Head of Intellectual Property | Head of International | Retail & Consumer
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Intellectual property infringement claims in the UK can be brought in either the High Court or the Intellectual Property Enterprise Court (referred to as IPEC). Choosing the right venue is an important part of formulating an effective enforcement strategy as there will be various consequences flowing from that decision.
IPEC has a more streamlined procedure than the High Court and is becoming the forum of choice for claimants. It contains a full time judge which aids the development of a consistent approach and cases often cost much less than in the High Court.
This guidance aims to answer some of the basic questions we receive relating to the procedure in IPEC and highlights the advantages and disadvantages of this court compared to the traditional route of litigating through the High Court.
IPEC is a specialist court dealing with intellectual property infringements and specialist IP judges hear the cases.
It was initially set up to provide a less costly and complex alternative to the High Court. It improves access to justice for small and medium sized companies (as well as other entities) by ensuring that the court process is much more streamlined.
IPEC is split into two parts; the small claims track and the multi-track. The small claims track is suitable for claims where the amount in dispute is £10,000 or less. Whereas, the multi-track is suitable for claims with a value between £10,000 and £500,000, although it may hear claims valued at more than £500,000 provided that all parties agree.
2.1 – Jurisdiction
IPEC can hear all types of IP disputes and also disputes in which intellectual property is a major concern. This is because IPEC is a branch of the Chancery Division of the High Court and, as such, can hear any case which is suitable for the Chancery Division providing it includes IP.
For example, the cases heard in IPEC include, but are not limited to, infringement of IP rights, amendments of patents, compensation for employees in respect of a patented invention and breaches of confidence such as misuse of trade secrets.
Consequently, it is often the court of first choice for many claimants involved in the litigation of IP rights and other IP related disputes.
2.2 – Value of claims
As stated above, IPEC is split into two different parts; the small claims track and the multi-track. The small claims track has a maximum claim value of £10,000; whereas the multi-track has a maximum value of £500,000 (unless the parties agree otherwise). This means that the maximum value of any claim that IPEC hears is £500,000. This is a significant limitation of the IPEC as any claims over £500,000 would need to be capped at this level.
In contrast, the High Court hears cases of any value.
2.3 – Restrictions on the procedure
IPEC is not the most appropriate court for all cases. There are several specialist procedural and costs rules applicable to claims in IPEC and it tends to be more suited to hearing claims that are shorter, less complex and of lower value than those claims which would usually be brought before the High Court.
Some general points to note about the nature of claims brought in IPEC:
2.4 – Available remedies
IPEC can order all the remedies which are commonly available in the High Court, including interim injunctions, damages and delivery up. However, the biggest difference is the damages and cost caps compared to the High Court.
As previously mentioned, in IPEC, for a claim allocated to the multi-track, damages are capped at a maximum of £500,000 (unless parties mutually agree to waive this cap). Costs are capped at £50,000 (total) and within that there are caps for each stage of the litigation.
It is important to know that interim remedies including interim injunctions, asset freezing orders and search and seizure orders are not available on IPEC small claims track but they are on the multi-track. Therefore, if a claimant seeks an order for one of these remedies, the claim should be made to IPEC multi-track which has jurisdiction to grant these types of order.
3.1 – Pre-trial
Before starting a claim, the parties must comply with certain steps as set out in Paragraph 6 of the Practice Direction – Pre-Action Conduct and Protocols (PD-PAP). The claimant must write to the defendant with concise details of the claim. The defendant should respond setting out if the claim is accepted and, if not, reasons why and an explanation as to which facts and parts of the claim are disputed. If the defendant is making a counterclaim, it should set out the details. The steps also include disclosing key documents relevant to the issues in dispute. Parties should also consider if it is appropriate to try and resolve any dispute outside of the court. This can be done in a number of ways including a negotiation directly between the parties, mediation, arbitration or conciliation. This is preferable to IPEC due to the cost of proceedings and the time consumed by preparing for and attending any trial.
3.2 – Starting a claim
The court itself can be found in the Rolls Building in London.
Any claim must be started by issuing a claim form and paying the prescribed fee. This claim form must include the nature of the claim, brief relevant details, and the remedies that are being sought.
When filing the claim form, the claimant can choose to file particulars of claim at the same time or within 14 days of issuing the claim form. The particulars of claim must set out concisely all the facts and matters relied on by the claimant and attach important documents to it. It should also state whether or not Paragraph 6 of PD-PAP has been complied with. The claimant should serve the sealed court documents on the defendant with the response pack.
3.3 – Defence, Counterclaim and Reply
After a defendant is served with particulars of claim, it has to serve its defence within 14 days of service of the particulars of claim or it can file an acknowledgement of service with the court if it needs more time or wishes to challenge the jurisdiction of the court.
