Intellectual Property Enterprise Court Overview October 2015
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Contents
Introduction 2
1 History of the Intellectual Property Court 3
1.1 Transitional arrangements 4
2 Suitability as a forum 5
2.1 Jurisdiction 5
2.2 Required value of claims 5
2.3 Nature of the claim 6
2.4 Remedies 7
2.5 Transfer of proceedings into or out of the IPEC 7
3 Procedural rules 8
3.1 Starting a claim 8
3.2 Statements of case 8
3.3 Timescales 9
3.4 Formalities 10
3.5 Specific guidance as to the content of statements of case 10
3.6 Case management 11
4 Small claims track 16
4.1 Suitability 16
4.2 Costs 16
5 Costs 18
5.1 Overall cap 18
5.2 Scale costs 18
5.3 Exceptions to the capped and scale costs regime 20
5.4 Procedure in respect of costs 21
5.5 Claims transferred into the IPEC 21
6 Successes 22
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Introduction
This note considers the special rules, procedures and cost considerations relating to
the Intellectual Property Enterprise Court, and the cases for which it is most suitable
as a potential forum.
The Intellectual Property and Enterprise Court (IPEC) is a specialist list within the
Chancery Division of the High Court.
The IPEC is intended to provide a cost effective forum to hear intellectual property
claims, as an alternative to the High Court. Savings are designed to be obtained by
active case management and a focus on streamlining the procedure of claims. This is
reinforced with a fixed-cost recovery regime, which significantly limits the exposure of
litigants in the IPEC to adverse costs awards.
The IPEC is presided over by a specialist circuit judge, currently HHJ Hacon. The
IPEC is administered from the Rolls Building, Fetter Lane, London, EC4A 1NL
DX160040 Strand 4.
The majority of this note deals with the multitrack of the IPEC. There is also a
separate small claims track, which is briefly discussed in this note (see Section 4,
p16).
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1 History of the Intellectual
Property Court
The IPEC started life as the Patents County Court (PCC). The PCC was instituted in
1990 to provide a less costly and complex alternative to the Patents Court, and was
part of the county court system. Its jurisdiction was limited to matters relating to
patents and registered designs, although related and ancillary claims arising out of
such proceedings could also be heard.
In June 2009, the Intellectual Property Court Users' Committee published a
consultation paper setting out proposals for reform of the PCC. A final report followed
in July 2009. The proposed reforms were driven by an increasing recognition that
small or medium-sized enterprises (SMEs) were wary of pursuing litigation in the High
Court due to the time and expense involved.
This report made a series of recommendations, including expanding the PCC's
jurisdiction to all forms of intellectual property, and plans aimed at streamlining
proceedings and implementing active case management by judges, in order to
achieve cost savings for the parties.
These proposals were adopted in the final report of the Review of Civil Litigation costs
by Lord Justice Jackson and on 1 October 2010 a new set of procedures were
implemented in the PCC in response to the Jackson Review. The proposed
requirements were that:
The parties should set out their respective cases fully but concisely at the outset.
No further evidence, written argument or specific disclosure should be permitted
without the permission of the judge.
Applications should, if possible, be dealt with on paper or by telephone.
Trials should be limited to one or at most two days.
Recoverable costs should be capped, both in total and according to a scale cost
regime for stages of the claim.
In 2011 a cap on the damages that could be awarded at the IPEC (currently
£500,000; see Section 2.2, p5) was implemented.
Following the Hargreaves review, the small claims track of the PCC was established
on 1 October 2012. On 1 October 2013, the PCC was reconstituted as a specialist list
of the Chancery Division of the High Court and renamed as the IPEC. Save for minor
amendments to the rules, the practice of the PCC did not change as a result of its
reconstitution as the IPEC.
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1.1 Transitional arrangements
Transitional provisions governing the reconstitution of the PCC as the IPEC are set
out at rule 30 of the Civil Procedure (Amendment No. 7) Rules 2013 (SI 2013/1974)
(L.19).
Proceedings which were underway in the PCC as at 1 October 2013 continue in the
IPEC as if they had been started in the IPEC (rule 30(a)).
Essentially, acts taken in compliance with the rules which applied in the PCC are
treated as having been taken in accordance with the corresponding rules of the IPEC
(rule 30(b)). Any judgment or order of the PCC continues to apply as if it had been a
judgment or order of the IPEC (rule 30(c)).
For transitional measures in respect of costs management, see Section 5, p18.
