29 May 2013

Correspondence with my MP on Clause 13 of the Intellectual Property Bill


Here is the email that I sent to my MP at 22:23 last night:

"Dear Jason,
You will shortly be required to consider the Intellectual Property Bill which was introduced into the House of Lords by Lord Younger, Parliamentary Under Secretary of State for Intellectual Property on 10 May 2013.
I have analysed the Bill in detail and written a detailed commentary entitled "The Intellectual Property Bill" 28 May 2013 which I hope you may find useful.
The Bill contains a lot of useful provisions and is generally to be welcomed but it contains one provision, clause 13, which would create a new offence of infringing a registered design punishable by 10 years imprisonment, an unlimited fine or both. 
During the consultation on the proposed provisions of the Bill, Sir Robin Jacob a former Lord Justice of the Court of Appeal and now a leading academic lawyer who is regarded by most as the greatest authority on IP law of the age, objected strenuously to the proposal in "Submission to the UK IPO on the issue of criminal sanctions for the deliberate copying of designs.". You will see that Sir Robin was supported in his objections by the Professors of IP Law from the Universities of Oxford, Cambridge, Glasgow, Edinburgh and Bournemouth and King's College London.   Despite the absence of any compelling evidence to the contrary the Minister blithely ignored those objections.
Before voting on clause 13 I should like you to ensure that the arguments of Sir Robin and those of the other distinguished scholars and indeed my own are put to the Minister. I appreciate that you will be whipped on this issue but I hope that good sense will prevail and that this ill judged provision will be withdrawn.
With very best wishes
Yours sincerely
Jane"

My MP's replied at 00:35 this morning. I am not a Conservative but I have t say that Mr. McCartney is the best constituency MP we have had in the Colne Valley since the legendary Richard Wainwright. I am particularly impressed that as he works as hard as I do,

"Dear Jane, 
Many thanks for the briefing on the Intellectual Property Bill. I now consider myself fully prepared for when it comes to the House of Commons. I shall look out for clause 13. 
Kind regards, 
Jason 
Jason McCartney MP

Member of Parliament for Colne Valley"
 portcullis"

I responded to Mr. McCartney at 07:45 this morning:

"Dear Jason,
Thank you for your email.
I can ask no more of you than that.
With best wishes
Yours ever,
Jane"

I have to congratulate ACID on its effectiveness as a lobbyist in getting a proposal that is so obviously bereft of merit this far. I do hope that the Minister sees the sense of the case against clause 13, which is overwhelming, and that he withdraws this unnecessary and unwise provision from an otherwise welcome bill.

28 May 2013

The Intellectual Property Bill


Viscount Younger of Leckie, Parliamentary Under Secretary of State for Intellectual Property


















In Digital Opportunity, A Review of Intellectual Property and Growth Professor Ian Hargreaves made 10 recommendations for IP policy which I discussed at length in "IP Policy: Does Hargreaves say Anything New?" 24 June 2011. Some of those recommendations required primary legislation. Others did not.  As I said in my article, Hargreaves was not the first review of IP policy in recent years and most of the previous ones had been left to gather dust.   I suspected the same would happen to Hargreaves.

Implementation of Hargreaves

To my surprise and delight, Hargreaves's recommendations were accepted broadly by HM Government ("HMG") (see "The Government Response to the Hargreaves Review of Intellectual Property and Growth" Aug 2011).  Not only that but HMG actually started to consult on the recommendations and even to implement some of those that do not require primary legislation.  The progress of such implementation is being monitored by the Intellectual Property Office ("IPO") on the "Implementing the Hargreaves Review" page of its website. The IPO has published a summary summarized of progress to date in its downloadable guide "What does Hargreaves mean for SMEs?" 

Intellectual Property Bill

On the 10 May 2013 Lord Younger, Parliamentary Under, Secretary of State for Intellectual Property, introduced the Intellectual Property Bill to the House of Lords. According to HMG's press release "New Bill proposes reformed intellectual property laws in the UK" 'the Bill delivers the remaining commitments from the Government's response to the Hargreaves Review." It also contains a number of provisions that Hargreaves did not recommend such as criminalizing registered design infringement. Before I discuss the Bill in detail I note with satisfaction that the minister was educated at the University of St. Andrews as was I. As he is slightly younger than me we may have been contemporaries though I don't remember him.  I also note that this is the first Intellectual Property Bill as such. We have had plenty of Bills on various types of IP but this is the first that incorporates the words "Intellectual Property" into its title. In my respectful submission that is something of a misnomer as the Bill deals mainly with patents and designs and would make a few consequential changes to copyright law.  The Designs, Patents and Copyright Bill would have been a more accurate title.

Overview of the Bill

The Bill is quite short consisting of 23 clauses in 4 parts with one schedule of minor amendments to the Patents Act 1977. According to the Explanatory Notes that have been prepared by the Department for Business Innovation and Skills ("BIS"):
"The main purpose of the Bill is to modernise certain aspects of the law relating to intellectual property (“IP”), in order to ensure that the IP system operates more efficiently, is clearer and more accessible, thus increasing legal certainty."
Part 1 provides for designs and Part 2 patents. Part 3 amends the Freedom of Information Act 2000 and the Copyright, Designs and Patents Act 1988. ("CDPA").  Part 4 makes the usual sort of consequential and transitional provisions.

Unregistered Design Right

Definition of "Design"

