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Tribunal Practice Notice (TPN 2/2000)

Costs In Proceedings Before The Comptroller

1. As part of its response to Lord Woolf’s report Access to Justice, the Patent Office has, in consultation with its users, reviewed the awarding of costs in proceedings before the Comptroller. This Practice Notice sets out the Comptroller’s practice on costs following that review.

Summary

2. The following are the main points addressed in this Practice Notice:

  • The present policy of costs awards being informed by a scale set by the Office in consultation with its users, and reviewed from time to time, will continue. (paragraph 8)
  • The scale of costs has been revised: the revised scale shown in annex A PDF document(21Kb) will apply to proceedings commenced on or after 22 May 2000, while the unrevised scale shown at annex B PDF document(15Kb) will continue to apply to proceedings commenced before that date. (paragraph 11)
  • Hearing Officers will be prepared to exceed the scale when circumstances warrant it, in particular but not exclusively to deal proportionately with breaches of rules, delaying tactics and other unreasonable behaviour. (paragraph 8 and 9)
  • Hearing Officers will actively consider making an award at preliminary hearings and not merely carry all costs over to the final decision. (paragraphs 12 and 13)
  • A deadline for payment will be attached to a costs award. (paragraph 14)
  • Security for costs will be determined on application for an amount appropriate in the case. (paragraph 16)
  • In appeals to the High Court or the Registered Designs Appeal Tribunal against her without-notice decisions, the Comptroller will generally seek her costs, while being willing not to do so, for example in cases where the party is likely to suffer some form of hardship if a costs award were made against them. (paragraph 19)

The Comptroller's Power and Discretion

3. The Comptroller and hence Hearing Officers acting for her have a wide discretion to award costs under section 107 of the Patents Act 1977, section 30 of the Registered Designs Act 1949, section 68 of the Trade Marks Act 1994, section 44 of the Trade Marks Act 1938 and section 250 of the Copyright, Designs and Patents Act 1988. Factors influencing the exercise of the Comptroller's discretion in relation to the award of costs have been considered by Hearing Officers from time to time in their decisions. The leading case, however, is Rizla Ltd's Application [1993] RPC 365, a patents case in which judgement was given by Anthony Watson QC sitting as a Deputy Judge of the High Court.

4. On page 374 of Rizla, the Deputy Judge held that:

  • "The wording of section 107 could not in my view be clearer and confers on the Comptroller a very wide discretion with no fetter other than the overriding one that he must act judicially. I see no reason why the previously adopted practice could not be altered by the Comptroller in the same way as from time to time an important decision leads the courts to adopt a different attitude to what had previously been accepted practice. Thus, if the Comptroller felt it was appropriate, a form of compensatory costs could become the norm."

He went on to say:

  • "As a matter of jurisdiction, I entertain no doubt that if the Comptroller were of the view that a case had been brought without any bona fide belief that it was soundly based or if in any other way he were satisfied that his jurisdiction was being used other than for the purpose of resolving genuine disputes, he has the power to order compensatory costs."

On page 377, towards the end of his judgement he said:

  • "Counsel was unable to refer me to any reported case where such a strong order for costs had been made by the Comptroller and therefore there is no established yardstick to measure what might be regarded as exceptional. I believe a case such as the present can only be regarded as exceptional if it can be shown that the losing party has abused the process of the Comptroller by commencing or maintaining a case without a genuine belief that there is an issue to be tried. In my view, this is not shown to be such a case."

Significantly, the Deputy Judge added:

  • "There are of course a large number of other circumstances such as deliberate delay, unnecessary adjournments etc. where the Comptroller will be entitled to award compensatory costs, but it is unnecessary to define what is clearly a wide discretion."

5. In the light of Rizla, the Office considers that the existing legislation provides the power to operate a nominal cost regime or a full cost recovery regime - or anything in between - and that no legislative change is necessary to put in hand any revision of that sort.

The use of a scale

6. It is the long-established practice that costs in proceedings before the Comptroller are awarded after consideration of guidance given by a standard published scale and are not intended to compensate parties for the expense to which they may have been put. Rather, an award of costs is intended to represent only a contribution to that expense.

7. In comments received from users, this existing practice was defended by some, partly on the grounds of maintaining the tribunal as a low cost one, and partly because the scale provides some certainty for businesses in budgeting for the costs they might incur. Others felt that the Office’s powers in relation to costs should be significantly increased. It was also suggested that the level of costs should reflect the Office’s disapproval of any breaches of the rules or unreasonable delay or complication caused by a party.

8. Users' comments taken as a whole supported the general thrust of the present policy based upon fixed reasonable costs, provided that there is the flexibility to award costs off the scale where the circumstances warrant it. The Office also believes this is the way to proceed, since it provides a low cost tribunal for all litigants, but especially unrepresented ones and SMEs, and builds in a degree of predictability as to how much proceedings before the Comptroller, if conscientiously handled by the party, may cost them. The present policy of generally awarding costs informed by guidance drawn from a scale will therefore be retained. However, the Office envisages the necessary flexibility as going beyond the criterion of "without a genuine belief that there is an issue to be tried" developed in the Rizla case. It is vital that the Comptroller has the ability to award costs off the scale, approaching full compensation, to deal proportionately with wider breaches of rules, delaying tactics or other unreasonable behaviour. The fact that this flexibility and the Comptroller's willingness to exercise it in suitable cases has been the subject of consultation and publicity means that there will have been "an established yardstick" underpinning a change in the previous practice.

