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Heather McCann, Partner, E-IP
www.e-ip.com
Jackson Tells It How It Is…..
Will his recommendations result in less costly IP litigation in England & Wales?
Introduction
In November 2008 Lord Justice Jackson was appointed to review the costs of civil litigation in England & Wales. Over the past year he has reviewed the spectrum of costs and funding issues. His final report was published on 14 January 2010. Running to over 500 pages, the report is comprehensive and makes several potentially significant recommendations. The full text of the report can be accessed from the Judiciary website at http://www.judiciary.gov.uk/about_judiciary/cost-review/jan2010/final-report-140110.pdf. In this update we focus on the key recommendations for intellectual property (IP) claims and SMEs. Two strands underpin the recommendations of the report:
- first, that civil litigation in England and Wales is hugely expensive and this threatens access to justice, particularly for individuals and SMEs; and
- second, that all the parties in a litigation, which includes not only the claimant and defendant but also the judges, barristers, solicitors and insurers, need to act responsibly towards the costs of such litigation to ensure that they are both reasonable and proportionate.
Summary
The Report's recommendations will need parliamentary will and time to become a reality. Whilst many of the recommendations appear sensible and may, if they become a reality, assist in keeping the costs of IP litigation to sensible levels, it remains to be seen whether there is the stomach for this kind of reform from any of the major political parties.
The Key Recommendations
Funding Litigation
1. Success fees and after-the-event (ATE) insurance premiums should cease to be recoverable
The report describes a claimant funding litigation through a combination of a conditional fee arrangement (no win, no fee) and ATE insurance as a ‘super-claimant'.
The super-claimant has no investment and hence no interest in the costs of the litigation because they will not pay them. This disinterest gives solicitors and insurance companies an opportunity to maximise their profits through very high success fees and insurance premiums which the opposing party cannot effectively challenge. Together, the opposing party faces a potentially devastating costs bill, which encourages early and potentially inappropriate settlement simply to avoid the cost of losing.
Pre-action Protocol
2. The practice direction on pre-action conduct should be substantially repealed because ‘one-size' does not fit all
The report recommends that there is a consultation regarding the creation of an IP pre-action protocol. Readers should note that this is not a new idea, and that indeed a draft IP pre-action protocol is already in existence. Further information and background can be found here: http://www.cipa.org.uk/download_files/code_of_practice.pdf
Case and Cost Management
3. Several recommendations for more active case management across civil litigation, and specifically IP cases, are made including:
a. Increased use of "docketing" which means that cases stay with the same judge;
b. Judges to be more mindful of the cost implications of their case management directions;
c. The creation of a ‘menu' of disclosure options to mitigate the rising cost of standard disclosure. This is primarily due to increased digital documentation which results in disclosure costs being disproportionate to the claim; and
d. Fixing costs in relation to certain claims. For example, in relation to fast-track Patent County Court Claims it is proposed that the costs are limited to £50,000 for contested patent infringement and £25,000 in all other cases.
Encouraging Settlement
4. Solicitors and barristers should be educated on the benefits of mediation and other types of ADR. The take up of these options should be strongly encouraged.
5. The Report recommends increased incentives for solicitors to make sensible offers of settlement and utilise part 36 CPR if at all possible. These include applying a 10% uplift to damages where the claimant made an offer (which was rejected by the defendant) and the damages subsequently awarded to the claimant are higher than their own offer.
Other IP Specific Recommendations
6. The Patent County Court (PCC) should be renamed as the Intellectual Property County Court. So as to more accurately reflect the breadth of its work.
7. Small claims and fast track IP litigation routes should be created, specifically:
a. Small claims would be claims with a value of less than £5000;
b. Fast track claims would be claims with a value between £5000 and 25,000. Guidance for the new fast-track claims would include model pleadings showing the level of information and detail that will be expected in these claims, and financial remedies available from the PCC would be limited to £250,000; and
c. To ensure a high quality of service from the Intellectual Property County Court Jackson recommended that one or more specialised district judges, deputy judges or recorders were available to deal with the small and fast track claims.
Contacts
Rachel Bunn
Partner, IP
rachel.bunn@waterfrontsolicitors.com
Chloe Taylor
Trainee solicitor
chloe.taylor@waterfrontsolicitors.com
Call us: 020 7234 0200