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GOVERNMENT RESPONSE
TO THE
CALL FOR EVIDENCE
ON
INTRODUCING A
SMALL CLAIMS TRACK
INTO THE
PATENTS COUNTY COURT
Intellectual Property Office is an operating name of the Patent Office
1
CONTENTS
Introduction 3
Executive Summary 4
Call for Evidence Question 1 6
Call for Evidence Question 2 12
Call for Evidence Question 3 15
Call for Evidence Question 4 17
Call for Evidence Question 5 20
Annex A – List of Respondents 21
2
INTRODUCTION
This is the Government response to a call for evidence1 which was launched on 19
January 2012 and ran for 4 weeks until 16 February 2012. The purpose of the call
for evidence was: to seek evidence and comments from stakeholders, interests and
Intellectual Property (IP) right holders on the detail of how the general small claims
track should work in relation to resolving the lowest value IP disputes; and to further
gauge support for changing the name of the Patents County Court (PCC) to better
reflect its jurisdiction.
The Reviews lead by Lord Justice Jackson2 and Professor Ian Hargreaves3 had
identified the broad support from judges, legal practitioners, court users, industry and
business to provide for an IP small claims track in the PCC. Following a positive
value for money assessment, the Government announced on 15 November 2011 its
intention is to introduce a small claims track in the PCC in October 2012.
The call for evidence received 28 responses mainly from legal/business/industry
representative bodies (see Annex A). The responses reflect the views of numerous
sectors but in particular the legal profession and creative industries. The
organisations which responded have significant memberships, for instance the
Creators' Rights Alliance/NUJ - 100,000 members, The Federation of Small
Businesses - 200,000 members and Anti Copying in Design - 1000+ companies.
The Government has considered the responses and has used these and the
supporting evidence to further refine its policy on how the small claims track will work
in the PCC and how best to amend the Civil Procedure Rules [CPR].
1
http://www.ipo.gov.uk/hargreaves-enforce-c4e-pcc.pdf
2
http://www.judiciary.gov.uk/NR/rdonlyres/8EB9F3F3-9C4A-4139-8A93-
56F09672EB6A/0/jacksonfinalreport140110.pdf
3
http://www.ipo.gov.uk/ipreview-finalreport.pdf
3
EXECUTIVE SUMMARY
The Government response to the Hargreaves review made the commitment that
„The Government will, subject to establishing the value for money case, introduce a
small claims track in the PCC for cases with £5,000 or less at issue, initially at a low
level of resource to gauge demand, making greater provision if it is needed‟. A
number of responses to the call for evidence were concerned that there was a
significant risk that the court may quickly become oversubscribed and swamped with
claims such that the object of the court would be defeated and its reputation would
be damaged irreparably.
With the overarching aim therefore to ensure that from the outset the IP small
claims track in the PCC works effectively, providing for a quick, cheap and
easy means for resolving lowest value IP disputes, the Government:
intends that the small claims track for IP claims should work largely the
same as the general small claims track (any deviations from that
approach are outlined below);
will assist the Judiciary in providing appropriate guidance for users to
help them to understand the scope of the track which will help to ensure
that it will function effectively from inception;
proposes that the initial scope of the track should encompass the rights
falling within the ordinary jurisdiction of the PCC, i.e. under Practice
Direction 63 paragraph 16.14 with the further addition of plant breeders’
rights;
will set an initial limit on damages available on the IP small claims track
at the current general limit of £5,000, with this rising to £10,000 in line
with the proposed general increase in 2013;
intends that, as interim injunctions are available under the more
appropriate ‘streamlined procedure’ of the PCC and at commensurate
cost, they will NOT be available on the IP small claims track in the initial
stages;
4
http://www.justice.gov.uk/courts/procedure-rules/civil/contents/practice_directions/pd_part63
4
will continually monitor the working of the track in the PCC and will
formally review this in 2014.
At the earliest opportunity and when a suitable legislative vehicle is available,
the Government will also change the name of the ‘Patents County Court’ to
better reflect its jurisdiction.
5
RESPONSES TO THE QUESTIONS POSED IN THE CALL FOR EVIDENCE
QUESTION 15: Do you agree that the small claims track for IP claims should
work largely the same as the general small claims track? Please provide
supporting evidence.
SUMMARY
1.1. Of the 26 responses to the call for evidence, 21 respondents answered
this question. There was a unanimous view that an IP small claims track
should work largely the same as the existing small claims track.
1.2. However, some respondents took the opportunity to express views on
various issues which had been outlined in the call for evidence document.
MEDIATION
1.3. Comments made in relation to mediation focussed on the need for IP
trained mediators. A few similar comments were made calling for IP
expertise in relation to the Judges hearing the claims on the IP small claims
track.
Government response:
1.4. The Ministry of Justice (MoJ) through HM Courts and Tribunal Service
(HMCTS) provide a free mediation service for all claims allocated to the small
claims track where the trained mediators seek to facilitate the resolution of a
broad range of disputes. Where parties agree to use the service, over 70%
of disputes are successfully resolved without the need to proceed to a court
hearing. Respondents who commented in the call for evidence believed that
mediation would also be important in helping to resolve IP small claims. We
will consider how the mediation service provided by HMCTS could work for IP
litigants on a small claims track. Given the facilitative nature of the mediation
5
http://www.ipo.gov.uk/hargreaves-enforce-c4e-pcc.pdf Para 4.1 a, page 13
6
service, HMCTS do not consider it necessary or appropriate for their
mediators to have specialist IP training.
1.5. Regarding Judicial expertise, HMCTS have identified two Deputy
District Judges with relevant IP experience.
ALLOCATION and TRANSFERS
1.6. Some respondents expressed concerns that should the defendant
disagree with a claimant‟s request for the case to be heard on the small
claims track that this may result in financial pressure being put on the
claimant. This would then defeat the purpose of having a small claims track.
In addition, some respondents expressed concerns that well-funded
defendants with greater financial resources would attempt to „bully‟ claimants
by arguing that the claims be wrongly placed in the multi-track.
Government response:
1.7. Under the present system an Allocation Questionnaire (AQ) is sent to
the claimant and defendant following either the filing of the defendant‟s
acknowledgement of service or their defence. When the AQ is returned, the
judge will need to decide on the appropriate track in situations where the
claimant and defendant disagree. The approach being taken for an IP small
claims track differs slightly in order to ease the administrative burden on the
court. It does ensure that, as now, it is the judge who will make the final
decision as to the appropriate track, in particular where there is a
disagreement between parties.
1.8. We believe that judicial case management will ensure such
disagreements do not escalate into drawn-out arguments over transfer and
will minimise the risks which have been identified to maintain access to
justice at proportionate cost. We expect that any such issues will be decided
quickly by the judge with no extra cost to the claimant. In contrast, any
defendant who seeks to have a case transferred to the higher track, for the
reasons highlighted above, is likely to incur disproportionate legal costs which
will not be recovered if it is then heard on the small claims track.
7
1.9. The allocation process will however be closely monitored and
reviewed.
GUIDANCE
1.10. Ten respondents emphasised the need for court guidance on a variety
of issues to ensure that the court functions effectively and litigants are clear
on what is expected of them. Respondents urged that clear and easily
understood guidance on calculation of damages, hearings, mediation,
allocation process, format for pleadings/evidence and witness statements
should be provided by the court.
1.11. Two respondents also urged that the pre-action code of conduct /pre-
issue protocol be highlighted to potential litigants. A further respondent
recommended that we provide a „dedicated IP advice service for litigants in
person and their lay representatives‟.
Government response:
1.12. It is clear that some of these issues are clarified by existing court
guidance on the small claims track. The IPO will work with the Judiciary to
develop further specific guidance to ensure that litigants are clear on the
small claim process to resolve IP disputes. It should therefore be much
clearer which claims will belong on the small claims track. We are grateful for
numerous representative bodies that also provided specific examples of the
types of cases their members might bring on this track and for providing
further assistance on possible measures of damages.
COURT LOCATION
1.13. Numerous respondents supported the expectation that most cases
would be resolved through telephone mediation or heard on paper. Four
respondents commented on the issue of IP small claim hearings being heard
at the Patents County Court in the Rolls Building, Fetter Lane, London.
8
1.14. Three respondents considered that this is appropriate as a pilot
arrangement but that this should be kept under review in particular to ensure
“it does not inhibit access to justice for impecunious claimants”. One
suggested that this should then be reconsidered in light of statistics on
claims. One respondent urged that the court holds any necessary directions
„on paper or by way of telephone, video or other electronic means‟.
1.15. One respondent considered that „the court should have branches in the
devolved nations and the north of England as well as in London‟ and a further
one believed that the court should sit in major regional centres from the
outset.
Government response:
1.16. It is anticipated that most IP small claims, like those in the general
track, will be resolved without the need for a hearing, either through small
claims mediation or through the judge deciding the issue on paper. The
Government has committed to introducing a small claims track initially at a
low level of resource to gauge demand, making greater provision if it is
needed. On this basis, then should it be necessary to resolve any disputes
on the IP small claims track through a court hearing, these will be heard at
the PCC, London. It should be noted that some (very limited) cost recovery
is available for attendance at court should a claim be successful. The
Government will also review location for hearings in due course as part of the
general review of the PCC.
OTHER ISSUES
USE OF EXISTING TRACK AND MONEY CLAIM ONLINE (MCOL)
1.17. Six respondents provided evidence that the existing general small
claims track, including via MCOL, is already resolving some IP disputes albeit
over unpaid debts/royalties. Given this, and that two responses asserted that
the track will also be used by larger enterprises to pursue unpaid
debts/royalties, concern was expressed that the court should have an
infrastructure capable of supporting the increased number of eligible claims
9
which does not inhibit access to justice. One respondent considered that „the
volume of work which the small claims track may attract may be
considerable.‟
Government response:
1.18. HMCTS have identified appropriate judicial resources which are
anticipated will deal effectively with the expected early demand. This will be
monitored closely. At least in the early stages following the introduction of
the track, IP claims will not be filed through the MCOL system.
COSTS SAVING MITIGATION/REPRESENTATION/ENFORCEMENT
1.19. One respondent considered that costs should be mitigated where
defendants ‘insist on having the case heard in a more costly manner [i.e.
through a hearing] as a means of increasing costs in order to dissuade
claimants’. A further respondent questioned the current level of cost
recovery.
1.20. One respondent was keen to emphasise the importance of legal
representation on the proposed IP small claims track. Another was
concerned at the cost of enforcing an order in particular where there is
continued infringement.
Government response:
1.21. We expect that robust and active judicial case management will ensure
that cases are decided in the most cost-effective way providing access to
justice at proportionate cost. In addition, we do not propose to deviate from
the current cost recovery rules in the general small claims track. A key
principle of the small claims track is that claimants may represent themselves
and we expect this to be fundamental to the IP track especially given the
provision of clear court guidance. Finally, there are existing enforcement
processes for the general small claims track which should be equally
effective on the IP small claims track.
10
ONLINE INFRINGEMENT/INFRINGEMENT OUTSIDE UK
1.22. Two respondents briefly raised the issues of online infringement and
infringement outside the UK.
Government response:
1.23. It may be appropriate for some claims involving alleged online
infringement, in particular of copyright protected works, to be heard on the IP
small claims track in the PCC. This will only apply where the alleged
infringement occurs within the court‟s jurisdiction, i.e. where it occurs in the
UK. Issues in relation to online infringement may be complex and each case
will need to be considered on its merits.
11
QUESTION 26: Do you agree with the type of IP claims that can be brought
before the small claims track?
SUMMARY
2.1. Of the 26 responses to the call for evidence, 18 expressed a view here,
largely agreeing with the proposals outlined. 11 agreed that the scope of the
IP small claims track should ensure that it could resolve appropriate
copyright, unregistered designs and trade marks disputes.
2.2. However, seven believed that other types of IP claim might also be
suited to the procedures of the small claims track. Two respondents
considered that registered designs should be within scope with one of these
also believing that passing off disputes may effectively be resolved on the
track.
2.3. One respondent believed that certain types of dispute involving plant
breeders‟ rights would also fit within the scope of the track in particular if the
damages limit was raised to £10,000. A further respondent considered that
unregistered community designs and database rights should be within scope
but that registered trade marks, where validity of the mark was put into
question, should be outside the scope.
2.4. Finally, three respondents did not believe that the scope of the track
should be codified at all, allowing the court to decide which disputes it could
resolve, transferring the others to the PCC streamlined procedure.
Government response:
2.5. We believe that the bulk of claims on an IP small claims track will
involve disputes relating to copyright, unregistered designs and trade marks.
6
http://www.ipo.gov.uk/hargreaves-enforce-c4e-pcc.pdf Para 4.1 b, page 13
12
2.6. Most responses support the Government view that claims involving
patent disputes, even where the limit is extended to £10,000, would not be
suited to the truncated procedures and minimal cost recovery regime of a
small claims track.
2.7. The Government response to the Independent Review of IP and
Growth stated that „The Government will ... introduce a small claims track in
the Patents County Court for cases with £5,000 or less at issue, initially at a
low level of resource to gauge demand, making greater provision if it is
needed‟7.
2.8. We are anxious to ensure that in the initial stages following
implementation, that the track is not overwhelmed with claims, rendering it
ineffective as a forum. Respondents felt that numerous other types of IP
rights might also work and in balancing potential demand with accessibility
we propose that the initial scope of the track should encompass the rights
falling within the ordinary jurisdiction of the PCC i.e. under PD 63 para 16.18.
2.9. These include: (1) copyright; (2) rights in performances; (3) rights
conferred under Part VII of the 1988 Act; (4) design right; (5) Community
design right; (6) association rights; (7) moral rights; (8) database rights; (9)
unauthorised decryption rights; (10) hallmarks; (11) technical trade secrets
litigation; (12) passing off; (13) protected designations of origin, protected
geographical indications and traditional speciality guarantees; (14) registered
trade marks; and (15) Community trade marks.
2.10. Generally speaking the „special jurisdiction‟ of the PCC is defined in
section 287 of the Copyright, Designs and Patents Act (CDPA) 1988 as
patents and designs9 and these are listed under CPR Part 63.2. As noted
above, with the exception of unregistered designs, we propose that the
„special jurisdiction‟ rights will be outside the scope of the new IP small claims
7
http://www.ipo.gov.uk/ipresponse-full.pdf
8
http://www.justice.gov.uk/courts/procedure-rules/civil/contents/practice_directions/pd_part63
9
http://www.legislation.gov.uk/ukpga/1988/48/section/287
13
track because they are likely to involve more complex issues. Taking the
approach of including the rights outlined in PD 63 paragraph 16.1 but not
including the rights under 63.2 will also exclude some rights which do not fall
within the court‟s special jurisdiction e.g. plant variety rights.
2.11. One respondent highlighted this anomaly and provided evidence of the
nature and complexity of the claims that plant breeders might bring in an IP
small claims track. We propose therefore to also include the plant variety
rights as listed in CPR part 63.2(1) (b) (iii).
2.12. The scope of the track will be reviewed in line with the commitment
made in the impact assessment accompanying the call for evidence.
14
QUESTION 310: Would you find increasing the upper damages limit for the
small claims track from £5,000 to be beneficial? If so – please provide details
why this would affect how certain IP disputes are resolved?