9. It would be impossible to indicate all of the circumstances in which a Hearing Officer could or should depart from the scale of costs; indeed it would be wrong to attempt to fetter his or her discretion is such a way. The overriding factor is to act judicially in all the facts of a case. That said, it is possible to conceive of examples. A party seeking an amendment to its statement of case which, if granted, would cause the other side to have to amend its statement or would lead to the filing of further evidence, might expect to incur a costs penalty if the amendment had clearly been avoidable. In another example, the costs associated with evidence filed in respect of grounds which are in the event not pursued at the main or substantive hearing might lead to award which departs from the scale. Costs may also be affected if a losing party unreasonably rejected efforts to settle a dispute before an action was launched or a hearing held, or unreasonably declined the opportunity of an appropriate form of Alternative Dispute Resolution (ADR). A party’s unnotified failure to attend a hearing would also be a relevant factor.

The numbers on the scale

10. The views of users, and the feeling of the Office itself, is that the amounts set out in the current scale, last revised in a notice published on 1 June 1994, should be adjusted to take better account of the real cost involved in litigation before the Comptroller.

11. With the implementation of the Trade Marks Act 1994 and the need for parties to take into account decisions of OHIM and the ECJ, and decisions on Directive issues handed down by courts in other jurisdictions, the costs of litigation before the Registrar are becoming somewhat higher than in the recent past. Similar factors are also arising in patents cases. In addition, the nature of preliminary hearings is becoming more significant and time-consuming. It is therefore not unreasonable to uprate the present scale of costs to reflect more appropriately the actual costs of litigation, while still maintaining the underlying contribution-not-compensation approach. A survey of recent substantive decisions indicates that the average award of costs by Hearing Officers in patents and trade marks cases is around £700. This is an insignificant sum, even as a contribution, in the current climate. The Office has proposed, and users have not disagreed, that an average closer to £2,000 would be more suitable: this would not represent full cost recovery but would be a realistic contribution. A revised scale which should deliver an average award of that order is set out at annex A. The new scale at annex A will be applicable in respect of an award of costs in proceedings commenced on or after 22 May 2000. The scale published in the Office’s journals on 1 June 1994, and reproduced at annex B, will continue to apply in proceedings commenced before that date.

Timing of costs awards and their payment

12. Users have remarked that the Office should be encouraged to award costs at any stage of proceedings and to order that an identified sum be paid immediately or within a limited and defined number of days. The Office agrees that in the current post-Woolf climate a regime which associates costs more closely with their cause is desirable. It is too easy when costs are, as now, generally rolled over into the final decision, for the reason they were awarded to be lost sight of, for example when an award is made to penalise the taking of a purely technical point to a preliminary hearing.

13. The Office therefore intends, far more frequently than in the past, to make costs orders as the cause of them arises. Examples of situations in which such an award might be made are:

  • (a) where "blame" can be attached to one or the other party, eg a missed deadline;
  • (b) where amendment to the statements of case is being sought (particularly when evidence has already been filed by the other side), although that could be tempered if the statements are being amended to remove a ground and make them more focussed.

14. A deadline for payment will be attached to the award, that deadline being 7 days after the expiry of the appeal period, unless an appeal is lodged in which case payment of the costs awarded would be suspended pending the appeal. So, for example, in the case of a costs award made following a patents hearing on a procedural point, if the decision was not appealed the costs would be payable within 7 days after expiry of the 14-day appeal period, and failure to make payment would have implications for the continuation of the case.

Licence of Right Cases

15. It has been customary in licence of right cases for the Comptroller not to make an award of costs unless one side pursues unreasonable terms or the circumstances of the particular case are sufficiently unusual to warrant a departure from that practice. It is not intended to alter that approach, except to the extent that the flexibility to address procedural difficulties may bite.

Security for Costs

16. It has been the normal practice in patent proceedings for the Office automatically to require a party that is not based in a Brussels Convention state to provide security for a fixed sum of £900. This contrasts with the practice followed in trade mark proceedings and the courts where security for costs is only ordered on application and following consideration by the Hearing Officer or the judge. As there is no good reason why the practice in patents proceedings should be different, the Office has decided to bring it into line with that followed elsewhere and to consider awarding such security only on application and not on the Office's own initiative. Moreover, instead of an award of a standard amount such as £900, the award should be determined, after consideration of argument and, if necessary evidence, wholly on a case by case basis proportionate to the estimated costs likely to be awarded at its conclusion.

"Without notice" (also known as ex parte) proceedings

17. The Office has decided not to change its practice of not awarding costs in "without notice" proceedings before the Comptroller.

18. In trade mark cases appealed to the Appointed Person, it is regarded as in keeping with the low cost of that appeal route for each side to bear its own costs. The Comptroller will continue with that approach.

19. As for appeals to the High Court (or Court of Session in Scotland) or the Registered Designs Appeal Tribunal (RDAT), the practice has varied as between the patents, designs and some trade mark appeals which follow that route. Should the Comptroller lose on appeal, she would expect costs to be awarded against her; there is therefore an argument that the public purse should be recompensed by a similar award should the decision go in the other direction. On the other hand, it might be argued that litigants in person should be given special treatment and that the Comptroller should not seek costs in such cases. Having reviewed the situation in consultation with users, it has been decided that on balance the Comptroller should seek costs in the full range of the without-notice appeals which she defends in the High Court or RDAT, while being willing not to do so in cases where the party is likely to suffer some form of hardship if a costs award is made against them, or where a significant point of general legal interest is involved.

20. Current contact details for enquiries about this notice are:

Sue Williams
Patents and Designs Directorate

Intellectual Property Office
Concept House
Cardiff Road
Newport
South Wales
NP10 8QQ
United Kingdom

Tel 01633 814736
Fax 01633 814491

Raoul Colombo
Trade Marks Directorate

Intellectual Property Office
Concept House
Cardiff Road
Newport
South Wales
NP10 8QQ
United Kingdom

Tel 01633 811407
Fax 01633 811175

A Brimelow
Comptroller-General of Patents, Designs and Trade Marks
19 April 2000