Dispute Resolution
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| Supreme Court of the United Kingdom
Author Christine Smith
Licence Creative Commons Attribution Share Alike 4.0 International Source Wikipedia |
30 July 2017
Jane Lambert
The Legal Systems of the UK
Although much of our legislation extends to the whole of the United Kingdom and a number of administrative tribunals have jurisdiction throughout the United Kingdom there is no such thing as United Kingdom law in the sense that there is US law or Canadian law that is distinct from the laws of the states and provinces in those countries or indeed European Union law that is separate from national law here. That is because the United Kingdom is not a federation but a unitary state in which legislative and administrative powers have been devolved or delegated to legislatures in Belfast, Cardiff and Edinburgh. There are three law districts in the United Kingdom each with its own legislation, courts and case law. By far the biggest of those three law districts is England and Wales and the rest of this article will consider dispute resolution in that jurisdiction.
Litigation Costs in England and Continental Countries
Patents, trade marks, design registrations and other intellectual property rights confer monopolies or exclusive rights that are enforced but also regulated by our civil courts. Because of our adversarial system of civil procedure where the parties rather than the courts identify the issues to be tried and the evidence to be considered, trials take considerably longer in England and Wales than they do in other European countries and consequently infringement and other litigation costs a great deal more. According to Taylor Wessing, a typical patent infringement trial last about 5 days in England compared to 2 hours in France, 3 to 4 hours in Germany for infringement and 5 to 6 hours to determine any questions of validity that may be raised, no more than one day in the Netherlands and one day for infringement and another for validity in Switzerland. Not surprisingly, that is reflected in costs: £200,000 to £1 million in England and Wales, €200,000 to €800,000 in France, €100,000 for infringement and between €100,000 and €200,000 in Germany, €75,000 to €200,000 in the Netherlands and between €125,000 and €250,000 in Switzerland. The high costs of enforcement in England and Wales is likely to be one of the reasons why there are significantly fewer European patent applications from the United Kingdom than there are from Germany, France, the Netherlands and Switzerland.
Levelling the Playing Field
Both the Ministry of Justice and the Department for Business, Energy and Industrial Strategy have been aware of those cost differences and have done their best to mitigate them by restricting the duration of trials and capping costs in the Intellectual Property Enterprise Court ("IPEC"), introducing a small claims track into that court and doing all that they can to advance the Unified Patent Court unitary patent before we leave the EU and showing signs of willing to stay in it even after Brexit. The Department of Justice has also taken steps to integrate the courts sitting in Birmingham, Bristol, Cardiff, Leeds and Manchester with those sitting in the Rolls Building in London. Those courts will be known collectively as the Business and Property Courts (see my articles Launch of a Judicial Superhighway? 12 July 2017 in IP North West and The Leeds Business and Property Courts 12 July 2017 in IP Yorkshire).
English and Welsh Legal System
For those who are unfamiliar with the English and Welsh legal system, justice is administered through courts and administrative tribunals. For civil matters, there are two courts of first instance, namely the High Court and County Court. Generally, high value and complex cases proceed in the High Court and all other cases in the County Court. For historical reasons, the High Court is divided into three Divisions, namely the Chancery Division, Queen's Bench Division and Family Division each of which has slightly different rules and practices. There are within the Chancery Division two specialist IP courts, namely the Patents Court and IPEC. Similarly, there is a specialist Technology and Construction Court ("TCC") within the Queen's Bench Division. The County Court has specialist hearing centres with judges who can hear IP and technology cases.
Specialist IP Courts
Claims relating to patents, registered and registered Community designs, semiconductor topographies and plant varieties have to be brought in the Patents Court or IPEC. All other IP cases must be brought in the Chancery Division (including IPEC) or the Manchester, Liverpool, Leeds, Preston, Newcastle, Birmingham, Bristol, Cardiff, Caernarfon and Mold hearing centres. IPEC has multitrack and small claims jurisdiction: claims falling within the multitrack are claims for less than £500,000 which can be tried in no more than two days.while claims of £10,000 or less relating to any IP right other than patents, registered and registered Community designs, semiconductor topographies and plant breeders' rights can be brought in the small claims track,
Technology and Construction Court
Claims relating to the design, supply and installation of computers, computer software and related network systems may be brought in the Technology and Construction Court either in London or the Birmingham, Bristol, Cardiff, Chester, Exeter, Leeds, Liverpool, Manchester, Mold, Newcastle upon Tyne and Nottingham civil court centres.
