Out-Law News 2 min. read

Intellectual Property Enterprise Court helping small companies enforce IP rights, research finds

The Intellectual Property Enterprise Court (IPEC) has helped small businesses enforce their IP rights as well as settle disputes out of court, research commissioned by the government has found.

In 2010, the Patents County Court, since renamed as the IPEC, was reformed with the intention of providing a judicial forum for small businesses to resolve IP disputes in a speedier and more cost-effective way than is available to them at the High Court. The reforms placed a cap on costs and damages that successful litigants can recover in cases brought before the IPEC, and introduced procedural changes designed to shorten the length of trials and decision making process.

In their study, three researchers, from Cardiff University, Santa Clara University and Toulouse School of Economics, scrutinised how effective the IPEC reforms have been in achieving their objectives.

The legal community is agreed that the reforms have "greatly improved" both SMEs' and individual right holders' "access to justice", they said. The researchers said there had been a "strong increase" in the number of claims lodged by SMEs in the IPEC since the £50,000 cost cap was introduced in October 2010.

"Regarding the costs cap, the benefit of it is that litigants know their potential exposure before initiating a claim; and although the cap is set at a limit of £50,000, in practice a costs award of less than £40,000 is commonly awarded to the winning party," the researchers' report (53-page / 853KB PDF) said.

The researchers also noted that changes in the way cases are managed in the IPEC has had the effect of "greatly speeding up the process of litigation". They said their study had shown that the damages cap of £500,000 has been perceived as having "a minimal impact on litigant behaviour", but said it may have helped increase "settlement rates".

"In practice, given the relatively low cost of filing a claim at the IPEC or [High Court/Patents Court] during the period of our study we suggest that the introduction of the costs cap has had an effect on the amount of cases settled before any case filing occurs i.e. that it has led to more pre-filing settlements, not less," the researchers said in their report. "Given the overall increase in filings at the IPEC, this would suggest that there has been a substantial overall increase in the occurrence of IP disputes more generally, post-October 2010."

"In other words, the IPEC reforms may have encouraged parties to enter into disputes with, and to seek redress from, potential IP infringers, where previously they would have not done so. The existence of a larger universe of disputes overall would explain why there is both an increase in filings at the IPEC and at the same time there is a greater share of disputes that settle pre-filing. In other words, the IPEC reforms might have had a substantial effect beyond the courtroom: the reforms appear to have fundamentally altered the IP dispute landscape, and in doing so they have increased the likelihood that IP holders will attempt to uphold their rights against potential infringers," they said.

Expert in the resolution of IP disputes David Woods of Pinsent Masons, the law firm behind Out-Law.com, said that the IPEC can be a useful forum for larger businesses to enforce their IP rights in.

"Businesses might consider bringing a case before the IPEC where recovery of damages is of less importance to them than asserting their IP rights, finding a quick resolution to others' unfair exploitation of their IP or where the damages they can expect to recover will fall below the level of the damages cap," Woods said.

"For example, in a brand protection context it is important for businesses to police and be seen to police their rights when others take advantage of their trade marks and identity to build a rival business proposition," Woods said. "Such cases may not cause substantial amount of financial harm. In addition, the IPEC may be an option where businesses wish to obtain an interim injunction preventing continuation of harm as a measure to encourage the end of infringing activity and a low cost settlement."

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