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2 Suitability as a forum
2.1 Jurisdiction
The IPEC hears intellectual property cases of all kinds and can hear claims relating to
UK and Community-wide rights where applicable. As part of the Chancery Division,
the IPEC can hear any case which can be heard in the Chancery Division as long as
intellectual property is a primary concern of the case.
Examples of cases commonly brought in the IPEC include:
Infringement claims relating to patents, designs, trade marks, copyright, database
rights, and any other intellectual property rights.
Revocation or invalidity claims in respect of registered rights.
Amendment of patents.
Declarations of non-infringement for all intellectual property rights.
Determinations of entitlement for all intellectual property rights.
Employee's compensation in respect of a patented invention.
Unjustified threats of proceedings for infringement of patents, designs or trade
marks.
Misuse of trade secrets and other breaches of confidence.
Claims such as contractual claims, defamation, malicious falsehood, breach of
duty where these form part of a broader intellectual property claim.
2.2 Required value of claims
Claims in the IPEC must have a maximum value of no more than a specified figure,
currently £500,000 (CPR 63.17A). This is the primary limitation, along with intellectual
property being the main concern of the claim, which determines whether a claim can
be brought in the IPEC. This cap applies to damages and/or accounts of profits.
For the purposes of valuing the claim, interest other than interest payable under an
agreement and costs are not regarded when applying the cap (CPR 63.17A).
However, "value" is not purely an assessment of the damages or account of profits
sought. Other remedies sought, such as injunctive relief, and the impact of these
remedies on the market more generally, are also a factor in the overall value of the
claim. The IPEC Court Guide suggests that, as a general rule, disputes in which the
value of sales in the UK of products protected by the intellectual property in question
exceed £1 million (whether by the owner, its licensee, or the infringer) are unlikely to
be suitable for the IPEC.
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The IPEC may hear claims valued at more than £500,000 if the parties both agree to
it having jurisdiction (CPR 63.17A (3)).
2.3 Nature of the claim
Due to the special procedural and costs rules applicable to claims in the IPEC, it is
generally most suitable for smaller, shorter, less complex, lower value actions.
Proceedings in the IPEC are subject to a number of special rules designed to achieve
its aim of providing a less costly and complex forum for lower value intellectual
property claims. These rules broadly divide into procedural rules intended to make
proceeding in the IPEC more efficient and reduce litigants' own costs, and costs
recovery rules which sharply limit the amount which can be recovered by the
successful party, reducing the adverse costs risk for litigants.
With this in mind, the following guidelines should be used when considering whether
the IPEC is the appropriate forum:
The IPEC is most suitable for claims where both parties are SMEs. Where only
one party is a SME, the IPEC may still be suitable but other factors below should
also be considered. It is worth noting that there is no set rule as to when a case is
suitable for the IPEC, and in particular, there is no rule that the parties must be
SMEs (although this will be a factor which points to the IPEC as being the proper
court). In MHCS and another v Polistas Ltd and others [2014] EWHC 4541
(IPEC), HHJ Hacon ruled that it was the nature of the claim which was
determinative, not the size of the parties. In that case, the fact that the issue was
fairly simple (the terms of a licence), there were only two key witnesses, a limited
number of documents, and a likely trial duration of no more than two days
outweighed the fact that one of the parties had significant resources and was not
a SME.
Trials in the IPEC should last no longer than two days and a trial estimate of
longer than two days suggests that the claim may be more suitable for the
Patents Court or the general Chancery list.
Cases requiring substantial experimental or survey evidence may not be suitable
for the IPEC, although experiments in a patent case may be admitted.
Cross examination of witnesses is strictly controlled. Where a large number of
witnesses are required the IPEC may not be the appropriate forum.
IPEC judges take an active role in case management and will take a "hands on
approach" at the case-management stage. This may include limiting disclosure,
expert evidence, and even the arguments, made at trial. Judges can also give a
preliminary assessment of their thoughts on the case, if both parties agree to this.
This can be of significant benefit in reducing the cost of the claim.
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Recoverable costs are subject to an overall cap (£50,000 in respect of
proceedings to trial on liability and £25,000 in respect of an inquiry into damages)
and scale costs within this (see Costs). This reduces the risk of a party being
liable for a significant amount of another party's costs, but also sharply reduces
the amount a party can recover for its own costs, regardless of the outcome.
2.4 Remedies
The IPEC can order all the remedies which are commonly available in the High Court,
including damages or account of profits (subject to the cap of £500,000), final and
interim injunctions (including search and freezing orders), delivery up and disclosure.
Note that the small claims track of the IPEC cannot order interim injunctions (see
Section 4, p16).
