06 May 2015

What to do about the new Practice Direction - Pre-Action Conduct

CPR 63.20 (2) requires those bringing claims in the Intellectual Property Enterprise Court ("IPEC") including the small claims track to state whether they have complied with paragraph 7.1(1) and Annex A (paragraph 2) of the Practice Direction (Pre-Action Conduct). If they don't the defendant has an extra 28 days in which to file his or her defence under CPR 63.22 (3). But if you actually turn to the Practice Direction - Pre-Action Conduct you will find that the old paragraph 7 and Annex A aren't there any more.

That is because the practice direction was updated on 29 April 2015. In their place, paragraph 6 provides:
"Steps before issuing a claim at court
6. Where there is a relevant pre-action protocol, the parties should comply with that protocol before commencing proceedings. Where there is no relevant pre-action protocol, the parties should exchange correspondence and information to comply with the objectives in paragraph 3, bearing in mind that compliance should be proportionate. The steps will usually include—
(a) the claimant writing to the defendant with concise details of the claim. The letter should include the basis on which the claim is made, a summary of the facts, what the claimant wants from the defendant, and if money, how the amount is calculated;
(b) the defendant responding within a reasonable time - 14 days in a straight forward case and no more than 3 months in a very complex one. The reply should include confirmation as to whether the claim is accepted and, if it is not accepted, the reasons why, together with an explanation as to which facts and parts of the claim are disputed and whether the defendant is making a counterclaim as well as providing details of any counterclaim; and
(c) the parties disclosing key documents relevant to the issues in dispute."
For intellectual property cases the removal of the old paragraph 7 and Annex A is a bit of a shame because it made litigators and their clients think about such things as whether they had title to the intellectual property right and what, if anything, had the other side actually done and whether it amounted to an infringement. I am sure a lot of dubious claims were nipped in the bud at that point.

While paragraph 6 (a) continues to summarize the requirements of the old para 7 it does not actually spell them out. I would therefore invite practitioners to look at an older set of rules which never had the force of law or even judicial backing but continue to provide templates for letters of claim and letters of response. I am referring, of course, to the Code of Practice for Pre-action Conduct in Intellectual Property Disputes which was drafted by Michael Skrein of Reed Smith and a panel of experts that included the late Sir Hugh Laddie and representatives of the bar, solicitors, patent and trade mark attorneys and in-house legal advisers to users of intellectual property rights over a decade ago.   This Code used to be on the CIPA website but the only place you find it nowadays is on Reed Smith's website.

I think the Code needs to be updated to take account of changes in the law but it is generally still a useful document. I trained a lot of my instructing solicitors and patent and trade mark agent litigators to refer to it and enclose it together with the old Practice Direction with their letters before claim when writing to unrepresented defendants.  Paragraph 3 sets out a checklist for letters before claim in all IP cases and Appendices A to F provide additional requirements for particular types of cases. Similarly, paragraph 4 gave a checklist for letters in response with additional content in the Appendices for different types of cases.

I would urge all IP practitioners - and even more non-IP specialist litigators with the odd IP case - to refer to this Code before firing off correspondence. The other day, Mr Justice Walker drew attention to the need for a sense of proportion in pre-action correspondence in Kazakhstan Kagazy Plc and Others v Zhunus (Rev 1) [2015] EWHC 996 (Comm) (16 April 2015). In particular, he said at paragraph [2] of his judgment:
"This case is an example of something which the court is seeing with increasing frequency. Claims are made for large sums. Emergency orders are obtained, without notice to the other side, which freeze assets worldwide up to the value of the sums claimed. From then on there is a series of interlocutory applications. They are heavier than they should be. Not weeks, but months, are spent assembling material to be put in evidence. Correspondence is exhibited. In some cases it includes something which correspondence should never include, namely the trading of insults between the solicitors for the parties. There has been little, if any, attempt to agree facts or issues. Time estimates for pre-reading are given which underestimate the time needed to read the key evidence and gain a grasp of what the real issues may be. The time needed is far more than it ought to be, largely because no expense has been spared in taking every point. There is an urgent need for commercial practitioners to bring a sense of proportion to this type of litigation."
This applies just as much to IP litigation as to any other and Michael Skrein's Code will help induce a sense of proportion.

If anyone wants to discuss this article or pre-action correspondence in general please call me on 020 7404 5252 during office hours or fill in my contact form.

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