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Monday, 1 October 2012

Brief from the AdvoKat: Capped-costs mean capped-costs! – the latest costs cases in the PCC


The AdvoKat
We can only speculate as to how His Honour Judge Birss QC spent his summer, for he has handed down no fewer than four judgments in the last week or so.  Of these, Fayus Inc v Flying Trade Group plc [2012] EWPCC 43 was an expression of the Judge’s preliminary opinion in a passing off and trade mark invalidity case, à la Weight Watchers v Love Bites [2012] EWPCC 11, a procedure that is itself of note.  However, it is the other three judgments, on costs in the PCC, which caught our attention.

The case of BOS v Cobra [2012] EWPCC 44 addresses the issue of how to apply the “issues-based” costs approach to the Patents County Court scale costs rules.  The Judge decided first that, were this all in the High Court, the Defendant would only get 65% of its costs paid by the Claimant, deductions being made to the costs due to the Defendant for points on which it lost and a further deduction being made to represent a payment by the Defendant to the Claimant of the Claimant’s costs of defending a duff validity counter-attack.

But then the question was whether that 65% should be applied to the Defendant’s costs before the scale limits were applied (with the result that if, as in this case, 65% of the Defendant’s costs related to producing a Defence and Counterclaim was still higher than the scale limit of £6,125 for this stage of the litigation, the discount would have no effect, because even after the discount, £6,125 was all it could get), or after (so that the Defendant would only get a maximum of 65% of the scale limit: 65% x £6,125).  The point the Claimant made, in arguing for the latter, was that if applied before the scale limits were applied, the issues based deduction would very often have no effect in reducing the costs recovered, and so there would be no incentive not to run bad points.

The Judge rejected the Claimant’s argument: his answer was: start with the actual costs incurred for each stage of the litigation by the winning party; summarily assess them; apply the issues based discount; check the result against the scale limit; award whichever figure is lower. 

In so holding, he noted that the function of the Case Management Conference in the Patents County Court is to weed out bad points if possible.  So arguably there should be fewer points for which it is necessary to make issues based deductions to the costs awarded.  But, as this case showed, duff points do get through the CMC net, and when they do, if the costs incurred at each stage are significantly higher than the scale limit, it may well be the scale that limits what a Defendant recovers, instead of any kind of adverse costs order made for pursuing bad points.

The cases of Gimex v The Chill Bag Co [2012] EWPCC Civ 34 and Liversidge v Owen Mumford Ltd [2012] EWPCC Civ 40 both dealt with what to do about costs when there are multiple defendants.  It appears certainty is paramount: a losing claimant will only ever have to pay out a maximum of £50,000  even when there are multiple defendants (unless it’s been really bad or the patent’s validity is previously certified).  In the Liversidge case, the Defendants had to split £50,000 between them (the fact that one of the Defendants was Abbott Laboratories presumably meant this was no great hardship).  In the Gimex matter, Gimex was not allowed to share out its single costs bill between two different groups of defendants in order to get above £50,000. 

The point that the Judge seemed keen to make in both cases is that the £50,000 cap means what it says: you can’t get round it by suing more than one person, and if you are one of several sued, then it may just be tough, you’ll have to split any costs award between you.  Again it is the CMC that offers the chance to sort this out, with the Judge noting that when there are multiple defendants it may well be best to stay the claim against all but one pending trial, or where a claimant has brought claims against several defendants in a single action in an effort to get the protection of the £50,000 limit it might be fairer to split the claims into separate actions: both good reasons for co-defendants to talk to each other and get their ducks in a row before the CMC.

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