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Thursday, 18 August 2011

Unpaid costs: what's your preference?

A device for dealing with
non-payers of costs: once you've
got them trapped, you can
tickle them till they agree
to pay up
A few days ago, it was a very concerned Kat who posted this message in his Monday Miscellany:
""This is just a quick request for any tips you or your readers might have for extracting Office for Harmonisation in the Internal Market (OHIM) opposition costs from reluctant [and presumably unsuccessful] opponents. 
Are you aware of any means by which those unwilling to pay can be compelled, reprimanded or shamed publicly as I'm unwilling to give up on €1,600 in costs that easily".
Since then, the IPKat's friend Ben Mooneapillay has written to him as follows:
"I have not looked at the question of unpaid OHIM costs awards in any detail, but my understanding is that they can only be enforced via the Court [This view is shared by other correspondents too -- and the Community Trade Mark Regulation makes no provision for just helping yourself, notes Merpel]. Unfortunately, the irrecoverable cost of such action may well exceed the original costs award [This view is shared by unsuccessful opponents who know that they are unlikely to face such an action, which is why they don't bother paying]. I have tried to find out whether the PCC  -- that's the Patents County Court [for England and Wales: not quite the Panacea County Court, but it's getting there!] -- can hear applications for enforcement of OHIM costs awards, but my initial enquiries did not yield anything helpful [Even if it did, it's not likely to worry an opponent based in one of those lovely bits of Europe that's miles from England and who has no assets in the jurisdiction].
The UK Intellectual Property Office has a "name and shame" list (http://www.ipo.gov.uk/t-unpaid-details.htm) [its official name is the Details of unpaid costs order cases page], which also has the neat effect, I believe, of forcing those on the list to stump up security for costs if ever they find themselves in another inter partes dispute before the tribunal".
The Kat took a look at the "name and shame" list. He was relieved to see that none of his friends are on it, but he was disappointed about two things.  One was the understandable reluctance of the IPO to use the terms "name and shame".  The other was the fact that some businesses are obviously quite good at living with the shame. Some have been living with it for years. Indeed, International Toiletries and Cosmetics Ltd recently celebrated the third anniversary of its unpaid costs order.  Merpel says, you can guess from the names of some of the costs debtors that they're not going to pay up in a hurry. Never Give Up Ltd is hardly going to cave in, is it? Even if it faces the prospect of a date in the PCC with Judge Birss QC.

In a so-far-unpublished editorial for the European Trade Mark Reports, IPKat team member Jeremy writes:
"... Since the amount of the costs order is small, and the amount of expenditure needed in order to extract it from the recalcitrant opponent from a national court is considerable, it does not make sense to spend a larger sum in pursuit of the recovery of a smaller sum. Costs orders are kept small in order not to discourage oppositions, but this policy actually encourages them since realistic unenforceability reduces the real cost of a failed opposition still further. The United Kingdom’s Intellectual Property Office has a “name and shame” website, but its efficacy is reflected by the length of time that names of opponents remain on it without paying. Making oppositions contingent on security for costs would be more effective, but this solution is reputed to be both legally impossible and politically unloved. ..." 
Name-and-shame and security for costs are just some of the solutions that might be adopted. Others might be  the award of costs on a far more generous scale, to make them worth suing for, a month-by-month increase in the sum awarded for as long as it is unpaid, or the temporary unenforceability of an unsuccessful party's IP rights till the outstanding sum is paid.  The IPKat is running a little poll in the side bar of his front page in order to ascertain readers' preferences.

8 comments:

Roufousse T. Fairfly said...

I'm puzzled. OHIM seems to have taken over much procedural know-how from the EPO, and I would have expected for them to have a device similar to Article 104(3) EPC, which reads:

104(3) Any final decision of the European Patent Office fixing the amount of costs shall be dealt with, for the purpose of enforcement in the Contracting States, in the same way as a final decision given by a civil court of the State in which enforcement is to take place. Verification of such decision shall be limited to its authenticity.

With that you'd only need to open the Yellow Pages at "B", let your finger walk and flip all the way to "bailiff", and choose the most appealing ad. Having these, er, thugs, showing up at the deadbeat's premises must be an even more humiliating experience than being listed on some meek wall of shame.

