The PCC Experiment What the US can learn from England’s “Patent Small Claims” experience Angela Fox Partner, RGC Jenkins & Co. AIPLA, Chicago, February 28, 2013

The First 20 Years  IP and especially patent litigation is expensive; complex law, need for experts, high stakes all contribute to a “leave no stone unturned” approach  Recognition, however, that small and medium-sized enterprises (SMEs) priced out of system  Establishment in 1990 of Patents County Court to address problem  Little used, however, in the first 20 years: - Limited jurisdiction – patents and designs only; trademark jurisdiction only acquired in Procedure, costs same as High Court - What special rules existed were abolished by new Civil Procedure Rules in Image problem – why go to a “county court” when the High Court could be had for the same price?  Only a handful of judgments per year

If at first you don’t succeed…  Jackson Review of civil litigation costs in 2010 recommended reform of PCC to achieve original objectives through: - Simpler and cheaper procedure - Restricted costs recovery - Both implemented on 1 October 2010 by Civil Procedure (Amendment No. 2 Rules 2010) - Cap on financial remedies - Implemented 14 June 2011 for patents and designs and 1 October 2011 for other IP; Patents County Court (Financial Limits) Order 2011 and Patents County Court (Financial Limits) (No. 2) Order Introduction of separate “small claims track” Implemented 1 October 2012  HHJ Colin Birss QC appointed; assisted by Recorders, Patent Court judges and, in small claims, district and deputy district court judges  Not mandatory for any cases, but cases began to flood in. Why?

A New Set of Principles  Guiding principle is access to justice for SMEs in IP matters, achieved through: – Ensuring proportionality of costs to the issues and value of the case; in this, the reformed PCC has been ahead of its time – Giving SMEs pre-action clout and thereby encouraging settlement; infringers can no longer rely on high cost of litigation to prevent SME right owners from enforcement  The PCC is available to all IP right owners: – All types of IP rights – All sizes of litigant – Provided the case is right for the PCC’s procedures

A Distinct Identity  Reformed PCC covers same IP and offers same remedies as the High Court  At same time, though, it is clearly distinguishable  Intended for less complex, lower-value cases: - £500K cap on financial remedies (taking account of value of all remedies sought, including damages, account of profits and final injunctions) - Cap can be waived by parties to keep an otherwise appropriate case in the PCC - £50K cap on recoverable costs; cannot be waived; court will rarely depart from this - Costs recovery based on contribution rather then reimbursement, but intended to shape how parties prepare their cases; “leave no stone unturned” approach not normally appropriate in costs-capped proceedings

A Distinct Procedure  New PCC rules are “a radical departure” – Westwood v Knight [2010] EWPCC 16 (trademarks and passing off) – Technical Fibre v Bell [2010] EWPCC 11 (patent)  More emphasis on pre-action conduct so that parties “show their hands” early on; intent is to encourage early resolution – New rules 63.20(2) and 22(2) – 42 days for service of defence if PD on Pre-Action Conduct followed; 70 otherwise – Costs can be allowed for some pre-action work; Westwood v Knight [2011] EWPCC 11  For same reasons, front-loading in pleadings (new Rule 63.20) – Pleadings can stand as evidence, and case decided on basis of statements of case and oral submissions where possible; cost-effective

A Distinct Procedure cont’d  Case management conference – mandatory to apply within 14 days of service of defence; trial date fixed at CMC; prevents “case drift”  CMC determines how case proceeds to trial  Standard disclosure (“discovery”) not available; specific disclosure only; limited to specific issues and parameters; must be ordered at CMC  No default entitlement to rely on witness statements, experts or experiments; must be ordered at CMC  Orders only made in relation to specific, identified issues, and only where cost-benefit test satisfied

A Distinct Procedure cont’d  Maximum trial length (normally) 2 days; time limits on submissions and cross-examination  Applications decided on paper where appropriate; option of deciding case, or part of case, on paper – Hoffman v DARE [2011] EWPCC 32 – Temple Island v New English Teas [2011] EWPCC 19  Availability of preliminary view on merits if parties wish – Weight Watchers v Love Bites [2012] EWPCC 11 – Fayus Inc. v Flying Trade Group PLC [2012] EWPCC 43  A distinct true “small claims” track for cases worth under £5K (will increase to £10K on 1 April 2013)

A Distinct Style  Proactive judicial case management with an emphasis on cost-benefit, proportionality - See for example Liversidge v Mumford [2011] EWPCC 34; potential for experiments to become a costly distraction: “To say that a party is entitled to prove its case the best way it can subject to caveats puts the matter the wrong way round. The purpose of the Patents County Court procedure is to facilitate access to justice, in part by streamlining and controlling what is admitted into the proceedings… What is reasonable and proportionate is always important. Seeking to justify potentially complex evidence on the basis that it is the best evidence is a path which leads to increases in cost and time.”

A Distinct Style cont’d  Careful management of court resources: – Focused, issue-based approach – Transfer of highly complex cases – Time limits on submissions and cross-examination, use of both oral and written submissions and availability of paper decisions on aspects of a case all help to keep trials short  PCC decisions enforceable in same court, by same judge  An experienced IP judge supported by Patents Court judges and specialist IP lawyers acting as Recorders

The PCC at Work  Since October 2010, approximately 350 cases started, and rate of new cases steady. Breakdown so far:  Trade marks /passing off – 40%  Copyright – 30%  Designs – 10%  Patents – 20%  Who is using the PCC? – SMEs, but also household names like Unilever, SC Johnson, 20 th Century Fox, Nike, Converse, Weight Watchers, Merck, BBC, Boots the Chemist – Small cases, but also bigger cases where not complex or where parties compromise on procedure or relief in order to keep case in PCC

Lessons from the PCC Experiment  To succeed, an IP “smaller claims” court needs: – A distinct identity from other IP courts – A procedure designed to minimise the cost of litigation – Proactive judicial case management with an eye to reasonableness and proportionality – The right judge: experienced in IP and capable of managing parties and court resources – Results - claims, trials, judgments, enforcement – No need for the court to be mandatory for any types of cases if you get it right

Thank You Any questions?