The Intellectual Property Enterprise Court is supposed to be a fast, efficient, and relatively low-cost forum for resolving IP disputes. One of its stated purposes is to “level the playing field”, and give small businesses a realistic opportunity to enforce their rights. One of the Court’s most important features is its cap on recoverable costs of £50,000. What that means is that a losing party cannot be ordered to pay more than £50,000 as a contribution towards the winner’s legal expenses.
The IPEC costs cap is important, because it allows business to establish some certainty as to the level of risk which is involved when taking a case to Court. In the past, the effectively unlimited liability for the other side’s costs closed the door to small- and medium-sized businesses, often forcing them to agree a less-than-ideal settlement with an alleged infringer. Intellectual Property is in its nature an uncertain business, not least because unexpected prior art can always come to light. Limiting the financial risk in the event that the case is lost is therefore essential for rights holders.
The case of F H Brundle v Perry is an example of a case in the IPEC where the Patentee did lose. To cut a long story short, the fencing hardware sold by Brundle was different from that covered by the claims in Mr. Perry’s Patent. Having established that Brundle were the winners, the question of costs arose, and the Judge was asked to exceed the £50,000 cap.
The costs cap in the IPEC is not absolute. It can be exceeded where a party’s behaviour is unreasonable, or amounts to an abuse of process. Brundle argued that this was such a case, citing Mr. Perry’s “persistent use of intemperate language and expletives in his pleadings”. At one stage in the proceedings, Mr. Perry even forged a letter from the Judge purporting to reverse the decision and ordering payment of £5 million to Mr. Perry.
The Judge in question, His Honour Judge Hacon, was no doubt somewhat vexed by the discovery of the forged letter, but showed what can only be described as remarkable restraint when he described Mr Perry’s behaviour as “unwise”, “intemperate” and “eccentric”. Unwise and eccentric it certainly was, but in the Judge’s view it was not unreasonable enough to justify exceeding the £50,000 costs cap.
HHJ Hacon’s decision has been met with incredulity in some quarters. If forging a letter from the Judge is not enough, then what on earth do you have to do in the IPEC to have the costs cap lifted for “unreasonable behaviour”? Mr. Perry might be lucky not to be in prison, and he is even luckier to have a costs award against him of “only” £49,645. In the end though, the Judge’s decision is probably logical. Mr. Perry’s language may have been foul, but Brundle’s lawyers did not appear to be arguing that they could charge more for being sworn at, so it is hard to see how foul language on its own should amount to unreasonable behaviour for the purposes of costs. As for the forged letter, the Judge’s said that no one would take it seriously. It is difficult to imagine that any lawyer involved in the case would want to dispute that, and of course they did not.
This “strikingly unusual” case (the Judge’s words) does demonstrate that the IPEC treats the £50,000 cost cap as extremely important indeed. Mr. Perry has arguably got off lightly, but the message from the Judge is that the IPEC can be trusted to keep costs awards within the cap in all but the most very exceptional circumstances, which should give businesses the confidence to enforce their rights in Court when required.