20 September 2012

Patents County Court - the New Small Claims Track Rules

I discussed HM Government's proposal to introduce a new small claims track for the Patents County Court from the beginning of October 2012 in "The New Small IP Claims Jurisdiction" (5 March 2012) and "Small IP Claims" (Chambers website 8 May 2012). We now have the rules for the new court.

Overview
Rule 10 of The Civil Procedure (Amendment No.2) Rules 2012 (S! 2012 No 2208) amends Part 63 of the Civil Procedure Rules as follows:
"Amendments to the Civil Procedure Rules 1998
10. In Part 63—
(a)   In the table of contents, after the entry for rule 63.26, insert—
'Allocation to the small claims track ........... Rule 63.27
Extent to which rules in this Part apply to small claims ........... Rule 63.28;'
(b)   in rule 63.1 (3), for 'Claims', substitute 'Save as provided in rule 63.27, claims'; and
(c)   after rule 63.26, insert—
'Allocation to the small claims track
63.27.—(1) A claim started in or transferred to a patents county court will be allocated to the small claims track if—
(a)    rule 63.13, but not rule 63.2, applies to the claim;
(b)    the value of the claim is not more than £5,000;
(c)    it is stated in the particulars of claim that the claimant wishes the claim to be allocated to the small claims track; and
(d)    no objection to the claim being allocated to the small claims track is raised by the defendant in the defence.
(2) Where rule 63.27(1) applies, the parties do not need to file an allocation questionnaire.
(3) If either—
(a)    the requirements of rule 63.27 (1) (a), (b) and (c) are satisfied, but in the defence the defendant objects to the claim being allocated to the small claims track; or
(b)    the requirements of rule 63.27  (1) (a) and (b) are satisfied, but not (c), and in the defence the defendant requests that the claim be allocated to the small claims track,
the court will allocate the claim to the small claims track or the multi-track in accordance with Part 26 (case management – preliminary stage).
(4)   Part 27 (small claims track) shall apply to claims allocated to the small claims track in a patents county court with the modification to rule 27.2 (1) (a) that Part 25 (interim remedies) shall not apply to such claims at all. Section VII of Part 45 (scale costs for claims in a patents county court) shall not apply to claims allocated to the small claims track in a patents county court.

Extent to which rules in this Part apply to small claims
63.28.—(1)   To the extent provided by this rule, this Part shall apply to a claim allocated to, or requested to be allocated to, the small claims track in a patents county court.
(2)    Rules 63.1, 63.13, 63.18, 63.20, 63.21, 63.22, 63.25, 63.26 (1) and (2), and 63.27 shall apply to the claim.
(3)    No other rules in this Part shall apply.'"
 There are likely to be consequential amendments to the Part 63 Practice Direction and the Patents County Court Guide. I shall blog those developments as soon as I learn of them.

Claims that can be bought within the Small Claims Track
CPR 63.27.(1) provides that a claim started in or transferred to a patents county court will be allocated to the small claims track if:
"(a)    rule 63.13, but not rule 63.2, applies to the claim;
(b)    the value of the claim is not more than £5,000;
(c)    it is stated in the particulars of claim that the claimant wishes the claim to be allocated to the small claims track; and
(d)    no objection to the claim being allocated to the small claims track is raised by the defendant in the defence."
Rule 63.13 requires claims relating to matters arising out of the Trade Marks Act 1994  and other intellectual property rights set out in Practice Direction 63 to be started in the Chancery Division, the Patents County Court, or a county court where there is also a chancery district registry.  Paragraph 16 of the Part 63 Practice Direction lists those rights as copyright, rights in performances, rights conferred under Part VII of the Copyright Designs and Patents Act 1988, design right, unregistered Community designs, association rights, moral rights, database rights, unauthorized decryption rights, hallmarks; technical trade secrets litigation, passing off, protected designations of origin, protected geographical indications and traditional speciality guarantees, registered trade marks and Community trade marks.   Rights that fall within CPR 63.2 include patents, registered designs, registered Community designs, unregistered design rights in relation to semiconductor topographies and plant breeders' rights.

Accordingly, any cause of action that should be brought in the Intellectual Property list in the Chancery Division or the Manchester, Leeds, Liverpool or other chancery county court will be allocated to the small claims track so long as the other conditions of CPR 63.27 (1) (that is to say, the value of the claim and the consent of the parties) are met.   Further, the court has power under CPR 63.27 (3) to allocate such a case to the small claims track even if one of the parties does not consent to such allocation.

