This article first appeared in IAM Yearbook: Building IP value in the 21st century 2017, a supplement to IAM, published by Globe Business Media Group - IP Division. To view the guide in full, please go to www.iam-media.com.
Controlling the wheels of justice can be more of an aspiration than a reality. A character in John Galsworthy’s 1910 play “Justice” said: “Gentlemen, justice is a machine that, when someone has once given it the starting push, rolls on of itself.”
A century or more after that, a civil lawsuit can still seem to have a mind of its own, spawning disclosure documents, witness statements, and courtrooms full of expensive people sitting for day after day.
Courts have in times past tended to see litigants as supplicants rather than customers. This has changed, as it had to. Courts, particularly those dealing with IP and other business-related matters, can see that efficient procedures and shorter trials are a necessity not a luxury; particularly so where there may be alternatives to litigation in the court system. If patents subsist in various countries a claimant frequently has a choice of arena for a dispute with a rival. The courts are alive to the fact that they are in a competitive market.
There have therefore been various stabs at reducing the time and expense of civil justice in the UK. The High Court’s “Woolf reforms” a few years ago involved a wholesale rewriting of the court rules, with the object of making the administration of justice simpler, quicker and cheaper. This has probably led to things being better than they were before, but old habits die hard - cases were still taking too long to come to court, and were lasting too long in court when they eventually did so.
More recently, a number of courts dealing with civil litigations in the business sector have got together. They have set up a pilot scheme to try and reduce the time and cost of litigation. It is called the “Shorter Trial Scheme” or STS for short. The courts doing this include the Technology and Construction Court and the Patents Court. The scheme has been running since October 2015. It will last for an initial period of two years. It is a voluntary scheme, not compulsory.
The thinking behind the STS is that if each case has a designated judge who will exercise firm control over procedures and timing, then the parties will get a quicker and cheaper result without any loss of quality.
That thinking it is not entirely new. Much of it emanates from the Intellectual Property Enterprise Court (IPEC), a junior branch of the system dealing with IP cases in which the trial will last two days or less. The IPEC has its own procedure where the judge is highly directive, and lays down strict timetables. Time consuming matters like document disclosure and cross-examination of witnesses are all tightly controlled. On the financial side, there is an upper limited for costs recovery, set a maximum of £50,000. There is also limit of £500,000 on damages recovery. This court has proved attractive to its customers. It has been a success.
Thus, for the last five years or so in the UK the IPEC has been handling disputes which would previously have required a trial lasting a week or longer, and dealing with them at a trial lasting a day or two. The cases are ready for trial within six months of the initial procedural hearing.
The success of the IPEC has started to sink in. The judges in the business-focused sections of the High Court saw this. There was clearly a demand from users for quicker and cheaper procedures. They thought “Why can’t we have some of that in our courts too?” The result is the STS. It has the same flavour as the IPEC procedures, but beefed up to accommodate cases that are somewhat more complex.
The courts in London have for a long time been a favoured jurisdiction for patent cases. There are specialist judges, both at first instance and in the appeal court. Among the lawyers, there is a substantial sector dealing exclusively with patent and other IP disputes. It is a mature forum. The IPEC has shown that, good as the system is, it can still be improved. The High Court has seen what can be done and is anxious to offer a similar service for the larger cases. In light of the fact that the High Court has an unlimited jurisdiction, the upper limit for trial length in the STS has been enlarged to four days (including pre-reading time for the judge). There is no costs cap. The other new procedures are largely similar to those in the IPEC but with some tweaks. The main features are:
- The judge handling the initial procedural Case Management Conference (CMC) will normally be the judge hearing the case at trial.
- Parties are encouraged to have applications dealt with on paper instead of at hearings.
- Disclosure of documents is limited. Initially the parties need only disclose those documents on which they rely. There is no “standard disclosure” like in most mainstream actions. If a party thinks that the other party has relevant documents from the past that will help its case, and if the other party does not disgorge them, it will have to make an application for specific disclosure.
- As in the IPEC, the judge will look at limiting the oral evidence at trial to identified issues or topics. At present in the High Court, cross-examination can be virtually open–ended and time consuming. In the STS the parties will have advance notice that their time in court will be limited. This is new for the High Court. It has worked well in the IPEC.
- The trial itself should take place within eight months of the CMC. The judge will give a date for delivery of the judgment, within six weeks of the trial. This is quicker than the general run of cases in the High Court. The quid pro quo for jumping the queue is that an STS case will take up less resource than a regular case.
- Legal costs payable to the winner will be summarily assessed if not agreed. This will involve the parties exchanging schedules of costs after the trial. The judge will assess the relevant costs summarily at a post-trial hearing. This eliminates the possibility of satellite litigation about costs. Wrangling about costs after a trial can take up a lot of effort and expense.
