Unpaid costs re-revisited

The IPKat didn't really expect the issue of unpaid costs in contested IP proceedings to disappear (see earlier post, "Unpaid Costs Revisited", here). That will only happen once there are no more unpaid costs. He has however been giving some thought to the letter, below, from Andy Bridle (Bridle Intellectual Property Limited, Canterbury), who has acted on behalf of a client who was awarded costs following a vexatious trade mark opposition by a competitor and who has been unable to recover the costs award that was made in his client’s favour.  He writes:

"...  It occurred to us that the attorneys for the other side could be considered to be liable for their client’s costs, as they are acting on behalf of their client. On this basis, a complaint could be raised with the relevant regulatory body for the attorneys in question (e.g. the Intellectual Property Regulation Board, IPReg, in the case of UK attorneys), if the costs award was not paid by the attorneys for the other side, on behalf of their client. This should represent a cost-effective method of recovering a costs order, as firms would not relish the idea of being dragged before the body responsible for regulating their industry for alleged non-payment of costs incurred by their client. It would then be up to the attorneys in question to recover this cost from their client in the same way that they would recover the cost of an official fee paid on behalf of their client.

I suspect that most firms would start to ask clients for funds to be held on account when asked to represent them in such proceedings, to cover the possibility of a costs award being made against their client. This should make parties think seriously before proceeding down the opposition route.

Of course, there exists the possibility of a party bringing proceedings without having professional representation. In such cases, it would be a relatively straightforward matter to increase the official fees in such cases to provide for a proportion of the fee being held by the Office in the event of a costs order being made against that party. Thus the fees payable by a party represented by a professional representative would be £X (or Euros) and the fees payable by a party representing itself would be £X+Y, where £Y would be refunded in the event that the party in question is successful or used as payment (or part payment) of the costs order in the event that a costs order is made against them. If the party is defending an opposition filed against them, then they would simply pay £Y when filing their counterstatement if they choose not to be represented.

The USPTO seems to be able to cope with a two-tier charging system (small entity fees and large entity fees), so such a system which charges different fees depending on the nature of the party in question should not be overly difficult or expensive to manage.

In terms of our experience, we are seriously considering raising a complaint with IPReg that the firm of attorneys representing the other side are breaching their professional duty by failing act on behalf of their client in settling the costs award that was made against their client".

Both Andy and the IPKat (who is mildly annoyed that he didn't think of putting this on the list of options in his recent poll) would like to hear from readers in the UK and beyond as to whether they think this might be a viable remedy to a problem which, though small in global terms, has a disproportionate power to annoy and frustrate successful parties in opposition proceedings.

Meanwhile, from Graham Burnett-Hall (a partner in Marks&Clerk Solicitors LLP) comes the following suggestion:

"With regard to the non-payment of costs relating to Community trade marks, I suggest a procedure by which, if any costs order was not paid within 28 days, the creditor could have the details of the debtor added to a list to which all credit rating agencies would be notified, or at least have access. The prospect of being given a bad credit rating should encourage prompt payment".

This Kat, who has at times been infuriated by the difficulty of raising credit even though he is the proud possessor of a perfect credit rating that stretches back into the mists of antiquity, would hate this fate to happen to him, but he wonders whether it would have the desired effect.  Again, readers' thoughts are welcomed.