If the defendant decides to file an acknowledgement of service, the period for filing a defence is 42 days from service of the particulars of claim. This will be 70 days from service of the particulars of claim if the claimant does not confirm that paragraph 6 of the PD-PAP has been complied with in the particulars of claim.
The defence must include details of which allegations are denied, admitted or refused to admit or denied. If any are denied, reasons should be given.
Any counterclaim by the defendant should be filed at the same time as the defence. The claimant’s reply to the defence (and possibly a defence to any counterclaim) should be served within 28 days of service of the defence.
3.4 – Statements of case
Statements of case such as the particulars of claim, the defence or reply are expected to be concise and succinct, whilst at the same time providing all the relevant information relating to the case.
There are particular rules relating to alleging infringement of certain intellectual property rights such as patents, registered design rights and unregistered design rights. Of particular note is that in patent infringement proceedings, it would be rare that more than 3 items of prior art can be pleaded in defence of a claim. For design right claims, limits will also be imposed at the case management conference.
3.4 – Statement of Truth
To validate a statement of case, a signed statement of truth must be provided by someone from the claimant or defendant, usually a senior member of a company, with full knowledge of the facts. This statement of truth is legally binding and the individual who signs it may be required to appear as a witness at the trial.
3.5 – Case Management Conference
The claimant is required, within 14 days of being served with all the defences, to apply to the court for a Case Management Conference (CMC). This is a preliminary hearing giving the judge and the parties the opportunity to manage the conduct of the case and set out the timetable to trial. In particular, it will identify the issues of fact and law which need to be resolved at trial. Other orders will cover the trial date, disclosure of any documents and the use of witnesses and experts. However, the use of experts and witnesses will be more limited and controlled than in the High Court.
In most cases, the judge is likely to order the parties to disclose a very limited category of documents in relation to particular issues. Also, known adverse documents across all issues are likely to be disclosable by the parties.
The parties should submit a bundle of documents at the court at least two days before the hearing and attempt to agree a draft order for directions before the hearing. If the directions are not agreed, the court prefers a single document with any proposed alternative directions highlighted.
It is possible to request that the judge provides a “non-binding opinion” on the merits of the case but such a request must be made by both parties before the CMC.
The trial date is also fixed at the CMC and the fee is then payable within 14 days.
3.6 – Transfers
Often cases are transferred into IPEC after starting in the High Court either following the court’s own initiative or through an application of one of the parties. In limited cases, the case may be transferred out of IPEC into the High Court.
The relevant factors when considering transfers into or out of the IPEC are:
a) if a party can only afford to bring or defend a claim in the IPEC; and
b) if the claim is appropriate for IPEC, paying particular attention to the value (including the value of an injunction), complexity and likely length of the trial.
3.7 – Trial
The trial should not last more than 2 days and the parties will agree to a strict timetable for the conduct of the trial. Many cases in the IPEC are heard within a single day.
If both parties agree, it is possible to agree to conduct trial on the papers but this is rare.
4.1 – Damages cap
As mentioned above, there is a limit regarding the damages that can be awarded in both the small claims track and the multi-track. These limits are £10,000 in the small claims track and £500,000 for the multi-track (unless agreed otherwise).
4.2 – Legal fees cap
One of the purposes of IPEC is to make an IP court accessible to most people. This is done partly by limiting the costs of the adverse party’s legal fees which it can recover. There is a cap of £50,000 (total) on the amount of costs which can be recovered meaning that the losing party will only have to pay the other party’s costs up to £50,000 and, in practice, awards are often closer to £35,000. There are certain caps at each stage of the litigation. This scale is set out in the Civil Procedure Rules in Practice Direction 45.
The total cap excludes court fees and wasted costs orders.
All costs are assessed summarily at the end of trial and so the parties are required to prepare and submit statements of costs before the trial date.
If, in an IP case, the parties go on to a damages inquiry or an account of profits there is a further £25,000 cap on the costs which can be recovered by the successful party.
4.3 – Exceptions to the caps
Despite the cost caps, there are exceptions where the court does not have to follow them such as:
a) If one of the parties has behaved in a way which is considered to be an abuse of the courts process.
b) The claim concerns the infringement or revocation of a patent, registered design or trade mark, the validity of which has been certified by a court or by the Comptroller-General of Patents, Designs and Trade Marks.
c) If a party has acted unreasonably in an application during the course of proceedings.
d) Where a (claimant’s) Part 36 offer has not been beaten (PPL v Hagan 2016). However, it has been emphasised (in Martin v Kogan) that the court should exercise restraint when going over the scale. A defendant’s successful Part 36 offer will not displace the cost caps.
