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good news for SMEs wanting to enforce intellectual property

28 July 2017
The Intellectual Property and Enterprise Court (IPEC) is an attractive forum for small and medium-sized enterprises (SMEs) wishing to manage their costs risk. This is because there is an overall cap on the costs that can be recovered from the losing party, as well as a number of phase caps. However this risk protection can be undone if cases commenced in the IPEC are transferred to the High Court too readily. This was the situation faced by 77M Limited when Ordnance Survey Limited and HMSO applied for 77M’s IPEC copyright infringement claim against them to be transferred.

77M had taken out after-the-event insurance to cover the opposing side's costs, but only had cover up to the £50,000 overall costs cap in IPEC. It was found to be in no position to fund the litigation by itself, if that included the risk of high costs to be paid should it lose in the general Chancery Division.

HH Judge Hacon therefore refused the application, as a transfer to the High Court “would raise a serious likelihood of having the practical effect of blocking 77M's access to justice”. This factor was “enormously important and may overwhelm other factors” relevant to whether or not a claim should be transferred out of IPEC (which include the value of the claim and any injunction sought, the complexity of the issues involved and the estimated length of trial).

In response to the clearer costs regime in IPEC, policies are now available which provide lower levels of financial cover for lower premiums. This decision will provide some comfort to SMEs relying on such policies to enable them to police their IP who are anxious not be left with a costs liability beyond the cover they have purchased.

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