Or am I perhaps missing something? I never had to collect money that way, so I don't know how it goes in practice. I can only imagine the puzzled look on the bailiff's face when dealing for the first time ever with a claim based on patent law rather than collecting unpaid parking tickets or rents.

I would however interpret the expression "final decision" in Art. 104 as excluding decisions by the OD which were not confirmed by the BoA in appeal. Correct?

Anonymous said...

why can't the debt just be sold on to a collection agency in the relevant territory?

David Musker said...

I have never tried this, but the answer as regards the relevant enforcement authority for the UK would appear to be the Registry rather than the Court - see Communication No 8/98 29 September 1998 on the competent authority referred to in Article 82(2) CTMR in the United Kingdom, http://oami.europa.eu/en/office/aspects/communications/08-98.htm
I am not aware of anything more recent than that, and it is still listed in the OHIM National Law booklet at
http://oami.europa.eu/en/office/diff/pdf/National_law.pdf

David Musker said...

As to the comment re Art 104(3), more or less the same is provided in Art 82 CTMR and Art 71 RCD, but these are modelled on what is now Art 299 of the Treaty on the Functioning of the European Union (TFEU) rather than on the EPC.

Meldrew said...

I would be tempted go with the unenforceability of own IP idea, but this raises the question of what IP and where. Should your UK IP be affected by an unpaid cost award in Burkina Faso?

A simpler approach might be to make the validity of an opposition or an application filed at a given body conditional upon settlement of any outstanding cost awards made by that body within, say, a month of filing the opposition or application.

Why shouldn't patent and trade mark offices operate a "clean hands" approach, and only respect parties who respect the awards made by that office?

Anonymous said...

We constantly face this issues and I keep returning to a rather simple answer to the problem - In addition to the Opposition fee, OHIM should take and hold the maximum award of costs payable by the Opponent as security for costs. If the applicant elects to defend the Opposition then they must provide Ohim with security for costs prior to the end of the Cooling Off period. Failure to do so by either party should result in a successful outcome for the other party.

David Harris said...

It doesn't look too complicated to enforce in the UK - mostly administrative. Firstly apply to the IPO under delegated powers from the Secretary of State. Then apply to register that at the High Court. Then enforce as you normally would (presumably the costs of encforcement being recoverable if the debtor has any money). Surely it should be possible to at least recover something of a EUR1600 award, or at least spoil the debtor's day?

RW Cumming said...

This is a tricky issue but one which my experience in the debt collection department of Walker Morris solicitors has given me an advantage for clients in IP and made it commercially viable to pursue even €300 awards.

Legal Basis

Pursuant to Article 85 of the Council Regulation (EC) 207/2009 (the Community Trade Marks Regulation), the OHIM has general powers to make orders for costs. Pursuant to Article 86, an order made by the OHIM shall be enforceable once the decision is verified as being authentic by a national court.

An order of the OHIM is directly enforceable in the European Union as an uncontested claim pursuant to Council Regulation (EC) 805/2004 (the European Enforcement Order Regulation). Article 6 entitles an applicant to a European Enforcement Order provided, inter alia:

• that the original order is enforceable;
• that the debtor is aware of the original order; and
• there is no conflict with the rules on jurisdiction.

A statement made in a solicitors' letter certifying this belief is sufficient.

Method
A European Enforcement Order can be obtained by sending to the County Court:
• form N219 Application for Enforcement Order Certificate;
• a draft European Enforcement Order Certificate;
• a copy of the OHIM decision;
• copies of correspondence with the Defendant's representative; and
• the court fee of £35.

The resulting EEO is then directly enforceable by any European Union enforcement body. However, this will rely on domestic procedures where the assets are based, which is where the real barrier to enforcement lies.

In England and Wales, an alternative is to seek to enforce over UK or Community trade marks by way of charging order pursuant to the Charging Order Act 1979 (as a beneficial asset held under trust). The costs of a charging order are recoverable i.e. £100 court fee, £110 fixed solicitors' costs and the cost to register at UKIPO or OHIM. The threat is usually sufficient to elicit payment however. :-)

Rob

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