Virtuoso Legal Obliterate IPEC Costs Glass Ceiling

Link Up Mitaka t/a thebigword v. Language Empire and Anor. [2018]
Beyond the IPEC Costs Cap
What lies beyond the IPEC costs ceiling for frustrated Claimants? 

Two weeks ago, we reported on our landmark win in the Link Up Mitaka t/a thebigword v. Language Empire Limited & Another [2018] case.

For an broad overview of this case, please read here.

What we did not report, but knew, at the time was that we had sought a further breakthrough from the court – that thebigword get their costs over and above the IPEC costs caps.

The IPEC: A Streamlined Court and a Costs Conundrum

For those of you unfamiliar with the Intellectual Property Enterprise Court (IPEC), it is a specialist court set up to hear IP related issues in a streamlined, faster and cost-effective way.

One of the main features of the court is that a litigant’s costs exposure is limited to a maximum of £50,000 (for a trial on liability) and £25,000 (for a trial on quantum) with each stage of litigation being assigned a recommended cap. This is the context within which we prepared to apply for indemnity costs outside these caps at the hand down hearing. The scale of the task was immediately apparent.

Crucially, the nature of the case in question, including the unreasonable obsfucatory conduct of the defendant during litigation, thus inflating costs; meant that our client would ideally be awarded costs beyond the ordinary boundaries set out by the court.

IPEC cases are divided into two trials (1) on liability (“has the defendant infringed?”) and (2) on quantum (“how much damages you are owed as a claimant”).

For starters, it is rare that cases even reach the quantum stage. Parties tend to agree on damages and costs once liability is settled to minimize further cost exposure. In addition to that, the IPEC has previously religiously stuck to the caps and there was scant case law to support our position. In fact, neither party’s lawyers were able to find a case in the IPEC where the scale costs had been disapplied.

A Careful Strategy on Costs

This challenge meant we had to approach this issue in a carefully crafted way. If you have read the report on the main judgment (see link above) you will remember that the Defendants in this case were found to be uncooperative to the point of obstructing the course of justice. We argued that many of the costs we incurred were a result of the same conduct. For example, we were forced to issue an application for a specific disclosure and go to a hearing for the same due a disagreement with the Defendants about how disclosure was conducted, and whether we were able to inspect some of the documents disclosed.

HHJ Melissa Clarke, after hearing submissions from both parties, agreed. There is a Rule 45.30 of the CPR does contain an exception to the capped costs scale for “an abuse of process”.  Counsel for the Defendants argued that each particular uncooperative act of the Defendants (such as the specific disclosure issue, or the attempts to blame third parties) were not an abuse of process but were part of a normal course of defending the proceedings.

The Judge agreed that some of the acts of the Defendant were not an abuse of process and that as such CPR 45.30 may not apply. However, as she had stated in her previous judgment on quantum, the instances in which the Defendants had indulged in “dishonesty and obfuscatory” were so numerous that she chose to use her general discretion and broad powers in relation to costs provided to her by CPR 44.

Keeping in mind the capped cost of £25,000 in the IPEC for an inquiry, HHJ Clarke ordered the Defendants to pay £98,260 plus interest of £1446.98.

This was a rare case – the facts of the case, particularly in relation to the Defendants’ conduct, was fairly unique. This may be why the Judge chose to apply her general discretion on costs rather than the specific exceptions to the fixed costs in the IPEC. Her thought process is best highlighted by the following paragraph:

“I did not make this decision lightly. I accept and understand that the costs cap is a key feature and benefit of litigation in IPEC, and that certainty about the application of the Scale Costs Scheme is extremely important to facilitate access to justice for litigants in lower value intellectual property claims. However, where there is an abuse of the processes of the court, as Lord Diplock guides us, the court has a duty to identify it. If the court does not protect the integrity of the court processes to ensure that it meets the overriding objective to deal with cases justly and at proportionate cost, who will?” (at paragraph 24).

In addition, IPEC litigants may want to take note:

“Litigants in IPEC must understand that conduct which amounts to an abuse of the processes of the court will cause them to lose the benefit of the protection that the Scale Costs Scheme gives them.” (at paragraph 25).

Conclusion

To conclude, such a case as Link Up Mitaka t/a thebigword v. Language Empire Limited and Anor., wherein the other side demonstrate obfuscation and opacity in their conduct, requires incredible patience to navigate to a satisfactory result.

It is, however, encouraging to note that the HHJ Clarke and the IPEC, in such instances, will employ discretion freely to ensure that Claimants who are frustrated and financially laden by evasive defendants can be adequately remunerated.

Such demonstrates that rules within the court cannot be abused by actors who seek to obstruct the course of justice.

For more in depth information relating to HHJ Clarke’s decision on costs, read the costs judgment here.

For more information about this judgment, please contact Philip Partington via email, or call:

02074 128 372

Virtuoso Legal Obliterates IPEC Costs Glass Ceiling was written by Lakmal Walawage

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