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UK – Global Flood Defence Systems v. Johan van den Noort / Costs

17 Feb 2016

Global Flood Defence Systems Limited and UK Flood Barriers Limited v Johan Van Den Noort Beheer BV, Johann Heinrich Reindert Van Den Noort and Flood Control International Limited, High Court of Justice of England and Wales, Intellectual Property Enterprise Court (HHJ Hacon), London UK, 5 February 2016, Neutral Citation Number: [2016] EWHC 189 (IPEC)

On 5 February 2016, Judge Hacon found that owing to the cost capping provisions for cases brought in the Intellectual Property Enterprise Court (the “IPEC”), costs cannot be assessed in IPEC cases until all of the issues the subject of the claim have been resolved. This decision was handed down shortly after Judge Hacon’s judgment on two out of the three substantive issues of the case (previously reported here).

The case concerned three distinct issues: (1) an allegation by the claimants that the defendants had made groundless threats of patent infringement; (2) a claim by the claimants for misrepresentation; and (3) a counterclaim by the defendants for minimum royalties due under a patent licence agreement. On 1 February 2016 Judge Hacon held that the claim in relation to the first issue should be adjourned, the claimants’ claim for misrepresentation failed and the defendants’ counterclaim for minimum royalties succeeded. The defendants sought their costs in relation to issues (2) and (3), subject to the IPEC’s costs cap. The claimants submitted that an order for costs could not be made until judgment had been handed down in relation to issue (1).

The Court considered the relevant provisions of the Civil Procedure Rules (CPR 45.31), which provide:

(1) Subject to rule 45.32, the court will not order a party to pay total costs of more than –
a) £50,000 on the final determination of a claim in relation to liability; and
b) £25,000 on an inquiry as to damages or account of profits.

(2) The amounts in paragraph (1) apply after the court has applied the provision on set off in accordance with rule 44.12(a).

(3) The maximum amount of scale costs that the court will award for each stage of the claim is set out in Practice Direction 45.”

The Court explained that the normal procedure at the end of a trial in the IPEC is for the Court to decide which party is the overall winner. Each of the costs incurred by the winner at each stage of the claim will then be subjected to summary assessment and, if relevant, set-off will be applied. The total of these costs will be awarded, subject to the £50,000 costs cap (BOS GmbH & Co KG v Cobra UK Automotive Products Division Ltd [2012] EWPCC 44 applied).

In this case, it was not possible for the Court to decide on an overall winner as one issue remained to be resolved. The assessment of costs was therefore adjourned. In reaching this decision, Judge Hacon considered the construction of the word “claim” in the costs cap provision of CPR 45.31(1)(a), finding that it must relate to a single set of proceedings as a whole (i.e. everything in dispute under one claim number), rather than all of the claims that have been the subject of a final determination by the Court. To find otherwise would provide separate costs caps for separate parts of a single set of proceedings, which cannot be in accordance with the overall intention of how the IPEC should work (Birss J’s decision in Liversidge v Owen Mumford Limited [2012] EWPCC Civ 40 followed).

Read the decision here.

Headnote: Lucie Fortune, Bristows LLP