Who is Responsible for Patent Litigation Costs?

The Intellectual Property Office, also known as the Patent Office, is the UK body responsible for all intellectual property rights including, trademarks, designs, patents and copyright.

If an infringement has been made on someone’s intellectual property rights, they will be entitled to make a claim against the alleged infringer. As in all inter-partes claims, there will be legal costs involved in the litigation of this type of claim. It is important that all parties to the claim are aware of who is responsible for paying patent litigation costs, and which costs are payable by each party.

In England and Wales, there are two different Courts which specialise in Patents, both with different procedures and limitations. The two specialist Patent Courts which deal with Patent Litigation, and Patent Litigation Costs are the Patents Court and the Intellectual Property Enterprise Court (IPEC). Barristers, Solicitors and Patent Attorneys are all able to represent parties before the English Courts for Patent litigation, and in many instances, a mixed team will be instructed.

Patent litigation can be expensive, with many cases brought before the High Court, Court of Appeal and the Supreme Court. Court fees of up to £10,528, trial fees of up to £1,090 as well as the costs of appeals (if applicable) and other legal fees are payable by the parties in a patent litigation case.

For successful recovery of your patent litigation costs, it is essential that you familiarise yourself with the rules regarding the recovery of costs, as well as ensuring that you get your costs budget right from the outset.  If a party fails to file a costs budget, they will face serious consequences and will be unable to recover their costs if their claim is successful.

For the successful party, recovery of costs can be negatively impacted by certain factors within the case, and thus, receiving parties should always ensure they follow all procedures correctly to avoid Court sanctions.

 

Recovery of Patent Litigation Costs

General rules on legal costs state that a successful party should be able to recover their costs of litigation from the unsuccessful party. While this is largely true for most patent cases, there are some exceptions where the successful party in a patent infringement case is unable to do so.

Legal costs in Patent litigation are set out under Part 44 of the Civil Procedure Rules as well as the EU’s Directive on the Enforcement of Intellectual Property Rights. They are likely to include legal fees, Court fees, expert fees, and other related expenses incurred during the process of litigation.

Costs management in the UK usually takes place in the form of a costs budget. When budgeting patent litigation costs, a litigant should consider the complexity of the case. Costs are likely to exceed £500,000 if both validity and infringement are an issue on the case, and it will therefore settle in the Patents Court.

The Court will usually make a Costs Order following the decision, and either a hearing, or agreement by the claimant and the alleged infringer. Generally speaking, the Court will usually Order the unsuccessful party to pay the costs of the successful party.

As the Court has full discretion as to which costs should be included in the Order of Costs, they will usually take into consideration, all the circumstances of the case.

 

Adverse Costs

The Court may consider the outcome of each issue, element or claim, and may decide to allocate costs accordingly. In exceptional circumstances, the overall successful party to the claim may be required to pay costs to the overall losing party for one or more elements of the case. This may be the case if the losing party was successful in one or more elements or issues within the case.

Conduct of the parties before and throughout the proceedings will also be taken into consideration. Any admissible offers to settle, made by either party, will be brought to the Court’s attention (unless the offer is a Part 36 offer, in which case, CPR 36 rules would be applicable).

UK Courts encourage parties to undertake alternative dispute resolution (ADR) such as arbitration or mediation if possible. Although this is not compulsory, it may have a negative impact on costs recovery for the successful party if there has been an unreasonable failure to carry out these ADR methods at various stages throughout the claim and could lead to parties being penalised.

Parties will usually seek to agree costs due to the time consuming and expensive nature of an inquiry into costs.

 

How Much Can a Successful Party Recover?

70 – 80% of incurred legal costs are usually recovered for the successful party when costs are assessed on the standard basis, though if there has been overspend on a Costs Budget, recovery may be reduced further.

The Court will not usually depart from an agreed or approved Costs budget, without good reason, in cases where a Costs Management Order has been made under the CPR.

The Court’s discretion will also be applied to the award of any indemnity costs, for which proportionality is not an issue. Indemnity Costs Orders, however, are very unusual and will only be made where the conduct of the paying party would be considered highly unreasonable. Awards for indemnity costs will usually result in 90%+ of the costs claimed being recovered.

 

The Patents Court

This Court takes on more complex, higher value claims for larger businesses. The Court has specialist Judges and the recoverable damages, or an account of profits, and costs awards are not capped. A CPR mandated costs management scheme is often applied to claims with a value of less than £10 million, issued in the Patents Court. In claims with a value of £10 million or more, the parties can mutually agree to succumb to the costs budgeting rules.

 

 

Intellectual Property Enterprise Court (IPEC)

This Court is used for lower value, less complex claims, usually for SME businesses and firms. Disputes handled by this court include disputes relating to intellectual property, for example, registered trademarks and designs, patents, and copyright.

This Court also uses specialist Judges; however, damages are capped at £500,000 and recoverable costs are capped at £50,000

Recoverable costs are capped at each phase of the claim. The total costs for the determination of liability are capped at £50,000 and the costs for determining the quantum of damages is £25,000.

 

How Can ARC Costs Assist?

ARC Costs are a team of experienced Law Costs Draftsmen who can provide assistance in all matters of your patent litigation costs, including drafting your costs budget and negotiation of budgets for paying parties.  We have experience in recovering and disputing costs in patent litigation cases, including European patent infringement cases.

At ARC Costs, our Costs Draftsmen pride themselves on their average recovery of 81% of the value of the Costs Budgets drafted.

Having assisted numerous specialist patent litigation departments, ARC Costs have developed a specialist in-house team to expedite your cashflow and maximise your costs recovery. We can be contacted via email at info@arccosts.co.uk, or by telephone on 01204 397302. For more information on legal costs, please find out more about our speciality areas of expertise and our services on our legal costs page.

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