Spotlight on Litigation

Having invested in building a strong IP portfolio covering the goods and services of your business, you want to be able to enforce those rights against an infringer, or to defend them against allegations of infringement. In fact, being able to enforce and defend your intellectual property (IP) rights is often essential to their value, management and exploitation. But, whether enforcing or defending, it is desirable to be able to do so in a cost-effective manner which is commensurate with the importance of the IP asset and your budget.

A common perception of IP disputes is that they are time consuming and costly. Sometimes prohibitively so. Many assume that such disputes will inevitably mean years of business interruption, lost resources and sunken costs while teams of lawyers and barristers battle it out. With this reputation it is little wonder that many consider disputes, and in particular litigation, to be a tool only to be used by those with deep pockets or reserved exclusively for their most valuable “blue chip” IP assets. More corrosively, a perception can develop that enforcing your IP rights is not worth the trouble, or that you cannot fight off a “troll”. But if you cannot enforce your rights what is the point of them? And if you cannot defend against yourself against allegations of infringements, how can you stand up for your business? You want to be in a position to enforce or defend the value of your innovations, and your investment in making those innovations, in order to allow your business to benefit commercially from those innovations in the future.

Facing claims of being too expensive and cumbersome, and competition from other jurisdictions, in particular Germany, changes to IP litigation in England were necessary. This was identified in the Woolf and Jackson reviews. UK civil litigation had to become more accessible, cheaper, and faster. For IP in particular, the English courts developed the IP & Enterprise Court (IPEC) from the Patents County Court. It is designed to improve access to IP litigation by providing a less costly and complex alternative to the Patents High Court, allowing the claimant to get damages and injunction more quickly and with less risk. Specifically, the reforms streamlined court procedures, limited trials to one or two days, and imposed caps on recoverable costs (£50,000) and on the damages that can be awarded (£500,000). Other changes followed, including the introduction of the Shorter Trial Scheme (STS) at the Patents Court. These changes tied in neatly with an increased emphasis in the English civil procedure rules on Alternative Dispute Resolution (ADR). While England is a historically pre-eminent venue for IP litigation, these changes have re-emphasised the English courts as a centre for global excellence in handling IP disputes. This has been further helped in large part by a collection of IP specialist judges of world renown, a body of deeply experienced IP lawyers, and a range of trusted ADR options.

There are a range of options for dealing with an IP disputes in England, one or more of which can be applied to leverage a commercially successful outcome.

Negotiation between the parties, including through mediation

Litigation should not be the first port of call to resolving a dispute. If the parties can discuss the situation amicably, it is possible to negotiate a successful outcome quickly and cheaply that achieves your commercial objectives. Sometimes an outside, independent mediator can help that process by providing an arm’s length forum for the parties to explore compromises. While mediation involves a semi-formal process, it still represents a route to an inexpensive resolution of the dispute.

Alternative dispute resolution (ADR)

Alternative dispute resolution (ADR), usually required by a contract or if the parties agree, should be considered before litigation. In fact, in the English civil procedure rules require the parties to consider ADR. ADR is especially attractive for handling international disputes where the parties are looking for a global solution or because they want to keep the nature of the dispute private and out of the public realm of court. There are various forms of ADR. One is mediation, as discussed above. Another is arbitration, e.g. using a body such as the London Court of International Arbitration (LCIA) or a specialist IP institution such as the World Intellectual Property Office (WIPO). Arbitration is a private and legally binding proceeding which does not threaten the underlying IP asset, but whose decision can be enforced in most countries through national arbitration acts. Expedited versions can be faster and cheaper. Finally, binding expert determination, available through specialist bodies including WIPO, is often an excellent option for very technical disputes – e.g. in relation to entitlement to an IP asset.

Dispute resolution venues outside of the traditional court system

Domain name disputes can be brought before an ICANN accredited arbitration group such as WIPO (for disputes concerning gTLDs) or national registry managers such as Nominet.uk (for dispute concerning ccTLDs). While there are limits to the types of actions available, e.g. claims of cybersquatting and abusive registrations or challenges based on the complainant’s existing trade marks, making use of these specialist bodies with their comparatively low costs and relatively rapid dispute processing, can often prove to be a highly efficient and cost-effective strategy.

Online platforms with IP policing systems such as Etsy, Amazon, Instagram, Ebay and YouTube provide a semi-formal forum for reporting IP infringement and counterfeit goods. These can lead to the take down the sale of infringing articles and stopping the unauthorised use of brands.

