between a patent attorney and his client might not be privileged.  Is the inventor the person within a company who is seeking and receiving legal advice?  Where there is one, might this not be the in-house IP coordinator rather than the inventor, or at least the person who initially instructs the patent attorney?  Fortunately, at least where the issue is about filing and prosecuting UK, EPC and PCT applications this issue is not relevant.  The reason is that privilege for patent attorneys arises in two ways: under s.190 of the Legal Services Act (for advocacy and the conduct of litigation), and s.280 of the Copyright Designs and Patents Act (equating a patent attorney to a solicitor in relation to the provision of advice relating to the protection of inventions etc. (the equivalent provision for trade mark attorneys is s.87, Trade Marks Act 1994).  In the latter case, s.103 Patents Act 1977 equates “patent proceedings” to litigation and so the form of privilege which is given in relation to prosecuting patent applications is (also) litigation privilege.  It therefore covers communications with “third parties” for the purpose of collecting information for the litigation.  The same may not be true of materials prepared for prosecution, say, in the USA.

PCC Page 39: The Robot Octopus hides the paperwork

Fastidiously fashioned 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 39th, former CIPA President Alasdair Poore continues his account of the effect of privilevge on the battle between the parties as to what documents the alleged infringer has to disclose.

Cautious’s patent attorney was rather surprised last week (well, a few weeks ago now) to learn that IPOff’s solicitors are claiming that the instructions IPOff sent to their “independent” design agency are privileged.  Apparently they contain legal advice.  As readers know, a key element of IPOff’s case that the Robot Octopus does not infringe unregistered design right is that they (or their design agency) designed the Robot Octopus independently and did not copy if from Cautious.
 IPOff should have mentioned privileged documents when giving disclosure.  Privilege is the right (of the client) to withhold the document from inspection, not to object to listing the document in the first place.  This is made clear in the Civil Procedure Rules, CPR31.10(4), which specifically provides for claims to withhold inspection, and Form N265, which allows the person listing documents to state:

“I have control of the documents numbered and listed here, but I object to you inspecting them ...”, and “I object to you inspecting these documents because ...”.

 (Form N265 is headed “Standard Disclosure”, but is clearly intended to be used for specific disclosure in the PCC, as provided in the Patents County Court Guide, Annex A (which is still on the Justice website under “Patents Court Guide”!))
 CPR31.10(4) (and N265) require the party to list the documents in a convenient order and manner and as concisely as possible. Practice Direction PD31 3.2 requires this to be normally in date order, numbered consecutively with a concise description.  Phipson on Evidence (Sweet & Maxwell) 17th edition, (pp 23-68) observes that this appears to require individual listing and identification of privileged documents and the basis for withholding them from inspection; but that there is no reported decision on the position, and the practice is still to list documents generically (for example  “Correspondence between the Defendant and their solicitors for the purpose of obtaining advice”).  Phipson argues that this may well be in accordance with the overriding objective (ie proportionate) but  

"in an exceptional case, where the claim for privilege has been shown to be unsatisfactory, [PD31] appears to give the court power to order privileged documents to be listed individually”.

So can Cautious challenge the claim to privilege? Is this case exceptional – Cautious's patent attorney would like to think so.  And there seem to be two grounds, one strong, the other less so.  The first is that IPOff appears not to have disclosed the relevant document anyway.  The instructions to the independent design agency, Fishy Designs at all, are clearly not “correspondence between the defendant and their solicitors for the purpose of obtaining advice”, and it seems most unlikely that they are “in contemplation of litigation”; so they have not made a claim to withhold the document from inspection at all at this stage.
 Secondly, it seems implausible ordinarily that instructions to a design agency would be privileged.
 Apparently there was copious authority historically to say that “a claim for privilege is conclusive” – so that the claim could not be challenged.  But, Phipson (pp 23-69) says that this was not the reality, and in West London Pipeline and Storage v Total UK [2008] EWHC 1729 the court was prepared to investigate a challenge on the basis that it was highly improbable that a particular report would have been prepared for the purpose of litigation rather than for investigatory reasons.
 Is it possible that instructions to Fishy Designs could be privileged?  Privilege is broadly a non-statutory creature, almost as difficult to get ones hands on as an octopus.  Section 190(2) of the Legal Services Act helpfully explains, in the quasi-algebraic way of that Act, that legal professional privilege applies to any communications, in relation to the provision of reserved legal services (in this context to provision of litigation and advocacy services) to non-solicitors (including, for example patent and trade mark attorneys) “in like manner as if P had at all material times been acting as P’s client's solicitor”.  The section does not help by saying when it applies in relation to a solicitor, and for this one has mostly to trek through dusty authorities from the last century, or at least one did until the collapse of BCCI.  That lead to the Three Rivers litigation, which bounced up and down to the Court of Appeal and House of Lords too many for an octopus to count.  More on the octopus’s encounter with fresh water, especially Three Rivers (No 5) [2003] EWCA Civ 474, next week.  Nor does section 190 help when it comes to looking at when non-solicitors may claim legal advice privilege.  More on that and the subsequent saga of Prudential [2010] EWCA Civ 1094 in the weeks to come.

