20 September 2012

Patents County Court - the New Small Claims Track Rules

I discussed HM Government's proposal to introduce a new small claims track for the Patents County Court from the beginning of October 2012 in "The New Small IP Claims Jurisdiction" (5 March 2012) and "Small IP Claims" (Chambers website 8 May 2012). We now have the rules for the new court.

Overview
Rule 10 of The Civil Procedure (Amendment No.2) Rules 2012 (S! 2012 No 2208) amends Part 63 of the Civil Procedure Rules as follows:
"Amendments to the Civil Procedure Rules 1998
10. In Part 63—
(a)   In the table of contents, after the entry for rule 63.26, insert—
'Allocation to the small claims track ........... Rule 63.27
Extent to which rules in this Part apply to small claims ........... Rule 63.28;'
(b)   in rule 63.1 (3), for 'Claims', substitute 'Save as provided in rule 63.27, claims'; and
(c)   after rule 63.26, insert—
'Allocation to the small claims track
63.27.—(1) A claim started in or transferred to a patents county court will be allocated to the small claims track if—
(a)    rule 63.13, but not rule 63.2, applies to the claim;
(b)    the value of the claim is not more than £5,000;
(c)    it is stated in the particulars of claim that the claimant wishes the claim to be allocated to the small claims track; and
(d)    no objection to the claim being allocated to the small claims track is raised by the defendant in the defence.
(2) Where rule 63.27(1) applies, the parties do not need to file an allocation questionnaire.
(3) If either—
(a)    the requirements of rule 63.27 (1) (a), (b) and (c) are satisfied, but in the defence the defendant objects to the claim being allocated to the small claims track; or
(b)    the requirements of rule 63.27  (1) (a) and (b) are satisfied, but not (c), and in the defence the defendant requests that the claim be allocated to the small claims track,
the court will allocate the claim to the small claims track or the multi-track in accordance with Part 26 (case management – preliminary stage).
(4)   Part 27 (small claims track) shall apply to claims allocated to the small claims track in a patents county court with the modification to rule 27.2 (1) (a) that Part 25 (interim remedies) shall not apply to such claims at all. Section VII of Part 45 (scale costs for claims in a patents county court) shall not apply to claims allocated to the small claims track in a patents county court.

Extent to which rules in this Part apply to small claims
63.28.—(1)   To the extent provided by this rule, this Part shall apply to a claim allocated to, or requested to be allocated to, the small claims track in a patents county court.
(2)    Rules 63.1, 63.13, 63.18, 63.20, 63.21, 63.22, 63.25, 63.26 (1) and (2), and 63.27 shall apply to the claim.
(3)    No other rules in this Part shall apply.'"
 There are likely to be consequential amendments to the Part 63 Practice Direction and the Patents County Court Guide. I shall blog those developments as soon as I learn of them.

Claims that can be bought within the Small Claims Track
CPR 63.27.(1) provides that a claim started in or transferred to a patents county court will be allocated to the small claims track if:
"(a)    rule 63.13, but not rule 63.2, applies to the claim;
(b)    the value of the claim is not more than £5,000;
(c)    it is stated in the particulars of claim that the claimant wishes the claim to be allocated to the small claims track; and
(d)    no objection to the claim being allocated to the small claims track is raised by the defendant in the defence."
Rule 63.13 requires claims relating to matters arising out of the Trade Marks Act 1994  and other intellectual property rights set out in Practice Direction 63 to be started in the Chancery Division, the Patents County Court, or a county court where there is also a chancery district registry.  Paragraph 16 of the Part 63 Practice Direction lists those rights as copyright, rights in performances, rights conferred under Part VII of the Copyright Designs and Patents Act 1988, design right, unregistered Community designs, association rights, moral rights, database rights, unauthorized decryption rights, hallmarks; technical trade secrets litigation, passing off, protected designations of origin, protected geographical indications and traditional speciality guarantees, registered trade marks and Community trade marks.   Rights that fall within CPR 63.2 include patents, registered designs, registered Community designs, unregistered design rights in relation to semiconductor topographies and plant breeders' rights.