IPO Tribunals
Disputes between those seeking patents and IPO officials known as "examiners" who examine their applications are referred to IPO officials called "hearing officers". They also determine disputes between applicants and those who claim to be the inventor or otherwise entitled to the invention and between patentees and those seeking to challenge their patents on various grounds. Appeals lie from the hearing officer to the Patents Court. Hearing officers in the Designs Registry of the IPO hear disputes between proprietors of registered designs and third parties over those registrations. Appeal lies either to the Patents Court or "a person appointed by the Lord Chancellor" who is known as an “Appointed Person”. There are also hearing officers in the Trade Marks Registry who hear disputes between applicants for trade marks and those opposing their applications known as "oppositions". Hearing officers also hear applications by third parties for the invalidation or revocation of registered trade marks. There are also Appointed Persons who hear appeals from hearing officers in trade mark cases. Alternatively, appeals can be made to the Chancery Division of the High Court.
Other Relevant Tribunals
Other important administrative tribunals for IP and related areas of law include the Copyright Tribunal which handles disputes over licensing schemes, the Company Names Tribunal and the General Regulatory Tribunal for disputes with the Information Commissioner over information rights.
Appeals and References to Court of Justice
Appeals lie from the County Court to the High Court and from the High Court to the Court of Appeal. Generally, permission to appeal has to be obtained either from the judge whose decision is the subject of the appeal or the appeal court. Appeals from the Court of Appeal lie to the Supreme Court of the United Kingdom. Until 29 March 2019 the United Kingdom will be a member of the European Union the laws of which apply to this country as they do to every other member state. While we remain in the EU we are bound by the decisions of the Court of Justice of the European Union on matters relating to Union law. Questions on EU law must be referred to the Court from any court of last resort in the UK and may be referred from any other court or tribunal under art 267 of the Treaty on the Functioning of the European Union.
Appeals lie from the County Court to the High Court and from the High Court to the Court of Appeal. Generally, permission to appeal has to be obtained either from the judge whose decision is the subject of the appeal or the appeal court. Appeals from the Court of Appeal lie to the Supreme Court of the United Kingdom. Until 29 March 2019 the United Kingdom will be a member of the European Union the laws of which apply to this country as they do to every other member state. While we remain in the EU we are bound by the decisions of the Court of Justice of the European Union on matters relating to Union law. Questions on EU law must be referred to the Court from any court of last resort in the UK and may be referred from any other court or tribunal under art 267 of the Treaty on the Functioning of the European Union.
Civil Procedure Rules
Since 1999 when the Civil Procedure Rules ("CPR") came into force, parties have been encouraged to avoid recourse to litigation wherever possible, Measures to encourage settlement have included Pre-action Protocols and the Practice Direction - Pre-Action Conduct and Protocols, CPR Part 36 that permits all parties to propose settlement with adverse financial consequences if an offer is rejected and not exceeded in ensuing proceedings and a massive hike in court fees (see EX50 HM Courts and Tribunal Service Civil and Family Court Fees From 6 March 2017).
Pre-Action Conduct and Protocols
Where Protocols exist, parties are expected to follow them. Where they do not exist parties should follow the Practice Direction. The only Pre-Action Protocol that is relevant is the Pre-Action Protocol for Construction and Engineering Disputes 2nd edition which would apply to computer supply disputes. Parties that do not follow the Protocol or Practice Directon may be penalized by being made to pay extra-costs, being disallowed costs to which they would otherwise be entitled or in other ways. The objective of the Practice Direction and the Pre-Action Protocols is to enable the parties to identify the issues in dispute and, wherever possible, to resolve them through negotiation or some other form of alternative dispute resolution ("ADR").
ADR
ADR is a collective term for all the ways of settling disputes other than going to court or an administrative tribunal, They include methods like negotiation or mediation where the parties reach a settlement by agreement and adjudicative methods such as arbitration, expert determination or early neutral evaluation where a third party imposes or recommends a settlement. The methods most frequently used in relation to IP and technology disputes are mediation, arbitration, domain name dispute resolution, expert determination and early neutral evaluation.
Mediation
Mediation can be described as "chaired" or "facilitated negotiation." Some disputes cannot be settled by direct negotiation because neither party knows the interests or motivation of the other side. That is where mediation can help. A third party known as a “mediator” can ascertain that information from each side through confidential meetings known as “caucuses”. That often enables him or her to devise options for settling the dispute which serve the interests of both sides but may never have been discovered by either. It is, in fact, a refinement of negotiation. The mediator does not adjudicate the dispute but he or she may challenge an argument or item of evidence upon which one party places undue reliance.
