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The case for UK litigation: Quality v Cost

09.01.18

Litigating is expensive. Naturally, therefore, determining a strategy for whether and where to enforce patent rights can provoke tough decisions. A recent report by the UK IPO (available here), burnishes the UK’s reputation as a highly-rated jurisdiction for patent litigation, but does not side-step the reality that this quality often comes at high financial cost. This cost can be a particular concern for companies that have not litigated much in the UK before, who may also be scared off litigating in the UK in the future. Must patentees resign themselves to paying high prices, or can the UK litigation system provide the quality without the cost?

How good is the UK patent litigation system?

The UK’s enforcement environment is placed at or near the top of global rankings. The IPO’s report cites Taylor Wessing’s Global Intellectual Property Index (GIPI), which listed the UK as the top jurisdiction for patent enforcement in 2015, though the UK fell slightly to second in the 2016 version. From a more qualitative angle, the 2016 GIPI highlights the availability of competent professional advisors, the specialisation and technical background of judges, and the consistency and influence of decisions as key drivers of the UK’s high standing in this area. The UK’s reputation for high-quality patent litigation only adds to incentives motivating patenting in the UK. However, this must be offset by the report’s findings that the location of consumer markets and economic activity are of greater relative importance to patenting decisions than the particulars of the different patent systems.

How costly is the UK compared to elsewhere in Europe?

Importantly, the IPO’s report highlights the UK’s relative shortcomings in the perceived cost-effectiveness of patent enforcement. The 2016 GIPI ranks the UK in seventh place on this metric, with Germany and the Netherlands taking the top two spots (followed by Sweden, Austria, France and Hungary). Indeed, the IPO’s report cites a study comparing legal costs in patent court cases, which further highlights the contrasts between different European jurisdictions. This study estimates German court costs in the range of €40,000 to €100,000 per party as against £1.5million for each side in UK cases reaching trial. This (rather alarming) disparity undoubtedly contributes to the larger proportion of infringement filings that have traditionally taken place in Germany. Interviewees also note that the bifurcated treatment of infringement and validity in German courts allows a claim to be presented as broad in scope to imply infringement and narrow in scope to gain validity, which can offer a tactical advantage to patentees. This suggests that there is work to be done to convince companies that the UK litigation system is good value for money.

Do the UK’s high costs put people off?

Stakeholders abroad report that high legal costs could discourage companies from patenting, let alone litigating, in the UK. However, the IPO’s report notes that respondents consider costs to be of lesser relative importance than the competence of judges and professional advisors. This view of the UK as a ‘premium’ jurisdiction for patent litigation, with a high-quality, expensive service, may be reassuring or problematic depending on the IP budgets and priorities of different parties. A lack of certainty on costs can be particularly daunting, as anyone who has accepted a waiter’s recommendation before seeing a price list will surely know. Companies that are cautious of high litigation costs, or that are unused to litigating in Europe, would be well-served by a friendlier, more à la carte entry-point to UK litigation.

Is it possible to access the premium content without the premium price tag?

The reforms to the Intellectual Property Enterprise Court (IPEC) in 2010-13 aimed to increase certainty on costs for any parties that might be wary of litigation-induced poverty. As explained in the IPO’s report, these reforms capped recoverable costs and damages and reduced the length and complexity of court actions. The cap on costs of £50,000 in the multi-claims track, falling to £10,000 in the small claims track, reduces the likelihood of patentees being scared off litigating by the financial implications of a negative decision. Equally, the procedural improvements, including mechanisms for active case management and the imposition of time limits, help to streamline the litigation process to the significant issues and further keep costs down.

Has increased certainty led to increased use?

The IPEC reforms help to mitigate financial reservations that SMEs might otherwise have over enforcing their rights. The IPO’s report cites evidence of a large increase in the quantity of cases filed at the IPEC due to these reforms, which provides encouragement they are paying dividends. In particular, SMEs have substantially increased their case filings, as well as increasing their number of out-of-court settlements. While cost-conscious patentees may still be discouraged from litigating, it seems clear that the IPEC reforms offer a valuable contribution to the balancing of cost, quality and certainty in the UK’s patent litigation system.

The upshot

The IPO’s report emphasises the UK’s reputation as a high-quality, yet high-cost, environment for patent enforcement. While this adds weight to views of the UK as an attractive jurisdiction in which to patent, it also challenges professional advisors to continue to strive for clarity on costs in order to provide a flexible and responsive service. For first-time UK litigators, as well as for cost-conscious veterans of UK litigation, the IPEC reforms help to provide access to the UK’s esteemed patent litigation system at a more commercially-attractive price.

For further information on this report, please contact James Beal or your usual Kilburn & Strode advisor.