In a significant development for UK patent litigation,
the Civil Procedure Rules Committee (“CPRC”) has recently
commenced a three-year pilot scheme, in which recoverable legal
costs for mid-tier patent disputes in the High Court’s Shorter
Trial Scheme (STS) are capped at £500,000. The cap hopes to
provide greater financial certainty for tech SMEs and start-ups in
planning and navigating litigation.
The STS, initially designed to streamline the procedure, has
already accommodated high-profile patent cases involving the likes
of Facebook, Voxer, Insulet, and Roche Diabetes Care. However,
despite its relative efficiency, and its uptake by major industry
players, unpredictability in terms of trial costs has until now
proven a deterrent for cost-sensitive parties, particularly SMEs
and start-ups, considering litigation.
PILOT PHASE
Implementing a cost cap involves significant adjustment of
procedural rules. As is usual for a significant amendment to Court
procedure, the CPRC’s approval of the proposal set in motion a
three-year pilot phase, which began on 1 January 2024. During this
trial period, the procedural efficacy and uptake of the newly
capped system, as well as any upstream impacts on patent litigation
and filing trends, will be closely monitored.
BRIDGING THE IPEC-PATENTS COURT GAP: MID-TIER CASES
Originally introduced in 2018, the STS was designed to address a
broad spectrum of cases brought before the Business and Property
Courts of the High Court, though notably does not admit cases
involving fraud, dishonesty, or those with multiple issues or
parties. A large proportion of admissible STS cases relate to IP;
such disputes are usually less complex than those typically heard
in the High Court but have higher stakes than those heard at the
Intellectual Property Enterprise Court (IPEC).
The new cost cap will automatically, and exclusively, apply to
patent disputes initiated within the STS, reflecting the
proposal’s specific aim to address uncertainty in the
technology and innovation sectors. Setting costs at £500,000
with no limit on financial compensation by way of damages or
account of profits, it caters to mid-tier patent litigation.
By comparison, the IPEC, established to hear low-value patent
disputes, currently caps costs in its highest-stakes
“multi-track” disputes at £60,000, with a
£500,000 maximum on compensation. The Patents Court, on the
other hand, establishes no universal cap at all. The STS will
therefore provide a welcome middle ground for mid-tier patent
claims. For such disputes, the capped STS offers claimants and
defendants alike improved financial risk forecasting without
limiting the scope for potential compensation.
NAVIGATING COMPETITIVE WATERS
The declining number of patent cases in UK courts post-Brexit,
as well as the emergence of the Unified Patent Court (UPC) as a
contender for pan-European patent disputes, makes efforts to
improve the attractiveness of UK court litigation more vital now
than ever. Beyond the immediate benefits for SME patentees and
industry operatives navigating patent-mined landscapes, the new
cost-capping system could return a competitive edge to UK patent
courts vying to be the arena of choice for European patent
litigation.
THE UPSHOT FOR SMEs
Cost-capping legislation should provide a firmer footing for
innovators within the technology sector. It not only addresses the
issue of cost unpredictability in enforcing and disputing patent
rights but also enhances legal accessibility. For smaller
businesses, the threat of exposure to eyewatering litigation costs
has proven a major hurdle in enforcing or attacking IP rights.
Indeed, and as said above, many larger companies have in the
past brought litigation in the STS, and we expect this to continue.
We frequently find multinational entities litigating in IPEC, often
because it provides certainty on downside risk. The STS, with the
new cost cap, provides similar certainty for disputes of greater
complexity.
As the pilot phase unfolds, and the implications for the UK
patent litigation landscape become clearer, legislators hope that a
more predictable and equitable framework reassures SMEs and
start-ups that obtaining UK and European patent protection is worth
the considerable investment – and inevitable risk – involved.
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