S.213 (1) of the CDPA provides:
"Design right is a property right which subsists in accordance with this Part in an original design."
Design is defined by s.213 (2) as "the design of any aspect of the shape or configuration (whether internal or external) of the whole or part of an article."  In  Ocular Sciences Ltd v Aspect Vision Care Ltd (No.2) [1997] RPC 289, [1996] EWHC Patents 1, (1997) 20(3) IPD 20022, Mr. Justice Laddie said in relation to that definition:
"The proprietor can choose to assert design right in the whole or any part of his product. If the right is said to reside in the design of a teapot, this can mean that it resides in design of the whole pot, or in a part such as the spout, the handle or the lid, or, indeed, in a part of the lid. This means that the proprietor can trim his design right claim to most closely match what he believes the defendant to have taken."
In Ocular Sciences the claimant claimed that design right subsisted in over 200 lens designs. Its counsel said that the design comprised: 
(a) the front surface dimensions of the lens; 
(b) the rear surface dimensions; and 
(c) the edge characteristics. 
He said that together these features, many of which are determined for each power of lens by the lens designer, made up the lens design. During the argument, the judge had expressed doubt as to whether the detailed dimensions on which the claimant was relying could really be 'designs' within the meaning of the Act. He explained his doubts as follows: 
"For example the -3.00 dioptre and -3.5 dioptre lenses in the plaintiffs' D1 - Edge III Thin range would appear to any normal observer to be identical. In fact, it would take sophisticated measuring equipment in the hands of a skilled technician to tell them apart. Surely they are a single design. They certainly look like the same design."
The claimant's counsel said that this was not so. 
"He said that the use of dimension is just another way of describing or defining the shape or aspect in issue. He argued that there was nothing in the Act to indicate that a shape defined by such detailed dimensions was excluded from protection."
Upon refection, the judge concluded that the claimant was right. 
"This is one of those areas in which it is necessary to bear in mind that the design right provisions are not derived from the Registered Designs Act, 1949. By section 1(1) of the latter Act, the word "design" is defined as meaning
'features of shape, configuration, pattern or ornament applied to an article by any industrial process, being features which in the finished article appeal to and are judged by the eye.'
Furthermore the 1949 Act excludes from consideration features of shape or configuration which are dictated solely by the function which the article has to perform. As that Act and numerous decisions under it demonstrate, appearance is everything where registered design law is concerned. Although the same word "design" is used in relation to design right, its meaning is different. There is no reference in the relevant provisions of the 1988 Act to features which appeal to and are judged by the eye. The Act was intended to give protection to wholly functional designs. The worth and ingenuity of a functional design over designs of similar overall appearance may be due to its detailed relative dimensions. Its detailed shape will, because of the different dimensions, be different. The eye may not be able to distinguish the shapes but that does not mean that they are not different. That being so, it seems to me that it is not possible to exclude detailed dimensional shapes on the ground that they are not designs. This does not mean that mere changes in scale produce different designs."
Clause 1 (1) omits the words "any aspect of" from s.213 (2) of the CDPA. If passed, the subsection would read
"In this Part 'design' means the design ....... of the shape or configuration (whether internal or external) of the whole or part of an article."
There is also a corresponding amendment to the definition of "design" for the purposes of s.51 (3) of the CDPA by virtue of clause 1 (2).

According to the Explanatory Notes 
"Subsection (1) limits the protection for trivial features of designs, by making sure that protection does not extend to “any aspect” of part of an article. It is expected that this will reduce the tendency to overstate the breadth of unregistered design right and the uncertainty this creates, particularly in relation to actions before the courts."
First, the definition of a design in the Copyright, Designs and Patents Act 1988 (CDPA) is not specific enough and does not exclude relatively minor “features” of a design as opposed to the design itself. The effect of this is that claimants can unfairly trim their claims to focus on just one aspect of the copied item, and even one aspect of one part of the copied item. This interpretation of the law (which has been confirmed by the courts) favours owners of designs and makes it difficult for other traders to know what they can and cannot do. Stakeholders claim that this can have a paralysing effect on innovation and can involve parties in unnecessary disputes. To resolve this problem, the definition of UDR will be amended to create certainty whilst not diminishing its unique value.
I have to say that I have my doubts as to the wisdom of these amendments. Mr. Justice Laddie was quite aware of the difficulty expressed above:
"The defendant will not know in what the alleged monopoly resides until the letter before action or, more usually, the service of the statement of claim. This means that a plaintiff's pleading has particular importance. It not only puts forward the claim but is likely to be the only statement of what is asserted to be the design right.
The remedy is particularity in pleading and anyone with any experience of design right litigation will be familiar with the short shrift given to sloppiness. The problem with any change of the law is that it opens the way for re-litigation of decided points.  I fear that some other poor blighter will have to pay for the points that were settled in Ocular Sciences to be revisited.

Definition of "original"

Design right does not subsist in a design unless it is original.  There is no definition of originality but s.213 (4) provides that
"A design is not “original” for the purposes of this Part if it is commonplace in the design field in question at the time of its creation."
In Farmer Build Ltd v Carier Bulk Materials Handling Ltd and Others [1999] ITCLR 297, [1999] RPC 461, [2000] ECDR 42, [1998] EWCA Civ 1900, Lord Justice Mummery endorsed Mr. Justice Aldous's decision in C & H Engineering v F Klucznik & Sons Ltd [1992] FSR 421, 427 that subject to s.213 (4) "original" in s. 213 (1) had the same meaning as in the earlier provisions of the 1988 Act relating to copyright in original literary, dramatic, musical and artistic works under s. 1 (1) (a) CDPA.  In Farmer Lord Justice Mummery said that the overall purpose of s.213 (4)
"was not to impose a requirement of novelty in order to secure the limited protection enjoyed by unregistered designs, but to guard against situations in which even short term protection for functional designs would create practical difficulties. Substantial similarity of design might well give rise to a suspicion and an allegation of copying in cases where substantial similarity was often not the result of copying but an inevitable consequence of the functional nature of the design. All that is meant by "original designs" in the context of s. 213 is (a) that the design for which protection is claimed must have been originated by the designer in the sense that it is not simply a copy by him of a previous design made by someone else (like a photocopy) and (b) that where it has not been slavishly copied from another design, it must in some respects be different from other designs, so that it can be fairly and reasonably described as not commonplace. The context is important. Design right, like copyright, is informally acquired and affords weaker protection, as only copying is actionable. Copying may be inferred from proof of access to the protected work, coupled with substantial similarity. This may lead to unfounded infringement claims in the case of functional works, which are usually bound to be substantially similar to one another. On the other hand, a registered design, like a patent, is a stronger right, is harder to obtain, but it is vulnerable to challenge on the ground that it is lacking in novelty and it would not be novel if it was well known and used by others. To introduce a requirement of novelty into unregistered designs would effectively remove from the limited new right a large measure of the protection that the right must have been intended to confer on designers to protect their work from plagiarism. It cannot have been the purpose of section 213(4) to take away by one provision all the protection given by another."
In determining whether a design was original Lord Justice Mummery said that the court should follow the following methodology:
"(1) It should compare the design of the article in which design right is claimed with the design of other articles in the same field, including the alleged infringing article, as at the time of its creation.

(2) The court must be satisfied that the design for which protection is claimed has not simply been copied (e.g. like a photocopy) from the design of an earlier article. It must not forget that, in the field of designs of functional articles, one design may be very similar to, or even identical with, another design and yet not be a copy: it may be an original and independent shape and configuration coincidentally the same or similar . If, however, the court is satisfied that it has been slavishly copied from an earlier design, it is not an "original" design in the "copyright sense" and the "commonplace" issue does not arise.

(3) If the court is satisfied that the design has not been copied from an earlier design, then it is" original" in the" copyright sense". The court then has to decide whether it is "commonplace". For that purpose it is necessary to ascertain how similar that design is to the design of similar articles in the same field of design made by persons other than the parties or persons unconnected with the parties.

