How can an SME enforce Intellectual Property Rights?  Claims in the Patents County Court

Intellectual property rights can generally only be enforced through bringing a court action against an infringer.  The high cost of intellectual property litigation often prevents SMEs from making a credible threat to infringers and can prevent them from defending claims brought by larger corporate entitles.

The Patents County Court has recently introduced rules for a small claims track (1 October 2012) to provide a forum to deal with low value intellectual property disputes initially under £5,000.

The Patents County Court (PCC)

The PCC was originally set up in 1990 with the aim of providing a less expensive and less complex alternative to High Court proceedings in the Patents Court and now sits in the Rolls Building in Fetter Lane.  The PCC has a specialist intellectual property judge assigned to it and can hear cases involving any type of intellectual property. 

However, the PCC did not really provide a cost effective remedy for SMEs until new rules were introduced on 1 October 2010.  Those provisions included rules to allow the judge to limit the amount of evidence and written argument permitted for each side and limited trials to one or at most two days. The most important provision has been to limit recoverable costs to a fixed-scale capped at £50,000 so that the cost exposure of any dispute is limited. The present PCC assigned judge, Judge Birss QC, has said that in reality the costs awarded in the PCC are never more than £30,000 and in some cases they are much lower.  Since the new rules were introduced a significantly greater number of cases have been commenced in the PCC.

In 2011, a £500,000 limit on the damages that may be awarded by the PCC was introduced to further define the court’s jurisdiction and avoid costly pre-action disputes over where a case should be heard.
 
The Small Claims Track

The new Small Claims track is intended to offer a more streamlined and cheaper alternative to the main PCC.  It covers disputes concerning trade marks, unregistered designs, copyright and database rights where potential damages are less than £5,000, but does not include patent or registered design right claims.
 
The costs that are recoverable are limited to the claim form issue fee and a few other small court fees.

Small track claims in the PCC will be handled by district judges with relevant intellectual property experience and most claims will be disposed of on paper.  Interim injunctions (orders granted by the court pending trial to prevent further infringement) are not available in the small claims track, but this is unlikely to be an issue if cases are disposed of quickly.
 
The new track should allow claims to be brought that would otherwise be uneconomic in the PCC because of the costs being disproportionate to any potential damages. In some situations there are alternatives to court action available for intellectual property disputes such as referring domain name disputes to ICANN’s UDRP, Nominet’s DRS or some other dispute resolution service or obtaining advisory opinions on whether a patent is valid or whether it has been infringed from the Intellectual Property Office.  However, where there is deliberate infringement of intellectual property rights a court order or the availability of a court order can be the only effective remedy.  For example the small claims track this should allow:

• small retailers to make a credible threat of court action against infringement of their trade marks on competitors’ websites; or

• photographers to bring claims to stop unlicensed copying of their photographs where the costs in the PCC would be.  A claimant has to state in its claim that it wishes the case to be allocated to the small claims track and defendants do have an opportunity to object if it is not a suitable claim.

Judge Birss has observed that the PCC has allowed smaller businesses to make a credible threat and to be taken seriously by larger (or even similar-sized) infringers of intellectual property rights.  It is to be hoped that the introduction of the small claims track will provide the “quick, cheap and easy means for resolving lowest value IP disputes” that the government intends it to be.