There is a general discretion of the court to award above the caps by reference to conduct of the parties. In respect of the total cap (£50,000) this is likely to be in exceptional circumstances and in respect of the individual caps (at each stage) this may be in less exceptional circumstances.
4.4 – Transferred claims costs
Costs which have been incurred in another court before the case was transferred into IPEC will not be subject to these limits as costs are dealt with according to the court they originate in and before the transfer of proceedings.
4.5 – Claims with multiple defendants
In claims where there are multiple defendants, there is no multiplication of the overall cost cap (£50,000). This means that all defendants are jointly liable for the single cost cap up to £50,000. Practically speaking, this means that a claimant would not be able to seek £50,000 from each defendant (Gimex v The Chill Bag Company (2012)).
4.6 – Claims against third parties
If a Part 20 claim is brought, that is a claim other than a claim by a claimant against a defendant, this gives rise to an additional set of scale costs (Martin v Kogan (2017)) i.e. the defendant’s exposure to costs could be doubled.
5.1 – Suitability
The small claims track can also be used for IP related disputes except those relating to patents, registered designs, semiconductor topography rights or plant varieties. It is not suitable if lots of witnesses are needed, complex or important issues of law are at stake, and the trial is likely to take more than one day.
There are also restrictions on the amount of damages sought in the small claims track with the amount of damages being capped at £10,000; although the IPEC guide states this is not a “hard and fast ceiling”. Other remedies are available in the small claims track and these include account of profits, delivery up orders and final injunctions.
5.2 – Costs
It is very unlikely that a judge will order the losing party to pay for the majority of the winning party’s costs in the small claims track. However, there are some limited circumstances where the court will award costs which include:
|Damages Capping||IPEC has a cap of £500,000 on the amount of damages/account of profits that can be sought (unless the parties agree otherwise).||No cap on the amount that can be claimed as damages or an account of profits.|
|Costs and Costs Capping||The cost to trial is likely to be between £75,000 to £150,000 plus VAT in most cases which is much lower than the High Court. Costs recovery in the IPEC is capped at £50,000 (total) for determination of liability hearings and a further £25,000 in respect of inquiries into damages. It may be possible, in certain circumstances, to override this by the claimant making a suitable Part 36 offer. Orders are often much less than these amounts.||The cost to trial is likely to be much higher than if the case was heard at IPEC often between £250,000 to £500,000 plus VAT in most cases. Must be reasonably and proportionately incurred, but multi-track claims are not subject to any specific cap. The usual rule of thumb is that around 60 to 70 per cent of the winner’s costs are recovered.|
|Location and Expertise||IPEC sits within the Royal Courts of Justice in London, but it is possible for cases to be heard at other courts in different locations. It is a specialist court that only deals with matters concerning IP. The judges that hear IPEC matters are therefore considered specialists in IP law.||High Court in London hears all civil disputes – therefore arguably it is not as specialist as IPEC but usually IP cases have specialist judges.|
|Statement of claims||There is an expectation on the parties to set out concisely all facts and arguments in their statement of case (e.g. particulars of claim and defence). Relevant documents should be attached. This means that drafting the statements of case is a more costly exercise than in the High Court. It is often said that the case is more front loaded in IPEC than the High Court. It is much more difficult to amend particulars of claim and the defence in the IPEC as there is more emphasis on getting it right at the outset.||The particulars of claim and the defence are often briefer and there is no need to include all the evidence. Parties can agree or apply to the court to amend the statements of case.|
|Disclosure and Witness Statements||There is no automatic disclosure provision in the IPEC or the ability to call witnesses and experts. However, it is likely that the parties will have to disclose documents which are “adverse” to their case or “support” the other party’s case. It will only be ordered if absolutely necessary and if the costs do not outweigh the benefits to be achieved.||Disclosure will form part of the civil process in the High Court. This is quite wide and an involved process. Essentially, the following documents must be disclosed by a party: a) those it relies on; b) those that adversely affects its own case or that of the other party; c) those that support the other side’s case. Also, witnesses and experts are routinely called.|
|Trial Length||2 days or less; although in some limited cases 3 days has been allowed.||No time limit.|
|Time Frame||6 to 12 months.||12 to 18 months.|
|Settlement||Settlement is less likely than in the High Court as the cost of the proceedings are much lower than the High Court and the level of liability for paying the winning party’s costs is far lower than the High Court.||Significant pressure to settle as a result of the high cost of proceedings and unlimited exposure to the winning party’s costs (subject to costs budgets).|
Our Intellectual Property Team are available to help you with any questions you have regarding IPEC. Please get in touch with the contacts below or follow the additional links: