Justice for SMEs

This can be a particular problem for SMEs operating on a limited budget. However, the recent passing of the Patents County Court (Financial Limits) Order 2011 effectively caps the costs of Court cases relating to patent and design infringement at more manageable levels.

In 2010 several reforms were introduced in order to simplify procedures at the Patents County Court (PCC). As well as simplifying procedures, the reforms also provided certain upper limits on the cost of litigating at the PCC.

Headline changes included providing greater certainty for IP right holders by limiting their exposure to a maximum of £50,000 in any cost award against them if unsuccessful; a structured scale of maximum recoverable costs for each stage in a claim; a heavier emphasis on written submissions prior to any Court hearing; and, limiting Court hearings to 1 or 2 days in duration. 

The 2010 reforms also proposed that the amount of damages that may be claimed by the successful party in patent and design cases heard at the PCC should be capped at a maximum of £500,000; however, this proposal was not actually approved until the Financial Limits Order 2011 was passed last month. This Order also clarifies exactly which disputes should be dealt with by the High Court and which should stay within the PCC.

What is the upshot of these reforms for innovative engineering companies? Well, put simply, the reforms should make enforcement of patent and design rights quicker, more straightforward and less expensive, thereby improving access to justice for SMEs.

In addition to reducing the cost of litigating a case against an infringing party, the reforms also reduce the financial implications of an adverse decision against the right holder at the end of the litigation. In turn, this may make obtaining patents more attractive to SMEs in the first place.

There is evidence that SMEs (and even larger organisations) have previously been deterred from protecting their innovations by enforcing/defending their IP rights through the Courts. 

This is often put down to SMEs taking the view that they have insufficient resources/inclination to get involved in a long drawn out Court case to enforce their rights.  In fact, this overlooks the fact that the vast majority of IP disputes are settled at a relatively early stage well before any Court proceedings, at relatively little expense.              

However, with these recent changes in legislation, even if a matter does require litigation at the PCC, small businesses should now feel more comfortable in their ability to take the required action without placing an excessive burden on resources.            

Clearly, taking Court action at the PCC will always involve some expense and uncertainty; however, the changes should be seen by the engineering sector as a welcome improvement to the previous situation.

In essence, the Order further differentiates the PCC from the High Court by ensuring that lower value, less complex cases, which often involve SMEs, will automatically fall within the jurisdiction of the lower, less expensive Court. The Order also provides greater clarity and certainty for SMEs regarding which Court is the appropriate one to hear the case. ·               

In summary, the broad intention of the 2010 reforms and the recent Order is that justice via the Courts will be much more accessible to SMEs and that there will be a shift away from a battle to determine which side has “the deepest pockets” when seeking to enforce patent and design rights. 

Details of the 2010 reforms can be found here. Details about the more recent Financial Limits Order can be found here.

Stewart Cameron is a director of Patent and Trademark Attorney firm, Cameron Intellectual Property