Accordingly, any cause of action that should be brought in the Intellectual Property list in the Chancery Division or the Manchester, Leeds, Liverpool or other chancery county court will be allocated to the small claims track so long as the other conditions of CPR 63.27 (1) (that is to say, the value of the claim and the consent of the parties) are met.   Further, the court has power under CPR 63.27 (3) to allocate such a case to the small claims track even if one of the parties does not consent to such allocation.

What about Patent, Registered Design and other Cases?
In Sullivan v Bristol Film Studios Ltd [2012] EWCA civ 570 (3 May 2012) Lord Justice Lewison said that although intellectual property claims have to be allocated initially to the multitrack by CPR 63.1 (3) there was nothing in the rules to prevent their reallocation to the small claims track under CPR 26.10. Nothing in the new rules will change that position.  However, Sullivan was a copyright case that falls within CPR 63.13 where parties have to file an allocation questionnaire unless the case qualifies automatically for allocation to the small claims track under CPR 63.27 (1) in which case the parties will be exempted from the requirement by CPR 63.27 (2).   The position may be different for cases falling within CPR 63.2 since CPR 63.8 (1) also exempts parties to such cases from filing allocation questionnaires,   Even if that is the case, there appears to be nothing in the rules to prevent the parties from requesting, or the court from giving, directions at the first case management conference that are similar to those it would give for cases in the small claims track.

Pleading
CPR 63.28 (1) preserves CPR 63.20 to CPR 63.22 which apply CPR Part 16 (and presumably the Part 16 Practice Direction)
"with the modification that a statement of case must set out concisely all the facts and arguments upon which the party serving it relies."  
In addition, the particulars of claim must state whether the claimant has complied with paragraph 7.1(1) and Annex A (paragraph 2) of the Practice Direction (Pre-Action Conduct) and whether the claimant wishes the claim to be allocated to the small claims track. That is quite a tall order for most litigants in person.

The requirement in CPR 63.21 for the statement of truth to be signed by one or more persons with actual notice of the facts is preserved for the small claims track.  CPR Part 18, which provides for further information at the request of a party, is specifically excluded from the small claims track by CPR 27 (2) (f) though the court retains the power to require further information of its own initiative.

Case Management
Unlike the multitrack, there is no requirement to apply for a case management conference for cases in the small claims track though the court can direct a preliminary hearing under CPR 27.6 if it considers such a hearing to be necessary. I should add that CPR 63.25 (3) also requires the court to deal with applications without a hearing unless it considers a hearing to be necessary.

In most cases the court will give
"a direction that each party shall, at least 14 days before the date fixed for the final hearing, file and serve on every other party copies of all documents (including any expert’s report) on which he intends to rely at the hearing" 
plus the other directions that appear in Appendix B to the Part 27 Practice Direction.  Such directions are defined as "standard directions" by CPR 27.4 (3) (a).

The court may also give "special directions, that is to say "directions given in addition to or instead of the standard directions" (CPR 27.4 (3) (b)).  Examples of such directions are set out in Appendix C of the Part 27 Practice Direction.  If a party wants to oppose an application for special directions, he or she must do so within 5 days of service of the application notice (CPR 63.25 (2)).

When giving standard or special directions the court will fix a date for a final hearing unless it considers a preliminary hearing to be necessary.   It can hold such a hearing only in the circumstances set out in CPR 27.6 (1):
"(a) where
(i)   it considers that special directions, as defined in rule 27.4, are needed to ensure a fair hearing; and
(ii)  it appears necessary for a party to attend at court to ensure that he understands what he must do to comply with the special directions; or
(b)  to enable it to dispose of the claim on the basis that one or other of the parties has no real prospect of success at a final hearing; or
(c)   to enable it to strike out (GL) a statement of case or part of a statement of case on the basis that the statement of case, or the part to be struck out, discloses no reasonable grounds for bringing or defending the claim."
The court has power under CPR 27.10 to deal with the case without a hearing if all he parties agree.   If the court considers it appropriate to dispose of the case in this way it will give notice that it proposes to deal with the claim without a hearing and invite the parties to notify the court by a specified date if they agree the proposal (CPR 27.4 (1) (e)).