(4) This comparative exercise must be conducted objectively and in the light of the evidence, including evidence from experts in the relevant field pointing out the similarities and the differences, and explaining the significance of them. In the end, however, it is for the court and not for the witnesses, expert or otherwise, to decide whether the design is commonplace. That judgment must be one of fact and degree according to the evidence in each particular case. No amount of guidance given in this or in any other judgment can provide the court with the answer to the particular case. The closer the similarity of the various designs to each other, the more likely it is that the designs are commonplace, especially if there is no causal link, such as copying, which accounts for the resemblance of the compared designs. If a number of designers working independently of one another in the same field produce very similar designs by coincidence the most likely explanation of the similarities is that there is only one way of designing that article. In those circumstances the design in question can fairly and reasonably be described as "commonplace". It would be a good reason for withholding the exclusive right to prevent the copying in the case of a design that, whether it has been copied or not, it is bound to be substantially similar to other designs in the same field.

(5) If, however, there are aspects of the plaintiff's design of the article which are not to be found in any other design in the field in question, and those aspects are found in the defendant's design, the court would be entitled to conclude that the design in question was not "commonplace" and that there was good reason for treating it as protected from misappropriation during the limited period laid down in the 1988 Act. That would be so, even though the design in question would not begin to satisfy any requirement of novelty in the Registered Designs legislation."
Clause  1 (3) of the Bill would insert the words "in a qualifying country" after "commonplace" in s.213 (4). It would also add that "and qualifying country” has the meaning given in section 217 (3)”of the CDPA. S.213 (4) would thus read
"A design is not “original” for the purposes of this Part if it is commonplace in a qualifying country in the design field in question at the time of its creation and qualifying country” has the meaning given in section 217 (3).”
Paragraph 10 of the Explanatory Notes states that there has been confusion as to the geographical coverage over which the meaning of "commonplace" applies and that the amendment aims to remove that confusion by specifying that the meaning of “commonplace” applies to those countries defined under section 217 (3). It would appear from the Impact Assessment that the rationale for this change is to achieve consistency with the Registered Designs Act 1949: 
"where the analogous concept of “novelty” extends to the whole of the European Economic Area. To resolve this problem, the definition of “commonplace” will be extended to expressly cover the EU, and other geographic areas where the UDR subsists."
Since the Court of Appeal went out of its way in Farmer to make clear that novelty and originality are very different things and that the concept of novelty had no relevance to unregistered design right it is far from obvious why the definition of "commonplace" needs to be brought in line with that of "novelty."

Commissioned Designs

One of the anomalies of the CDPA is that a person who commissions a design acquires design right in the design (unless the commissioner and designer agree otherwise) but a person who commissions a copyright work such as a computer program does not acquire the copyright in that work (compare s.11 of the CDPA with s.215). Clause 2 (1) would cure that anomaly by deleting s.215 (2).

After amendment s.215 would provide that:
"(1)    The designer is the first owner of any design right in a design which is not created ....... in the course of employment.
(2)     ....................................
(3)    Where, in a case ...................... a design is created by an employee in the course of his employment, his employer is the first owner of any design right in the design.
(4)     If a design qualifies for design right protection by virtue of section 220 (qualification by reference to first marketing of articles made to the design), the above rules do not apply and the person by whom the articles in question are marketed is the first owner of the design right."
Clause 2 (2) would make consequential amendments elsewhere in the CDPA. 

I was not aware that this anomaly was ever a problem in practice.   Designers who wanted to retain design rights in their designs contracted out of s.215 (2) in their terms and conditions or other contracts.

If Parliament passes this amendment customers who need design right in their designs will have to negotiate and possibly pay a little extra for it as  those who commission software development and other copyright works have to do now. 

Qualification

Before the 1 Aug 1989 functional designs were protected in the UK by artistic copyright.  Copying an article made to a design that had been recorded in a design drawing was tantamount to copying the drawing and thus infringed the copyright in the drawing.  Under the Berne and Universal Copyright Conventions citizens and residents of states that are party to one or other of those Conventions are entitled to copyright protection for their works under the copyright laws of all the other contracting states. Thus, an American author acquires copyright protection for his work in the United Kingdom under our copyright law just as a British author acquires copyright protection in the USA under that of the USA.

One of the many problems of protecting functional designs by artistic copyright was that not all countries protected such designs in that way. A few Commonwealth and other common law countries such as Ireland and South Africa did but most states did not. Consequently, many foreign designers enjoyed more extensive protection for their designs in the UK than they did at home. More importantly, they enjoyed greater protection in the UK than British designers enjoyed in their countries. 

Part III of the CDPA substituted unregistered design right as the means of protecting functional designs for artistic copyright. Since design right is not covered by the copyright conventions new provisions for reciprocal protection had to be adopted. That resulted in the horrendously complicated provisions of sections 217 to 221 of the CDPA.

Clause 3 (2) of the Bill would simplify those provisions slightly.  After amendment s.217 would be as follows:
"(1)    In this Part—
...........................
“qualifying person” means
(a)    an individual habitually resident in a qualifying country, or
(b)    a person who has in any qualifying country a place of business at which substantial business activity is carried on.”
(2)     References in this Part to a qualifying person include the Crown and the government of any other qualifying country.
(3)    In this section “qualifying country” means—
(a)    the United Kingdom,
(b)    a country to which this Part extends by virtue of an Order under section 255,
(c)    another member State of the European Union], or
(d)    to the extent that an Order under section 256 so provides, a country designated under that section as enjoying reciprocal protection.
(4)............................
(5)     In determining for the purpose of the definition of “qualifying person” whether substantial business activity is carried on at a place of business in any country, no account shall be taken of dealings in goods which are at all material times outside that country."
Other sub-clauses of clause 3 make consequential changes elsewhere in the Act. One of the most important of those changes is that qualification by first marketing would refer to the country in which sales are made rather than the nationality or residence of the person doing that marketing.

Though fairly minor, these amendments are sensible and deserve support.

Exceptions

Clause 4 inserts the following exceptions to design right:
insert—
Miscellaneous
 244A    Exception for private acts, experiments and teaching
Design right is not infringed by—
(a)      an act which is done privately and for purposes which are not commercial;
(b)      an act which is done for experimental purposes; or
(c)      an act of reproduction for teaching purposes or for the purpose of making citations provided that—          
(i)   the act of reproduction is compatible with fair trade practice and does not unduly prejudice the normal exploitation of the design, and
(ii) mention is made of the source
.
244B Exception for overseas ships and aircraft
Design right is not infringed by—
(a)      the use of equipment on ships or aircraft which are registered in another country but which are temporarily in the United Kingdom;
(b)     the importation into the United Kingdom of spare parts or accessories for the purpose of repairing such ships or aircraft; or
(c)     the carrying out of repairs on such ships or aircraft.”
According  to the the Explanatory Notes the policy is to bring unregistered design right in line with registered design law. Since design right is infringed by copying the design and not by making a similar work I struggle to see the need for such harmonization. I also repeat the remarks that I made above with regard to originality that novelty and originality are two very different things and novelty has no relevance to design right.