There are two mediation services that specialize in intellectual property and technology law disputes:
Arbitration
Arbitration is the determination of a dispute on its merits by a decision maker known as an “arbitrator” who is appointed by or with the consent of the parties pursuant to an agreement between them to resolve the dispute in that way, The parties’ agreement, known as an “arbitration agreement”, may be a clause of a contract which relates to other matters or it may be one specifically to resolve their dispute. A properly drafted agreement will specify the mode of arbitration, its seat, the rules that will apply and how arbitrators are to be appointed. Arbitrations in England and Wales are governed by the Arbitration Act 1996.
Some arbitrations are very formal in that issues are identified in written pleadings, documents relevant to the dispute are disclosed and exchanged in advance, evidence is taken on oath, witnesses are cross examined and the parties are represented by solicitors and counsel. Often the arbitrator in formal arbitrators is a retired or serving judge. Other arbitrations, such as those conducted under the GAFTA (Grain and Feed Trade Association) Arbitration Rules, are less formal. Proceedings can be conducted entirely in writing and lawyers are banned from appearing at hearings under rule 4.8 of the GAFTA Rules. Under the Arbitration Act 1996 the courts support arbitrations by, for example, granting interim injunctions and compelling the attendance of witnesses and the disclosure of documents but they have limited powers to disturb the result.
A factor that limits the use of arbitration in intellectual property disputes is that the public as well as the parties has an interest in whether a patent, registered design or trade mark should be granted and whether it should remain on the register. Also, IPEC small claims track provides a low cost alternative to arbitration for small intellectual property disputes in respect of all intellectual property rights except patents, registered and registered Community designs, semiconductor topographies and plant breeders’ rights. But arbitration is used to resolve computer supply, licensing and joint venture disputes particularly where the parties are in different countries.
The WIPO Arbitration and Mediation Center specializes in resolving intellectual property disputes through arbitration and expedited arbitration. As I said earlier, I am on the WIPO panel of neutrals.
Since 1999 when the Civil Procedure Rules ("CPR") came into force, parties have been encouraged to avoid recourse to litigation wherever possible, Measures to encourage settlement have included Pre-action Protocols and the Practice Direction - Pre-Action Conduct and Protocols, CPR Part 36 that permits all parties to propose settlement with adverse financial consequences if an offer is rejected and not exceeded in ensuing proceedings and a massive hike in court fees (see EX50 HM Courts and Tribunal Service Civil and Family Court Fees From 6 March 2017).
Pre-Action Conduct and Protocols
Where Protocols exist, parties are expected to follow them. Where they do not exist parties should follow the Practice Direction. The only Pre-Action Protocol that is relevant is the Pre-Action Protocol for Construction and Engineering Disputes 2nd edition which would apply to computer supply disputes. Parties that do not follow the Protocol or Practice Directon may be penalized by being made to pay extra-costs, being disallowed costs to which they would otherwise be entitled or in other ways. The objective of the Practice Direction and the Pre-Action Protocols is to enable the parties to identify the issues in dispute and, wherever possible, to resolve them through negotiation or some other form of alternative dispute resolution ("ADR").
ADR
ADR is a collective term for all the ways of settling disputes other than going to court or an administrative tribunal, They include methods like negotiation or mediation where the parties reach a settlement by agreement and adjudicative methods such as arbitration, expert determination or early neutral evaluation where a third party imposes or recommends a settlement. The methods most frequently used in relation to IP and technology disputes are mediation, arbitration, domain name dispute resolution, expert determination and early neutral evaluation.
Mediation
Mediation can be described as "chaired" or "facilitated negotiation." Some disputes cannot be settled by direct negotiation because neither party knows the interests or motivation of the other side. That is where mediation can help. A third party known as a “mediator” can ascertain that information from each side through confidential meetings known as “caucuses”. That often enables him or her to devise options for settling the dispute which serve the interests of both sides but may never have been discovered by either. It is, in fact, a refinement of negotiation. The mediator does not adjudicate the dispute but he or she may challenge an argument or item of evidence upon which one party places undue reliance.
There are two mediation services that specialize in intellectual property and technology law disputes:
- The World Intellectual Property Office (“WIPO”) Arbitration and Mediation Center; and
- The Intellectual Property Mediation Service.
Arbitration
Arbitration is the determination of a dispute on its merits by a decision maker known as an “arbitrator” who is appointed by or with the consent of the parties pursuant to an agreement between them to resolve the dispute in that way, The parties’ agreement, known as an “arbitration agreement”, may be a clause of a contract which relates to other matters or it may be one specifically to resolve their dispute. A properly drafted agreement will specify the mode of arbitration, its seat, the rules that will apply and how arbitrators are to be appointed. Arbitrations in England and Wales are governed by the Arbitration Act 1996.