2.5 Transfer of proceedings into or out of the IPEC
The transfer of proceedings into and out of IPEC to and from other courts is governed
by CPR 30, and in particular paragraphs 9.1 and 9.2 of Practice Direction (PD) 30.
This states that, when considering whether to order a transfer of proceedings to or
from the IPEC, the court will consider whether:
A party can only afford to bring or defend the claim in the IPEC.
The claim is an appropriate one for the IPEC, having particular regard to:
the value of the claim (including the value of an injunction);
the complexity of the issues; and
the estimated length of the trial.
The court may specify the terms of any transfer to or from the IPEC and award
reduced or no costs where it allows the claimant to withdraw the claim (paragraph
9.2, PD 30).
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3 Procedural rules
The IPEC is governed by the CPR generally. However, specific procedural rules
relating to the IPEC are contained in CPR 63.17 to 63.28 and paragraphs 27 to 32 of
PD 63, which override or modify other parts of the CPR in respect of the IPEC. These
procedural modifications are intended to streamline procedure in the IPEC in order to
reduce costs for litigants.
Below is a summary of the procedure in the IPEC, with attention drawn to specific
rules that differ from the usual course of proceedings in other courts, and practical
notes which have arisen from cases coming out of the IPEC.
3.1 Starting a claim
3.1.1 Pre-action protocol
The PD on pre-action protocols and conduct applies to claims in the IPEC. However,
claimants will have to make their own decision as to whether it is appropriate to
engage in pre-action correspondence before issuing proceedings in the light of the
provisions for groundless threats applicable to certain intellectual property right
claims; see Practice note, Threats actions and intellectual property rights. If the Pre-
action PD is not followed, this will increase the time allowed for the defendant to file
its defence; see Section 3.3, p9.
3.1.2 Issuing proceedings
Claims in the IPEC are issued at the Rolls Building. The usual rules in respect of
starting a claim apply.
CPR 63.14 applies to claims relating to the service of claim forms and other
documents relating to registered rights, and sets out that documents may be served
at addresses provided on the appropriate register for the right in question. Relevant
statements of case must be served on the Comptroller or registrar if a party is seeking
a remedy which, if granted, would affect an entry in any UK Patent Office register
(CPR 63.14(3)).
3.2 Statements of case
3.2.1 Requirements
Statements of case in the IPEC must concisely set out all the facts and arguments
which the party relies on (CPR 63.20(1)), as well as complying with the general
provisions for statements of case in CPR 16. Amendments to statements of case are
discouraged and therefore it is important that parties set out in sufficient detail all of
the arguments and facts they intend to rely on at trial.
In addition, unnecessarily lengthy statements of case will not be permitted. Parties
are encouraged to set out brief statements of the arguments that will be relied on,
rather than setting out legal arguments in detail.
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Statements of case in the IPEC can stand as evidence at trial. For this reason, CPR
63.21 modifies Part 22 in respect of statements of truth, by stating that the statement
of truth verifying a statement of case must be signed by a person with knowledge of
the facts alleged. If no one person has knowledge of all the facts, multiple persons
who between them have knowledge of all the facts alleged must sign the statement of
truth.
The particulars of claim must state whether the claimant has complied with paragraph
7.1(1) and Annex A (paragraph 2) of the Pre-action PD (CPR 63.20(2)). Note that the
Pre-Action PD was amended with effect from 6 April 2015 and the cross references in
CPR 63.20(2) are no longer correct. Until this is updated, it may be prudent to refer
both to paragraph 6 of the Pre-action PD as amended, and paragraph 7(1) and Annex
2 (paragraph 2) of the old Pre-action PD, to ensure compliance with CPR 63.20(2).
This requirement is especially important because the time for filing a defence is
dependent on whether such a statement has been made (see Section 3.3, p9).
In addition to the IPEC specific requirements contained in CPR 63.20 and 63.21,
statements of case relating to patent and registered design claims must also comply
with the general requirements set out in paragraphs 4.1 to 4.6 of PD 63.
3.3 Timescales
CPR 63 modifies some of the timings for the filing of statements of case in the IPEC
compared with other courts.
The usual rules apply in respect of service of particulars of claim. These can be
served at the same time as, or up to 14 days after, the claim form is served (CPR
7.4(1)). If a copy was not filed at court at the same time as the claim form, it must be
filed within seven days of service on the defendant (CPR 7.4(3)).
If no acknowledgement of service is filed by the defendant, the usual rules apply and
it must file the defence (and any counterclaim) within 14 days of service of the
particulars of claim (CPR 15.4(1)(a)).