SUMMARY
3.1. Twenty two respondents answered this question with 16 agreeing that
the current limit of £5,000 should be raised for IP claims on a small claims
track. Six respondents did not express a preference for the limit. Of the
remaining, five considered £10,000 the optimum limit, one was in favour of
£20,000, two favoured £25,000 and two further considered it should be less
that £25,000.
3.2. Although six believed that there was no need to raise the limit, three of
those believed it should remain in line with the limit for the general small
claims track.
Government response:
3.3. It is expected that the Ministry of Justice will raise the general small
claims limit to £10,000 in 2013 and they will consider a further raise to
£15,000 in the future after full evaluation of the increase to £10,000. Given
this, and in light of the responses we received to the call for evidence, we
propose to take the same approach in relation to the IP small claims track i.e.
initially £5,000, rising to £10,000 in line with the general small claims track
rise. This will ensure a degree of consistency and, by firstly introducing the
small claims track with a claims limit of £5,000, should assist in ensuring that
the court is not initially overwhelmed by claims.
3.4. Four respondents raised the issue of punitive damages being available
as a deterrent to infringement in particular for copyright infringement. The
central purpose of a civil law award of damages in the UK is not to punish the
10
http://www.ipo.gov.uk/hargreaves-enforce-c4e-pcc.pdf Para 4.1 c, page 13
15
defendant; it is to compensate the claimant for damage, loss or injury they
have suffered as a result of another‟s acts or omissions.
3.5. However, under CDPA section 97(2)11
“The court may in an action for infringement of copyright having regard to all
the circumstances, and in particular to -
the flagrancy of the infringement, and
any benefit accruing to the defendant by reason of the infringement,
award such additional damages as the justice of the case may require”.
3.6. A similar provision is made for unregistered design right infringement
under CDPA section 229(3).12
11
http://www.legislation.gov.uk/ukpga/1988/48/section/97
12
http://www.legislation.gov.uk/ukpga/1988/48/section/229
16
QUESTION 413: Taking into account the rules governing interim injunctions, do
you consider that the small claims track for IP claims should provide for
these? If so – please detail why.
SUMMARY
Interim Injunctions
4.1. Of the 20 responses which commented on this issue, 12 believed that
interim injunctions should not be available on the IP small claims track given
the principles governing these (although three responses did not offer any
reasons why they should not be available). Eight responses believed interim
injunctions should be available although one response advocated a system
akin to a German procedure with a cost recovery far in excess of what is
permitted under the UK general small claims track i.e. it advocated
permissible costs recovery of £5,000-10,000.
Responses which considered Interim Injunctions should not be available
4.2. These were received from four legal representative bodies/firms, five
copyright representative bodies/firms, two large enterprises and 1 individual.
4.3. Five responses considered that, if a claim was one where an interim
injunction in relation to infringement of an IP right was required, then it was
likely the claim was not appropriate to be heard on a small claims track. One
of those responses went further by asserting that many IP claims may be
suited to being resolved on small claims track but that also seeking an interim
injunction would take them outside the scope. A further one of those
responses added that the system currently in place in the PCC and High
Court is sufficient to deal with applications for interim injunctions.
4.4. In addition, four responses considered that a properly functioning IP
small claims track with the possibility of expedited timetable to trial in certain
13
http://www.ipo.gov.uk/hargreaves-enforce-c4e-pcc.pdf Para 4.1 d, page 13
17
situations would be a more effective approach. One response did not
consider they were necessary believing that except for moral rights reasons,
photographers did not seek injunctions. Three responses considered that the
possibility of obtaining an interim injunction on a small claims track would be
a disproportionate remedy.
Responses which considered Interim Injunctions should be available
4.5. These were received from two legal representative bodies/firms, five
copyright/design representative bodies/firms and one large enterprise.
