Background
Main principles
Recent decisions
Comment
In two recent cases the English courts provided helpful guidance on the application of the procedural rules governing the transfer of IP proceedings to and from the Patents County Court (PCC).
IP claims are heard in either the PCC (or regional county courts) or the Chancery Division of the English High Court (or regional High Court registries). The PCC is a specialist county court; while the Chancery Division comprises a general court - which deals with business and property disputes, trusts and probate claims, as well as IP claims - and two specialist courts, one of which (the Patents Court) deals solely with IP claims.
Traditionally, small and medium-sized enterprises and private individuals have been discouraged from bringing or defending actions in the High Court, as the procedure is generally lengthy, formal and expensive. The PCC was established to handle smaller, less complex, lower-value claims. The value of claims heard in the PCC is limited to £500,000 and the maximum amount of costs recoverable by a winning party from a losing party is capped at £50,000 (or £25,000 for inquiries as to damages or accounts of profits). The result has been that prospective claimants and defendants have been able to take cheaper and swifter action in safeguarding their IP rights (and in some cases, to take action when they otherwise would not have done so). The PCC has freed up time for the High Court to deal with lengthier, more complex and more valuable IP actions.
However, despite the general rule that simpler, low-value claims are to be heard in the PCC, while more complex, high-value claims are to be dealt with by the High Court, there have been a number of recent examples of disagreement or confusion over the appropriate judicial forum for claims. The Civil Procedure Rules (CPR) allow parties to make applications to the court to transfer proceedings into or out of the PCC.
Transfers between different levels of court (ie, from a county court to the High Court or vice versa) are governed by CPR 30.3, while transfers based on the type of subject matter in a claim are governed by CPR 30.5.
CPR 30.3 sets out a number of matters to which a court must have regard - for example:
- the financial value of the claim;
- whether it would be more convenient or fair for the proceedings to be held in the other court;
- the availability of a judge specialising in the type of claim in question;
- whether the facts, legal issues, remedies or procedures involved are simple or complex;
- the importance of the outcome of the claim to the public in general; and
- the facilities available to the court at which the claim is being dealt with.
CPR 30.5 provides that a judge dealing with claims in a specialist list may order proceedings to be transferred to or from that list, and that an application for the transfer of proceedings to or from a specialist list must be made to a judge dealing with claims in that list.
Two recent court decisions provide useful guidance on the application of the main principles applicable to the transfer of IP proceedings between courts.
CPR 30.3 in practice
Comic Enterprises Limited v Twentieth Century Fox Corp(1) concerned alleged trademark infringement and passing off between a UK comedy club and the US producer of the television series Glee, in which the defendant US producer sought a transfer to the High Court.
Applying CPR 30.3, the PCC held that the value of the claim was sufficiently substantial to support a transfer to the High Court. The potential financial ramifications to the defendant, should its television programme be pulled off air in the United Kingdom, were significant.
The PCC refused to accept that the factual investigation necessary into 'honest practices' of the parties and the contextual use in the case required a transfer to the High Court. However, the investigation that would be required into the passing-off element of the claim (goodwill, misrepresentation and damage) was held to be sufficiently complex to require a transfer.
In addition, it was held that the scope and number of issues in play were substantial enough to require a transfer to the High Court. The two-day trial system in the PCC would not provide sufficient time to cover them all.
It was decided that the defendant's likely costs in the High Court would be in the region of between £400,000 and £750,000, and the effect of a costs order against the claimant (or an order for security for costs) would devastate the claimant's claim and its business. While the defendant contended that the claimant was wealthy enough to litigate in the High Court, it also suggested that it would seek an order for security for costs against the claimant if the claim were transferred. To satisfy the PCC's concerns over the defendant's inconsistent approach, the defendant undertook not to make an application for security for costs above the PCC's costs cap of £50,000 in the event that the claim was transferred to the High Court.
Ultimately, the decisive factor in this case was the claimant's approach to the litigation. It had attempted to conduct High Court style litigation in the PCC, seeking not only damages but also an injunction, that if given would have devastated the defendant. It was therefore appropriate in the interests of justice, despite the claimant's size and finances, to transfer the proceedings to the High Court.
The meaning of 'a specialist list' under CPR 30.5
DKH Retail Limited v Republic (Retail) Limited(2) – concerned a claim for infringement of an unregistered design in which a potential transfer of proceedings from the High Court to the PCC was considered by a High Court judge. The court gave guidance as to the type of judge that can hear transfer applications. It confirmed that patent and design cases in the PCC and Patents Court form part of a 'specialist list' for the purposes of CPR 30.5, while trademark and other IP cases do not. As such, and in accordance with CPR 30.5, applications to transfer the former must be heard by a judge sitting in the PCC or Patents Court, while applications to transfer the latter may be heard by a non-PCC or Patents Court judge.
These cases may not introduce new law or principles as to the transfer of proceedings, but they do act as a helpful reminder of the relevant rules that judges and applicants must follow and the common pitfalls that applicants would do well to avoid. Although there has been some confusion in the past among parties and judges regarding the application of the rules governing the transfer of IP proceedings, these cases should provide some much-needed clarity on the subject.
Most would agree that the PCC has succeeded in providing quicker and cheaper access to justice for claimants and defendants concerned with simpler, lower-value IP claims than those traditionally heard in the High Court. As the PCC continues to cement itself as a commercially viable option for potential litigants, it is likely to see the number of IP claims brought in it, and applications to transfer to it, swell.
For further information on this topic please contact Paul Joseph or Tom Cadwaladr at RPC by telephone (+44 20 3060 6000), fax (+44 20 3060 7000) or email ([email protected] or [email protected]).
Endnotes