However, if (as will usually be the case) an acknowledgement of service is filed, the
period for filing the defence (and any counterclaim) is either:
If the particulars of claim state that paragraph 7.1(1) and Annex A (paragraph 2)
of the Pre-action PD (see Section 3.2.1, p8 for information on these cross
references) has been complied with, 42 days from service of the particulars of
claim (CPR 63.22(2)).
If the particulars of claim do not contain such a statement, 70 days from service
of the particulars of claim (CPR 63.22(3)).
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If the claimant wishes to file a reply to the defence (and a defence to any
counterclaim), it must file and serve this on all other parties within 28 days of service
of the defence (CPR 63.22(4)).
Where a defendant wishes to file a reply to a defence to a counterclaim, it must file
and serve its reply within 14 days of service of the defence to counterclaim (CPR
63.22(5)).
Timescales are generally treated strictly in the IPEC. The timescales relating to filing
and serving the defence and any replies may only be extended by order of the court
and for good reason (CPR 63.22(6)). In practice, the court seems generally willing to
grant extensions on applications by consent of all parties in order to further settlement
discussions, but this remains at the court's discretion.
3.4 Formalities
CPR 63.21 modifies Part 22 in respect of the IPEC by specifying that the statement of
truth must be made by a person with knowledge of the facts alleged (or by persons
who between them have such knowledge). Where more than one person signs a
statement of truth, the statement should identify which parts of the statement of case
is verified by which signatory.
In practice this means it will usually be the representative(s) of the claimant or
defendant signing the statement of truth. This requirement is present because
statements of case can stand as evidence in trial. In this regard, "where possible" the
court will decide claims solely on the basis of statements of case and oral evidence
(paragraph 30.1, PD 63).
3.5 Specific guidance as to the content of statements of
case
The IPEC Court Guide provides the following specific guidance in respect of
statements of case for patent, registered design, trade mark and copyright claims.
3.5.1 Patent proceedings
Claimants should avoid including lengthy detail regarding the construction of
patent claims. Each party should identify the claims in issue (for infringement and
validity) and identify the relevant features of those claims.
Parties should break down relevant patent claims into suitable integers and relate
these to specific elements of the alleged infringing product or process, in order to
explain the case on infringement. Points on construction may need to be
identified but lengthy argument is not required.
A lack of novelty argument is likely to require a similar approach to infringement,
with the claim integers related to the relevant parts of the prior art relied upon.
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An obviousness argument is likely to require a statement addressing the
allegedly obvious step(s).
Where a party challenges validity, the claims of the patent which are alleged to
be independently valid should be identified in the patentee's reply/defence.
A statement of the facts that are said to be relevant and common general
knowledge is likely to be necessary. A short summary of the relevant technical
background may be helpful.
3.5.2 Design proceedings
The nature and characteristics of the informed user should be identified.
3.5.3 Trade mark proceedings
Similarities relied on between a mark and a sign will not generally require significant
explanation. Detail may be necessary in relation to allegations that goods or services
are similar. Parties should identify the nature and characteristics of the relevant
consumer.
3.5.4 Copyright proceedings
A defence of independent design will need appropriate detail explaining the facts on
which the defence is based.
3.6 Case management
3.6.1 Pre-case management conference
Claimants should apply for a case management conference (CMC) within 14 days of
all defendants wishing to file and serve a defence having done so. Where the case
has been transferred from another court, the claimant should apply for a CMC within
14 days of the transfer. If in either case, the claimant fails to do so, the defendant
should apply.
There is no fast track in the IPEC, and therefore all cases (other than those suitable
for the small claims track of the IPEC (see Section 4, p16)) are allocated to the multi-
track. As a result, parties are not required to file and serve directions questionnaires
(CPR 63.8). A directions questionnaire is required for claims proceeding on the small
claims track, where there is a request for, or objection to, the case being allocated to
the small claims track. The court should send these to the parties, and they should be
completed and returned within 14 days of receipt.
There is no need to file costs budgets in respect of any claim in the IPEC.
Although not expressly stated in the CPR, the case of Cranford Community College v
Cranford College Ltd [2014] EWHC 349 (IPEC) confirms that parties are not required
to serve disclosure reports in the IPEC.
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(See Legal update, No obligation to provide disclosure reports in IP Enterprise Court.)
HHJ Hacon determined that disclosure reports are not required because they form
part of the rules in respect of standard disclosure, and as per CPR 63.24(2), the
provisions on standard disclosure do not apply in the IPEC. It is not clear whether
parties are still required to comply with the requirements of paragraphs 8 and 9 of PD
31B (discussion of e-disclosure ahead of the first CMC) in light of this decision, but
arguably it would seem that this is not required.