Registered Community Designs

S.53 (1) of the CDPA provides:a defence to copyright infringement in the following circumstances:
"The copyright in an artistic work is not infringed by anything done—
(a)    in pursuance of an assignment or licence made or granted by a person registered under the Registered Designs Act 1949 as the proprietor of a corresponding design, and
(b)    in good faith in reliance on the registration and without notice of any proceedings for the cancellation or invalidation of the registration or for rectifying the relevant entry in the register of designs;
and this is so notwithstanding that the person registered as the proprietor was not the proprietor of the design for the purposes of the 1949 Act. "
S.53 (2) defined a “corresponding design”, in relation to an artistic work as "a design within the meaning of the 1949 Act which if applied to an article would produce something which would be treated for the purposes of this Part as a copy of the artistic work."  Clause 5 would extend that defence to registered Community designs.

Registered Designs

Property in Commissioned Designs

S.2 (1A) of the Registered Designs Act 1949 provides:
"Where a design is created in pursuance of a commission for money or money’s worth, the person commissioning the design shall be treated as the original proprietor of the design."
Clause 6 (1) would remove s.2 (1A) and all references to that subsection in the Act. The purpose of that provision is to harmonize the 1949 Act with the Community Design Regulation.

I repeat the remarks that I made earlier in relation to commissioning functional designs.  If this provision is passed those commissioners who need to own the commissioned designs must contract for ownership of the design. They may be able to do so in their commissioning agreements or possibly terms and conditions of procurement.

Right to Apply for a Registered Design

S.3 (2) of the Registered Designs Act 1949 requires an application for the registration of a design to be made by the person claiming to be the proprietor of the design. There is no similar requirement in the Community Design Regulation. Clause 6 (2) would abolish that subsection and bring the 1949 Act in line with the Regulation.

Right of Prior Use

S.64 of the Patents Act 1977 and s.11 (3) of the Trade Marks Act 1994 provide defences of prior user in patent and trade mark infringement proceedings. There is no corresponding right in the Registered Designs Act 1949. Clause 7 (1) would establish such a right by inserting a new s.7B into that Act:
“7B Right of prior use
(1)   A person who, before the application date, used a registered design in good faith or made serious and effective preparations to do so may continue to use the design for the purposes for which, before that date,
the person had used it or made the preparations to use it.
(2) In subsection (1), the “application date”, in relation to a registered design, means—
(a)    the date on which an application for the registration was made under section 3, or
(b) where an application for the registration was treated as having been made by virtue of section 14(2), the date on which it was treated as having been so made.
(3) Subsection (1) does not apply if the design which the person used, or made preparations to use, was copied from the design which was subsequently registered.
(4) The right conferred on a person by subsection (1) does not include a right to licence another person to use the design.
(5) Nor may the person on whom the right under subsection (1) is conferred assign the right, or transmit it on death (or in the case of a body corporate on its dissolution), unless—
(a) the design was used, or the preparations for its use were made, in the course of a business, and
(b) the right is assigned or transmitted with the part of the business in which the design was used or the preparations for its use were made.”
 Accession to the Hague Agreement

The Hague Agreement Concerning the International Deposit of Industrial Designs facilitates the registration of designs in much the same way as the Patents Co-operation Treaty does with patents and the Madrid Protocol with trade marks. The EU has been party to the Hague Agreement in respect of registered Community designs since 2008. Clause 8 would insert a new s.15ZA into the Registered Designs Act 1949 to enable the UK to accede to that Agreement:
“15ZA Accession to the Hague Agreement
(1)    The Secretary of State may by order make provision for giving effect in the United Kingdom to the provisions of the Geneva Act of the Hague Agreement Concerning the International Registration of Industrial
Designs adopted by the Diplomatic Conference on 2 July 1999.
(2)    An order under this section may, in particular, make provision about—
(a) the making of applications for international registrations at the Patent Office;
(b) the procedures to be followed where an international registration designates the United Kingdom;
(c) the effect of an international registration which designates the United Kingdom;
(d) the communication of information to the International Bureau;
(e) the payment of fees.
(3)    An order under this section may—
(a) amend this Act;
(b) apply specified provisions of this Act with such modifications as may be specified.
(4)    An expression used in subsection (2) and in the Agreement referred to in subsection (1) has the same meaning in that subsection as it has in the Agreement.”

Repeal of S.18 (3A)

S.19 (3A) of the Registered Designs Act 1949 provides that where unregistered design right subsists in a registered design, the Registrar of Designs (that is to say the Comptroller or chief executive of the Intellectual Property Office) may not register an interest unless he or she is satisfied that the person entitled to that interest is also entitled to a corresponding interest in the design right. Clause 9 (1) would abolish s.19 (3A).

Inspection of the Register

Clause 9 (2) would extend the public right of inspection under s.22 (1) of the Registered Designs Act 1949 to "every document kept at the Patent Office in connection with that design.” The remaining sub-clauses of clause 9 provide for electronic inspection of the register.

Accounts of Profit against Innocent Infringers

S.24B of the Registered Designs Act 1949 excuses innocent infringers from liability for damages or an account of profits but there is no similar provision in the Community Designs Directive. Clause 10 (1) would amend s.24B (1) as follows to allow claimants to claim an account of profits from an innocent infringer but not damages:
"In proceedings for the infringement of the right in a registered design damages shall not be awarded................. against a defendant who proves that at the date of the infringement he was not aware, and had no reasonable ground for supposing, that the design was registered."
Appeals to the Appointed Person

Clause 10 (2) would allow appeals from the Registrar to an appointed person as an alternative to the court as already happens in trade mark proceedings.  This is a very sensible reform and one for which I have argued for many years.  I have suggested it in several consultations including, most recently, on the reform of the Patents County Court (see my article "Costs: why not abolish the Patents County Court" 15 Jan 2010). Perhaps I can claim credit for this very sensible measure. Appeals to the Registered Designs Appeal Tribunal are abolished by clause 10 (4)..

Opinion on Designs

Clause 11 (1) of the Bill would insert a new s.28A into the Registered Designs Act 1949 on the lines of s.74A of the Patents Act 1977. Such new section would enable the Secretary of State to make regulations for IPO examiners to give opinions on
"specified matters relating to—
(a) designs registered under this Act;
(b) designs of such other description as may be specified."
Correspondingly, clause 11 (2) would insert a new s.249A into the CDPA to extend the new designs opinion service to unregistered design right questions.

Interestingly, no equivalent to s.74B of the Patents Act 1977 is proposed though rules for reviewing opinions could be made by statutory instrument.

Like appeals to the appointed person, this is a very sensible reform and one that I have suggested many times before.  I hope that Parliament accepts these provisions.

Forms and Directions

Another sensible reform is clause 12 which would give the Registrar the same sort of powers to prescribe forms, make rules and give directions in relation to designs as he has in relation to patents and trade marks.

