17 January 2012

Costs in the IPO

This article was prompted by the decision of Mr. Phil Thorpe in Farr v Orbis Corp. (No. 2) BL/0/469/11 23 Dec 2011 where the hearing officer refused to award the defendant costs off the scale published in Tribunal Practice Note ("TPN") 2/2000 as amended by TPN 4/2007 against a litigant in person.  As the time for appealing has not yet run out, and as I represented the claimant at the costs hearing, it would be wrong for me to say anything more about that particular case. Rather I wish to explore the Comptroller's jurisdiction to award costs for proceedings in the Intellectual Property Office.

S.107 (1) of the Patents Act 1977 provides:
"The comptroller may, in proceedings before him under this Act, by order award to any party such costs or, in Scotland, such expenses as he may consider reasonable and direct how and by what parties they are to be paid."
In Rizla Ltd.'s Application [1993] RPC 365 Anthony Watson QC confirmed that that section confers a very wide discretion upon the Comptroller with no fetter other than that he or she must act judicially. At the time of that appeal it was already the practice for hearing officers to award only a contribution towards the costs of a successful party. The question for Mr. Watson was whether the Comptroller had jurisdiction to award compensatory costs if proceedings were begun or maintained without a genuine belief that there was an issue to be tried. The deputy judge held that there was indeed such jurisdiction but it was to be exercised only in exceptional circumstances.

The exceptional circumstances that Mr Watson had to consider was whether there had been abuse of the tribunals' process.   In TPN 2/2000 Alison Brimelow helpfully added a few more examples at paragraph 9:
"A party seeking an amendment to its statement of case which, if granted, would cause the other side to have to amend its statement or would lead to the filing of further evidence, might expect to incur a costs penalty if the amendment had clearly been avoidable. In another example, the costs associated with evidence filed in respect of grounds which are in the event not pursued at the main or substantive hearing might lead to award which departs from the scale. Costs may also be affected if a losing party unreasonably rejected efforts to settle a dispute before an action was launched or a hearing held, or unreasonably declined the opportunity of an appropriate form of Alternative Dispute Resolution (ADR). A party’s unnotified failure to attend a hearing would also be a relevant factor."
Although the Comptroller took pains to point out that  it would be impossible to indicate all of the circumstances in which a Hearing Officer could or should depart from the scale of costs and wrong to attempt to fetter his or her discretion is such a way, it is reasonable to suppose that the conduct of the party at fault would have to be eiusdem generis the examples mentioned above.

So what circumstances would justify an award of costs off the scale? In Statoil ASA v University of Southampton BL 0/268/05 8 Sept 2005 Mr. Peter Hayward awarded the claimant £120,000 after finding that the defendant's refusal to make any concession on entitlement or inventorship even though its own main witness acknowledged that claim 1 had come from the claimants had caused the claimant to incur extra costs which it would not have incurred had the defendant behaved more reasonably. That case is probably the high water mark of the jurisdiction.   In Wragg v Donnelly BL 0/280/10 9 Aug 2010 I was unable to persuade Mr. Elbro to award off the scale costs where the claimant had persisted with his claim despite two s.74A opinions against him. Mr. Back refused to make an off the scale order in ASI Solutions Plc v Nu-Phatt BL 0?154/06 27 June 2006 where it was alleged that the defendant had maintained a case that was bound to fail; that its behaviour was an abuse of process; that its general behaviour caused the claimant unnecessary expense and that it had failed to settle.

Although it would appear from the case law that there is no consistency Rizla does in fact suggest an approach that appears to be followed by hearing officers in practice.  The starting point is "a presumption that the standard scale will provide a reasonable award." It is therefore up to the party seeking to persuade the hearing officer to depart from the scale to convince him or her that "in the particular circumstances of the case (my italics), the scale produces an unreasonable award." Only if he or she is so persuaded should the hearing officer enquire as to what would be a reasonable award.  The italicized words are important because it means that conduct that would justify a departure from the scale in one case would not necessarily justify it in another.   Clearly a litigant in person will be allowed more latitude than a major company or other institution represented by counsel.   As for the amount of the award the Comptroller observed rightly at paragraph 5 of TPN 2/2000 that her discretion under s.107 (1) allows her "to operate a nominal cost regime or a full recovery regime - or anything in between." Again, the quantum must be whatever may be reasonable in the particular circumstances of the case. 

Should anyone wish to discuss the question of costs with me further, he or she can call me on 0800 862 0055 or use my contact form. I can also be reached on Facebook, Linkedin, twitter or Xing.

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