21 June 2022
  • Share

Comments on the current functioning, and the future, of the IPEC.

Following Hacon HHJ’s participation in a recent CMS panel, which considered whether there are aspects of IPEC procedure in need of reform, we put the same question to our legal team and here’s what they had to say.

The introduction of the IPEC was a significant step towards broadening access to intellectual property litigation for small commercial entities and individuals. Jackson LJ’s Review of Civil Litigation Costs (published 14 January 2010) identified that despite the introduction of the Patents County Court (PCC) in the 90’s, the prohibitively high costs of the high court Patents Court continued to exclude SME’s from enforcing and defending their intellectual property rights (IPRs). The reformation of the PCC into the IPEC following Jackson LJ’s review, which included making it part of the High Court and implementing the £50k total recoverable costs cap, was designed to reduce the costs of IP litigation and encourage SME’s to both create and use those IPRs that are so essential to economic activity.

Time frames

While the creation of the IPEC, (loosely in the words of Douglas Adams) “made a lot of people very happy and has been widely recognised as a good move”, it is always important to challenge and question whether accepted procedures are truly serving the interests of justice and the overriding objective. The IPEC does appear to be failing one of its key aims according to the IPEC Guide, which is to provide parties with a “speedier” procedure than would otherwise be found in the High Court. However, is this a failing of the IPEC or is this one of the ways it is succeeding? i.e., by encouraging parties where possible, to negotiate and settle their disputes without putting undue pressure on judicial time. Much of the dispute resolution system of England and Wales is designed to facilitate, private, commercially driven, and independent dispute settlement.

Cost cap

In addition to questioning existing case time frames, the cost cap is certainly also due for review. The £50k cap on total recoverable costs was proposed more than 12 years ago and hasn’t been increased since it was first introduced. A modest increase, to bring the figure in line with inflation, or reapportionment of costs within each costs stage may be most appropriate1. In the recently published CMS IPEC Review, Thomas St Quintin observed in his foreword that small defendants may be pressured by rising costs into capitulating rather than defending their case to trial. We agree with this to an extent, however, the cost cap also functions (if you’ll pardon the classic analogy) as something of a ‘sword and shield’. On the one hand, it protects and safeguards the unsuccessful party from the risk of an unknown cost order.  On the other hand, as each party incurs unrecoverable costs, the cap may encourage negotiation and settlement.

The problem with the costs cap arises when one party fails to act in line with the IPEC’s aims and principles – for example through disproportionate conduct that inflates the other party’s costs. It is easy to assume that this conduct is more common among parties with deeper pockets, but this is not always the case. It is a problem that is difficult to effectively address ‘after the fact’ and with a costs cap in place.  From our experience, the IPEC judges already engage in active case management and therefore new approaches might be needed to try to manage costs. These could include conduct expectations in the IPEC Guide.  Alternatively, it might be possible to develop an option for real-time case management; a process of reviewing and managing persistent or flagrant non-compliant behaviour to avoid smaller companies (whose cash flows and bank balances are unable to wear inflated costs) being driven out of litigation.

Pleadings, witness statements and disclosure

It has also been suggested that costs could be controlled by introducing low page limits when it comes to witness statements and pleadings. We consider however, that judicial discretion is sufficient in this area, especially as many matters heard in the IPEC, while entirely appropriate for the venue, are too complex to set out in a statement of case only a handful of pages long. Justice would not be served by restricting a clear and concise pleading based on an arbitrarily low page limit.

Perhaps instead, the IPEC guidelines or Part 63 could expand on indicative lengths of pleadings, witness statements and disclosure. We already see this in various courts, such as in the Court of Appeal in respect of skeleton arguments (under Practice Direction 52C) and it is also common practice in the world of IP. The Patents Hearings Manual sets out suggested lengths for arguments and for judgments and the Tribunal section of the Trade Marks Manual sets out various thresholds, including a 300 page limit for evidence submissions.