Criminalizing Registered Design Infringements

A much less sensible provision and one which I hope that Parliament will reject is clause 13 which would introduce a new offence of copying a registered design punishable with a maximum penalty of 10 years imprisonment and an unlimited fine. In my very first post to this blog "Porridge for Patent Infringement" 22 Aug 2005 and many subsequent posts I warned of the dangers of extending the criminal law from bootlegging, counterfeiting and piracy to patent and registered design infringement.

Let me give you just one reason why this proposal is barmy. Questions such as whether a design is new and has individual character are regarded as sufficiently difficult to remove them from the general jurisdiction of the Chancery Division and assign them to the specialist judges of the Patents Court (see CPR 63.2). Those questions, which are thought rightly or wrongly to be too difficult for all but a handful of judges, will be put routinely to juries and lay magistrates since it would be a defence under s.35AZ (4) to show reasonable relief that the registration of the design was invalid.  The litigation in California between Samsung and Apple shows the folly of entrusting difficult questions of IP law to juries (see "Apple v Samsung - Yet more Revelations" 31 Aug 2012). In the Apple case the foreman of the jury is said to have known something about patent law. Our juries and indeed lay justices are drawn from all parts of society. There is no educational or even IQ qualification for serving on a jury or serving as a magistrate.

There is an international obligation under art 61 of TRIPS to "provide for criminal procedures and penalties to be applied at least in cases of wilful trademark counterfeiting or copyright piracy on a commercial scale" but there is no obligation to extend it to any other IP right. If this proposal comes into law it will give succour to those who has been campaigning for criminal sanctions for patent infringement for years.

This dangerous proposal is no doubt the result of persistent lobbying by ginger groups of manufacturers and designers who make the very reasonable point that enforcement in the Patents and Patents County Courts was notoriously expensive. That was certainly the case before 1 Oct 2010 but it is no longer true now (see "New Patent County Court Rules" 31 Oct 2010). If any changes to the law are needed the extension of the jurisdiction of the small claims track of the Patents County Court to registered and registered Community design cases would be much more sensible.

Patents

Marking

S.61 (1) of the Patents Act 1977 provides:
"In proceedings for infringement of a patent damages shall not be awarded, and no order shall be made for an account of profits, against a defendant or defender who proves that at the date of the infringement he was not aware, and had no reasonable grounds for supposing, that the patent existed; and a person shall not be taken to have been so aware or to have had reasonable grounds for so supposing by reason only of the application to a product of the word “patent” or “patented”, or any word or words expressing or implying that a patent has been obtained for the product, unless the number of the patent accompanied the word or words in question."
Clause 14 (1) would insert the words  “or a relevant internet link”.after “the number of the patent” at the end of the subsection. Clause 14 (2) would insert a new sub-section (1A) defining "relevant internet link" as
"an address of a posting on the internet—
(a) which is accessible to the public free of charge, and
(b) which clearly associates the product with the number of the patent.”
I suppose a link to esp@cenet might do though patentees would do well to monitor their links in view of the changes to the service.

Opinions

S.74A (1) of the Patents Act 1977 confines examiners' opinions to the following issues:
"(a) as to whether a particular act constitutes, or (if done) would constitute, an infringement of the patent;
(b) as to whether, or to what extent, the invention in question is not patentable because the condition in section 1(1)(a) or (b) above is not satisfied."
Clause 15 would broaden that jurisdiction to a prescribed matters in relation to patents which could include supplementary protection certificates by virtue of sub-clause (3),  Presumably those prescribed matters will be defined by statutory instrument.  Clause 15 (4) will give the examiners' opinions some real welly since the Comptroller would be able to revoke patents found to be invalid under the following new sub-sections to s.73:
“(1A)   Where the comptroller issues an opinion under section 74A that section 1(1)(a) or (b) is not satisfied in relation to an invention for which there is a patent, the comptroller may revoke the patent.
(1B)   The power under subsection (1A) may not be exercised before—
(a)    the end of the period in which the proprietor of the patent may apply under the rules (by virtue of section 74B) for a review of the opinion, or
(b)    if the proprietor applies for a review, the decision on the review is made (or, if there is an appeal against that decision, the appeal is determined).
(1C) The comptroller shall not exercise the power under subsection (1A) without giving the proprietor of the patent an opportunity to make any observations and to amend the specification of the patent without contravening section 76.”
The threat of revocation means that patentees (and more importantly their patent agents) have to take examiners' opinions seriously and produce the sort of evidence with which they would resist a revocation application.  If that happens it will be no bad thing.

Unified Patent Court

Undoubtedly the most important provision of the Bill is clause 16 which would insert a new s.88A into the Patents Act 1977 to implement the agreement on the Unified Patent Court.  The text of the new section would be as follows:
88A Implementation of Agreement on a Unified Patent Court
(1)   The Secretary of State may by order make provision for giving effect in the United Kingdom to the provisions of the Agreement on a Unified Patent Court made in Brussels on 19 February 2013.
(2)   An order under this section may, in particular, make provision—
(a)   to confer jurisdiction on a court, remove jurisdiction from a court or vary the jurisdiction of a court;
(b)    to require the payment of fees.
(3)    An order under this section may also make provision for varying the application of specified provisions of this Act so that they correspond to provision made by the Agreement.
(4)  An order under this section may—
(a)  make provision which applies generally or in relation only to specified cases;
(b) make different provision for different cases.
(5) An order under this section may amend this Act or any other enactment.
(6) An order under this section may not be made unless a draft of the order has been laid before, and approved by resolution of, each House of Parliament.
(7) The meaning of “court” in this section is not limited by the definition of that expression in section 130(1).”
 The February agreement clears the last hurdle for the implementation of the unitary patent, that is to say a European patent designating the member states of the European Union except Spain and Italy as a single territory. It is the next best thing to an EU patent. The idea of a Community patent was first agreed in Community Patent Convention nearly 40 years ago and Parliament actually ratified that Convention by passing the Patents Act 1977. The Convention never came into force because of objections over language and litigation.  There have been a number of attempts to revive the idea but they have all foundered on the same objections.

The language objection is that Italian and Spanish are not official languages at the EPO in Munich as they are at OHIM in Alicante. That question has still not been resolved wholly which is why this new European patent has to be a unitary patent rather than an EU one.

The litigation objection has been resolved by the February agreement which will establish a unified patents court with a chamber in London to adjudicate on disputes over life sciences inventions. Hargreaves recommended that HMG
"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."
According to the press release that I mentioned earlier it is estimated that the unitary patent will lead to direct benefits to business of up to £40 million per year and it is anticipated that the London Court will benefit the economy an estimated £200 million per annum. Of course, all those benefits will be lost if the UK ever leaves the EU.

Information Sharing with Overseas Patent Offices

Hargreaves also recommended that the UK should work to make the Patent Cooperation Treaty a more effective vehicle for international processing of patent applications. That would be achieved by clause 18 which would amend s.118 of the Patents Act to facilitate the sharing of information with overseas patent offices.