Disclosure and Evidence
The rules on automatic disclosure or inspection do not apply to the small claims track (CPR 27.2 (1) (b)).  CPR 27 (2) also excludes the general rules on evidence under CPR Part 32 (except CPR 32.1 which provides for the court to control evidence) and the miscellaneous rules about evidence in Part 33.   CPR 27.5 provides that no expert may give evidence, whether written or oral, at a hearing without the permission of the court.

Representation
Paragraph 3.2 of the Part 27 Practice Direction allows parties to be represented at hearings by lay representatives as well as by barristers, solicitors or legal executives.

Hearings
CPR 27.8 enables the court to adopt any method of proceeding at a hearing that it considers to be fair. According to paragraph 4.2 of the Part 27 Practice Direction, hearings will generally be in the judge’s room but may take place in a courtroom.   Hearings are be informal in that strict rules of evidence will not apply, the court does not need to take evidence on oath and it may limit cross-examination.   In particular, paragraph 4.3 of the Practice Direction permits the judge to

  • ask questions of any witness himself before allowing any other person to do so
  • ask questions of all or any of the witnesses himself before allowing any other person to ask questions of any witnesses,
  • refuse to allow cross-examination of any witness until all the witnesses have given evidence in chief, and 
  • limit cross-examination of a witness to a fixed time or to a particular subject or issue, or both.

The court has power under CPR 27.3  to grant any final remedy in relation to a small claim which it could grant if the proceedings were on the fast track or the multi-track.   Semble that must include final (but not interim) injunctions, orders for delivery up and the other usual remedies for intellectual property infringement.   The proceedings are recorded and the court must give reasons for its decisions.

Costs
CPR 63.27 (4) precludes the court from awarding scale costs under CPR Part 45.  Instead CPR 27.14 will apply which limits the costs to

  • the fixed costs attributable to issuing the claim,  
  • any court fees paid by that other party, expenses which a party or witness has reasonably incurred in travelling to and from a hearing or in staying away from home for the purposes of attending a hearing,  
  • a sum not £90 per day for any loss of earnings or loss of leave by a party or witness due to attending a hearing or to staying away from home for the purposes of attending a hearing,  and
  • a sum not exceeding £200 for an expert’s fees.
In proceedings which include a claim for an injunction or an order for specific performance the court may allow up to £260  for legal advice and assistance relating to that claim.

The court may also award such further costs as it may assess  to be paid by a party who has behaved unreasonably. A party’s rejection of an offer in settlement will not of itself constitute unreasonable behaviour for this purpose but the court may take it into consideration when it is applying the unreasonableness test.  It goes without saying that CPR Part 36 does not apply to the small claims track (CPR 27.2 (g)).

Fixed Fee Representation
In view of the limitations of the costs that can be awarded in the small claims track, chambers will offer in accordance with the Public Access Rules fixed fee advice and representation for actions in the small claims track for clients who are willing and able to conduct their own litigation. Also, members of chambers will provide training and support for any law firm or patent or trade mark agency that is prepared to offer fixed fee litigation for claims in that track.

Further Information
As I said yesterday in "Soon there will be a Remedy if Someone steals your Idea", (NIPC Inventors Club 19 Sept 2012), this seemingly insignificant rule change could be enormously important for the UK economy which is why it was recommended by Hargreaves, Gowers and Jackson.  I shall be giving a talk on these new rules to Sheffield Inventors Club at Sheffield Central Library in Surrey Street on Monday 1 Oct 2012 between 18:00 and 20:00. Anyone wishing to attend should contact Lynne Hinchcliffe on 0114 273 4712 . There will be no charge for the talk but space is limited and recent events have been very well attended.   Should anyone want to learn more of this topic, he or she should call me on 0800 862 0055 or contact me through Facebook,Linkedin, twitter or Xing, or through my contact page.