No later than four days before the date of the CMC, parties must file and serve
application notices in respect of any orders they wish to be made at the CMC
(paragraph 5.8, PD 63). Parties are encouraged to agree directions in advance of the
CMC, and the provisions of CPR 29.4 apply in respect of exchange of draft directions.
The claimant must, no later than four days before the CMC, file at court and provide
to the other parties bundles containing:
The claim form and all statements of case (but where a summary of a statement
of case has been filed, the summary is sufficient).
A pre-trial timetable, if agreed or ordered.
The principal orders of the court.
Any agreements reached in relation to disclosure.
(Paragraph 5.9, PD 63.)
Parties should also exchange and seek to agree lists of issues in advance of the
CMC and seek to agree these in advance. However, the IPEC Court Guide suggests
that costs should not be incurred debating issues ahead of the CMC, where these can
be dealt with at the CMC in a more efficient manner.
3.6.2 Case management conference
CMCs are usually conducted in hearings, although if both parties consent, the court
may determine the CMC on paper (CPR 63.23(3)).
It is usually the case that one judge hears all applications (and trials) in respect of a
claim. This encourages active case management and the IPEC is likely to take a fairly
robust approach to directions in order to ensure that the claim is managed in a
proportionate and cost-efficient way.
A party wishing to have a statement of case stand as evidence should raise this at the
CMC. Permission will usually be granted, in line with the objective set out in
paragraph 30.1 of PD 63 that statements of case and oral submissions should, where
possible, be the sole evidence on which claims are determined.
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3.6.3 Review of the issues
The court will identify the issues in the claim, having regard to the statements of case
and lists of issues prepared by the parties. This will inform its decision as to the
directions it makes and whether any additional evidence other than the statements of
case should be prepared.
3.6.4 Possible directions
In determining what order to make as to further evidence to be prepared, exchanged
and/or filed before trial, the IPEC will apply a cost-benefit test to ensure that the
benefit of that evidence in terms of its value in resolving the issues justifies the cost of
producing and dealing with it (paragraph 29(2), PD 63). In addition, such evidence will
be limited to specific and identified issues.
There is a general presumption that statements of case and oral evidence alone
should, where possible, be the sole evidence at trial (paragraph 30.1, PD 63).
The evidential steps which the IPEC may order, if warranted by the cost-benefit test,
are as follows:
Disclosure. Any order as to disclosure will only ever be for specific disclosure,
limited to particular identified issues and possibly to particular documents or
classes of documents. The court may, in patent cases, order product or process
descriptions in the usual way, in place of the defendant's disclosure obligation
(insofar as it relates to any infringement claim).
Experts' reports. The IPEC will expect the parties to have a good idea of the field
in which experts should operate, and the CMC order will specify the issue(s)
which any expert evidence should address.
Experiments and supply of samples, where necessary.
Witness evidence. Where possible, the IPEC will seek to avoid further witness
evidence and rely solely on statements of case. Where further witness evidence
is required, it will be limited to particular issues, and likely no more than one to
two witnesses. The IPEC may make allowance for witness evidence in reply.
Survey evidence is not mentioned in PD 63.23, but in Westwood v Knight [2011]
EWPCC 11 the IPEC considered the possibility of survey evidence in respect of
likelihood of confusion and denied it on the basis that it failed the cost-benefit
test. It seems unlikely that survey evidence would generally be permissible in the
IPEC.
Further written submissions or skeleton arguments. In general, the IPEC will not
order skeleton arguments where the statements of case and/or witness evidence
will satisfactorily deal with the issues. Where skeleton arguments are necessary,
they are likely to be limited to particular issues.
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(Paragraph 29, PD 63.23.)
Other than in exceptional circumstances, the IPEC will not permit a party to file
evidence beyond that ordered at the CMC.
The IPEC's order will also set out the nature of the final trial, including whether oral
testimony and cross-examination is necessary. If an oral hearing is considered
necessary (as opposed to a decision on the papers alone), it will be of fixed duration
of no more than two days. If cross-examination of witnesses is permitted, the order
will limit this to particular issues and defined time limits.
The order will also set out the timetable to trial taking into account the production of
such material as is ordered.
3.6.5 Possible costs issues at the case management conference
If a defendant wishes to seek security for costs, it should do this before or at the
CMC, in accordance with the usual rules contained in CPR 25.12-14.