Dispute resolution venues within the traditional court system

The UK Intellectual Property Office (UKIPO) provides a formal forum for applications to cancel or revoke UK patents, designs and trade marks, to challenge another party’s entitlement to such UK registered rights, and to pre-emptively oppose the grant of an UK application for such an IP right. The process of clearing away invalid rights and preventing third parties from obtaining rights which conflict with your own, can not only protect your business, but it can provide valuable leverage in commercial negotiations. Compared to a typical commercial dispute in the High Court, UKIPO procedures are generally quite flexible, responsive, fast and relatively inexpensive, with a lower cost risk.

Intellectual property infringement claims in England can be issued either in IPEC or other courts in the Intellectual Property List in the Business and Property Courts of England and Wales, commonly the Patents Court. As noted above, IPEC provides a streamlined and more cost-effective forum to hear lower value and less complex IP claims than the Patents Court. Complexity is determined not by the technical nature of the claim, but by the claim’s size and fact matrix, because an IPEC case must be heard within a one or two day trial. Critically, IPEC provides the full spectrum of infringement remedies, including legal capped cost awards and damages, and injunctions.

The Patents Court is the forum for all other English IP litigation. But even there the parties can take advantage of the Shorter Trial Scheme (STS). The STS was developed, like IPEC, for improved efficiency and cost. It introduces among other things, strict timelines, reduced pleadings and more limited evidence and disclosure. But it does not have the cost and damages caps of the IPEC.

In addition to managing costs, both IPEC and the Patents Court STS aim for trial within 12 months of issuing the claim.

The COVID-19 pandemic has had, and continues to have, an enormous human cost. Many planned developments in the world of litigation, designed to provide for quicker and cheaper access to remedies such as injunctions and damages, have also been delayed as a result of the pandemic. However, we have seen dramatic progression in areas such as the use of Video and Audio Conferencing. The use of applications such as Zoom, Skype, Microsoft Teams has allowed for widespread remote court, mediation and arbitration attendance in place of in-person hearings, and proceedings have been supported by the submission and use of electronic bundles instead of physical copies of trial bundles.

As observed by the Chancellor of the High Court, Sir Geoffrey Vos in his address to the Chancery Bar Association (delivered via Zoom in June 2020 ), many of the pandemic-driven adaptions have been welcomed by the legal profession, though further work is needed to ensure that any continuing use of the the innovations that have been implemented by the courts once the pandemic is ‘over’ will survive and, in fact, be improved upon.

With a view to safeguarding the administration of justice during the pandemic and looking ahead to a post-COVID-19 world, the Civil Justice Council and Legal Education Foundation carried out a ‘Rapid Review’ of the impact of COVID-19 measures on the civil justice system in May 2020. The review collated survey responses from individuals using the court system during the first UK lockdown. A remote consultation was also conducted. The review identified that the experiences of COVID-19 measures have been mixed, but, in general, the findings were positive. Most respondents supported the continuing use and development of remote justice and the findings indicated that there would be more support for an increasingly targeted application. For example, expanding the use of remote hearings for commercial litigation as well as:

“reserving remote hearings for matters where the outcome is likely to be less contested, where the hearing is interlocutory in nature and for hearings where both parties are represented.”

It seems likely therefore that, once the pressures of social distancing and lockdown measures ease, the courts will seek to establish a middle ground where they can make use of the best of both worlds going forward. For example, assessing claims at an early stage to identify those most appropriate for remote hearings, developing hybrid proceedings where interim hearings are conducted remotely and trials where only vulnerable witnesses are cross-examined in person, and use of electronic trial bundles. We anticipate that continuing with the progress made in these areas will be supplemented by further improvements in technology allowing, for example, cheaper disclosure and better presentation of evidence. In addition, perhaps the continued use VC trials, where appropriate, will enable overseas clients to attend trials in the UK without travelling.

We have had some good experience ourselves of this new virtual flexibility. In one example, early in the Pandemic we conducted a 14-hour CEDR mediation in respect of a trade mark dispute entirely by Zoom. The mediator used features available through Zoom to provide break-out and plenary “rooms” for inter-parte negotiations and client discussions to happen. The case statement and evidence were, of course, entirely electronic. A particular benefit was that our client’s US attorneys were able to attend without incurring all the travel expenses that had originally been expected. The negotiations led to a successful cross-jurisdictional settlement. Both sides, and the mediator (for whom this was the first such “virtual” mediation), were enthusiastic about the process and satisfied that they were not adversely affected by the virtual nature of the process.