Further Reading
HM Courts & Tribunal Service "Guide to the Patents County Court Small Claims Track"
HM Courts & Tribunal Service "The Patents County Court Guide"
IPO "Resolving IP Disputes through the Courts" 1 Oct 2012
IPO "New small claims track for businesses with IP disputes"
Department for Business "New Small Claims Track for Businesses with IP Disputes" 2 Oct 2012
Jane Lambert "How to bring a Small Claim in the Patents County Court" 12 Oct 2012 NIPC
Jane Lambert   "Soon there will be a Remedy if Someone steals your Idea" NIPC Inventors Club 19 Sep 2012
Jane Lambert "Patents County Court: More on the Small Claims Track" 13 Oct 2012
Jane Lambert "Civil Justice Centre or Rolls Building" 15 Oct 2012 IP North West
Jane Lambert "How Small Businesses in Yorkshire can protect their IP" 13 Oct 2012 IP Yorkshire
Jane Lambert "The IPO's New Improved Mediation Service - will it make a difference?" 7 Apr 2013
Jane Lambert "What does the Intellectual Property Enterprise Court mean for Litigants in the North West?" 12 Oct 2013 IP NorthWest
University of the Arts, London "Own It" "The PCC Small Claims Track – What Does This Mean For SMEs?"  19 Sept 2012
AvidityIP "Patents County Court Small Claims Track enters into force"  2 Oct 2012
Barbara Cookson "Driving on the Small Claims Track" Solo Independent IP Practitioners 23 Sep 2012

Presentation
Jane Lambert "The Patents County Court Small Claims Track" 1 Oct 2012

17 September 2012

Euro-defences: Oracle America Inc v M- Tech Data Ltd

On 5 Nov 2009 Oracle America Inc, which was then known as Sun Microsystems Inc. ("Oracle"), applied to Mr. Justice Kitchin for summary judgment against M-Tech Data Ltd. ("M-Tech") (see Sun Microsystems Inc v M-Tech Data Ltd and another [2010] 2 CMLR 7, (2010) 33(2) IPD 33010, [2010] ETMR 13, [2009] EWHC 2992 (Pat), [2010] FSR 9). Oracle is the registered proprietor of a series of UK and Community trade marks comprising or consisting of the word "Sun" in respect of, inter alia, computers, computer hardware, computer software and computer peripherals.   M-Tech, which supplies computer hardware in what has been described as the secondary market for hardware, had purchased 64 Sun disc drives from a broker in the USA, imported them into the UK and sold them to a business called KSS Associates. Oracle contended that those disc drives were put on the market by M-Tech in the UK without its consent and thereby infringed its British and Community trade marks.

M-Tech resisted that application essentially on three grounds. 
  1. It contended that Oracle had failed to establish where the disc drives were first marketed, and said it might be the case that the discs were first marketed in the European Economic Area ("EEA"), in which case Oracle's trade mark rights would have been exhausted. 
  2. It asserted that the enforcement by Oracle of its trade mark rights was contrary to articles 28 to30 of the Treaty of Rome as its effect would be to prevent the attainment of a single market in hardware which has been marketed by Oracle or with its consent in the EEA. 
  3. It asserted that the enforcement by Oracle of its trade mark rights was connected with agreements which are contrary to article 81 of the Rome treaty and therefore prohibited. The agreements relied upon were those between Oracle and its authorized distributors which required the distributors to buy Oracle equipment, whether new or second hand, within the Oracle authorized supply network whenever possible. 
The judge rejected all those arguments and gave judgment to Oracle under CPR 24.2.

M-Tech appealed to the Court of Appeal (Lord Neuberger MR, Lady Justice Arden and Lord Justice Tomlinson) which held that all three points were arguable (Oracle America Inc v M-Tech Data Ltd and Another  [2010] ETMR 64, [2010] EWCA Civ 997, [2011] FSR 2, [2011] ECC 4, [2011] Eu LR 117). Oracle appealed to the Supreme Court.

