UK Patents County Court Reform: Making it easier for small businesses to enforce their IP rights

The publication of Lord Justice Jackson's Review of Civil Litigation Costs has sparked radical procedural reform in the Patents County Court ("PCC") aimed at addressing the problems encountered by small and medium sized enterprises ("SMEs").

First phase of reform
The first, and most significant, phase of reform took effect on 1 October 2010 when The Civil Procedure (Amendment No 2) Rules 2010 (SI 2010/1953) came into force.

Limit to costs orders
Litigants can now pursue proceedings in the PCC safe in the knowledge that, should an award for costs be made against them, their exposure is limited to £50,000, where liability is disputed, or £25,000 on an enquiry as to damages or account of profits.[1]

The parties can also keep a running tab on their maximum exposure to costs throughout the case as the new regime sets out a sliding scale of the maximum amount of costs recoverable at each stage of a dispute.[2]

Users of the PCC are now able to assess their potential exposure to an adverse costs order both at the outset and throughout a case, which is vital to encourage SME's to enforce (or defend) IP rights in the PCC.

Flexible case management powers
The new Rules have granted the PCC unprecedented flexibility with regards to case management powers which aim to streamline procedure and reduce costs for litigants

Where possible, the court will determine cases on the basis of the parties' statements of case and oral submissions.[3]

The right to rely on supplementary disclosure, witness statements, expert evidence and written submissions is to be controlled by the Judge at the first case management conference ("CMC") and will only be ordered in relation to specific and identified issues if the court is satisfied that the benefit of further material justifies the cost of producing and dealing with it[4].

The effect of this provision is to frontload IP disputes as litigants must be prepared to particularise both the factual and legal basis of their claim at the outset. This will provide the parties with a more complete picture as to the merits of their respective opponent's case at an early stage which can only serve to encourage settlement and reduce wasted expenditure on proceedings.

The court will aim to further reduce expense by dealing with cases without a hearing unless a hearing is considered necessary.[5] Any hearings will be restricted to a maximum of 2 days with cross-examination strictly controlled by the court[6].

Second Stage of Reform
On 29 March 2011, the Grand Committee considered and approved the Draft Patents County Court (Financial Limits Order) 2011, which came into force on 14 June 2011.

Limit as to recoverable damages in the PCC
The Statutory Instrument has established an upper limit of £500,000 for damages or an account of profits in all proceedings within the 'special jurisdiction' the PCC.

The 'special jurisdiction' of the PCC is limited to patent and design rights[7] and does not include Trade Mark or Copyright disputes. The limit will provide guidance for IP owners who may be unsure as to whether the PCC is the most suitable forum for their case to be heard.

SME's will be able to proceed to litigation with the comfort that their potential exposure to damages is capped at £500,000. The cap will enable litigants to objectively assess the commercial viability of pursuing a claim at the outset. It is hoped that this will lead to a reduction in the number of instances where SMEs are deterred from defending valid IP rights due to the risk of facing a potentially crippling award of damages should they be unsuccessful.

Cheaper insurance
Baroness Wilcox and Lord Young, who both sat on the Grand Committee that considered the Draft Order, have highlighted the availability of IP insurances as an ancillary advantage to the damages cap. Such insurance is not currently available at affordable prices in the UK and could provide SMEs with a valuable means of funding IP litigation.

The upshot
The ongoing reforms to the PCC should be seen as a positive step towards the provision of a commercially viable alternative to High Court Litigation for low value IP disputes. The cost cap, flexible case management powers and the proposed maximum limit of recoverable damages, will undoubtedly ease the concerns of SME's and make the protection of their IP rights easier and more affordable.

Author: Joe Cobley, trainee solicitor, TLT LLP
Date: July 2011

If you require any further information on the reforms to the PCC please contact Neil Meakin, a partner specialising in commercial and IP litigation in TLT's London Office.
e: neil.meakin@tltsolicitors.com  /  t:  +44 (0)20 3465 4140

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¹ CPR 45.42(1)
² PD 45 (25C)
³ PD 63 (31.1)
⁴ PD 63 (29.2)
⁵ CPR 63.25(3)
⁶ PD 63 (31.2)
⁷ PCC (Designation & Jurisdiction) Order 1994, Article 3