Court confirms dramatic highest court fees for IP claims optional

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We review the effect of Lifestyles Equities CV v Sportsdirect.com Retail Limited on the payment of court issue fees in IP claims.

Court issue fee increases

On 9 March 2015 the Intellectual Property Enterprise Court, as well as others, was subject to a rule change which resulted in dramatic increases of the fees for issuing proceedings. The fees for issuing proceedings are divided into two categories – those for money claims and those for non-money claims. If both types of claim are made, both fees are payable.

The change in fees for money claims is where the difficulties arise: essentially 5 per cent of the amount claimed, up to a maximum fee of £10,000, and if the amount claimed is not specified, a fee of the full amount of £10,000. If the claim was for a non-monetary amount (such as an injunction) the fee would only be £480. If you knew the claim was for £20,000, the fee would be £1,000. If you did not know what the monetary amount of the claim was – it might prove to be almost nothing – the fee would be £10,000.

There is a rather large gap between £10,000 and £480 so, understandably, this has resulted in many rethinking whether this is a disincentive to bring their case at all, something that IPEC was designed to overcome.

Lifestyle Equities CV v Sportsdirect.com Retail Limited

In Lifestyles Equities CV v Sportsdirect.com Retail Limited – a case involving both alleged trade mark infringement and inducement to breach of contract – the Defendants asserted that the appropriate fee should include the fee due in respect of an unspecified amount of money (as well as for a non-money order): £10,480, instead of £480. They made an application to stay the claims against them until the Claimants had paid the appropriate court fees. But which fees are the correct fees to pay? Master Clark’s decision shows that practitioners should take care as to how they frame any claim that involves potential monetary relief.

The decision in Page v Hewetts Solicitors

Firstly, Master Clark commented that the Defendants “did not seek to argue that I should not follow Page v Hewetts Solicitors”. In that case the Court Office had indicated that the correct fee had not been paid because the case involved both a money claim and a claim for an account of profits. The issue was critical because a Limitation Act point turned on whether the correct fee had been paid in time – and Hildyard J concluded that it had not, because a claim for an account of profits was a non-money claim, so an additional fee was payable. He incidentally suggested sending the parties away for potential mediation as the next stages in court – including a further trip to the Court of Appeal – would result in disproportionate costs.

Difference between claim for account and inquiry into damages

In Lifestyle Equities, Master Clark upheld the Defendants’ argument that the position in relation to an account of profits is different from a claim for an enquiry into damages. He agreed with Hildyard J that an account is not simply an assessment of loss or a claim for money, and it is a non-money claim.

In contrast, a claim for an inquiry into damages is a money claim. There is no difference between claiming for a specified amount of damages, damages to be assessed by the court or an inquiry into damages. Accordingly Master Clark stated that the Claimants’ claim for an inquiry into damages (arising under the inducement to breach of contract claim), was in his view, “fatal to the Claimants’ argument that the whole of their claim is a non-money claim”. He ordered that the claim should be stayed until the appropriate fee had been paid – based on the very substantial estimate of potential damages (or an unspecified level of damages).

Postscript

That is not the end of the story, however, for intellectual property claims. Master Clark expressly stated that: “If, therefore, this claim had been only for trade mark infringement, then I would have held that the appropriate fee had been paid.” The basis for reaching this conclusion is explained in relation to the Defendants’ “third argument”. Their argument was that “even if an account of profits is a nonmoney claim, the claim [for trade mark infringement] includes a money claim (damages) as an alternative, so that fee 1.1 [for a money claim] is payable”. Master Clark observed (helpfully, but unnecessarily, in the light of his finding that the inquiry into damages for inducement to breach of contract was indeed in any event a money claim), that “the two forms of relief are not mere alternatives, but are mutually exclusive, and it is not until a claimant elects for an inquiry (which it may not do) that it can be said that its claim is to recover money”.

Comment

The lesson is that, in intellectual property infringement cases, in order to avoid paying the issue fee for a money claim at the outset, one should always claim an account of profits or inquiry into damages at the claimant’s option – something which, although of course normal practice, could mean a simple “damages only” IP case would still end up with a two stage procedure and a separate damages hearing, when, in some cases a simple claim for damages to be assessed at the liability trial might well be more straightforward.

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