We previously reported that the Civil Justice Council had proposed a pilot for a £500,000 costs cap for recoverable adverse costs in patent cases in the Shorter Trial Scheme (STS) as part of its Costs Review: Final Report. On 28 November 2023, the Civil Procedure Rules Committee approved this £500,000 adverse costs cap on liability (with a £250,000 cap on any quantum phase) and confirmed it will operate as a three-year pilot on all patents claims issued in the STS from 1 January 2024.
The STS affords parties the opportunity to resolve disputes in a more streamlined manner, with increased court control of the management of the dispute. In practical terms, this includes placing limits on the length of pleadings, disclosure, and witness evidence. Further, a docketed judge sits for a maximum four-day trial (including reading time) and endeavours to hand down judgment within six weeks of the same. The aim is to lead to a reduction in costs, with judgment within a year of the case starting (though any appeal to the Court of Appeal would be conducted in the usual way – though the court will seek to take into account the fact that the face was in the STS and the desire for expedition).
Whilst the Intellectual Property Enterprise Court is suitable for low-value patent claims (with a £60,000 cost cap for a final determination of liability, £30,000 cost cap on any quantum phase and a £500,000 cap in damages), and the general Patents Court route provides no cap at all, the STS and its new £500,000 adverse costs cap for a final determination of liability, and £250,000 cost cap on any quantum phase will be well suited to mid-tier and mid-value patent claims. For such disputes, using the STS will provide both claimants and defendants greater certainty as regards the financial risk of issuing or defending proceedings, without limiting access to damages.
The £500,000 cost cap proposal was submitted by the Intellectual Property Lawyers' Association (IPLA), who undertook an analysis of the latest patent claims brought under the STS, and highlighted five cases in which cost orders had varied from £410,621.10 - £714,684, so it is notable that the cap is at the lower end of this scale.
Although the IPLA recommended that the cost cap being introduced as a five-year pilot, it will operate as a three-year pilot for now. Claimants must specify that the claim has been started in the STS on the Claim Form, and the cost cap will form part of the usual procedural rules. Should a defendant decide that the case is too complex or otherwise unsuitable for the STS, it may apply to transfer the claim out.
The STS will now potentially be a more attractive option for litigants in certain patent disputes, which will need to be taken into account when considering patent enforcement and challenge strategies, including alongside potential litigation in the Unified Patent Court.
The next key question is when, or if, the pilot should be extended to other areas of IP, with suggestions that it could extend to all STS cases in the IP list.