In November 2008, the then Master of the Rolls, Lord Clarke of Stone-cum-Ebony, appointed Lord Justice Jackson to conduct a review of the costs of civil litigation. As part of his review, Lord Justice Jackson consulted extensively and published a Preliminary Report in May 2009.

Yesterday, Lord Justice Jackson published his final report on the Review of Civil Litigation Costs. His report contains a number of recommendations for the reform of the civil justice system in England & Wales in order to promote justice at proportionate cost. Many of these recommendations are relevant to general commercial litigation and in particular intellectual property litigation.

This bulletin concentrates on Lord Justice Jackson's findings and recommendations that are of particular interest to the intellectual property community. The full text of the Final Report can be accessed from the Judiciary website here.

General recommendations for civil litigation

Of interest to users of the civil litigation system in England & Wales, including those involved in cases relating to IP disputes, are the following general recommendations:

  • Success fees relating to conditional fee agreements and after-the-event insurance premiums should no longer be recoverable from unsuccessful opponents in civil litigation.
  • The general Practice Direction for pre-action conduct should, for the most part, be repealed. Technically this Practice Direction applies to all intellectual property cases (and other general cases not covered by specific Pre-Action Protocols) and Lord Justice Jackson considers that this "one size fits all" approach leads to wasteful and unnecessary costs. Of interest to the intellectual property community is a recommendation for a consultation on a specific IP Pre-Action Protocol.
  • Alternative Dispute Resolution ("ADR") is currently underused. Lord Justice Jackson believes that the practitioners, the judiciary and the public should be educated as to the potential benefits of ADR, in particular mediation, and that an authoritative handbook on ADR should be published.
  • Greater case management and costs sanctions for excessively and unduly lengthy witness and expert evidence.
  • Greater and more robust case management by the judiciary including ensuring that, where possible, cases remain with the same judge.
  • Greater incentives for settlement of disputes including enhancement of the current settlement offer regime under Part 36 of the Civil Procedure Rules. Lord Justice Jackson proposes that a successful claimant's costs recovery where a defendant has failed to beat a claimant's offer should be enhanced by 10%.

Further commentary of these recommendations and other proposals in the Final Report are contained in our general bulletin published yesterday, accessible here.

Lord Justice Jackson recognises that the creation and use of intellectual property plays an important role in economic activity, and that the civil justice system must enable parties to assert or defend their intellectual property rights.

Specific recommendations relating to intellectual property disputes

Major IP litigation

In relation to major litigation, Lord Justice Jackson appears to conclude that, on the whole, the intellectual property courts (the Patents Court and general Chancery Division) work well, providing a high quality forum for complex, high value litigation. However, whilst the specialist nature of the disputes inevitably lead to significant costs, Lord Justice Jackson considers that some costs can be reduced by certain reforms. The Final Report in particular focuses on case management in the Patents Court – a number of respondents to the consultation, including the Law Society, called for more active judge-led case management so that issues can be narrowed at an early stage. Interestingly, the Final Report discusses the applicability of Markman-like hearings in English patent litigation for the early narrowing of issues of claim construction. Lord Justice Jackson has recommended that the Patents Court judges and the Intellectual Property Court Users' Committee ("IPCUC") should consider whether such proposals should be instigated for intellectual property disputes

Lower value litigation

The major focus of the intellectual property section of the Final Report is on lower value litigation and the role of the Patents County Court. The Patents County Court currently exists as a forum for the resolution of lower value disputes and disputes between SMEs. However, there have been concerns for a number of years over the prohibitively high costs of litigating in the Patents County Court (in essence, the costs of litigating in the Patents County Court were the same as in the High Court, thereby frustrating the purpose behind the Patents County Court). In July 2009, the IPCUC published a report with a number of proposals for reform of the Patent County Court in order to address these concerns. The major proposals were to re-name the Patents County Court as the Intellectual Property County Court, reform the procedures of the court so that parties must set out their case at the outset, with evidence and legal arguments in the initial pleadings, early and active case management, limitation to trials of two days maximum, a costs cap of £50,000, and a cap of £500,000 on the financial remedies available.

According to Lord Justice Jackson these proposals met with almost universal support from the intellectual property litigation community (despite, as Lord Justice Jackson notes, there being little comprehensive evidence of an "unmet need" for IP litigation faced by SMEs) and he himself found the proposals persuasive. The Final Report therefore recommends that the proposals in the IPCUC's report be implemented. Lord Justice Jackson also commented that the identity and case management skills of the Patents County Court judge would be crucial to the success of the court.

Very low value IP disputes

Lord Justice Jackson considers that there is an unmet need for justice in relation to very low value intellectual property disputes and believes that a small claims procedure is required for resolution of such litigation. The Final Report proposes that a small claims track is established in the Patents County Court for intellectual property claims with a monetary value of less that £5,000 and a fast track is established for claims of a value between £5,000 and £25,000. Lord Justice Jackson recommends that such cases are dealt with by the appointment of a district judge with specialist patent experience.

Summary

So in summary, Lord Justice Jackson recommends that:

  1. The Patents Court judges and the IPCUC should consider whether any changes can be made to the current practice in the Patents Court for increased case management and early narrowing of issues.
  2. The IPCUC's proposals for reform of the Patents County Court should be implemented.
  3. Once implemented, clear guidance should be provided to users of the new Intellectual Property County Court, including model form pleadings.
  4. A small claims track and fast track for IP claims should be set up in the new Intellectual Property County Court for lower value IP disputes.
  5. One or more district judges, deputy district judges or recorders with specialist patent experience should be available to sit in the Intellectual Property County Court to deal with small claims and fast track cases.
  6. There should be a consultation in order to ascertain whether there is support for either an IP specific Pre-Action Protocol or additional guidance regarding pre-action conduct of cases.