Proposals to reform the junior Intellectual Property (IP) court of England and Wales (the Patents County Court or PCC) put forward by the Intellectual Property Court Users Committee have been on the table for some time, as highlighted in our previous analysis.
The proposals were put forward in response to past calls for reform of the procedure of the PCC. The driver behind them was the wide spread criticism, particularly by SMEs, of the almost 20 year old PCC's cost effectiveness and efficiency as a distinct forum for IP litigation in this jurisdiction.
The amendments to the court procedural rules (CPR) which will bring into effect most, but not all, of the proposals have now been published and will come into force on 1st October 2010. Those which cover costs provisions are found in Part 45 of the CPR and its practice direction, and the amended PCC procedure is in Part 63 of the CPR and its corresponding practice direction.
What will not be implemented on 1 October 2010
Several proposals contained in the Intellectual Property Court Users Committees final report which will not be implemented next month (in some cases because they require primary legislation) include:
- a jurisdictional damages limit for the PCC of £500,000;
- the renaming of the PCC as the Intellectual Property County Court and the extension of its special jurisdiction (conferred by section 287(1)(a) of the Copyright Designs and Patents Act 1988) to all types of intellectual property;
- the PCC's divorce from the London County Court, and
- the provision of a detailed court guide giving guidance (including sample pleadings) on what should now be included in the statements of case (see below) and which cases are and are not suitable to be heard in the reformed court (again see below). For example, it has been suggested that a "case which concerned a product with a turnover of more that about £1 million per annum would prima facie not be suitable for the PCC." However, although "the value of the claim (including the value of an injunction) and the complexity of the issues will be relevant" they should not be determinative factors as "the primary criterion should be whether the case is one which an SME requires the forum to be the PCC in order to achieve access to justice".
What will come into effect on 1 October 2010
Cost provision amendments (Part 45 and PD 45)
The costs for all claims in the PCC have been capped at £50,000 for liability and at £25,000 for an inquiry as to damages or account of profits. In many cases, this may be a major benefit for the parties involved as their costs exposure is limited to these amounts. The cap takes into account any uplift on a CFA (conditional fee agreement) and any ATE (after the event insurance).
In addition these is also a scale of costs for the main procedural stages of a claim, that for liability being set out below in Table A and that for inquiry as to damages or account of profits set out in Table B below. These are maximums - the amount awarded will depend on the nature and complexity of the claim:
Procedural amendments (Part 63 and PD 63)
In the new regime the parties' pleadings are expected to be the foundation of any case which will go to trial at the PCC. Where possible, the PCC will determine the claim on the basis of the parties' statements of case and oral submissions. The statement of case must set out concisely all the facts and arguments upon which the party serving relies and must be verified by a statement of truth signed by a person (or persons) with actual knowledge of the facts alleged.
From the 1st October there will be no automatic standard disclosure within the PCC, meaning efficiency and speed to trial may be easier to achieve.
There will be a tighter procedural timetable and case management will also be strictly controlled. At the first case management conference (CMC) the PCC will identify the issues and decide whether to order any of the following evidential steps-
- specific disclosure;
- a product or process description (or a supplementary product or process description where one has already been provided);
- witness statements;
- experts' reports;
- cross examination at trial;
- written submissions or skeleton arguments.
The presumption is that the PCC will not make any such order in most cases but will only do so if specific and identified issues exist, and if the court is satisfied that the benefit of ordering the further material in terms of its value in resolving those issues justifies the cost of producing and dealing with it.
The court will endeavour to ensure that trial lasts no longer than two days and any cross-examination will be strictly controlled.
Save for exceptional circumstances, an application to transfer the claim to the High Court or to stay proceedings must be made before or at the case management conference.
These reforms are welcomed. Their intention is to make the PCC into a distinct venue for IP dispute determination where there is certainty as to costs exposure and a procedural environment more in line with some of the highly regarded tribunals of continental Europe.
How popular a choice the revitalised court will be, particularly with the SMEs it is targeting, may depend a lot on the appointment of the new PCC judge.
Of particular importance will be the new PCC judge's and his High Court colleague's attitude to applications to transfer out to the High Court. A decision to start a case in the PCC in order to achieve a limited costs exposure can only be made confidently if there is a high probability it will stay there or the consequences of it moving will not be too great. The Intellectual Property Court Users Committee recommended that "the Court should have power to order transfer on terms, for example enabling the claimant to withdraw its claim with a limited liability for costs." This power is not expressly included in the CPR changes but may come within the court's general discretions.
Furthermore, the costs of a potential appeal need to be taken into consideration. The changes do not address this issue and the Intellectual Property Court Users Committee regarded it as beyond their remit. They noted however "we are confident that the Court of Appeal would be sensitive to the question of costs on appeal from the reformed PCC, and would be unlikely to award more by way of appeal costs than the first instance costs".
Staying within the cost caps, so as to not end up with unrecoverable costs if you win (in excess of the usual 30-40%) will be challenging. However the stricter controls now put in place mean that with the right judge at the helm they are not unrealistic in appropriate cases.