- Current practice in the High Court requires the parties to exchange breakdowns of anticipated costs. This is done at an early stage. The objective is supposed to be to manage and control the amount of costs as litigation progresses. This is called costs budgeting. It must have seemed a good idea at the time, but the reality is it is widely perceived to be a wasteful box-ticking exercise that can cost more money than it saves. It cannot be universally thought to have been a good idea across the board, because there is no requirement in the STS for costs budgeting during the pre-trial period. In the STS, schedules of costs are needed only after the trial, and therefore only after the costs have been incurred. The result is that the court is to make a “quick and dirty” assessment after the event, as opposed to the tiresome procedures that can apply in other cases. The costs landscape under the STS is deliberately low maintenance, although without any actual cap on recovery.
The costs cap in the IPEC has been an attractive feature for the level of cases which that court deals with. This is so even where a party knows at the outset that it might not recover much of what it has spent even if it wins. The IPEC costs cap does of course work both ways. It means that a party can quantify ahead of time the maximum it will have to pay if it loses. The maximum is £50,000. But this is not a global figure. Rather, it is made up of a number of slices, corresponding to various steps in the litigation. It is rare for the amount to reach £50,000. The risk of losing is manageable. This is part of the attraction of the IPEC.
The High Court does have power to transfer actions to the IPEC. It will normally consider this if the value of the claim is ascertainable from the initial documents filed, and is less than the £500,000 maximum which the IPEC can award. However, the value ascribed to the claim in the initial documents can be a notional figure or a stab in the dark, or even zero if the defendant is not yet on the market, so it is not always simple to make an assessment on the documents alone. The court has tried to dampen down fears that there would be a flood of transfers to the IPEC against the wishes of the claimant, and points out that there were only 7 transfers in the first few months of 2016.
To date, the only alternative to the IPEC has been a full action in the High Court. There is now the halfway house of the STS. Yes, there is no costs cap; but the quicker procedures and the shorter trial length should mean that the parties incur legal costs at a lower level than in a conventional action.
Paragraph 3 above touched on the issue of disclosure of documents, and it compared the minimalist STS procedure with a conventional action. Disclosure of documents (formerly called “discovery”) has long been a bugbear in civil litigation, and particularly so in patent cases. If, for example, a patent is challenged on the ground of obviousness (and it is rare that this is not the case) then the patentee must usually be required to disgorge all its R&D documentation leading up to the making of the invention. Until 1995 the requirement was for this to reach back in time to the earliest moment when the research started. In an attempt to limit this, the initial obligation of disclosure was then limited to a window of 4 years, two years either side of the priority date. But even so the volume of documents could be large. The time and expense of disclosure was often seen as a waste of effort.
Some further changes to court procedures, known as the Jackson reforms, came on-stream in 2013, and these have had an impact on the disclosure process. Two recent cases in the Patents Court (High Court) demonstrate a much more frugal approach, with cost very much uppermost in the court’s mind. Whereas the assumption had in the past been that an order for disclosure of documents was virtually automatic, the question now has to be rigorously assessed against a cost benefit analysis. So, even in a conventional High Court case, disclosure of documents is becoming less of a burden. The STS procedure is even simpler – disclosure of documents is limited, initially at any rate, to those on which the party intends to rely.
I have given a special emphasis to document disclosure because historically the costs involved in that step have been a significant component in patent litigation. But across the board the High Court is becoming increasingly conscious that some of its time-honoured procedures are not necessarily the best way of doing things. There is a general trend towards streamlining procedures, and an awareness that time in a courtroom costs a lot of money. The STS takes this a step further.
Whether this new scheme is a success largely depends on the amount of use that will be made of it. Claimants can choose to designate a case as being within the scheme. The court has power to transfer an existing case into the scheme. The court can do this even if the parties do not propose it.
The indications are that the use of the STS has been fairly limited so far. It has however been running for less than a year. Looking ahead, it needs to be credible, both to users and lawyers. Not so long ago, most practitioners would have been sceptical that an IP action could be done and dusted in two days or less, and with all parties believing that they had had a fair hearing. The IPEC has shown that it is very feasible. As time goes on, that realisation should permeate through the body of practitioners in business-focused courts.
There is really no logic in having an efficient procedure for smaller cases, but having to churn though more formal procedures where there is a bit more at stake. There will always be cases where the stakes are so high and the issues so complex, that a streamlined procedure will not suit the parties. But there is a wealth of cases in between.
The judges in the UK are well aware that in several areas of law there is competition with jurisdictions elsewhere. In patent cases the main competitor tends to be Germany. This shorter trials procedure goes a long way towards meeting the concerns that many potential litigants have in England and Wales. It has obvious attractions, but could wither on the vine unless it is used.