Sunday, 4 March 2012

Pile on the pleas, pay for the privilege

It's okay to have lots of bullets to fire
at the other side's patent -- but it may
cost you dearly if you use them all ...
An eye-catching decision on costs was delivered last month by the Court of Appeal, England and Wales (Lords Justices Elias and Kitchin, plus Sir Robin Jacob) in MMI Research Ltd v Cellxion Ltd and others [2012] EWCA Civ 139, 23 February 2012.

In the wake of its own earlier decision this January (here, discussed by Norman Siebrasse on the IPKat here) that a patent for a method of breaking through the security system of the Global System for Mobile Communications was invalid for obviousness, the Court of Appeal had to determine the level of costs: for (i) the main trial, (ii) the trial of remitted issues, (iii) the application leading to the second trial and (iv) the appeal itself.

Giving judgment for the court, Sir Robin Jacob ruled that no order for costs should be made for the first three of those categories. Notwithstanding the fact that Cellxion was the overall winner at trial, it had only won on one issue but had raised what the court regarded as an unnecessarily large number of points in the issues on which it did not win. Not just this, but it gave evidence which the court described as "wasteful and unsatisfactory". On the excessive raising of points Sir Robin had this to say, at [9]:
" ... We think the defendants were indeed profligate in the number of points they took. A defendant cannot take as many "reasonable" points as it likes and not have to pay for any of them if they are unsuccessful. If he has a large number of potential such points he should make a judgment as to which are the better ones. A good test to apply is not merely "is this point a reasonable runner?" but also "which of my reasonable runners are the best few?" If only a few such points are run and all but one fails, the court may deprive the party of its costs of the unsuccessful points. But there comes a point when more sanction is called for. This is particularly important in a patent action where very often a host of possible defences could be run. A reasonably strict costs regime should make a defendant concentrate on his best – which may indeed also give him a better chance of winning".
While it was appropriate to deprive Cellxion of its own costs on the issue on which it won, this action was nonetheless still not so exceptional that the company should be ordered to pay any of the other side's costs. Since Cellxion's appeal on the remitted issues was close to hopeless, while it won on obviousness it should only have 70% of the costs of the appeal.

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