Other Provisions

Clause 19 would insert a new s.22A into the Freedom of Information Act 2000 to exempt certain information derived from a research programme from the disclosure provisions of the Act in certain circumstances.

Clause 20 would impose a duty on the Secretary of State the Secretary of State to present to Parliament by the end of September each year a report that sets out how, in his opinion, the activities of the IPO has supported innovation and growth in the UK. This is another of Hargreaves's recommendations.

Clause 21 would enable the Secretary of State to extend copyright and performers' right protection to citizens and residents of new states without listing all the countries and territories to which such protection already applies.

Conclusion

Except for clause 13 which must be resisted strenuously, this Bill contains some very sensible provisions and is generally to be welcomed. I shall be bending the ear of my MP as the Bill proceeds through the Commons and I urge everyone with an interest in IP olicy to do the same. Should anyone wish to discuss this article or IP generally he or she can call me on 020 7404 5252 or use my contact form. I can also be followed on  Facebook, Linkedin, twitter or Xing.

Further Reading

ACID Submission Details and Survey
Tanya Aplin and Others "Submissions to the UK IPO on the issue of criminal sanctions for the deliberate copying of designs" 1 Oct 2012 IPO
Thomas Dillon "UK: Intellectual Property Bill" 4-5 IP 28 May 2013
International Chamber of Commerce "Business Concerns on Use of Criminal Sanctions for Design Infringements" 30 Apr 2013
IP Federation "Criminal sanctions for Registered Design infringement" 3 June 2013
James Nurton "Should there be criminal penalties for design infringement" 10 May 2013 Managing IP
Out Law "Government considers introducing criminal sanctions for infringements of design rights"
"Reforms to design rights and patents framework proposed by Government" 13 May 2013

13 May 2013

Software Patents: HTC Europe Co Ltd v Apple Inc

In HTC Europe Co Ltd v Apple Inc [2013] EWCA Civ 451 (3 May 2013), the Court of Appeal (Lord Justices Richards, Lewison and Kitchin) ventured again into what Lord Justice Lewison described at paragraph [140] of the Court's judgment as "the minefield of the exclusion from patentability of computer programs 'as such'".

The Appeal
This was an appeal from the judgment of Mr Justice Floyd (as he then was) in HTC Europe Co Ltd v Apple Inc [2012] EWHC 1789 (Pat) (4 July 2012). The judge found that two of the claims of one of Apple's patents were invalid because they related to computer programs as such and one of those claims was also invalid for obviousness. He also found that all the claims of another patent were invalid either for want of novelty or obviousness.  The first of those patents, European patent number 2,098.948, related to computer devices with touch sensitive screens that are capable of responding to more than one touch at a time. The second, European patent number 1,964,022, to ways of unlocking computer devices with touch sensitive screens.   After the trial Apple and HTC settled their dispute and HTC took no further part in these proceedings.  However, Apple invited the Comptroller to appear on the appeal "to protect the public interest by intervening to the extent necessary to prevent invalid patents being restored to the register."

Computer Programs "as such"
Art 52 (2) (c) of the European Patent Convention provides that programs for computers shall not be regarded as inventions. However, art 52 (3) adds that art 52 (2) shall "exclude the patentability of the subject-matter or activities referred to therein only to the extent to which a European patent application or European patent relates to such subject‑matter or activities as such."

In Aerotel Ltd. v Telco Holdings Ltd and Others  [2007] Bus LR 634, [2006] EWCA Civ 1371, [2007] RPC 7, [2006] Info TLR 215, [2007] BusLR 634, [2007] 1 All ER 225 the Court of Appeal propounded the following four step approach to determining whether a software implemented invention was a computer program as such:
"i) properly construe the claim;
ii) identify the actual contribution;
iii) ask whether it falls solely within the excluded subject matter;
iv) check whether the actual or alleged contribution is actually technical in nature."
(Simon Hart, who was involved in Macrossan which has heard at the same time contributed this article "Patents: Re Macrossan's Application" 5 Apr 2006). The Court of Appeal's approach was criticized by the Technical Board of Appeal in Duns Licensing Associates LP, T 0154/04 - 3.5.01 though the Court of Appeal concluded in Symbian v Comptroller-General of Patents [2008] EWCA Civ 1066, [2009] RPC 1, [2009] Bus LR 607 that most of the decisions of the Board and the English Courts were reconcilable (see my article "Software Patents: Here we go again" 9 Oct 2009). 

The first of those steps is straightforward but the second and third tend to elide and the fourth acts as a check on the previous two.   It follows that in practice the question whether a software implemented invention is patentable boils down to the question: "has the invention made a technical contribution to the known art?". Between paragraphs [45] and [49] Lord Justice Kitchin identified the following pointers:
"First, it is not possible to define a clear rule to determine whether or not a program is excluded, and each case must be determined on its own facts bearing in mind the guidance given by the Court of Appeal in Merrill Lynch and Gale and by the Boards of Appeal in Case T 0208/84 Vicom Systems Inc [1987] OJ EPO 14, [1987] 2 EPOR 74, Case T 06/83 IBM Corporation/Data processing network [1990] OJ EPO 5, [1990] EPOR 91 and Case T 115/85 IBM Corporation/Computer-related invention [1990] EPOR 107.
[46] Second, the fact that improvements are made to the software programmed into the computer rather than hardware forming part of the computer does not make a difference. As I have said, the analysis must be carried out as a matter of substance not form.
[47] Third, the exclusions operate cumulatively. So, for example, the invention in Gale related to a new way of calculating a square root of a number with the aid of a computer and Mr Gale sought to claim it as a ROM in which his program was stored. This was not permissible. The incorporation of the program in a ROM did not alter its nature: it was still a computer program (excluded matter) incorporating a mathematical method (also excluded matter). So also the invention in Macrossan related to a way of making company formation documents and Mr Macrossan sought to claim it as a method using a data processing system. This was not permissible either: it was a computer program (excluded matter) for carrying out a method for doing business (also excluded matter).
[48] Fourth, it follows that it is helpful to ask: what does the invention contribute to the art as a matter of practical reality over and above the fact that it relates to a program for a computer? If the only contribution lies in excluded matter then it is not patentable.
[49] Fifth, and conversely, it is also helpful to consider whether the invention may be regarded as solving a problem which is essentially technical, and that is so whether that problem lies inside or outside the computer. An invention which solves a technical problem within the computer will have a relevant technical effect in that it will make the computer, as a computer, an improved device, for example by increasing its speed. An invention which solves a technical problem outside the computer will also have a relevant technical effect, for example by controlling an improved technical process. In either case it will not be excluded by Art 52 as relating to a computer program as such."
At paragraph [143] of his judgment, Lord Justice Lewison regretted that because the apparently simple words of art 52 (2) and (3) 
"both our courts and the Technical Boards of Appeal at the EPO have stopped even trying to understand them. However we are so far down that road that "returning were as tedious as go o'er". Instead we are now engaged on a search for a "technical contribution" or a "technical effect". Instead of arguing about what the legislation means, we argue about what the gloss means."
He concluded at [147]:
"So the upshot is that we now ignore the words "computer program … as such" and instead concentrate on whether there is a technical contribution. It is, if I may say so, a singularly unhelpful test because the interaction between hardware and software in a computer is inherently "technical" in the ordinary sense of the word. If I buy a software package that malfunctions the software house will often offer me "technical support". But that is clearly not enough for the software to qualify as making a "technical contribution". In Symbian this court declined to provide a definition of the right kind of technical effect; but instead provided a recommended reading list."
From that "reading list" Lord Justice Lewison had distilled the following signposts as to what constituted a "technical effect" in AT&T Knowledge Ventures LP, [2009] EWHC 343 (Pat), [2009] Bus LR D51, [2009] FSR 19:
"i) whether the claimed technical effect has a technical effect on a process which is carried on outside the computer;
ii) whether the claimed technical effect operates at the level of the architecture of the computer; that is to say whether the effect is produced irrespective of the data being processed or the applications being run;
iii) whether the claimed technical effect results in the computer being made to operate in a new way;
iv) whether there is an increase in the speed or reliability of the computer;
v) whether the perceived problem is overcome by the claimed invention as opposed to merely being circumvented."
In this appeal, he substituted 
"It would be a relevant technical effect if the program made the computer a better computer in the sense of running more efficiently and effectively as a computer."
which had been suggested by Mr Justice Mann in Gemstar-Tv Guide International Inc and Others v Virgin Media Ltd and Another  [2009] EWHC 3068 (Ch), [2010] RPC 10 for his own formulation in paragraph (iv),   Lord Justice Kitchin adopted Lord Justice Lewison's revised signposts at paragraph [51] of his judgment.