PCC Page 38: Has the Robot Octopus lost control?

Has IPOff's disclosure got Cautious
into a real stew ...?

Meticulously masterminded 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 38th, former CIPA President Alasdair Poore considers how a poor and apparently inadequate attempt to comply with the requirement of disclosure can be dealt with.

"IPOff has asserted that the design of its allegedly infringing Robot Octopus was independently created – produced by an independent design agency, Fishy Designs.  In the Case Management Conference (CMC), the PCC ordered specific disclosure in relation to the allegation of independent design.  IPOff provided a list of documents, and copies of the disclosable documents on the list [Note: this list should include non-disclosable documents (such as privileged ones) although usually in a fairly cursory manner].  However, Cautious’s patent attorney thinks the list is deficient and wrote to IPOff’s solicitors, asking that his client make a better effort at disclosure.
 The response is blunt. Our client has done a proper job.  There is no further disclosure.  They add that the instructions to Fishy Designs are privileged, as containing legal advice [not sure about that!]. Cautious’s patent attorney’s assistant has prepared a note on current position: “You have asked me to comment on what steps we can take in relation to IPOff’s clearly inadequate disclosure.
 The first point to make is that, even where a party has given disclosure, you can make an application for further disclosure (CPR 31(12), PD31 5.1).  The application must set out specifically what documents are sought and provide evidence in support of the application (PD31 5.2, and see the White Book para 31.12.2).  The Court must take into account the overriding objective (PD31 5.4), and so it seems that the application or evidence should also explain why disclosure is proportionate.  However, where it appears that the failed to comply with the obligations in the CMC Order, it will usually make an order (PD31 5.4).
 In this case there are several aspects which we can rely on:  

·         There appear to be several deficiencies in relation to disclosure of emails.  First it is clear that “electronic documents”, such as emails, word documents and spreadsheets are disclosable (CPR 21.4 and PD31A 2A.1 and also see the Practice Direction on Disclosure of Electronic Documents PD31B at para 5 for examples).  The standard form of “Disclosure Statement” which is set out in PD31A, Annex (and N265) specifically requires a statement as to the extent of search carried out – including a statement of what electronic document resources have been searched (such as PCs, laptops and servers).  IPOff has simply left that statement untouched.  Clearly it should have searched some of these resources.  Indeed its reference to emails seems to show that it has.  Note that where “there is a failure to make a sufficient search, the court will "usually" make such order as is necessary to ensure that the obligations on the respondent are properly complied with”  (Digicel v Cable & Wireless [2008] EWHC 2522 at para 36 applying PD31 5.4) 

·         PD31A also makes specific comments about “deleted” documents: “In addition … the definition [CPR 21.4] covers those documents that are stored on servers and back-up systems and electronic documents that have been ‘deleted’.”  This makes it clear that IPOff should have considered searching for deleted documents on some of those resources.  In practice ‘deleted’ documents often still remain in place after deletion; they simply cannot be viewed using simple resources such as the application from which they have been deleted, or the file listing. 

·         There is also an obligation to search for copy documents where these might be materially different from those disclosed (CPR31.9) – these might for example be on a colleague’s computer, or smart phone.  This rule means that it is not necessary to list every copy – eg where they do not differ in a respect which a party intends to rely upon or which may assist either party.  However, clearly when the copy of the document which is disclosed has been deleted, any remaining copies which have not deleted should be disclosed. 

