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The Patents County Court is an innovative judicial forum. It aims to deliver a cost effective and swift resolution for Intellectual Property (IP) disputes, in turn boosting access to justice for SMEs and entrepreneurs.

However, the recent case of Comic Enterprises Limited v Twentieth Century Fox Corp [2012] highlights that this forum should not be exploited by being used as a mechanism for conducting High Court style litigation with the benefit of limited adverse costs exposure. Litigants have been warned that trying to ‘have your cake and eat it ’ will not work.

If a case should be litigated in the High Court, other mechanisms – such as After the Event insurance – should be used to limit adverse costs exposure.

BACKGROUND TO THE PATENTS COUNTY COURT

Why was the Patents County Court introduced? The aim of the Patents County Court, when it was set up in 1990, was to provide a simpler, swifter and ultimately cheaper way of resolving IP disputes than the traditional High Court.

The Patents County Court was established specifically to handle small, non-complex and lower value disputes, enabling IP rights to be protected that historically would not have been due to the High Court barriers, whilst freeing up the High Court to deal with more complex claims.

WAS IT AN OVERNIGHT SUCCESS?

The Patents County Court was not the initial success that was envisaged, and the introduction of the Civil Procedure Rules in 2001 meant that both the cost and process of litigating in the Patents County Court was no different from the High Court. Therefore, changes were made to refine the scope of the Patents County Court encourage its use, such as the introduction of damages and costs limits in 2011.

SCOPE OF THE PATENTS COUNTY COURT

What is the current scope of the Patents County Court? Distinguishing features of the Patents County Court include:

Damages which the court can award are limited to £500,000;
Recoverable costs are on a fixed scale and limited to £50,000;
Trial is limited to 2 days maximum; and
Documentation is limited – parties are asked to set out their cases at the outset and judge’s permission is required to submit any further evidence, written argument or specific disclosure
The above costs capping seeks to encourage IP disputes to be pursued, removing the risk of significant adverse costs awards associated with the High Court.

PATENTS COUNTY COURT VS. HIGH COURT

What is the rough guide to using the Patents County Court rather than the High Court?

Patents County Court suitable for:

Small;
Simple;
Low value disputes
High Court suitable for:

Large;
Complex;
High-value disputes
WHAT IF IT IS NOT CLEAR WHICH ROUTE TO TAKE?

Despite the above general rules, there has been some confusion over the appropriate judicial forum to use for claims which lie on the boundary of the distinction.

Therefore, the Civil Procedure Rules (CPR) allow parties to apply to the court to transfer proceedings either:

out of the High Court into the Patents County Court; or
out of the Patents County Court into the High Court.
WHEN CAN A CASE BE TRANSFERRED?

CPR 30.3 sets out a number of matters to which a court must have regard when considering an application for transfer, including:

the financial value of the claim / amount in dispute;
whether it would be more convenient or fair to be held in another court;
the availability of a specialist judge;
whether the facts, legal issues, remedies or procedures involved are simple or complex;
the importance of the outcome of the claim to the public in general.
THE RELEVANCE OF COMIC ENTERPRISES LIMITED V TWENTIETH CENTURY FOX CORP (2012)

Comic Enterprises Ltd owns the trademark “the Glee club”, running comedy clubs in England using this name. Twentieth Century Fox produces the US TV programme “Glee”. Comic Enterprises Ltd issued a claim against Twentieth Century Fox in the Patents County Court for infringement of this trademark and passing off.

Twentieth Century Fox made an application to transfer the proceedings out of the Patents County Court and into the High Court. This application was made based upon:

The value of the claim exceeded the £500,000 damages cap within the Patents County Court; and
The complexity of the factual and legal issues warranted a High Court forum.
The argument: Comic Enterprises Ltd contested the application, arguing that transferring the proceedings to the High Court would open them up to the risk of significant adverse costs, therefore hindering access to justice for Comic Enterprises as an SME. The cost capping within the Patents County Court limited their adverse costs exposure to £50,000.

The outcome: The Court approved the transfer of this case to the High Court.

The court looked at factors within CPR30.3, as above, when considering this case. The deciding factor was the conduct of Comic Enterprises Ltd, who the Court believed were “running this case as … a piece of full scale High Court litigation”, but tried to mitigate their adverse costs risk by restricting the case to the Patents County Court.

The Court stated that Comic Enterprises Ltd was trying to “have its cake and eat it” by trying to undertake High Court conduct all the while benefiting from cost capping.

It was therefore appropriate in the interests of justice to transfer the proceedings to the High Court.

THE FUTURE

What does this decision mean for clients with potential IP disputes? This decision provides clarity for litigants as to when the benefits of the Patents County Court can be enjoyed. In order to benefit from the cost capping within the Patents County Court, a case should accordingly be conducted in a streamlined, appropriate way, e.g. through narrowing factual issues and ensuring information is exchanged before proceedings are issued.

If parties do not adhere to this streamlined procedure and try to invoke High Court style litigation, then an application for the case to be transferred to the High Court may be approved.

What if my case is more suitable for the High Court but I want to limit my costs risk? TheJudge is able to access a range of solutions for clients litigating in the High Court, but concerned about the costs risks faced.

Effective use of After the Event insurance can cap or remove the risk of having to pay the opponent’s costs following a defeat in the High Court, as well as covering some or all of the policyholder’s own side’s costs. The premium for such cover is typically deferred to the end of the case and contingent upon success, meaning that the policyholder only pays the premium at the end of the case and only if they win. In addition, for policies taken out before 1st April 2013, the premium is a recoverable cost in the litigation, meaning that it can be claimed from the losing party.

Therefore, the real way to “have your cake and eat it” is to litigate complex disputes in the High Court, benefiting from unlimited recoverable costs and damages, but using ATE insurance to reduce the downside risk. This improves the risk/reward for a client and takes cost out of the equation when considering litigation strategy.

TheJudge is also able to access After the Event insurance and low cost disbursement funding for cases within the Patents County Court. Please contact a broker today to find out what options are available.