The Lords Justices applied that analysis to European patent number 2,098.948 did make a technical contribution to the art and that its contribution did not lie in excluded matter.

Obviousness
Lord Justice Kitchin referred to the Court of Appeal's previous decision in Pozzoli Spa v BDMO SA and another  [2007] BusLR D117, [2007] EWCA Civ 588, [2007] FSR 37:
"(1)(a) Identify the notional 'person skilled in the art'.
      (b) Identify the relevant common general knowledge of that person.
(2) Identify the inventive concept of the claim in question or, if that cannot readily be done, construe it.
(3) Identify what, if any, differences exist between the matter cited as forming part of the "state of the art" and the inventive concept of the claim or the claim as construed.
(4) Ask whether, when viewed without any knowledge of the alleged invention as claimed: do those differences constitute steps which would have been obvious to the person skilled in the art or do they require any degree of invention?"
The Court considered whether the trial judge had followed that approach and found that he had.   Thus, the appeal against obviousness failed in respect of both patents.

Further Information
The computer program exclusion is one of my special interests and has been for nearly 30 years, If anyone wants to discuss this case or any of the issues please call me on +44 (0)20 7404 5252 or contact me through Facebook, Linkedin, twitter, Xing, or my contact page.

04 May 2013

Success Fees and ATE Premiums in the Patents County Court: Henderson v All Around the World Recordings Ltd

As I mentioned in "Intellectual Property Litigation - the Funding Options" 10 April 2013, it was possible until the 31 March 2013 for a litigant to enter an agreement with his or her solicitors and counsel known as a conditional fee agreement ("CFA") whereby the lawyers would look to the other side for payment not only of their assessed costs but also of an uplift known as a success fee and the premium for insurance against their own and the other side's costs in case of failure known as after-the-event ("ATE") insurance if they won the case or obtained a satisfactory settlement. As I also mentioned in that article, it is still possible to enter a CFA but any success fee and ATE insurance premium must now be paid by the successful party - usually out of any damages or accountable profits he or she may receive.

On 1 Oct 2010 CPR Parts 63 and 45 and the corresponding Practice Directions were amended for proceedings before the Patents County Court ("the PCC").  Those amendments, which I discussed in detail in the "New Patents County Court Rules" of the 31 Oct 2010, controlled the time that could be spent on proceedings before the PCC and limited the costs that could be recovered from the other side to £50,000 for the determination of liability and £25,000 for an inquiry as to damages or account of profits.

After legal aid for business disputes was abolished by para 1 (h) of Schedule 2 to the Access to Justice Act 1999 I, like most intellectual property practitioners, was asked almost as a matter of course by many solicitors and their clients to accept instructions on a CFA. Although I looked into the possibility on a couple of occasions I never actually entered a CFA and I explained why in my article of 10 April 2013.  There was never very much scope for CFAs in intellectual property litigation for the reasons I gave in "No Win No Fee" on the NIPC website on 14 July 2011.  As I also observed in my 10 April article there was even less scope for CFAs in the Patents County Court with scale costs and capped totals.

The widely held assumption that the £50,000, £25,000 and stage costs caps excluded success fees and ATE premiums was challenged in Henderson v All Around the World Recordings Ltd and Another (No. 2) [2013] EWPCC 19 (27 March 2013). This was an action for infringement of a performer's rights which Judge Birss QC (as he then was) decided in Henderson v All Around the World Recordings Ltd and Another [2013] EWPCC 7 (13 Feb 2013). The claimant had entered a CFA with specialist solicitors and counsel.  Her solicitors' costs were £88,103.50 plus VAT £17654.70, her counsel's fees were £8,285 plus VAT of £1,657 and her disbursements were £889.67 plus VAT of £168.73. Her solicitors' success fee was 60% and her counsel's 100% which would have produced a grand total of £232,676.20 had it been allowed. She had not been entirely successful and the costs of an unsuccessful copyright claim and half the costs of an application were awarded against her but she had succeeded overall.  The question for Judge Birss QC was how much of those costs he should award in view of the £50,000 limit.

