The Patents Court is one of paramount rank worldwide. However, standard trial costs are high – rarely below £1M on each side, often very much more - sufficiently disconcerting to put its service and whatever potential bounty beyond the reach of many would-be litigants. Whilst the Intellectual Property Enterprise Court has rapidly garnered a reputation of prominent eminence for smaller value IP cases – with damages limited to £.5M and inter partes costs capped at £60,000 – it too fails to tap into a potential mid-range of patent litigation.
The introduction of the Shorter Trials Scheme (STS) in 2018 has proved a more attractive option for some SMEs. With abridged procedural steps, a trial length or no more than four days, and summary assessment of all costs, the STS – available in all Business and Property Courts - offers a relatively speedy and potentially more cost-effective route to judgment in suitable cases (typically mid-range commercial disputes involving fewer issues, with limited disclosure and limited reliance on witness and expert evidence). However, costs management (budgeting) is not a normal feature in STS cases, and nor does the scheme include a cap on recoverable costs. Unsurprisingly, the Civil Justice Council’s Costs Review (final, May 2023), reported warm support for the idea of introducing a costs cap into the STS for patent cases. The proposal to cap recoverable liability costs at £500,000 was said to represent a proportionate figure given the likely value of patent disputes suitable for the STS – providing a much needed degree of certainty for those bringing or defending mid-rank patent proceedings. At the same time, it was noted that the proposed ceiling was similar to recoverable costs in comparable cases in the UPC (€400,000 for cases valued at €4M, €600,000 for cases valued at €8M).
Emerging out of the CJC recommendations, and subsequent work undertaken by the Civil Procedure Rules Committee, the IP Court Users Committee and other stakeholders, a new pilot scheme came into effect in January 2024. The pilot scheme will run for three years. Details are set out in Practice Direction 51ZD – Pilot Scheme for Capping Costs in Patent Cases in the Shorter Trials Scheme.
Highlights:
- Inter partes costs awards will total no more than £500,000 for claims relating to liability, and £250,000 for an inquiry as to damages or account of profits.
- The costs caps apply after the court has applied any set off.
- The costs caps exclude VAT where applicable, as well as court fees, any costs of enforcement, wasted costs, and additional costs caused by the opponent’s unreasonable behavior.
- The provisions of CPR Part 36 apply, but with some adjustments (for example, the court will apportion the costs cap to take account of the stage in proceedings at which the relevant period expired).
Other points to note:
The provisions on costs in the STS, set out in PD 57AC, Para 2.56-2.59, continue to apply. All costs claims are summarily assessed; in the case of the main trial costs/costs of action the assessment follows submission of costs schedules of ‘sufficient detail’ in which costs should be divided into phases (those applicable to the cost budgeting regime).
Led by Dr Michael Heslin, our IP costs team is the most experienced in the UK. Contact us about detailed or summary assessment in IP cases.