Where there are multiple defendants, the parties should consider the impact of the
costs capping provisions. Any uncertainties should be raised at the CMC.
3.6.6 Applications
Applications in the IPEC are governed by the usual provisions set out in CPR 23, with
the following modifications contained in CPR 63.25:
Except in respect of applications to be heard at the CMC, the respondent must
file and serve its response to an application within five days of service of the
application notice.
An application for the transfer of a claim out of the IPEC to the Patents Court, or
the general Chancery Division, or for a stay of proceedings, must be made at or
before the first CMC. An application to transfer a claim from the IPEC made later
in the proceedings will only be heard in exceptional circumstances.
All applications other than for the CMC will be dealt with without a hearing unless
the court considers a hearing necessary.
3.6.7 Amendments to statements of case
Parties are encouraged to set out their case in full in their initial statements of case. If
a party wishes to amend its statement of case, it should first seek the agreement of
the other parties. If this is obtained, the court will usually allow the amendment.
If consent cannot be obtained from the other parties, a party seeking to amend its
statement of case will need to apply. In considering whether to grant the application
the IPEC will consider all the circumstances including proportionality and the cost-
benefit test contained in CPR 29.2.
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3.6.8 Other proactive case management steps
The IPEC is proactive in seeking to reduce the issues and streamline the final trial.
For example, in Beechwood House t/a Binleys v Guardian Products [2010] EWPCC
12, HHJ Birss QC heard a summary judgment application in which it was apparent
that the underlying issue was unlikely to be determinable on a summary or strike out
basis, but that it would likely need to be disposed of as a preliminary issue before
trial. Rather than waste the opportunity, HHJ Birss QC invited the parties to agree that
the issue could be dealt with in that hearing, but on the merits rather than on a
summary basis. The parties agreed reducing the issues which needed to be decided
at trial.
The IPEC is also willing to express preliminary and non-binding opinions, if requested
by the parties, in order to assist the parties in settlement negotiations (see Weight
Watchers v Love Bites [2012] EWPCC 12 and Fayus v Flying Trade [2012] EWPCC
43).
3.6.9 Documents and trial timetable
The IPEC Court Guide provides detailed guidance as to the preparation of bundles for
trial and application hearings. In general, all papers should be lodged at the Rolls
Building by noon two days before the hearing is to take place, unless a different
period is specified in the CPR, the IPEC Court Guide, or by the judge.
Important documents should also be supplied electronically on a USB stick or by
email, usually in either Microsoft Word or text searchable .pdf format. For trial, this will
include skeleton arguments, important patents and drawings, witness statements, and
expert reports.
Parties should follow paragraph 9 of PD 63 ahead of trial. One week before the trial is
due to begin, both parties should inform the court in writing of the estimated length of
its oral submissions, examination-in-chief of its own witnesses, and cross-
examination (if permitted) of the other parties' witnesses.
Four days before the trial, the claimant must file the trial bundle, a reading guide for
the judge (in accordance with paragraph 9.3 of PD 63), and a detailed trial timetable,
which should have been agreed with the other parties if possible).
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4 Small claims track
The small claims track of the IPEC is suitable for straightforward and lower value
claims. It is intended to be even more streamlined and cost efficient than the multi-
track of the IPEC. In general:
Parties should not require legal representation.
There should not be significant pre-hearing preparation.
The formalities of the trial process are reduced.
There is a minimal and limited risk in respect of third-party costs.
Cases on the small claims track are heard by one of three district judges, or by
deputy district judges.
4.1 Suitability
The small claims track can only be used for intellectual property claims relating to
copyright, UK and Community trade marks, passing off, and UK and Community
unregistered designs. In general, the small claims track is particularly popular for
simple copyright claims, for example, brought by photographers in respect of
unauthorised reproduction of photographs online.
The small claims track cannot hear claims relating to patents, registered designs, and
plant varieties.
Most importantly, there is a limit on the value of a claim which can be heard on the
small claims track of the IPEC. Like the limit for the small claims track in other courts,
this is currently £10,000 (CPR 63.27).
Most final remedies, such as damages or account of profits (up to the £10,000 limit),
delivery up or destruction of infringing items and/or final injunctions are available.
However, interim remedies are not available on the small claims track.
4.2 Costs
There are only very limited circumstances in which a party on the small claims track
will be ordered to contribute to the costs of another party. These are set out at CPR
27.14 and include:
Fixed sums in relation to issuing the claim.
Court fees.
Reasonable expenses incurred by a party or witness in travelling to or from a
hearing or staying away from home in order to attend a hearing.
