An intellectual property court for small and medium-sized businesses is about to transform the dynamics of how entrepreneurs and innovators go about enforcing their rights
The value of any of your ideas ultimately depends on whether you can make them stand up legally. For innovators such as Roland Hill, it can seem like sailing in the America’s Cup. “Only the wealthy few can enter the race,” he says. “The rest of us in dinghies can forget it.”
For the last 25 years, Hill’s see-through graphics have appeared on the sides of buses and taxis round the world. Produced under licence from his portfolio of 24 patents, you can see these advertisements from the outside, but they are transparent from the inside.
In any one year here in the UK, Hill expects to see about 20 abuses of his intellectual property (IP). Ideally, he would like to negotiate a solution in each case, involving the offenders withdrawing the goods, paying damages, placing a proper order and signing a licence.
As someone who has spun out numerous products from his technology, he has had to learn how to bring even major players to the table, despite the fact that they know they can bluster and delay, because the costs and risks of going to court have been so prohibitive.
“No one in their right mind would rush to the High Court,” Hill says. “If we lost, the costs would put us out of business.”
In the last few weeks, he has started to change his mind about his prospects for gaining access to justice. In October, a revamped junior IP court started hearing cases. Officially, it might be called the Patents County Court, but it is in fact designed to cover all kinds of IP cases at the small and medium-sized business level in England and Wales.
Hearings are designed to be short and sweet. Cases run on a tight schedule and a cap is placed on your liabilities for legal costs if you lose. In countries such as Germany, where similar courts operate, hundreds of IP actions are brought every year, as opposed to the trickle of cases from smaller companies that go through the High Court in the UK.
It represents a fundamental streamlining in IP cases, according to Alasdair Poore, president of the Chartered Institute of Patent Attorneys and a partner at Mills & Reeve, the Cambridge law firm. “Trials will be cut down from a week to one day,” he says. “Recoverable costs will come down to a fraction of their previous level.”
In submitting a case, you will be expected to lay out all the evidence in such a way that the new judge could take a decision based on the paperwork alone. So you have to be concise. At an initial conference to manage your case, the judge might ask you to have a go at sorting out the case with the other party. If a trial is going to happen, he will tell you what other evidence he is expecting to hear. Unlike the High Court, cross-examination and expert witnesses will be kept to a minimum. You should then be back in court within four months.
The other big change is that instead of having to employ a legal team of three (an IP attorney, a solicitor and a barrister), your IP attorney now has the right of audience, so can represent you throughout. Again, the intention is to bring down your legal costs. It is no surprise that many IP practices are now setting up litigation teams expecting to conduct high-volume, low-cost work for growing businesses at the new IP court.
In English law, of course, if you lose, you pay the other side’s legal expenses. In the High Court, you can find yourself with a bill running into seven figures. In the new IP court, your liability is capped at £50,000.
“The advantage,” says Poore, who is sounding out his own technology clients in Cambridge about taking disputes to the Patents County Court, “is that you know what your risk is before you enter proceedings. Any small business would prefer to know their downside and put a cost on it, rather than have an open-ended liability.”
Such a calculation is likely to be particularly relevant if you are battling against a corporate that can afford to spend a fortune on the best legal advice. Even if they do produce an encyclopedia of evidence, it will count for little with the judge, who wants any submissions to be short enough to act on quickly.
The cap on costs also breaks down into the amounts that can be recovered on each step in building the case. For instance, you can only claim a maximum of £5,000 for witness statements. By adopting this staged approach, your costs will be proportionately less if the case ends early.
The danger of hearing a case in a lower court is that appeals will then be made against the result. Poore expresses confidence that the new IP rules will not be undermined. “All sides of the legal profession have supported these changes,” he says. “It’s hard to see the Court of Appeal making larger awards that go
against the principles on which the case was originally made.”
If, instead, the Patents County Court succeeds in becoming a credible mechanism for smaller businesses to pursue IP disputes, it will trigger a change in the culture of enforcing the rights in innovations. If you only have to wait four months for a day’s hearing at the Patents County Court, then you are in a stronger position to argue for shorter, sharper procedures at arbitration as an alternative to going to court.
If the judge is likely to press for a decision on the basis of the written evidence you submit, why not just ask for an opinion from an expert? A barrister will give you a report on the determining points of law. Or for £200, you could go to the IP Office, where an examiner will let you have an opinion on the validity of each side’s argument.
The best outcome of all, of course, is that you can negotiate a commercial agreement.
If you clearly have fast-track, low-cost access to justice, then your competitors and imitators will think twice before bullying you or cheating you out of your rights. In making your IP stand up in the market, the Patents County Court promises to give you a powerful extra lever to pull.