Some arbitrations are very formal in that issues are identified in written pleadings, documents relevant to the dispute are disclosed and exchanged in advance, evidence is taken on oath, witnesses are cross examined and the parties are represented by solicitors and counsel. Often the arbitrator in formal arbitrators is a retired or serving judge. Other arbitrations, such as those conducted under the GAFTA (Grain and Feed Trade Association) Arbitration Rules, are less formal. Proceedings can be conducted entirely in writing and lawyers are banned from appearing at hearings under rule 4.8 of the GAFTA Rules. Under the Arbitration Act 1996 the courts support arbitrations by, for example, granting interim injunctions and compelling the attendance of witnesses and the disclosure of documents but they have limited powers to disturb the result.
A factor that limits the use of arbitration in intellectual property disputes is that the public as well as the parties has an interest in whether a patent, registered design or trade mark should be granted and whether it should remain on the register. Also, IPEC small claims track provides a low cost alternative to arbitration for small intellectual property disputes in respect of all intellectual property rights except patents, registered and registered Community designs, semiconductor topographies and plant breeders’ rights. But arbitration is used to resolve computer supply, licensing and joint venture disputes particularly where the parties are in different countries.
The WIPO Arbitration and Mediation Center specializes in resolving intellectual property disputes through arbitration and expedited arbitration. As I said earlier, I am on the WIPO panel of neutrals.
Domain Name Dispute Resolution
A service that is similar to arbitration in several respects is domain name dispute resolution under the Uniform Domain-Name Dispute-Resolution Policy or similar services offered by country code domain name authorities such as Nominet’s Dispute Resolution Service and EURid’s .eu Alternative Dispute Resolution Rules. These resolve disputes between trade mark proprietors and domain name registrants cheaply, speedily and decisively, Domain name dispute resolution has proved to be spectacularly successful with many thousands of decisions since the UDRP was introduced in 1999. For more information on those services, visit my Domain Name Disputes page.
Expert Determination
Expert determination is where the parties ask a person who is expert in the subject matter of the dispute to resolve it in accordance with his or her own knowledge and experience. Perhaps the best known example of expert determination is a provision in a lease that requires a surveyor to determine tenants contributions to charges for shared facilities or services. Similar clauses appear in other contracts where it is necessary to determine technical issues such as computer supply agreements. Such clauses usually make clear that the person making the determination does so as an expert and not as an arbitrator
Early Neutral Evaluation
Early neutral evaluations are without prejudice, non-binding opinions on the likely outcome of a dispute or of one or more issues in a dispute. G2 of the Commercial Court Guide provides for such evaluations to be given by judges of the Commercial Court with the agreement of the parties if they are likely to facilitate the resolution of a dispute. Hearing officers in the Intellectual Property Office have also issued early neutral evaluations known as preliminary evaluations in inter partes proceedings (see para 2.02.1 of The Patents Hearings Manual). Counsel, solicitors and patent and trade mark attorneys also give such opinions and I have been asked to do so on more than one occasion.
Intellectual Property Office Opinions
A particularly popular and inexpensive form of early neutral evaluation is provided by s.74A of the Patents Act 1977. That section enables parties to a dispute to seek the opinion of a patent examiner on the validity of a patent or a supplementary protection certificate or on whether such patent or SPC has been infringed. An application for an examiner’s opinion on any of those issues costs £200. Parties with an interest in the outcome can file evidence and submissions in writing. About 30 opinions are delivered by the IPO each year.
S.11 of the Intellectual Property Act 2014 inserted a new s.28A into the Registered Designs Act 1949 which provides a similar service in respect of registered and other designs but regulations to implement this service have not yet been made.
Other forms of ADR
There are many other forms of ADR such as conciliation, escalation clauses, med-arb and mni-trial but these are rarely if ever used for the resolution of IP or technology disputes in England and Wales.
Contact
Intellectual Property Office Opinions
A particularly popular and inexpensive form of early neutral evaluation is provided by s.74A of the Patents Act 1977. That section enables parties to a dispute to seek the opinion of a patent examiner on the validity of a patent or a supplementary protection certificate or on whether such patent or SPC has been infringed. An application for an examiner’s opinion on any of those issues costs £200. Parties with an interest in the outcome can file evidence and submissions in writing. About 30 opinions are delivered by the IPO each year.
S.11 of the Intellectual Property Act 2014 inserted a new s.28A into the Registered Designs Act 1949 which provides a similar service in respect of registered and other designs but regulations to implement this service have not yet been made.
Other forms of ADR
There are many other forms of ADR such as conciliation, escalation clauses, med-arb and mni-trial but these are rarely if ever used for the resolution of IP or technology disputes in England and Wales.
Contact
For further information, call me on +44 (0)20 7404 5252 or send me a message on my contact form.
Further Reading
Further Reading
Date
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Author
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Title
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5 Jan 2017
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Jane Lambert
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