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Loss of earnings or loss of leave suffered by a party or witness caused by
attending a court hearing, limited to £90 per day for each person (paragraph 7.3,
PD 27).
In proceedings which include a claim for an injunction, a sum for legal advice and
assistance not exceeding £260 (paragraph 7.2, PD 27).
Up to £750 for experts' fees, although in general it is unlikely that the IPEC would
order expert evidence for a claim on the small claims track.
Any further costs as the court may decide at the conclusion of the hearing should
be paid by a party who has behaved unreasonably. A party's rejection of an offer
of settlement will not of itself constitute unreasonable behaviour but the court may
take it into consideration (CPR 27.14(3)).
There is a separate court guide which contains detailed information in respect of
procedure on the small claims track (see Justice: Guide to the Intellectual Property
Enterprise Small Claims Track).
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5 Costs
The cost provisions of the IPEC are intended to make the court more accessible by
reducing the risk of an adverse costs order against a party, giving certainty to litigants
as to their maximum potential exposure to their opponents' costs, regardless of the
outcome of the case. This is done by making costs awards in the IPEC subject to a
capped and scale costs regime, set out in Section VII of CPR 45 and PD 45.
5.1 Overall cap
Subject to limited exceptions (see Exceptions to the capped and scale costs regime)
a party will not be ordered to pay total costs of more than £50,000 on final
determination of a claim in relation to liability, and no more than £25,000 on an inquiry
as to damages or account of profits.
5.2 Scale costs
The overall cap is also subject to a scale costs regime which limits the costs
recoverable for each stage in the litigation. Claims started on or after 1 October 2013,
are subject to the following maximum scale costs (as well as the overall cap of
£50,000), set out in Section IV of PD 45, Table A.
Stage of a claim Maximum amount of
costs
Particulars of claim £7,000
Defence and counterclaim £7,000
Reply and defence to counterclaim £7,000
Reply to defence to counterclaim £3,500
Attendance at a case management conference £3,000
Making or responding to an application £3,000
Providing or inspecting disclosure or product/process
description
£6,000
Performing or inspecting experiments £3,000
Preparing witness statements £6,000
Preparing experts' report £8,000
Preparing for and attending trial and judgment £16,000
Preparing for determination on the papers £5,000
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Costs recoverable in respect of an inquiry into damages are subject to the following
scale costs (in addition to the overall cap of £25,000), set out in Section IV of PD 45,
Table B.
Stage of a claim Maximum amount of costs
Points of claim £3,000
Points of defence £3,000
Attendance at a case management conference £3,000
Making or responding to an application £3,000
Providing or inspecting disclosure £3,000
Preparing witness statements £6,000
Preparing experts' report £6,000
Preparing for and attending trial and judgment £8,000
Preparing for determination on the papers £3,000
Subject to assessment, the following may be recovered in addition to the amounts
specified for each stage:
Court fees
Costs relating to enforcement of a court order
Wasted costs
VAT where appropriate; all scale costs are net of VAT
(CPR 45.31(4A) (a-c) and (5).)
The scale costs specified in Tables A and B above, which were set out in
amendments made to PD 45 by the 66th update to the CPR, apply only to
proceedings started on or after 1 October 2013 (see CPR 66th Update, paragraph
25). Lower scale costs apply to proceedings started before that date. In respect of
such proceedings, these lower scale costs also apply to matters occurring after 1
October 2013 (PPL v Hamilton (No.2) [2013] EWHC 3801 (IPEC)).
The scale costs regime sets out the maximum recoverable; costs are still determined
according to normal principles of recoverability within these limits, and the court will
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also have regard to the nature and complexity of the claim when determining the
scale costs to award.
5.3 Exceptions to the capped and scale costs regime
There are the following three express exceptions under which the IPEC may order the
payment of increased costs beyond the limits set out in the capped and scale costs
regime:
Where the court considers that a party has behaved in a manner which amounts
to an abuse of the court's process (CPR 45.30(2)(a)).
Where the claim concerns the infringement or revocation of a patent or registered
design or registered trade mark which has earlier been certified valid by a court
or by the Comptroller-General of Patents, Designs and Trade Marks (CPR
45.30(2)(b)).
Where a party has behaved unreasonably in an application, in which case the
costs of that application may be awarded at the conclusion of the hearing and fall
outside the £50,000 cap (CPR 45.32 and CPR 63.26(2)). However, consequential
increased costs incurred in respect of other stages of the claim as a result of the
application are not subject of this exemption and would need to be sought under
CPR 45.30(2)(a) (abuse of court's process) (PPL v Hamilton [2013] EWHC 3467
(IPEC), at paragraph 17).