Adoption and implementation into other courts

Having said this, we maintain that one of the central ways that, in our experience, the IPEC is successful, is in its active judicial case management of case timeframes and disclosure and evidence procedures. However, the success of many aspects of the IPEC can also be measured by their adoption and implementation into other courts. For example, the Shorter Trial and Flexible Trials Schemes (STS and FTS) which are now permanently installed in the Business and Property Courts (B&PCs). The IPEC-origins of many features of these schemes are clear. Partly in the parallels we can draw between the schemes and key characteristics of the IPEC’s streamlined and efficient proceedings, but also in the contributions and involvement of IPEC figurehead, Birss LJ, in the development and application of the scheme. Birss LJ was heavily involved in the development of the STS and FTS, being one of the judges whose opinions were sought by the Chancellor at the time2. In addition, his historically proportional approach to disclosure (such as in Positec v Husqvarna3) and involvement in the early stages of the Disclosure Pilot Scheme under Practice Direction 51U (operating in the B&PCs and extended until 31 December 2022) seem likely to hark back to his experiences of cost and time-efficient disclosure orders in the IPEC.

All-in-all however, we consider that the advantages introduced by the creation of the IPEC vastly outweigh any failings and believe that these limited short-falls can be remedied with some carefully considered and relatively focussed improvements. We look forward to hearing any future proposals on this front.

 



References

  1. On 10 June 2022, the Civil Procedure Rule Committee (CPRC) approved amendments to CPR 45.31 to increase the overall and stage costs caps to £60k and £30k. This will come as part of the October common-commencement cycle. In addition, Tables A and B in Practice Direction 45 Section IV will also be amended in line with the increased caps. This decision was recently published as item 7 of the minutes of the CPRC’s 10 June 2022 meeting. (Link to minutes). We support this increase noting that an inflation-only increase would have brought the overall cap up to £62,372.14 according to the Bank of England’s inflation calculator. We consider that regular reviews of the costs caps would be of significant benefit to the future success of the IPEC.
  2. https://www.judiciary.uk/wp-content/uploads/2015/09/Shorter-and-Flexible-Trial-Schemes-Announcement.pdf
  3. Positec Power Tools (Europe) Limited v Husqvarna AB [2016] EWHC 1061 (Pat) “Experience in IPEC shows that the obligation to disclose documents which may be adverse to a party's case can be preserved as a critical aspect of a fair trial at common law within an issue by issue based disclosure regime in which disclosure on some issues, such as obviousness, is not ordered because the likely probative value of what is produced is not worth the cost. Applying what I perceive to be the right approach under the CPR as they now are, I am not satisfied that an order for standard disclosure, or an order for issue-based disclosure including the issue of obviousness, would be in accordance with the overriding objective in this case. This is an ordinary obviousness case with no special features which might make such disclosure worth the cost.”


About the authors

This blog was co-authored by Caroline Hart, David Fyfield, and Emma Kennaugh-Gallacher.

Caroline Hart Author Circle

 

Caroline Hart

Caroline is an experienced solictor and member of our legal services team. She has particular expertise in the defence and enforcement of intellectual property rights. Caroline also deals with non-contentious IP matters, including advising on IP assignments, licensing, and collaborations, as well as GDPR and other general contractual matters. Caroline has been listed as a recommended lawyer and key lawyer in the 2022 edition of The Legal 500.

Email: caroline.hart@mewburn.com

 


David Fyfield Author Circle

 

David Fyfield

David is an experienced solicitor and member of our legal services team. David has extensive experience advising on a wide range of contentious and non-contentious intellectual property matters. He has particular expertise in relation to disputes concerning patents, trade marks, and designs. He also advises on issues concerning copyright, domain names, confidential information, and Intellectual Property aspects of corporate and commercial transactions. David has advised on proceedings before the High Court, Court of Appeal, Intellectual Property Enterprise Court, and UK and EU Intellectual Property Offices.

Email: david.fyfield@mewburn.com

Emma is a Senior Professional Support Lawyer for the Legal and Trade Mark Practice Groups and is responsible for producing, managing and maintaining the bank of know-how, precedents and other materials and resources. In addition, she delivers regular training, updates and articles for the Practice Groups, the firm and its clients, covering developments in the law and in practice. Emma has a BSc in Biology from the University of York and obtained a Graduate Diploma in Law from the University of Law, York. She completed a training contract in the Leeds office of top regional law firm, qualifying as a solicitor in 2013.
Comments

Sign up to our newsletter: Forward - news, insights and features

Our People

Our IP specialists work at all stage of the IP life cycle and provide strategic advice about patent, trade mark and registered designs, as well as any IP-related disputes and legal and commercial requirements.

OUR PEOPLE

Contact Us

We have an easily-accessible office in central London, as well as a number of regional offices throughout the UK and an office in Munich, Germany.  We’d love to hear from you, so please get in touch.