Practice - MCPS v Made TV

Royal Courts of Justice

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Jane Lambert

Intellectual Property Enterprise Court (Recorder Michaels) Mechanical-Copyright Protection Society Ltd and another v Made Television Ltd and others [2024] EWHC 405 (IPEC) (29 Feb 2024)

This was an application by the defendants to a debt recovery and copyright infringement claim for permission to file and serve an Amended Defence and Counterclaim. The claimants offered to consent to amendments to the Defence but not to the launch of a counterclaim.  The application was heard by Recorder Michaels at a case management conference on 21 Feb 2024.  The recorder handed down her judgment on 29 Feb 2024.

The claimants referred the recorder to CPR 17.1 (2) (b), CPR 20.4 (2) (b) and paras [40] to [42] of Lady Justice Asplin's judgment in Elite Property Holdings Ltd and Another v Barclays Bank Plc [2019] EWCA Civ 2212:

"[40] …it is important to bear in mind that the overriding objective applies and the question of whether permission to amend should be given must be considered in the light of the need to conduct litigation fairly and justly and at proportionate cost.
[41] For the amendments to be allowed the Appellants need to show that they have a real as opposed to fanciful prospect of success which is one that is more than merely arguable and carries some degree of conviction: ED&F Man Liquid Products Ltd v Patel [2003] EWCA Civ 472. A claim does not have such a prospect where (a) it is possible to say with confidence that the factual basis for the claim is fanciful because it is entirely without substance; (b) the claimant does not have material to support at least a prima facie case that the allegations are correct; and/or (c) the claim has pleaded insufficient facts in support of their case to entitle the Court to draw the necessary inferences: Three Rivers District Council v Bank of England (No3) [2003] 2 AC 1.
[42] The court is entitled to reject a version of the facts which is implausible, self-contradictory or not supported by the contemporaneous documents and it is appropriate for the court to consider whether the proposed pleading is coherent and contains the properly particularised elements of the cause of action relied upon."

The claimants argued that permission to plead the proposed counterclaim should be refused on the ground that it would have no real prospect of success. 

Ms Michaels noted that many of the issues in the proposed counterclaim had been raised in amendments to the Defence to which the claimants had already offered to consent.  She directed herself to consider whether the addition of the proposed Counterclaim would passe "the usual IPEC cost/benefit analysis test."

I mentioned that test in my commentary on Ms Pat Treacy's judgment in Wise Payments Ltd v With Wise Ltd and others [2024] EWHC 234 (IPEC) (9 Feb 2024) but did not explain what it was.  Para 29.2 of the Part 63 Practice Direction provides:

"The court will make an order under paragraph 29.1 only –
(1) in relation to specific and identified issues; and
(2) if the court is satisfied that the benefit of the further material in terms of its value in resolving those issues appears likely to justify the cost of producing and dealing with it."

The "court" referred to in that paragraph is the Intellectual Property Enterprise Court and the orders mentioned in para 29.1 were for specific disclosure, a product or process description (or a supplementary product or process description where one has already been provided),  experiments, witness statements, experts’ reports, cross-examination at trial and written submissions or skeleton arguments.  However, His Honour Judge Birss QC (as he then was) extended the test to all orders and directions of the court in  Temple Island Collection Ltd v New English Teas Ltd and another [2011] EWPCC 19 on 22 June 2011.  He said at para [29] of his judgment in that case:

"As stated there the cost-benefit test is specific to the question of whether further material will be admitted but in my judgment the cost-benefit analysis can and should be applied more widely in the Patents County Court. It is a key aspect of the court's function to deal with cases in a proportionate manner."

The Patents County Court ("PCC") was abolished on 1 Oct 2013 by the Crime and Courts Act 2013 and replaced by the Intellectual Property Enterprise Court ("IPEC") (see Jane Lambert What does the Intellectual Property Enterprise Court mean for Litigants in the North West? 12 Oct 2013 IP Northwest). Judge Birss added at [32]:

"In my judgment the costs cap and the cost-benefit test as applied in the PCC go hand in hand. One reason the costs are capped is because the kinds of case for which the PCC procedure is designed are the less costly, less complex and less valuable cases. The procedure is intended to be more streamlined, faster and more actively managed than High Court litigation. If one party risks being put to substantial costs by a step taken by the other party, the actual costs spent may well not be recovered because they will be above the cap. So the cost-benefit test plays a role in cutting back on costly and complex steps in litigation in order to save costs. If a step which failed the costs benefit test was permitted, it is likely to lead to the other party not being adequately compensated in costs."

Recorder Michaels applied that test between paras [17] and [20] of her judgment in Mechanical-Copyright Protection Society Ltd and another v Made Television Ltd and others [2024] EWHC 405 (IPEC) (29 Feb 2024).  She considered the points of overlap between the defence and counterclaim and concluded: "that giving permission to file the Counterclaim would add nothing or virtually nothing to the costs of getting to trial, other than in requiring the Claimants to plead a Defence to Counterclaim, at least part of which need only repeat parts of the existing draft Reply to the Amended Defence."  There were a number of new allegations but only one separate issue.  All of that pointed towards permitting the amendment.

She then considered some of the adverse consequences of permitting the proposed counterclaim which were some additional expense and delay.  The defendants had indicated that they might rely on the declarations that they sought in their counterclaim in possible proceedings in the Copyright Tribunal.  The recorder was sceptical of the benefits of such proceedings to the defendants and thought that they could rely on findings on their defence just as well but she did not dismiss the value of the desired declarations to the defendants altogether.

Balancing all those factors Ms Michaels decided to grant permission to file a statement of case containing those parts of the counterclaim which essentially repeated the points raised in the Amended Defence.  A draft Defence and Counterclaim contained allegations of dishonesty which the defendants offered to delete in the course of the hearing.  There were also allegations on payment that the recorder considered to be legally incoherent and without any prospect of success.  She refused to permit the defendants to include those allegations and the consequent prayer for a declaration in the proposed counterclaim.  

She ordered the Amended Defence and Counterclaim to be served within 7 days.   The costs of the application were reserved.   The other costs of the case management conference were to be costs in the case.  Anyone wishing to discuss this article may call me on 020 7404 5252 during UK office hours or send me a message through my contact page.