Lords Walker, Clarke, Sumption, Reed and Carnwath allowed the appeal and restored the judgment of Mr. Justice Kitchin (Oracle America Inc  v M- Tech Data Ltd [2012] 1 WLR 2026, [2012] WLR 2026, [2012] UKSC 27). Delivering judgment on behalf of the Court, Lord Sumption set out in full articles 5 and 7 of Directive 2008/95/EC of the European Parliament and of the Council of 22 October 2008to approximate the laws of the Member States relating to trade marks ("the directive"). He said at paragraph [4]:
"It has been accepted ever since the decisions of the Court of Justice in Silhouette International Schmied GmbH & Co. KG v Hartlauer Handelsgesellschaft mbH (Case C-355/96) [1999] Ch 77 and Sebago Inc v GB-Unic SA (Case C-173/98) [2000] Ch 558, that the combined effect of articles 5 and 7.1 of the directive is to confer on the trade mark proprietor the exclusive right to control the first marketing in the EEA of goods bearing his trade mark, even if they are genuine goods which have previously been put on the market by him or with his consent outside the EEA. This is the only right attaching to the trade marks which is relevant in the present case. The subsequent decision of the Court in Zino Davidoff SA v A&G Imports Ltd (Joined Cases C-414/99 to 416/99) [2002] Ch 109, underlined its absolute nature by establishing that the consent of the trade mark proprietor had to be such as to amount to an unequivocal renunciation of the right. It could therefore rarely be implied, and never from the mere fact of his having placed the goods on the market outside the EEA and/or his silence on the question whether they had been lawfully placed in the market within the EEA: see paras 53-56. These decisions are understandably unpopular with parallel traders not forming part of the authorised distribution network of the trade mark proprietors. But they are securely established as part of the legal order of the EU in the domain of trade mark protection. Proposals to modify their effect or to adopt a rule of international exhaustion have been firmly rejected by the EC Commission and the Economic and Social Committee and no attempt was made to change the position when the new directive was adopted in 2008."
At paragraph [12] Lord Sumption noted that  the directive is in most respects substantially based on the case law of the Court of Justice that had developed over the two previous decades on the reconciliation of the prohibition of quantitative restrictions on imports and exports under arts 34 and 35 of the Treaty on the Functioning of the European Union ("TFEU") with art 36 which permits such restrictions for the protection of industrial and commercial property. He noted at paragraph [14] that "articles 5 and 7 of the directive already embodies both the primary provisions governing the free movement of goods in articles 34 and 35, and the limited exception in article 36 for the protection of industrial and commercial property."

The right that Oracle sought to enforce was to prevent the importation of goods into a member state of the EEA.   Art 7 was irrelevant because that article only restricted the right of a trade mark owner to object to the onward distribution of goods already lawfully within the EEA. M-Tech complained that Oracle had chilled the secondary market for Oracle goods by refusing to say whether or not a particular product had been put on sale in the EEA with or without its consent. Such refusal might possibly be unlawful but even if it was it would not take away the rights conferred upon a registered proprietor by art 5 of the directive.

As to the art 81 (or art 101 TFEU) point, Lord Sumption observed that although an intellectual property right is not itself an agreement or concerted practice capable of contravening article 101 of the treaty "there are undoubtedly circumstances in which it may be unenforceable because there is a sufficient nexus between the exercise of the right and the agreement or concerted practice in question". The test, which dates back to Case 40/70 Sirena Srl v Eda Srl  [1971] ECR 69  is whether it is "the subject, the means or the result of a restrictive practice"or "when it is the purpose, the means or the result of an agreement … or concerted practice" (see Keurkoop BV v Nancy Kean Gifts BV [1982] ECR 2853, [1983] FSR 381, [1982] EUECJ R-144/81, [1983] 2 CMLR 47, [1982] Com LR 212). His Lordship concluded at paragraph [32] that "neither the trade marks nor the rights conferred on their proprietor by the directive can be characterised as the subject, the means or the result of an agreement or concerted practice contravening article 101."

Since the hearing before Mr Justice Kitchin, M-Tech had added the argument that enforcement of Oracle's trade marks would constitute an abuse of rights as that concept is understood in EU law. That point seemed to the judge to be incapable of succeeding in circumstances where their other points had failed.  Even if Oracle had eliminated independent resellers from the secondary market by aggressive enforcement of its rights, that would not make such enforcement an abuse of rights.

Lord Sumption acknowledged that there were still obscurities in this area of EU law but the particular legislative provisions and legal principles were entirely clear and there was no need for a reference to the Court of Justice of the European Union.

Should anyone wish to discuss this article or the appeal world he or she should call me on 0800 862 0055 or contact me through Facebook, Linkedin, twitter or Xing, or through my contact page.

16 September 2012

The UK’s International Strategy for Intellectual Property

In my post on Lord Marland ("Lord Marland becomes Minister for Intellectual Property" 15 Sept 2012I) I referred to The UK’s International Strategy for Intellectual Property, As there was considerably more interest in that policy document than there was in the Minister in my feedback I have decided to take a closer look at that document.