(CPR 45.30.)
In the case of either the first or second bullet points above, the entire proceedings
and both sides' costs will fall outside the cost caps. In the case of the third bullet, only
the costs of the application in question are outside the caps (Henderson v All Around
The World Recordings Ltd [2013] EWPCC 19, at paragraph 10).
In addition to the three express exceptions, the general discretion of the court in
respect of costs also applies in the IPEC(The court has a general discretion as to
whether costs are payable and the amount of such costs, and specifies certain
circumstances which must be considered including the conduct of the parties (CPR
44.2). However, the discretion is "strongly conditioned by the special rules as to
costs" in respect of the IPEC.
This has been interpreted as meaning that the IPEC may depart from the cost and
scale caps at its own discretion, in the following circumstances:
In the case of the overall costs caps, only in "truly exceptional" cases; to do
otherwise would undermine the point of the cost capping system (see Henderson,
at paragraph 12).
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In respect of the scale caps (that is, the scale costs for the stages, whilst still
respecting the overall caps), although it will seldom be open to the court to
disregard the scale costs regime, it does not require the truly exceptional case
necessary for the overall caps to be disregarded (Brundle v Perry [2014] EWHC
979 (IPEC)). (See Legal update, IP Enterprise Court considers transitional costs
provisions and departure from costs cap due to losing party's behaviour.)
An example of this is seen in Brundle v Perry. The defendant had exhibited
obstructive behaviour, including persistent use of expletives and "intemperate
language" in pleadings and communications. More troublingly, he had sent a
fraudulent email purporting to be from the judge to all the parties, containing an
apparent ruling in favour of the defendant. HHJ Hacon held that this behaviour, while
"strikingly unusual", was not "truly exceptional on the scale of unsatisfactory
behaviour."
HHJ Hacon was prepared to depart from the scale costs, but not the overall caps, and
therefore awarded an additional £2,000 costs, taking the total awarded against the
defendant to £49,645.
5.4 Procedure in respect of costs
Costs are dealt with by summary assessment (CPR 45.41(3)). There is no detailed
assessment in the IPEC. In preparing statements of costs, parties will need to explain
in relation to which stage of the claim the costs were incurred.
The costs of interim applications are reserved to the conclusion of a trial, where they
will be dealt with on summary assessment (CPR 63.26(1)). The court can order the
costs of an application to fall outside the cost caps and scale cost limits if it is satisfied
that a party has behaved unreasonably (CPR 63.26(2)).
As a result of the capped and scale costs regime, the costs management procedures
in CPR 3.12 to 3.18, including the requirement for costs budgets, do not apply (CPR
3.12(1)(c)).
5.5 Claims transferred into the IPEC
For cases that have been transferred to the IPEC from elsewhere (either the County
Court or another part of the High Court), the IPEC will deal with costs incurred in
proceedings before transfer (and therefore outside the IPEC costs regime) on a case-
by-case basis. Costs incurred in the High Court before transfer are usually dealt with
by summary assessment and not subject to the IPEC costs regime.
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6 Successes
A report commissioned by the UK government and published in June 2015 found that
the reforms implemented in the IPEC appeared to have led to a large increase in
claims filed (see Evaluation of the Reforms of the Intellectual Property Enterprise
Court 2010-2013 (22 June 2015)). In addition, case filings by SMEs were found to
have increased substantially since the reforms. In 2013, 45% of IPEC cases were
filed by SMES, and 22% by individuals. There also appeared to be evidence of a
causal link between the reforms and the quantity of out-of-court settlements. Survey
evidence found that the cost caps and active case management were the most
influential reforms impacting the large increase in cases.
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Reproduced from Practical Law with the permission of the publishers. For further
information visit http://www.practicallaw.com or call 020 7542 6664.
Kemp Little LLP 2015. All rights reserved. This publication may not be reproduced or
transmitted by electronic or other means without the prior consent of the copyright
owner. Applications for the copyright owner’s permission to reproduce any part of this
publication should be addressed to Kemp Little LLP.
The information and opinions contained in this guide are not intended to be a
comprehensive study, nor to provide legal advice, and should not be relied on or
treated as a substitute for specific advice concerning individual situations.
Kemp Little LLP is a limited liability partnership. Registered number OC300242.
England Registered office as shown.
For more information contact:
Peter Dalton Associate, Intellectual Property & Litigation
+44 (0) 20 7710 1604 [email protected]