"Fees, please!" say the Courts, but can IP owners preserve their cash?

Money: a precious commodity

There have been dark and foreboding rumblings in England and Wales to the effect that the recent increase in court fees is a dire and dreadful thing, and something that will drive deserving litigants from the courts, at any rate if they are poor and impecunious. This Kat's view is that the level of fees is of no importance -- if you don't have to pay them, that is.  With that in mind, this weblog is pleased to host this guest piece from Andy Lee (Brandsmiths), who has given some thought to how the worst effects of the new fees might be mitigated. He wonders whether others might be thinking along the same lines, and this is what he says:

Since the court fees in England and Wales changed on 9 March 2015 when the Civil Proceedings and Family Proceedings Fees (Amendment) Order 2015 (SI 2015/576) came into force, I have thought on a few occasions how this would impact on IP claims, given the substantial increase in the fees payable. I know that some practitioners were concerned that this could impede on access to justice for claimants generally. However I wonder if there is a way around this,  as I will set out.  

What litigants think ...

Almost every IP case in England and Wales proceeds as a split trial. From experience, there is now commonly an express direction included in case management directions setting out that liability will be tried separately from quantum of damages and that those directions focus on disclosure and the like regarding the issue of liability only. Liability is then tried and, if the claimant is successful, any sums due are assessed on an inquiry or an account of profits (at the claimant’s election) –- the court making such an order at the request of the claimant which has included it in its prayer for relief. And so, until that point, all remedies in the claim are non-monetary (eg injunctions, delivery up/destruction, publication).

... and what they do

But there is the age-old problem in IP cases that one can often not tell the scale of the infringement at the start, which makes it difficult to assess what compensation could be due. The basic objective of the claimant is to stop the infringing activity. If a claimant loses on the issue of liability, this never becomes an issue (subject to any appeal).  It is typically (putting aside novel cases such as Big Bus, noted by the IPKat here and here) only upon liability being established that a defendant will be ordered to give information which will shed light on how much compensation may be due.  

In my experience, when issuing claims before the large increase in court fees, one calculated the court fee by (in addition to the non-monetary part of it which in the High Court is currently £480), paying the “unlimited” amount which from memory was claims exceeding £300,000. This resulted in a court fee payable of around £2,000. For most claimants this was not a problem but, even if it were,  one could often pick a lower level i.e. say damages of no more than £100,000 as a “best guess” for issue purposes  but maybe include an express reservation to pay an increased fee, if needs be, should the compensation claim be higher.

When the new court fees were introduced, more one person to whom I spoke thought this could have an adverse impact on court access for IP owners. For example, for any claim worth more than £200,000 the court fee is now £10,000 plus the non-monetary relief fee of £480. That is a significant increase.

My view is that there is a solution to this. One could simply pay the non-monetary relief fee and undertake in the claim form (under the heading “value”) to pay an appropriate additional fee, should the claimant be successful on the issue of liability and if the court then made an order that all sums due be paid following an inquiry as to damages or at the claimants election an account of profits. Further, Page v Hewetts Solicitors and another [2013] EWHC 2845 (Ch) is authority that a claim for an account of profits is a non-monetary claim. One could envisage a situation in which the claimant only asks for an account because the factual circumstances of the case may so dictate. It might have sufficient information at the start of the case that, even though it does know the scale of the infringement, it also knows it will find it to show switch selling (there may be large price difference between the claimant's and defendant's products for example, or they may operate at different levels of the market, eg luxury brand as opposed to midmarket) but where it suspects that the defendant has a large profit margin (possibly because it has cheap copies made abroad). It is also more difficult for defendants, following Hollister (noted by the IPKat here and here) to deduct a proportion of general overheads from the profit payable, so generally a account of profits claim may yield more compensation than they historically did. In such cases one cannot see why any fee would need to be paid in addition to the non-monetary part and so, on the current rates, those claims could be issued for £480.

In most cases the claimant will want to keep its options open and maintain the option for an inquiry to damages. It seems to me arguable that, until the court finds for the claimant on liability and directs there be an inquiry and the claimant actually elects for one, there is no compensation claim before the Court.  It is arguable that one is still asking for a non-monetary relief by asking for an Order that the claimant may pursue an inquiry and the defendant pay all sums due on such an inquiry. The claimant is not asking for a specific sum, merely that any sum found be paid. So a happy medium could be that, if the claimant makes an election for an inquiry, it pays an appropriate fee for compensation, given that it might have a better idea following Island v Tring disclosure of the value of the claim.

Indeed in Tring itself, Lightman J at para 10 spoke about the Order the court makes being a declaration that the claimant is entitled to judgment on an inquiry or account at its election; that supports my view that the order at that stage is still of a non-money nature. However there is one caution. If I am wrong and the court requires all fees to be paid even if quantum may never be decided, in Page the failure to pay correct court fee meant the claim was not brought within limitation. And so anyone near limitation may be advised to hedge their bets pending some clarification on this point.

I have thought whether my views are effected by the “value” of the claim for the purposes of costs budgeting. Claims said be worth more than £10 million are excluded from budgeting. However, as is clear from the Civil Procedure Rules, CPR 3.12 such value can be the value of non-monetary claims (ie the value of the injunction), so that maintains the difference between a non-money and a money claim -- which is how the court fee payable is split. So this makes no difference, in my view, to my approach, given that an injunction could have a value to a business in terms of brand protection aside from what compensation is due.

I wonder whether anyone else has thought of this in light of the fees increase and how it impacts on IP claims or other claims where there is a split trial?