The claimant's case was compelling. His Honour summarized her counsel's argument at paragraph [17]:
"He submitted that the key was Miss Henderson's lack of means combined with the imbalance of power in this case between the individual claimant and the defendant record company. Mr Pearson reminded me of certain passages in my judgment in which I referred to the imbalance between Miss Henderson and All Around the World. He submitted that the presence of this combination made this case highly unusual and sufficiently exceptional to justify the course he proposed. Otherwise the claimant would simply not get justice in this case. As an individual singer songwriter with no means the claimant had no other course to take. She could not have argued the case on her own, she needed to seek legal assistance and advice from specialist solicitors and counsel like Fladgate and Mr Pearson. She had to take out an ATE insurance policy since the alternative if she lost would be bankruptcy and that would have caused her to lose her copyrights in her other music since such rights would be subject to the bankruptcy. If the cap is not lifted, Miss Henderson will remain liable for these sums but will not recover them from the defendant. She will have to pay them out of the money she presumably will recover by way of damages or an account of profits from the defendant. He argued that it is likely that the sums due will to a considerable extent be eaten up by the costs over and above the cap. These problems all arose from the combination of Miss Henderson's lack of means and the imbalance of power between an individual musician and a powerful record company. Mr Pearson repeated his point that this combination of factors was highly unusual and so to lift the cap now would not undermine the certainty of the Patents County Court costs capping procedure. He said that justice in this case simply could not be done without removing the costs cap."
The costs cap is contained in CPR 45.31:
"(1)    Subject to rule 45.32, the court will not order a party to pay total costs of more than –
(a) £50,000 on the final determination of a claim in relation to liability; and
(b) £25,000 on an inquiry as to damages or account of profits."
The CPR 45.32 exception applies where a party has behaved unreasonably.and that was not the case here. Although on its face CPR 45.31 seems quite clear the claimant's counsel argued that the court had a discretion to depart from it in circumstances other than those provided by CPR 45.32. In support of that contention the claimant relied on paragraph [20] of Judge Birss QC's judgment in  Westwood v Knight [2011] EWPCC 11 (11 May 2011):
"Rule 44.3(1)(b) provides that the court has a discretion as to the amount of costs but despite that it is clear that the limits at the various stages and the overall £50,000 limit are intended to be adhered to. The purpose of the limits is to aim for certainty for litigants (see section 5 Costs Recovery in the Final Report of the IPCUC's Working Group on Proposals for Reform of the Patents County Court). The correct approach must be to apply the limits if they can possibly be applied, recognising however that in the end the court always has a discretion as to costs (CPR r44.3) and that includes as to the amount of costs. It is a discretion which in my judgment will very rarely (if ever) be exercised to exceed the limits set by Section VII. For one thing specific exceptions are provided for (r45.41(2)). Furthermore to exercise a discretion on a wider basis in all but the most rare and exceptional case would undermine the very object of the scale in the first place. For the scale to give a measure of certainty to litigants, it has to possible to be sure that the limits will apply well before any costs are incurred and most likely before any action has even commenced. Before they embark on litigation to enforce their intellectual property rights (or defend themselves) the potential users of the Patents County Court system need to be able to make a prediction in advance as to their likely costs exposure. Their legal advisers need to be able to say with confidence that the costs capping provisions can be relied on."
The defendant submitted that passage was wrong and invited the judge to reconsider it.  His Honour accepted the invitation noting that there had been no argument on the discretion point in Westwood and that he could now decide the point with the benefit of proper argument from lawyers on both sides. He decided at paragraph [12] that he did have discretion to depart from the cap but that he should exercise his discretion very sparingly:
"Rule 44.3 is the general rule about costs applicable under the CPR. Costs are within the court's discretion and that includes the amount. The exercise of that discretion is strongly conditioned by the special rules about costs in the Patents County Court but in my judgment it has not been excluded entirely by the rules. I can only refer again to what I said in Westwood. The discretion exists but to exercise it to depart from the cap in anything other than a truly exceptional case would undermine the point of the costs capping system."
Judge Birss exercised that his discretion as follows. First  he assessed summarily the claimant's costs after deducting the sums awarded to the defendant but without taking the success fee and ATE insurance premium into account and found that she was entitled to £33,546.25 made up of £2,920 counsel's fees and £30,626.25 solicitors' fees plus VAT. Next he decided that the claimants counsel and solicitors were entitled to a 60% success fee and awarded them £1,752 and £18,375.75 respectively. He awarded the claimant a total of £52,484.25.

However, he refused to award her the ATE premium for the following reasons:
"[38] First I am not satisfied this is a sufficiently exceptional case to justify disapplying the cap. Although there was an imbalance of power between the claimant and the defendant, as a factor alone or as one combined with the claimant's lack of means, this does not take the case into truly exceptional territory. Moreover insofar as the argument was an attempt to seek to paint the defendant in a bad light, I reject the submission that the defendant's conduct explained in my main judgment, as a whole, was such as to justify any departure from the normal costs approach in the PCC. Given the circumstances in this case, if it was fair to disapply the costs capping system, that would create considerable and highly unwelcome uncertainty about costs in the PCC and would weaken access to justice for other litigants.
[39] Second I accept Mr Harbottle submission about the High Court. A litigant who wishes to recover a reasonable proportion of the totality of his of her legal costs has a clear option available, to litigate in the High Court. In that system none of the problems now faced by the claimant would arise. I do not agree that the case would simply have been transferred to the PCC if it had been commenced in the High Court. Mr Pearson submitted that justice would not be done if I did not depart from the costs cap. That submission would have provided solid grounds for the claimant to argue in favour of keeping her case in the High Court. Indeed if it was a concern to the claimant or her legal advisers in the first place, the case should have been begun in the High Court.
[40] As I have repeated on numerous occasions hitherto, the point of the Patents County Court is to facilitate access to justice for smaller litigants in intellectual property cases. To make a costs award which risks causing a winning claimant to be deprived to a significant extent of the fruits of her victory is very unwelcome. However I believe what is really happening in this case is an example of a psychological phenomenon I have become familiar with in the PCC. When the risk was in the future, the claimant wished to litigate in the Patents County Court to protect herself against the risk of an adverse costs award. That is why proceedings were brought and pursued in this court with this costs regime. The impact of the PCC cap on the claimant's actual costs if she won was predictable. If the claimant had lost, the costs cap would have been strongly relied on. The claimant was able to enforce her intellectual property rights in this case because of the predictability of the costs cap remaining in place. She was relying on it. Now that the claimant has won, the uncertainty has evaporated. The balance of risk and reward is now entirely different. In today's circumstances it now seems to the claimant quite unfair that the cap prevents her from recovering a higher share of her costs. But that is because the position after judgment is very different."
So what lessons can be drawn from this case? First, success fees and ATE premiums are caught by the CP45.31 costs cap but the court does have a discretion to allow them in exceptional circumstances.  In this case, the judge allowed the claimant just over £50,000 to cover the lawyers' success fees but he would not award her the ATE premium for the reasons set out above. It may be hard but everybody knows what hard cases make. The second lesson is that not every case is suitable for the Patents County Court. In this case the problem was the costs cap.  In others it will be the 2 day limit for trials or the limited time available for each issue.  There was been a wholesale stampede from the provincial Chancery District Registries and County Courts to the Rolls Buildings and I have to say that I have been part of that stampede. Perhaps we should revisit those courts especially now that costs are managed much more strictly in all civil courts.

If anyone wants to discuss this case or any of the issues please call me on +44 (0)20 7404 5252 or contact me through Facebook, Linkedin, twitterXing, or my contact page.