4.6. All the responses considered that the Civil Procedure Rule on Interim
Injunctions in relation to general small claims should apply to an IP small
claims track i.e. that they should also be available in relation to IP claims on a
small claims track. Three responses considered that in some cases it is the
injunction, i.e. which seeks to stop the infringement, that is often the key
issue. Other responses believed it would be useful where there is a „clear-cut
breach‟ (design right infringement was cited), where there is repeated
infringement or where the loss cannot be adequately compensated in
damages e.g. for Moral Rights.
4.7. One response urged the Government to be cautious in proposing not to
include an interim injunction option since this might create problems in
situations where it might prove invaluable. One response, while advocating
the option of having interim injunctions on an IP small claims track, was also
concerned about them being a disproportionate remedy. However, it
considered PCC guidance to support the nature and aims of interim
injunctions on an IP small claims track would address this issue.
Final injunctions
4.8. All respondents considered that final injunctions should be available
although one response appeared to both advocate their need and question
whether they had any purpose. One respondent believed that proportionality
should also be a key consideration for the court in deciding on the wording of
a final injunction.
18
Government response:
Interim Injunctions
4.9. Of the remedies available under CPR part 25, the small claims track
only permits interim injunctions (CPR 27.2). With regard to IP claims
specifically, interim injunctions are often complex and contentious matters
which increase cost for litigants. This seemingly defeats the purpose of the
new IP small claims track which is to improve access to justice at
proportionate cost. The call for evidence outlined the principles that the court
must consider in determining whether to grant an interim injunction for
alleged IP infringement. The Government does not consider that the
procedures of a small claims track lend themselves to properly adhering to
those principles.
4.10. In contrast, the streamlined procedures of the PCC would seem to offer
an appropriate route for applicants to secure an interim injunction which
ensures proportionality for all parties. The Government also believes that the
cost to an applicant who is seeking an interim injunction under the
„streamlined procedure‟ would be no greater than it would be on the small
claims track. However, through the „streamlined procedure‟ it is probable that
these costs would be recoverable in the event of a successful outcome to the
case. The Government understands that Interim Injunctions are rarely
sought in the PCC – only one application in the past 18 months. We will
continue to monitor demand.
4.11. The Government does not propose that interim injunctions will be
available on the new IP small claims track. We consider that their availability
under the „streamlined procedure‟ of the PCC ensures that this is effective,
proportionate and dissuasive.
Final Injunctions
4.12. All final remedies that are available on the general small claims track
will be available in relation to an IP small claim track.
19
QUESTION 514 Do you think the Patents County Court should be renamed to
better reflect the range of intellectual property cases it considers?
SUMMARY
5.1. All respondents who expressed a view (23) considered that the Court
should be renamed. Many believe that this should be completed as a matter
of urgency as the present name is a source of confusion for SMEs.
Numerous suggestions were received most common of which was
„Intellectual Property County Court‟ (although two respondents suggested
omitting the word „County‟).
Government response:
5.2. The Government intends to change the name of the Patent‟s County
Court at the earliest opportunity and when a suitable legislative vehicle
becomes available.
14
http://www.ipo.gov.uk/hargreaves-enforce-c4e-pcc.pdf Para 4.1 e, page 13
20
ANNEX A
RESPONDENTS:
Anti Copying in Design
Association of Illustrators
British Association of Picture Libraries and Agencies
British Copyright Council
British Society of Plant Breeders Ltd
British Telecommunications PLC
Consumer Focus
Creators' Rights Alliance/NUJ
Design and Artists Copyright Society
Design Council
Federation Against Software Theft
IP Lawyers' Association and Law Society
Justin Kelly
Marker Law
Mars Incorporated
NA3T
Nokia
Reportdigital
Rouse Legal
SME Innovation Alliance
Stop43
The Association of Photographers Ltd
The Chartered Institute of Patent Attorneys
The Federation of Small Businesses
The Law Society of Scotland
The Publishers Association Limited
Walker Morris
Webb Aviation Aerial Photography
21