·         PD31B 20 to 23 make clear what the scope of a reasonable search for electronic documents is.  It should take into account the overriding objective, including dealing with a case in a manner which is proportionate (PD31B 20).  Where specific disclosure is sought of documents which are not “reasonably accessible” you must demonstrate that the relevance and materiality justify the cost and burden of retrieving and producing the document(s).  Thus ‘deleted’ documents, unless they are readily accessible from an archive copy, may require us to show that production is justified. 

·         Note that under the Practice Direction on Disclosure of Electronic Documents (PD31B 8), the parties are urged to discuss electronic disclosure before the Case Management Conference.  [There is an extensive discussion of electronic disclosure, emails and back-ups, and failure to agree the extent of search in Digicel v Cable & Wireless [2008] EWHC 2522 (see para 33 onwards].  This must be even more relevant in the PCC where the objective of the procedure is slim-line.  But it is not clear that discussion would have been realistic here, where IPOff was disputing giving any disclosure but it is pretty clear that they should have raised it as soon as they knew that disclosure was required.  PD31B 9 specifically says that where a party plunges in without discussion the court may require it to do it all again.It might be a chance to show you superior knowledge of the electronic disclosure rules!
 Secondly, IPOff has not listed any previous drafts of the drawings, although the minute refers to the 5^th draft being sent to it.  Clearly earlier drafts exist and it seems probable that IPOff was sent copies of them, and should have listed them whether or not it still has the copies. IPOff should also have considered documents in the possession of Fishy Designs. CPR 31.8 covers not just documents in a party’s possession, but also those which a party is entitled to, or of which it is entitled to obtain copies (see the White Book, para 31.8.2, 31.8.3 for a further explanation of possession and control, and for example Langbar International v Rybak [2007] EWHC 3255 para 47 (only need to establish prima facie case for control)).   It seems quite possible that Fishy Designs have some documents which belong to IPOff.  This should cover both the emails and, if IPOff deny having previous drafts of the drawings, those previous drafts.”
 [This is rather a bold statement.  Only some documents belonging to subcontractors will be ones which the principal is entitled to or to make copies of.  This will be subject to the terms of engagement with the contractor.  Secondly, the common position for a person providing services, is that material created for the principal, belong to the principal.  That means that original drawings may well belong to IPOff.  This is a good reason for making sure that the client is aware of looking for documents their subcontractors have generated.  However Fishy Designs’ copy of letters sent by IPOff belong to Fishy Designs, and Fishy Designs’ copies of letters sent by them to IPOff also belong to Fishy Designs.  The same would seem to apply to emails – so it is far from clear that Cautious could insist on disclosure of these.  However, Langbar v Rybak ([2007] EWHC 3255 para 47) notes the difficulty that the other party will have in knowing what is in the principal’s control, and provides that only a prima facie case for control need be established – go for it.] One further possibility that Cautious might consider is to approach Fishy Designs for its side of the story.  There is no property in witnesses and, unless they are employed by the other party, no ethical reason for not approaching them.  There may of course be some practical reasons, so tread with care".

PCC Page 37: The Octopus – keeping documents up its sleeve

Cautious's list of desired documents--
does it match IPOff's deliverables?

Elegantly embroidered 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 37th, former CIPA President Alasdair Poore considers whether IPOff has complied with an order to give specific disclosure of certain documents relevant to this dispute ...

In the patent and design right infringement proceedings brought by Cautious against IPOff in the PCC, IPOff was ordered to give specific disclosure.  This was limited to documents relevant to IPOff’s allegation that they had independently developed the designs of the Robot Octopus (which, Cautious alleges, infringe Cautious’s unregistered design right).  The form of the order was the standard form of order, as provided in the PCC Guide (currently, as noted in last week’s PatLit Blog, bizarrely to be found under “Patents Court Guide” in the “Patents Court” page on the Justice web site):

The parties will make and serve on the other of them a list in accordance with form N265 of the documents in their control which relate to [issue X] by [date].

IPOff served the list of documents in accordance with the Order. IPOff’s solicitor also supplied copies of relevant documents with a covering letter saying that, in order to save time and effort, they had made copies of the documents as well as supplying the list in accordance with the Order.  Could Cautious's patent attorney please confirm that they would meet the costs of copying?

