The new disclosure pilot scheme (the Pilot) in the Business and Property Courts under Practice Direction 51U (PD51U) aims to manage the costs associated with disclosure. It sets out strict guidance on preservation of documents, the level of disclosure to be provided with statements of case, and preparation for disclosure and discussion between the parties prior to the case management conference (CMC), and then sets out different levels of disclosure which may be ordered. The intellectual property (IP) courts can show this works: they have been innovating along these lines for some time. This article discusses some experiences in the IP courts, and how the IP court procedures relate to and provide lessons for the Pilot.
IP litigants in the English courts can choose a number of different routes, including the Intellectual Property Enterprise Court (IPEC), the Shorter Trial Scheme (STS), the Flexible Trial Scheme (FTS), and full High Court proceedings (including the Patents Court), as well as a small claims court. The forum will depend on the nature of the right in dispute, the complexity of the claim and its value. The rules are tailored with this in mind.
Disclosure in IP cases
IP judges are known for their active case management, including in relation to disclosure. The approach operating in the IPEC is a good example. The Patents Court and High Court have also led the way, with significant limitations in disclosure applying to “normal” patent cases, active application of proportionality including refusing disclosure entirely, and a focus on narrowing issues, such as limiting the examples of unregistered designs relied on.
The Pilot does not, unless otherwise ordered, apply to proceedings in the IPEC, the STS and the FTS, and the provisions limiting disclosure in the Patents Court in patent and registered design cases will continue to restrict any requirement for disclosure under the Pilot. Where the Pilot does apply in IP cases outside these limits, it is expected that it will encourage judges to be even more proactive in applying selective disclosure; the judges are already robust in requiring a party to apply a cost/benefit approach.
IPEC – learning lessons quickly
The IPEC deals with the smaller, shorter, less complex IP claims – especially aimed at smaller businesses. Established in the 1990s as the Patents County Court with the aim of making IP litigation more accessible, it was reconstituted as a specialist list within the High Court in October 2013. The procedures are designed to manage smaller cases, with already limited disclosure requirements. Parties must set out their case fully in the statement of case, including providing initial supporting documentation. “Standard disclosure” does not apply, no disclosure reports are required, and ANY disclosure is only by order of the court. The court explicitly applies a cost-benefit test, giving permission in relation to specific and identified issues only. This is quite similar, but somewhat simpler, than the scheme adopted by the Pilot.
The recent patent case of Coloplast AS v Macgregor Healthcare Ltd is a good illustration of the approach – as well as paying heed to the Pilot. The case concerned a ready-to-use urinary catheter. The parties argued over whether it was well known that there was a customer demand for one type of catheter. The order for disclosure was limited to specific categories of documents. The evidence showed however that Coloplast must have other documents which were highly relevant to the issue of customer demand for these particular types of catheter.
Judge Hacon said that it was not satisfactory that an order for specific disclosure, however framed, should result in a party concluding that it need not disclose documents which to its knowledge relate to a material and central issue and which it knows to be in its possession – ie this approach is in line with the new disclosure regime:
“… All five proposed disclosure models A to E will require disclosure of adverse documents (as there defined). The pilot will not apply in the IPEC. Nonetheless, hereafter where disclosure is ordered at all in the IPEC it is likely that disclosure will include, as a basic minimum, known adverse documents. Since such documents do not require a search, save in unusual circumstances their disclosure will accord with the IPEC goal of minimising costs.”
“My second observation is that although the IPEC procedure is designed to keep disclosure to the essential minimum – generally, running an increased risk of excluding relevant documents from disclosure is a price well worth paying for the savings in cost and time – this should not be allowed to result in a real likelihood that the court will reach a false understanding of an important issue. The overriding objective, including making sure that the case is heard fairly, must always take precedence...”.
Patents and registered design cases (if they are large, complex or high value) are heard in the Patents Court. Standard disclosure is already modified. For example, in relation to validity of a patent, disclosure is normally limited to a four year window – two years either side of the priority date of the patent (the date the patent was filed unless priority is claimed from an earlier application).