In Digital Opportunity A Review of Intellectual Property and Growth Professor Ian Hargreaves recommended that
"The UK should resolutely pursue its international interests in IP, particularly with respect to emerging economies such as China and India, based upon positions grounded in economic evidence. It should attach the highest immediate priority to achieving a unified EU patent court and EU patent system, which promises significant economic benefits to UK business. The UK should work to make the Patent Cooperation Treaty a more effective vehicle for international processing of patent applications."
He amplified his thinking in Chapter 3 of his review. HM government accepted all Professor Hargreaves's recommendations including this one and the policy document considers how that strategy may be implemented.

The executive summary declares that the government's overreaching aim is 
"An efficient, respected international intellectual property system that encourages innovation and creativity while enabling the economy and society to benefit from knowledge and ideas."
Its key goals are 
"1. A Well-Functioning International Framework Reform of the international IP system – including work on improving uptake of the Patent Co-operation Treaty to tackle patent backlogs that cost the global economy up to £7.6 billion per year of additional pendency, and reform at the World Intellectual Property Organisation, where finances and governance have historically proven difficult.
Influence in Europe, the source of much of the IP framework governing UK business, and often negotiating on behalf of the UK government – pushing for a unitary EU patent and patent court with real benefits for business; working to secure EU copyright reforms that will lead to increased growth and economic benefits, such as cross-border licensing; and work to ensure IP elements of Free Trade Agreements are in line with UK priorities.
2. Good National RegimesPushing for more effective and consistent enforcement of IP laws within national regimes – by strengthening relationships with key economies like China, India, Brazil, and the US, and establishing a network of IP Attachés.
Providing practical support to business operating overseas – the Intellectual Property Office will work with UKTI, supported by the FCO, and the IP Attaché network, to provide this.
3. Economic and Technological DevelopmentStriking the right balance between industrial and development priorities, to help stimulate economic growth and tackle critical global challenges – tailoring IP policy to the level of development of countries, pushing for further TRIPS flexibilities for Least Developed Countries, and supporting diffusion of medicines and climate change technology."
A schematic on page 2 spells out the detailed policy and shows how all those goals come together to achieve the overall aim.  All good stuff, but how much influence can be exerted in Europe which is recognized correctly as "the source of much of the IP framework governing UK business, and often negotiating on behalf of the UK government" by a government that has stood aloof from Europe on many issues and which contains many Euro-sceptic elements?

15 September 2012

Lord Marland becomes Minister for Intellectual Property

One of the least reported changes in the recent ministerial reshuffle has been the replacement of Baroness Wilcox as Minister for Intellectual Property by the Rt. Hon. Lord Marland.  As he is not exactly a household name I looked him up Lord Marland on Wikipedia and found that he had enjoyed a successful career in business. One of his businesses was Hunter  Boot Ltd which he saved by transferring production from Britain to China (see "Hunter Boots owner Lord Marland looks for new prey" The Telegraph 14 Feb 2009). He had been less successful in politics  contesting Somerton and Frome for the Tories in the 2001 general election and coming second.

Lady Wilcox had been rather a good minister in my view. For instance, she had backed patent reform opening the first WIPO patents symposium in London on 6 March 2012. That is one of the objectives of the IPO's international strategy (see "The UK’s International Strategy for Intellectual Property" 11 Aug 2012). I saw her at the "Cracking Ideas" awards ceremony in Wallasey in June (see "Cracking Ideas: My Encounter with Wallace & Gromit" NIPC Inventors Club blog 20 June 2012). Lord Ashcroft has apparently described the sacking of good ministers as "mystifying" (see "Lord Ashcroft: Reshuffle was 'mystifying'" Independent 15 September 2012).  In Lady Wilcox's case I am inclined to agree.

Whether rightly or wrongly she has gone and we must welcome Lord Marland and wish him every success. He takes office at a crucial moment with the implementation of the Hargreaves report.  If I had to choose a Minister for Intellectual Property I would consider Sharon Bowles MEP who is at least a patent agents as well as Chair of the European Parliament's Economic and Monetary Affairs Committee of the European Parliament.  There is no reason why she could not have been ennobled but perhaps she prefers to stay where she is.