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Wednesday, 5 November 2014

You don't have to be small: IPEC keeps case for itself- plus UPDATE

STOP PRESS: almost immediately after posting the item below, we received an email from the very helpful Douglas Campbell (Three New Square, counsel for MHCS and, as it happens, someone who has first-hand experience of hearing cases before IPEC, where he has sat as a judge since 2013) who tells us:

I’m afraid you have the parties the wrong way round! This is not surprising since Lawtel [the only available source] did the same. So it was Polistas’s application for transfer; MHCS which had the mark, and Polistas which manufactured the polo shirts, etc, etc.  
You are certainly right in the result, though, since the application for transfer failed.  
Your readers might be interested to know that Judge Hacon, unusually, made an immediate order for costs under Part 63.26(2). This was despite the fact that the defendants were effectively appearing in person (Mr Lynn was the second defendant and also appeared on behalf of the first and third defendants as their managing director) against a large company. £3,000 was ordered, being the total allowable.
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The cost-capped, damages-capped Intellectual Property Enterprise Court (IPEC) in England and Wales is designed for use by small and medium-sized claimants; it also has a small claims track. Good news, though, is that you don't have to be small in order to use it. This is the message from MHCS and another v Polistas Ltd & others, a ruling of Judge Hacon yesterday that has not made it to the BAILII case law database but which has been spotted by the subscription-only Lawtel service.  In short, this was an action concerning manufacturing overruns: the court had to determine whether a licence agreed between MHCS and Polistas, allowed MHCS to produce more than 150 polo shirts bearing Polisas's mark. Polistas said it didn't, while MHCS said that there was no limitation on the duration of the licence or on the number of shirts it could make bearing Polistas's mark. Unhelpfully, it appeared that the licence was only partially recorded in writing.

IP licence terms:
best when written ...
Before Judge Hacon, MHCS accepted that the licence might have been terminable on reasonable conditions, but they were unspecified. It also transpired that MHCS had breached an order requiring him to serve within 28 days an amended defence which complied with the Civil Procedure Rules, CPR r.63.20. Be that as it may, Judge Hacon had to decide whether MHCS should have further time to file a compliant defence and whetther the claim should be transferred to the general [and generally much more expensive] Chancery Division of the High Court. Said MHCS, the situation was the very opposite to that in which a large, wealthy party was pushing a smaller defendant into the High Court, to his financial detriment. Rather, this case was so complex that it should be determined in the general Chancery Division. What's more, MHCS had a conveniently unpleaded counterclaim for defamation that would certainly exceed the financial limits of the IPEC. Surely, in such a case, the correct course of action was to transfer the proceedings?

Judge Hacon had no difficulty in refusing this application. In his view, taking a pragmatic view of the issue:

* It was unfortunate that the filed defence was very short and plainly in breach of r.63.20. On the face of the pleadings, it was not easy to know what the issues at trial would be. However, it wasn't easy to say that there was any real force in MHCS's points. * MHCS was plainly in breach of the order to serve an amended defence. He would however be given another 14 days to serve a CPR-friendly defence. If he didn't, there was an extreme risk that his defence would be struck out.

* The IPEC was principally a forum for small and medium enterprises -- and sometimes even for litigants in person. It was not however for the exclusive use of those parties. An important aspect of its jurisdiction was to determine matters that were not particularly complex and which could be decided more cheaply and quickly than in the general Chancery Division. Although MHCS was less wealthy than Polistas, the parties' relative size was not decisive: it was more significant to determine whether the nature of the case, in fact and law, meant that it was appropriate for determination in the IPEC.

* The issue before the court was very simple: basically, what were the terms of the licence? The trial would feature just two key witnesses, some documents and further evidence about what happened after the agreement. This matter could easily be resolved within two days and, in the [unlikely?] event that a tenable defamation claim was pleaded, its value would not exceed the £500,000 limit of the IPEC.

The IPKat fully agrees that the IPEC should not be treated as the exclusive reserve of little folk, hobbit-sized businesses and commercial minnows.  Indeed, companies as sizeable as IPC Media, Aldi and Kohler Mira have litigated in this court since its formation; its predecessor, the Patents County Court, entertained non-minnows such as Weight-Watchers and the Monte Carlo Casino.  Let's keep as many cases as we can down in cheap-and-easy courts where they can be swiftly and economically litigated.

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