December 15, 2011


A new service for litigating intellectual property (IP) rights owned by small and medium sized businesses (SMEs) is to be introduced at the Patents County Court (PCC) by the end of 2012.  It should fill a need not fully met by other initiatives aimed at SMEs in recent years.

The Gowers Review[1] in 2006 noted that IP litigation in the UK was complex and expensive, which fell particularly heavily on SMEs often dissuading them from bringing cases against larger firms with deeper pockets.  It therefore proposed reforming the PCC to provide a faster, more cost-effective procedure.  In the event, the PCC was reformed following an initiative from judges and IP lawyers to introduce from October 2010 a cap on recoverable costs of £50,000 and, later, a damages limit of £500,000[2].

But despite the success of the reformed PCC, in large part thanks to the hands-on approach of its judge, His Honour Judge Birss QC, it has not provided the complete answer.  Funding an action that might in fact cost an SME more than £50,000 in its own costs, and might require it to pay up to that amount to the other side if it loses, still presents a significant barrier to litigation.  Hence the recent Hargreaves Review[3] found that more than 15% of SMEs had stopped enforcing their IP because of the high cost of litigation.  It recommended that a small claims track for low monetary value IP claims be introduced in the PCC.  On 15 November the Government announced that it would be putting this recommendation into effect by the end of 2012.  The new small claims service will:

• apply to copyright, trade mark and design actions but not patent actions, as they are typically more complex;
• limit costs (up to an amount still to be decided);
• and have a damages cap of £5,000 per case.

The small claims service should meet the costs concern for SMEs in the Gowers Review.  IP litigation in the UK remains complex, however.  The range of options to a would-be litigant include: customs detention and destruction procedures, Trading Standards procedures, UK Intellectual Property Office (IPO) proceedings, IPO mediation, the IPO opinion procedure for patents, the IPO's Company Names Tribunal, the PCC and the High Court (including the Patents Court).  To these can be added proceedings before OHIM, the European Patent Office and Nominet and other domain name dispute resolution procedures under ICANN's umbrella.  There is also political pressure for agreement on an EU "Unified Patents Court" by the end of this year, which the UK is lobbying to be based in London.

So while the expectation is that lawyers will not necessarily need to be involved in cases following the PCC's small claims service, an SME would be wise to take legal advice on whether it is the best option to follow in the first place.  The rules on transfer to other more expensive court procedures, and how easily this can be achieved, will also be crucial to its success.  That said, the service should fill a demand and enable SMEs that have previously been reluctant to bring court proceedings due to the costs involved to enforce their IP rights.

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