01/11/10

By Stephen Gardiner, Patent Attorney at Dehns.

Many small businesses fear court. The cost of enforcing your rights or defending yourself when challenged can be prohibitive. To a certain extent you can control your own costs, but you cannot control your opponent's costs.

Therefore an opponent with a big budget can be a big worry. If you win, you should get your costs paid, but if you lose, that big budget suddenly becomes your big problem. The fear of losing can therefore be too off putting even when there is a strong hope of success.

20 years ago, the Patents County Court (PCC) was set up as an alternative to the High Court, to handle smaller cases at lower cost. However, the procedural rules of the two courts were the same, making it difficult to streamline the cases in the PCC, but from 1 October 2010 the PCC rules are different.

There is still no limit on the award of damages that the PCC can make (although a proposed limit of £500,000 is in the pipeline), but there are now limits on the costs that the successful party can claim.

The new rules introduce a limit of £50,000 of costs in a trial to determine liability. If a party is found liable, the costs are capped at £25,000 in the subsequent enquiry into the level of damages. And these are not just caps on the total costs.

each stage of the case has a maximum amount that can be awarded for, so if you pull out early, your costs liability is further reduced. Of course your opponent can still spend all it likes on the case, but big budget companies should no longer be able to scare off smaller businesses with threats of potential costs - they'll have to pay the excess themselves.

Trials should also be faster. Comprehensive statements of case containing all the facts and arguments up front should help the judge to identify the key issues and control the further trial procedures (experiments, witness statements, expert's reports, ...) based on a cost-benefit analysis. There is also now a policy to keep the trial itself to no more than 2 days in length.

The reduced cost liability should bring cases within the realms of litigation insurance (frequently impractical in the High Court), thus adding to the attractiveness.

Overall, both sides should have a much better idea of where they stand with regard to costs at each stage of the trial. You know what you have spent and what you might get back if you win, and you know the maximum costs claim against you if you lose. This should mean that small businesses can budget more easily and should have the confidence to stand up for their rights.