What about Patent, Registered Design and other Cases?
In Sullivan v Bristol Film Studios Ltd [2012] EWCA civ 570 (3 May 2012) Lord Justice Lewison said that although intellectual property claims have to be allocated initially to the multitrack by CPR 63.1 (3) there was nothing in the rules to prevent their reallocation to the small claims track under CPR 26.10. Nothing in the new rules will change that position.  However, Sullivan was a copyright case that falls within CPR 63.13 where parties have to file an allocation questionnaire unless the case qualifies automatically for allocation to the small claims track under CPR 63.27 (1) in which case the parties will be exempted from the requirement by CPR 63.27 (2).   The position may be different for cases falling within CPR 63.2 since CPR 63.8 (1) also exempts parties to such cases from filing allocation questionnaires,   Even if that is the case, there appears to be nothing in the rules to prevent the parties from requesting, or the court from giving, directions at the first case management conference that are similar to those it would give for cases in the small claims track.

Pleading
CPR 63.28 (1) preserves CPR 63.20 to CPR 63.22 which apply CPR Part 16 (and presumably the Part 16 Practice Direction)
"with the modification that a statement of case must set out concisely all the facts and arguments upon which the party serving it relies."  
In addition, the particulars of claim must state whether the claimant has complied with paragraph 7.1(1) and Annex A (paragraph 2) of the Practice Direction (Pre-Action Conduct) and whether the claimant wishes the claim to be allocated to the small claims track. That is quite a tall order for most litigants in person.

The requirement in CPR 63.21 for the statement of truth to be signed by one or more persons with actual notice of the facts is preserved for the small claims track.  CPR Part 18, which provides for further information at the request of a party, is specifically excluded from the small claims track by CPR 27 (2) (f) though the court retains the power to require further information of its own initiative.

Case Management
Unlike the multitrack, there is no requirement to apply for a case management conference for cases in the small claims track though the court can direct a preliminary hearing under CPR 27.6 if it considers such a hearing to be necessary. I should add that CPR 63.25 (3) also requires the court to deal with applications without a hearing unless it considers a hearing to be necessary.

In most cases the court will give
"a direction that each party shall, at least 14 days before the date fixed for the final hearing, file and serve on every other party copies of all documents (including any expert’s report) on which he intends to rely at the hearing" 
plus the other directions that appear in Appendix B to the Part 27 Practice Direction.  Such directions are defined as "standard directions" by CPR 27.4 (3) (a).

The court may also give "special directions, that is to say "directions given in addition to or instead of the standard directions" (CPR 27.4 (3) (b)).  Examples of such directions are set out in Appendix C of the Part 27 Practice Direction.  If a party wants to oppose an application for special directions, he or she must do so within 5 days of service of the application notice (CPR 63.25 (2)).

When giving standard or special directions the court will fix a date for a final hearing unless it considers a preliminary hearing to be necessary.   It can hold such a hearing only in the circumstances set out in CPR 27.6 (1):
"(a) where
(i)   it considers that special directions, as defined in rule 27.4, are needed to ensure a fair hearing; and
(ii)  it appears necessary for a party to attend at court to ensure that he understands what he must do to comply with the special directions; or
(b)  to enable it to dispose of the claim on the basis that one or other of the parties has no real prospect of success at a final hearing; or
(c)   to enable it to strike out (GL) a statement of case or part of a statement of case on the basis that the statement of case, or the part to be struck out, discloses no reasonable grounds for bringing or defending the claim."
The court has power under CPR 27.10 to deal with the case without a hearing if all he parties agree.   If the court considers it appropriate to dispose of the case in this way it will give notice that it proposes to deal with the claim without a hearing and invite the parties to notify the court by a specified date if they agree the proposal (CPR 27.4 (1) (e)).

Disclosure and Evidence
The rules on automatic disclosure or inspection do not apply to the small claims track (CPR 27.2 (1) (b)).  CPR 27 (2) also excludes the general rules on evidence under CPR Part 32 (except CPR 32.1 which provides for the court to control evidence) and the miscellaneous rules about evidence in Part 33.   CPR 27.5 provides that no expert may give evidence, whether written or oral, at a hearing without the permission of the court.

Representation
Paragraph 3.2 of the Part 27 Practice Direction allows parties to be represented at hearings by lay representatives as well as by barristers, solicitors or legal executives.

