Thursday, 24 January 2013

Lifting the cap: costs orders and abuse of process

Xena Systems Ltd v Cantideck & Another [2013] EWPCC 1 (18 January 2013) is a fairly long (121 paragraph) ruling in the Patents County Court from Judge Colin Birss QC on an inquiry into damages for patent infringement.

The claim related to the infringement of Xena's European patent for a “rolling” platform for use on construction projects (pictured here): The defendants submitted to judgment on liability in August 2011. Following the damages inquiry, which was heard in November 2012 Xena was awarded substantial damages.  The decision noted here relates to, among other things, the costs of the inquiry. The Patents County Court was established to allow greater access to the courts for SMEs with intellectual property issues and, since its recent reform, that court can now cap the level of legal costs which can be recovered from another party. In a damages inquiry such as this, the total costs which can normally be recovered are £25,000 (and in practice usually less). However, where the Court considers that a party has behaved in a manner which amounts to an “abuse of the Court’s process”, the scale costs for claims in the Patents County Court can be disapplied.

Judge Birss QC was careful not to define what may amount to an “abuse of the Court’s process”. However, he was satisfied that there had been an abuse of the Court’s process by the defendants in this claim, given the defendants’ failure to provide disclosure in relation to the recall and modification of infringing platforms, after the defendants had been ordered to disclose such documents at the Case Management Conference. The court also found that a letter sent by the defendants before the inquiry was an abuse of process as it claimed that the total number of infringing platforms dealt with by the defendants was 17 when it had in fact been 38.

 After hearing submissions on costs, Judge Birss lifted the cap on costs and awarded Xena its costs of the inquiry, which were summarily assessed (at the parties’ election) on an indemnity basis. The burden of showing that there had been an abuse of the court’s process was higher than that required to award costs on the indemnity basis, so the award of costs on an indemnity basis followed naturally from the finding of abuse. While the Patents County Court continues to offer significant protection on costs for litigants, this case is a clear example of the Court’s willingness to remove that protection in order to deal with the conduct of a party, where appropriate.

Thanks go to DMH Stallard, solicitors, for drawing the attention of PatLit to this decision.  DMH Stallard acted for the successful claimant in these proceedings.

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