Just how much litigants can expect to spend, and recover, in trademark litigation before the new-style Patents County Court ("PCC") is now clearer, thanks to a recent judgment on costs in Dame Vivienne Westwood OBE v Anthony Edward Knight ( EWPCC 11).
Likewise, more light has now been shed on the criteria for assessing whether cases brought in the High Court should be transferred down to the PCC's more cost-controlled regime (Caljan Rite-Hite Ltd. v Sovex Ltd.,  EWHC 669 (Ch) ).
The guidance on both points is likely to be of keen interest to UK trademark and CTM owners contemplating action before the reformed PCC.
Westwood on Costs
Under the new PCC rules, successful parties to trademark infringement and other actions brought before the court are limited to recovering a maximum of £50,000 in costs from the losing party.
These costs are assessed in stages, which are themselves capped as in the table at bottom left.
This is in contrast to the High Court, where costs are unlimited, albeit at the discretion of the judge, although they do not often exceed 60% to 80% or so of actual costs except where assessed on an indemnity basis or where the losing party is otherwise penalised in costs.
Nonetheless, the fact that costs exposure before the High Court is unlimited makes such actions costly to lose, and it is difficult at the outset to predict with any certainty a party's maximum level of costs exposure. The hesitancy of SMEs to attempt to enforce their rights in this system was one of the main reasons why a costs capping regime was introduced at the heart of the reformed PCC.
Westwood was the first PCC case under the new regime to offer detailed guidance on how the court is approaching the assessment of costs within the scale. In it, the judge noted that although the court has a discretion to award costs off the scale, in practice it will do so only in the most exceptional cases, if ever. Litigants need to know with clarity what their likely costs exposure will be, the court noted, and advisors need to have confidence in the system of costs capping so that they can convey to their clients that it works and will be adhered to.
With that in mind, the judge examined the parties' submissions on where costs should fall within the scale.
In that regard, the judge noted that parties seeking costs need to provide a schedule of costs broken down by stage of the proceedings. The judge held that in principle, if the costs claimed for a particular stage exceeded the stage cap, then the cap was very likely to be the figure awarded. If the costs were lower than the stage cap, then the lower figure was likely to be awarded. That was not, however, to say that costs up to a particular stage cap would always be justified or indeed awarded, and for simpler trademark disputes, in particular, the judge observed that costs spent or awarded at each stage should not necessarily even reach the stage caps.
The judge also confirmed that pre-action correspondence can be included in costs claimed as part of the particulars of claim and defence and counterclaim stages of the proceedings. To do otherwise, he noted, would run counter to the desireability of encouraging pre-action settlements.
In this case, the claimant incurred total costs in the region of £86,000. Since the case was handled by the High Court during the particulars of claim stage before being transferred to the PCC, the PCC damages cap for the particulars of claim stage did not apply, and the claimant was awarded total costs of around £60,000.
The total amount of costs incurred in this case for trademark and copyright infringement and passing off were substantially below the amount likely to have been incurred had the case been handled under the fuller High Court procedure, which could easily have surmounted £250,000.
Caljan on Transfers
In this further case, the High Court seized an early opportunity to apply in detail the criteria for determining whether a case brought in the High Court should remain there, or be transferred down to the PCC.
The same criteria are relevant to whether a PCC case should in fact be transferred to the High Court.
In Caljan, the claimant sought an order for rectification of the Trade Marks Register to substitute itself for the defendant, Sovex, as proprietor of a UK registered trademark. The defendant sought to have the case transferred to the PCC, where costs and procedure would be more closely reined in.
In fact, however, the factual matrix behind the dispute was intensely complicated, and Sovex had initially indicated that the claim should be heard by the High Court and that it intended to call six witnesses, and estimated costs in the region of £150,000, which was far above the maximum recoverable costs in the PCC. On that basis, the claim had proceeded in the High Court and a trial window had already been fixed.
Although the High Court had jurisdiction to transfer a case to the PCC where appropriate (as indeed it did with Westwood, above), it did not consider Caljan suitable for transfer. It noted that both parties had estimated likely costs far above the maximum recoverable in the PCC (with Caljan's estimate coming in at around £225,000). Evidence that Sovex could not have continued to defend the case if it had remained in the High Court would have been material, but in fact the evidence suggested, to the contrary, that Sovex had significant financial backers who would support its case in either court, and Sovex itself conceded that it would continue to defend in any event.
The court noted that the issues in this case were complex and would require disclosure, witness statements and cross-examination, all of which were closely restricted in the PCC. It was unlikely to be capable of being heard in two days or less. All these factors militated against a transfer.
The judge also noted that the value of the trademark in dispute was estimated at over £500,000, which also pointed toward the High Court as the appropriate forum for the dispute. Given that there was no evidence that any party would be denied access to justice if the case remained with the High Court, the judge declined to order the transfer.
These cases show that the PCC is establishing itself as an effective, cost-controlled tribunal for smaller, less complex IP cases, and that users of the system can have confidence that the restricted costs recovery regime will be applied.
They also show that the PCC and the High Court are both cognisent of the overlap in their jurisdictions and will consider carefully any factors that tend to suggest that a case would be more appropriately heard by the other. Issues of costs, complexity and access to justice are likely to play a key role in these decisions.
The cap of £500,000 on damages in PCC actions within the so-called "special jurisdiction" (patents and designs) came into force in mid-June, and is expected to come into force for trademark and passing off matters in the autumn. Even before then, though, the value of the IP at the heart of a dispute is likely to be relevant to where a claim should be brought, as acknowledged by the court in Caljan.
The PCC is already attracting a busy docket and the judge of that court is disposing of cases energetically and expeditiously, with a flexible procedure and more informality than proceedings before the High Court. While litigation will never be cheap, before the PCC enforcement of IP rights is now at least becoming possible for many SMEs, for whom it once was a necessity they could not afford.