In Positec v Husqvarna, Positec, who wished to sell robotic lawnmowers in the UK, sought to revoke Husqvarna’s patent. Husqvarna initially prepared a Disclosure Report for documents within the four year window but it later argued that no validity disclosure should be given. Birss J considered the correct approach to disclosure in light of the menu of options set out in CPR 31.5(7) – ranging from dispensing with disclosure, through specific disclosure and standard disclosure, to any other appropriate order. He commented that “disclosure from the patentee in obviousness cases has been a notorious point for many years”; and that proportionality was important. The two major considerations are the likely probative value of the material and the cost in the context of the proceedings as a whole. Birss J observed, refusing an order for disclosure:
“Experience in IPEC shows that the obligation to disclose documents which may be adverse to a party's case can be preserved as a critical aspect of a fair trial at common law within an issue by issue based disclosure regime in which disclosure on some issues, such as obviousness, is not ordered because the likely probative value of what is produced is not worth the cost."
"Applying what I perceive to be the right approach under the Civil Procedure Rules as they now are, I am not satisfied that an order for standard disclosure, or an order for issue based disclosure including the issue of obviousness, would be in accordance with the overriding objective in this case. This is an ordinary obviousness case with no special features which might make such disclosure worth the cost”.
If Husqvarna later changed its obviousness case, the judge commented that there was still room in the timetable for focussed disclosure (ie following the exchange of fact and expert evidence in which the issues will be clarified) if ordered.
We may see further reduction in disclosure in the larger patent and design cases as a result of the introduction of the new disclosure regime but, as illustrated above, the IP judges already manage disclosure fairly tightly in such cases.
The Shorter and Flexible Trials Schemes
The schemes are suitable for some IP cases - those unlikely to require extensive disclosure and/or reliance upon extensive witness or expert evidence. The idea is that the schemes should help to foster a change in litigation culture, aims aligned with those of the new disclosure regime. In the STS the protocol on pre-action conduct does not apply, but parties must provide reasonably full statements of case and a core bundle of documents they rely on – similar to Initial Disclosure under the Pilot, but with no explicit reference to known adverse documents. Then a list of issues must be agreed and filed prior to the CMC and if disclosure is sought on a particular issue, the request must be made not less than 14 days before the CMC. Disclosure lists include reliance documents and documents requested by the opponent that a party has agreed to produce or was ordered to produce. Applications for specific disclosure and further information made after the CMC are discouraged under the STS. Again the procedure is similar to that under the Pilot.
Other IP cases
Other IP cases will often be larger, more complex trade mark and passing off, copyright and unregistered design right disputes, often involving substantial disputed issues of fact. The judges often apply active case management in the interests of proportionality – for example narrowing the issues to be addressed, and controlling survey evidence. Further streamlining brought about by the Pilot is to be welcomed.
Extended Disclosure will often be required in such cases. Any such order must be “reasonable and proportionate” having regard to the overriding objective which includes the nature and complexity of the issues in the proceedings, the importance of the case including non-monetary relief (the injunction is often the most important remedy in IP cases), the probative value of the documents sought, the number of documents, the ease and expense of searching, the financial position of the parties and the need for proportionality. The proposed Disclosure Model will depend on the nature of the issue identified (different models can be proposed for different issues) and no model will apply without the approval of the court.
The different models are explained in PD51U. In summary, Model A is disclosure confined to adverse documents; Model B is limited disclosure; Model C is request-led search-based disclosure; Model D is narrow search-based disclosure, with or without narrative documents; and Model E is wide search-based disclosure (similar to Peruvian Guano on specific issues, and only to be ordered in an exceptional case).
The Disclosure Review Document is the document by which the parties must identify, discuss and seek to agree the scope of any Extended Disclosure sought of Model C, D or E. That exercise is likely to take time. Given that the document needs to be filed before the CMC, it is likely to lead to the front loading of costs even if the early focus on issues and curtailing of disclosure leads to cost saving later down the line.
Key themes that can be distilled from the new disclosure regime are the need for greater thought to identify issues at an earlier stage of the proceedings (and prior to the first CMC), encouragement for parties to discuss and agree the issues in dispute, narrower and more specific disclosure requests/orders and staged disclosure. Although the Pilot does not apply to a number of routes for IP cases, parties would be well advised to heed to overall direction.
There are clear lessons to be learnt from the way IP courts have approached these issues. Active case management is not an unusual feature of IP cases. The cultural shift was already well underway in the IP courts and it is likely that the new disclosure rules will complement and accelerate it. The new provisions will encourage an even more limited approach to disclosure and further streamlining, although there will always be cases where wider disclosure is appropriate.