Hearings
CPR 27.8 enables the court to adopt any method of proceeding at a hearing that it considers to be fair. According to paragraph 4.2 of the Part 27 Practice Direction, hearings will generally be in the judge’s room but may take place in a courtroom.   Hearings are be informal in that strict rules of evidence will not apply, the court does not need to take evidence on oath and it may limit cross-examination.   In particular, paragraph 4.3 of the Practice Direction permits the judge to

  • ask questions of any witness himself before allowing any other person to do so
  • ask questions of all or any of the witnesses himself before allowing any other person to ask questions of any witnesses,
  • refuse to allow cross-examination of any witness until all the witnesses have given evidence in chief, and 
  • limit cross-examination of a witness to a fixed time or to a particular subject or issue, or both.

The court has power under CPR 27.3  to grant any final remedy in relation to a small claim which it could grant if the proceedings were on the fast track or the multi-track.   Semble that must include final (but not interim) injunctions, orders for delivery up and the other usual remedies for intellectual property infringement.   The proceedings are recorded and the court must give reasons for its decisions.

Costs
CPR 63.27 (4) precludes the court from awarding scale costs under CPR Part 45.  Instead CPR 27.14 will apply which limits the costs to

  • the fixed costs attributable to issuing the claim,  
  • any court fees paid by that other party, expenses which a party or witness has reasonably incurred in travelling to and from a hearing or in staying away from home for the purposes of attending a hearing,  
  • a sum not £90 per day for any loss of earnings or loss of leave by a party or witness due to attending a hearing or to staying away from home for the purposes of attending a hearing,  and
  • a sum not exceeding £200 for an expert’s fees.
In proceedings which include a claim for an injunction or an order for specific performance the court may allow up to £260  for legal advice and assistance relating to that claim.

The court may also award such further costs as it may assess  to be paid by a party who has behaved unreasonably. A party’s rejection of an offer in settlement will not of itself constitute unreasonable behaviour for this purpose but the court may take it into consideration when it is applying the unreasonableness test.  It goes without saying that CPR Part 36 does not apply to the small claims track (CPR 27.2 (g)).

Fixed Fee Representation
In view of the limitations of the costs that can be awarded in the small claims track, chambers will offer in accordance with the Public Access Rules fixed fee advice and representation for actions in the small claims track for clients who are willing and able to conduct their own litigation. Also, members of chambers will provide training and support for any law firm or patent or trade mark agency that is prepared to offer fixed fee litigation for claims in that track.

Further Information
As I said yesterday in "Soon there will be a Remedy if Someone steals your Idea", (NIPC Inventors Club 19 Sept 2012), this seemingly insignificant rule change could be enormously important for the UK economy which is why it was recommended by Hargreaves, Gowers and Jackson.  I shall be giving a talk on these new rules to Sheffield Inventors Club at Sheffield Central Library in Surrey Street on Monday 1 Oct 2012 between 18:00 and 20:00. Anyone wishing to attend should contact Lynne Hinchcliffe on 0114 273 4712 . There will be no charge for the talk but space is limited and recent events have been very well attended.   Should anyone want to learn more of this topic, he or she should call me on 0800 862 0055 or contact me through Facebook,Linkedin, twitter or Xing, or through my contact page.

Further Reading
HM Courts & Tribunal Service "Guide to the Patents County Court Small Claims Track"
HM Courts & Tribunal Service "The Patents County Court Guide"
IPO "Resolving IP Disputes through the Courts" 1 Oct 2012
IPO "New small claims track for businesses with IP disputes"
Department for Business "New Small Claims Track for Businesses with IP Disputes" 2 Oct 2012
Jane Lambert "How to bring a Small Claim in the Patents County Court" 12 Oct 2012 NIPC
Jane Lambert   "Soon there will be a Remedy if Someone steals your Idea" NIPC Inventors Club 19 Sep 2012
Jane Lambert "Patents County Court: More on the Small Claims Track" 13 Oct 2012
Jane Lambert "Civil Justice Centre or Rolls Building" 15 Oct 2012 IP North West
Jane Lambert "How Small Businesses in Yorkshire can protect their IP" 13 Oct 2012 IP Yorkshire
Jane Lambert "The IPO's New Improved Mediation Service - will it make a difference?" 7 Apr 2013
Jane Lambert "What does the Intellectual Property Enterprise Court mean for Litigants in the North West?" 12 Oct 2013 IP NorthWest
University of the Arts, London "Own It" "The PCC Small Claims Track – What Does This Mean For SMEs?"  19 Sept 2012
AvidityIP "Patents County Court Small Claims Track enters into force"  2 Oct 2012
Barbara Cookson "Driving on the Small Claims Track" Solo Independent IP Practitioners 23 Sep 2012

Presentation
Jane Lambert "The Patents County Court Small Claims Track" 1 Oct 2012

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