Factual and Procedural Background
The Plaintiff commenced an action against the Defendant alleging infringement of registered trade marks, passing off, infringement of copyright, and sought declarations of invalidity of certain of the Defendant's registered trade marks. The case began in the High Court with the Claim Form issued on 24th June 2010. The Defendant did not file a formal Defence but submitted several documents titled "Counterstatement of claim" which functioned as defences. The case was transferred to the Patents County Court (PCC) by order on 1st October 2010, where new procedural rules applied. The case management conference (CMC) occurred on 15th November 2010, the trial was heard on 8th March 2011, and judgment was given on 22nd March 2011 in favor of the Plaintiff. The judgment included declarations of invalidity of the Defendant's trade marks, injunctions, orders for delivery up, rectification of the register of trade marks, orders concerning domain names, and an enquiry as to damages or account of profits with a time-limited option to proceed. Permission to appeal was refused. The present opinion concerns the assessment of costs following the trial and judgment.
Legal Issues Presented
- The proper approach to the assessment of costs in the Patents County Court under the new procedural and costs rules effective from 1st October 2010.
- The application and interpretation of the costs capping provisions, including stage limits and overall caps on recoverable costs.
- The treatment of costs incurred both before and after transfer from the High Court to the Patents County Court.
- The scope of recoverable costs in relation to the stages set out in the Costs Practice Direction, including pre-action costs and costs of considering multiple defence documents.
- The calculation and inclusion of VAT in the costs award under the capped costs regime.
- The appropriate date from which interest on costs should run within the costs capping framework.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| [2010] EWPCC 11 (Technical Fibre) |
Application of new procedural and costs rules package in the Patents County Court. |
Supported the view that the new package of procedural and costs rules applies as a whole to PCC proceedings. |
| Caljan Rite-Hite Ltd v Sovex Ltd [2011] EWHC 669 (Ch) |
Interpretation of the scope of the new PCC procedural and costs rules. |
Confirmed that costs incurred before transfer to the PCC are not subject to the automatic provisions of Part 45 costs rules. |
| CPR Part 44 Rule 44.3 |
General discretion of the court regarding costs orders. |
Guided the court’s approach in exercising discretion on whether to order costs, the amount, and timing of payment. |
| CPR Part 45 Section VII |
Scale costs and cost capping rules specific to the Patents County Court. |
Provided the framework for summary assessment of costs with stage and overall caps applied in this case. |
Court's Reasoning and Analysis
The court began by outlining the procedural history and the legislative framework governing costs in the Patents County Court, emphasizing the application of CPR Part 44 and the specific costs provisions in Part 45, Section VII. The court explained that the new procedural package effective from 1st October 2010, including rules on costs capping, applies to all PCC proceedings except limited exceptions not relevant here.
The court highlighted that all costs in the PCC are subject to summary assessment and are capped both at the level of individual procedural stages and overall, with a maximum recoverable amount of £50,000 for the PCC stage of the proceedings. Costs incurred in the High Court before transfer are not capped but still subject to summary assessment.
The court adopted a stage-by-stage approach to costs assessment, applying summary assessment within each stage and then comparing the result to the applicable stage limit, awarding the lower amount. The overall cap was then applied. This approach ensures adherence to the statutory limits while allowing for lower awards where appropriate.
The court addressed specific issues raised, including the treatment of pre-action costs and costs of considering multiple defence documents. It concluded that costs properly attributable to a procedural stage, including pre-action work that fits within that stage, are recoverable within the capped framework. The court also allowed costs at the "Defence and Counterclaim" stage for considering the Defendant’s multiple counterstatements, despite no formal Reply being filed.
Regarding VAT, the court recognized complexities in a capped system where some costs attract VAT and others do not. The court adopted a method of deducting non-VAT costs before adding VAT to the remainder and then adding back non-VAT costs, resulting in a final costs figure inclusive of VAT.
Finally, the court addressed interest on costs and determined that interest should run from a single date approximating the midpoint of when costs were incurred, selecting the date of the case management conference. This approach balances fairness and practicality within the capped costs regime.
Holding and Implications
The court AWARDED COSTS to the Plaintiff in accordance with the summary assessment and costs capping rules applicable in the Patents County Court. The total costs awarded, inclusive of VAT and interest from the case management conference date, amounted to £71,496.63.
This decision confirms the effective operation of the new costs capping regime in the Patents County Court, demonstrating that the system can be practically applied to complex intellectual property disputes. The ruling clarifies the application of stage limits, overall caps, and treatment of pre-transfer and pre-action costs. It establishes a clear methodology for assessing costs within the capped framework, providing certainty and predictability for litigants and their legal advisers in future PCC proceedings. No new precedent beyond the interpretation and application of the existing costs rules was set.