Cautious's patent attorney’s assistant has reviewed the documents and list.  His conclusion is that there is something fishy going on.  Cautious's patent attorney is more reserved about whether there is something fishy, but there do seem to be some problems.  He writes to IPOff’s solicitor:

“Dear xxx, thank you for your client’s list of documents and also for sending us copies of the relevant documents.  We will revert on the question of costs in due course.

In the meantime, we are concerned that there appear to be some significant gaps in the disclosure you have given.  For example, in relation to the creation of your client’s alleged independent design, you are relying on  it having been created by an independent design agency.  The disclosed documents include a note of a meeting between your client and the design agency, Fishy Designs.  The note refers to the “5^th draft of the drawings emailed to us earlier in the week”.  Clearly (a) there have been earlier drafts which have not been listed; (b) there also appears to have been email correspondence with Fishy Designs – you state that such email correspondence was in the possession of your client but is not any longer as it has now been deleted from the system; (c) there is no reference in the list to any instructions provided to the design agency; and (d) there is no reference to other documents created by the design agency.  We remind you of your duties in relation to proper disclosure as set out in the Practice Direction PD31A 4.4 “the legal representative must endeavour to ensure that the person making the disclosure statement … understands the duty of disclosure under Part 31”.  It is quite apparent from the extent of disclosure made that your client does not understand what these duties are or is deliberately concealing relevant documents.  Please can you make clear these duties and serve an amended list within 7 days including all the documents in your client’s control which relate to the allegation that the design made by your client was made independently. Please can you also emphasise the serious consequences which attach to making a false disclosure statement [The party making disclosure is required to include in it a ‘Disclosure Statement’.  The form of this is set out in the Annex to PD31A.]  In particular, please point out to your client that making a false disclosure statement is contempt of court and your client could be sent to prison for breach.  [See Civil Procedure Rules CPR 31.23 and PD31A 8.  A slight overstatement.  The failure is “without an honest belief in its truth”, but still a point to make to a client]  We also remind you of your duty to explain to your client that it should ensure that that it preserves all documents.  This is additionally made quite clear in PD31B 7, and please let us know specifically when these emails were deleted and how this came about. [PD31B relates to disclosure of Electronic Documents]…”

Some comments on the disclosure process: 

·         The rules on disclosure are set out in Part 31.  The general procedure for standard disclosure is set out in Part 31.10.  Although, in the PCC, disclosure is not “standard disclosure”, but specific disclosure limited to particular issues, it is as well to understand the overall procedure. 

·         Disclosure is carried out by preparing a list of documents (see PD31A 3).  It is easy for clients to become confused as to what disclosure is.  It is rather natural for them to understand that it is supplying copies of relevant documents – rather than preparing the list (see CPR 31.2).  It is possible (and may be convenient in simple cases) for parties to agree to disclose documents without making a list (CPR 31.10(8)(a)). 

·         The list of documents must (usually – see CPR 31.10(8)(b)) contain a disclosure statement (CPR 31.10(5) to (7))).  The content of disclosure statement is set out in PD31A 4.2, and the specific form is set out in PD31A Annex.  The standard form of disclosure list is set out in form N265, as noted above, and conveniently this includes the form of disclosure statement (which rather suggests that IPOff has been rather careless in signing it, given the current state of play). 

·         Obtaining copies, or seeing the documents, is called inspection. The right to inspection is set out in CPR 31.3, and the procedure for inspection in CPR 31.15.  In this case, as provided in the form of order in the PCC Guide (see Annex A to the Guide): “If any party wishes to inspect or have copies of such documents as are in another party's control it shall give notice in writing that it wishes to do so and such inspection shall be allowed at all reasonable times upon reasonable notice and any copies shall be provided within 14 days of the request, upon the undertaking of the party requesting the copies to pay the reasonable copying charges” (note that the wording of this is slightly different to CPR 31.15). 

·         It is always worth considering whether you want inspection, as opposed to just receiving copies.  In some cases seeing the actual document, especially if it has manuscript markings on it, may be important.  Could IPOff be trying to do something underhand here? 

·         As noted above, and is made clear in the disclosure statement, a party has a duty to make proper disclosure (see CPR 31.23), and its legal advisor has a duty to make clear the extent of the client’s obligations in making disclosure (PD31A 4.4).

Next week:  Turning the magnifying glass on the Octopus sleeve ...