SMEs await introduction of promised Intellectual Property “Small Claims Court”

A new year is upon us, and 2012 is expected to see the introduction of a new "Small Claims" service for most types of intellectual property claims through the jurisdiction of the Patents County Court (PCC).

The Government announced late last year that it would be introducing the service, following recommendations made in Lord Justice Jackson`s review of litigation costs, which were subsequently supported by recommendations made within Professor Ian Hargreaves` detailed review of Intellectual Property law and procedures which was published in mid-2011.

The Hargreaves report highlighted the fact that one in six Small to Medium Sized Enterprises had not taken action to enforce potentially legitimate intellectual property claims because of fears about the costs of doing so.

At present, the Patents County Court (the specialist division of the County Court which has jurisdiction to deal with Intellectual Property cases - not only those involving patents) imposes a costs cap of £50,000 per party, and is limited in the damages it can award in patent and design cases to £500,000 (this limit is expected to be applied to copyright and trade mark cases later this year as well).

Of course, the reality for many SMEs with an intellectual property claim is that while the value of their claim may fall well within the £500,000 damages cap, the prospect of embarking on litigation, even with costs capped at £50,000 per party may simply be "too rich for their blood." The Patents Court of the Chancery Division of the High Court can also hear intellectual property claims without a limit on either costs or damages.

The proposed new "Small Claims Track" for intellectual property claims in the Patents County Court will impose fixed costs at a much lower level (meaning that a successful party will only be able to recover legal costs up to that level) and will limit damages to £5,000 but, importantly, it appears that the availability of the remedy of a Court Order to stop sales of infringing items (an injunction) will still be available.

The new process should suit those SME businesses who feel it is worthwhile taking some action (and perhaps even incurring some costs) in order to stop infringing activity from taking place, as a priority over chasing a large financial award in damages. Also, if the process is similar to the existing "Small Claims" jurisdiction in civil claims, then the procedural steps will be considerably streamlined, meaning that a case should reach a final judgment considerably more quickly than through the existing court procedures.

One curiosity of the Government`s announcement at present appears to be the omission of patents from the list of IP Rights over which the new small claims track will have jurisdiction (with only copyright, trade marks and designs being referred to). It is thought that this may be because the evidential and technical complexity of much patent litigation makes it unsuitable for a Small Claims approach, although it may simply have been an accidental omission from the press release!

Of course, the finer details still remain to be announced, and until the formal procedures are known in more detail we cannot know for sure whether it will prove to be the "silver bullet" that some SMEs have been waiting for, in seeking to manage and enforce their Intellectual Property Rights.

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.