Forthcoming changes to the Civil Procedure Rules will expand the range of options available in resolving intellectual property disputes for lower value claims.

These changes are great news for SMEs and others who have struggled to justify the cost of enforcement when faced with prolific (often web-based) infringement of their intellectual property rights, as the new low-cost, "no-frills" regime will limit their exposure both in terms of costs and management time. By way of example, HHJ Birss, the judge in the Patents County Court (PCC), has been reported as saying he expects that photographers in particular will be able to take advantage of the new rules.

The reforms

In January 2010, the Jackson Review of Civil Litigation Costs published several recommendations for streamlining the intellectual property litigation system and reducing the costs of pursuing lower value claims.

During the past two years, the PCC has seen the successful introduction of streamlined procedures as part of its aim to deal more efficiently with lower value and less complicated intellectual property claims. These procedures have included active case management by the court, and costs and damages caps of £50,000 and £500,000 respectively.

On the back of this, further reforms will now be implemented through the latest revision to the Civil Procedure Rules. Taking effect from 1 October 2012 these changes will see a small claims track introduced in to the PCC. The small claims track is already commonly used for other forms of civil litigation.

The imminent extension of the small claims track to intellectual property claims will be available for trade mark, passing off, copyright, database right and unregistered design right matters. The small claims track will not be available for claims relating to patents or registered designs.

What is a "small claim"?

A "small claim" is any claim valued at under £5,000. The problem with the current system is that small claimants, or those with small disputes, were deterred by the potential time and costs associated with taking the issue to court. The aim of the reforms is to introduce a quicker and easier route for litigation of such cases that is more proportionate to their value. It being acknowledged that, the importance of a case may be high even though its financial value is small.

How does a case get allocated to the small claims track?

Even if a claim meets the value requirements, allocation of it to the small claims track is not automatic. Allocation must be elected by either the claimant or defendant. If a claimant wishes to use the new track, it must state this in the Particulars of Claim. The defendant may object in its defence. If it does so, the court will take account of the grounds of objection, and determine allocation based on the complexity and value of the claim.

The procedure

The small claims track procedure should be quicker, easier and cheaper than a multi-track hearing. For example, various procedural steps such as the filing of allocation questionnaires have been removed, reducing the costs to both sides.

Due to the cost of the hearings involved, interim remedies including injunctions will not be available (although final injunctions will be).

Costs on the small claims track

The introduction of the small claims track brings with it a restrictive costs regime aimed at reducing the expense (and risk) of pursuing such claims. Typically, each party will pay its own legal costs but court fees, loss of earnings for a party and/or a witness of up to £90 per day, and travel expenses can be recovered by the winning party. Legal fees of up to £260 and expert fees of up to £200 per expert may be capable of recovery in certain cases.

The overriding objective in relation to claims proceeding on the small claims track is to keep costs low and in proportion to the value of the claim.

Consequences for businesses

The reforms are extending a well known and frequently used court track into the realms of certain types of intellectual property claims. For cases of lower value, this opens up a new avenue to pursue a quicker, cheaper and all round more proportionate resolution to the claim.

It is most likely to be of use to SMEs, who own intellectual property but are wary of enforcing it for fear of the costs implications. In particular, we expect photographers, artists and other owners who rely on licensing income to use the track as a way of cracking down on web-based infringement. There is now a way to attempt to stem the significant impact on revenue caused by prolific low-level infringement over the internet.