Cheaper IP protection for SMEs

In the past, small and medium-sized enterprises have been put off enforcing their intellectual property (IP) rights. That could be about to change, writes Stephen Gardiner, a patent attorney at law firm Dehns.

If a big company with a large legal budget infringes one of your patents, you’re faced with a choice. You can accept the damage the infringement will do to your business, or you can choose to fight, watching the other side lining up expensive lawyers and glancing meaningfully at the clock.

It’s all very well if you win, but losing could have an even more devastating impact on your business than the infringement itself, as you’ll be required to pay all the larger company’s costs.

The Patents County Court (PCC) was initially set up as a low-cost alternative to the High Court, aimed at SMEs.  Until now the procedural rules of the two courts have been the same, making it difficult to reduce costs in practice, but from 1 October 2010 the PCC rules have changed.

The new rules introduce a limit of £50,000 for costs in a trial to determine liability. If a party is found liable, there is a further limit of £25,000 for costs in the subsequent enquiry into the level of damages.

What’s more, these are not just caps on total costs. There is a scale of costs indicating the maximum amount that can be awarded for each stage of the case, so if a party pulls out early, its costs liability is significantly reduced (very useful if it suddenly transpires that you don’t have a leg to stand on). Your opponent can still spend all it likes on the case, but you needn’t end up paying for all of it.

Of course if you are on the receiving end of an infringement claim, there is still the question of damages if you lose. For the time being there is still no limit on the award that the PCC can make, but there is a proposal to limit this to £500,000 in due course.

As for speed, at the start of the procedure parties must prepare much more comprehensive statements of case containing all the facts and arguments they wish to rely upon. From these, the judge can identify the issues and decide what further procedures (experiments, witness statements, experts’ reports and so on) are really necessary based on a cost-benefit test.

Robust case management by the judge should therefore keep things moving along as well as avoiding unnecessary costs. There is also now a policy to keep the trial itself to no more than two days in length.

One important effect of the cost capping is that it should bring cases within the realms of litigation insurance. In the High Court, the higher costs can make insurance financially unviable if not completely impractical.

Overall, the new rules should make budgeting easier, with no big surprises. You can control your own costs, bearing in mind what you might get back if you win, and you know how much you are up for if you lose. This should mean that growing businesses no longer feel priced out of litigation and should be more confident to stand up for their rights.


Nick Britton

Nick Britton

Nick was the Managing Editor for when it was owned by Vitesse Media, before moving on to become Head of Investment Group and Editor at What Investment and thence to Head of Intermediary...

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