Nexus: Costs

[Guest Post] Fighting for your IP rights in Denmark – it’s expensive, but now maybe less so?

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With thanks to Hanne Kirk and her team at Gorrissen Federspiel (Denmark):

“Something is rotten in the state of Denmark” - so were the words of Marcellus in Shakespeare’s Hamlet. He could have very well been speaking about the Danish court system in 2019. This may be stretching the point a bit, but the fact remains, nevertheless, that Danish companies are increasingly turning their backs on the legal system. From 2010 until now, the number of lawsuits filed before the Danish district courts has been reduced by half.

A (partial) explanation for the trend away from civil lawsuits may be found in the limited level of costs recovery granted to the winning party. In Denmark, the losing party in a lawsuit is required only to reimburse the winner for costs “which have been necessary for the adequate conduct of the case” – and this assessment is left to the court’s discretion. Costs awards are therefore generally granted for amounts far less than the actual costs incurred.

With a new decision issued on 29 August 2019 by the Danish Eastern High Court (Danish only), the tides may now be turning. A new precedent may just have been set for the recovery of a party’s costs incurred by the use of experts, including European Patent Attorneys, and not least for legal costs recovery in general in Danish patent disputes. European Patent Attorneys, in particular, are often brought as expert witnesses by the parties, and their statements and testimonies (although admitted as evidence of a party rather than as impartial expert statements) tend to be regarded as highly persuasive.

The case concerned the companies Gilead and Sandoz who had been in a legal dispute over a potential infringement of Gilead’s patent for the products “Emtricitabin and Tenofovirdisoproxil (as fumerat)”. Gilead was granted a preliminary injunction, which Sandoz appealed. While the appeal was underway, Gilead’s patent was declared invalid in a separate case against a third party. Sandoz therefore brought a separate motion before the Maritime and Commercial High Court (MCHC) to lift the preliminary injunction.

Sandoz won the motion. In litigating the motion, Sandoz incurred actual documented costs of DKK 754,265 (approx. EUR 100,000), the majority of which were legal fees, while the rest were costs incurred by expert statements, including from European Patent Attorneys. The MCHC granted Sandoz a costs award of DKK 60,300. In other words, Sandoz, as the winner of the lawsuit, was able to recover less than 8% (!) of its actual costs.

Sandoz appealed the judgment on costs recovery to the Danish Eastern High Court. The appeal included an assessment of the total recovery of costs incurred in the connected suits between Sandoz and Gilead, including the appeal before the High Court.

The High Court held that the losing party, Gilead, should reimburse Sandoz for 49.5% of its legal costs and 100% of the costs spent on European Patent Attorneys.

Sandoz yesterday (artist’s impression)

In an earlier (unpublished) decision issued by the Eastern High Court on 31 August 2016 regarding legal costs in a patent dispute, the High Court held that the losing party, Morten Lundvig ApS, should reimburse the winning party, Simpson Strong-Tie A/S, in full for the costs spent on a European Patent Attorney. With regard to the remaining legal costs, however, the High Court granted Simpson Strong-Tie A/S a modest cost award of just below 11% of the actual legal costs.

In light of this earlier 2016 decision, the new 2019 decision issued by the Eastern High Court in the case of Sandoz vs. Gilead is likely to set a new precedent in Denmark for the recovery of legal costs and European Patent Attorneys’ fees in particular. Prior to these two decisions, costs incurred by a party’s use of European Patent Attorneys as expert advisers were considered recoverable only to the extent the costs had been“necessary for the adequate conduct of the case”.

In the recent 2019 decision, the High Court considered article 14 of Directive 2004/48 on the enforcement of intellectual property rights in light of the CJEU’s recent decision in Case C-57/15, United Video Properties Inc., and found that all European Patent Attorneys’ fees should be refunded 1:1. In doing so, it seems that theHigh Court is moving towards full recovery of patent attorneys’ fees 1:1, without performing a discretionary “necessary for the adequate conduct of the case” assessment.

The case is a step in the right direction for the recovery of European Patent Attorneys’ fees in Denmark. What’s more, the award of actual legal costs incurred was set at 49.5% of the documented legal costs. This is a high level of costs recovery compared to most cases – and potentially the beginning of a general trend towards higher costs awards. However – and more likely – it may also just underline the point that the level of costs awards granted by Danish courts is too low, and that this may have lead companies to turn their backs on the Danish court system. Indeed, the Danish recovery rate has long seemed to be much lower than in comparable jurisdictions such as Norway and Sweden. In these neighboring Nordic countries, the winning party is generally awarded full costs, unless it is apparent that a full award is not merited (e.g. where the winning party’s legal costs are exceedingly and unnecessarily high compared to the costs spent by the losing party).

Danish policymakers have started to look into the trend away from civil lawsuits in Denmark. We will have to wait and see if any political action is taken. This GuestKat is hopeful that an increase of the costs recovery level awaits ahead. For now, at least, it is a welcome sight that European Patent Attorneys’ fees are ostensibly fully recoverable.

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Bocacina v Boca: a costly affair, but who pays for what?

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The Intellectual Property Enterprise Court (“IPEC”), which superseded the Patents County Court for England and Wales in 2013, is acclimatising nicely to its new name, though it has been a few months since the first decision to come from the IPEC (Bocacina Ltd v Boca Cafes Ltd [2013] EWHC 3090 (IPEC)) reached the database of the British and Irish Legal Information Institute BAILII: this decision was reported on by Darren Smyth on the IPKat back in October, here.

This Kat is in a particularly reflective and sentimental mood, since the costs decision in this case was published just last week (the costs decision can be read in full on BAILII here). So what was the costs ruling about?

Background

Just to recap, the trial judgment, delivered on 14 October 2013, involved a successful passing off claim by the claimant, who owned a restaurant/café in Bristol called ‘Bocabar’, against the defendant who opened up another café called ‘Boca Bistro Café’ in close proximity to the claimant’s restaurant. The court held that a significant number of members of the public would be likely to be confused into believing that the two cafes were connected, given their close proximity and the common use of the word ‘Boca’ in their respective names. Accordingly, a successful claim for passing off was established, and the defendant’s registration for the word mark BOCA BISTRO CAFÉ was held to be invalid.

Costs judgment

The “raison d’etre” of the IPEC is to provide a cost-effective alternative to IP litigation. Daniel Alexander QC stated in his judgment that

‘the object of this court is, however, not only to decide cases more efficiently and cheaply but also to help SMEs resolve disputes without the need for a trial. Quite often, the biggest obstacle to early resolution in such cases is costs….one of the ways in which this court can achieve this aim is to take account of reasonable admissible offers made to settle a case at an early stage of proceedings in determining what costs should be paid, if an action is pressed to trial in the face of such offers.’

It is also worth reminding ourselves that under the Civil Procedure Rules CPR Rule 44.(2)(4), in deciding what order (if any) to make about costs, the court will have regard to all the circumstances, including –

(a) the conduct of all the parties;

(b) whether a party has succeeded on part of its case, even if that party has not been wholly successful; and

(c) any admissible offer to settle made by a party which is drawn to the court’s attention, and which is not an offer to which costs consequences under Part 36 apply.

In this case, the claimant claimed £23,460 worth of costs. Both parties put forth their submissions in relation to costs (although the defendant’s submissions were 21 days late), and the defendant asked the court to pay particular attention to an offer that was put forward in December 2012, just after the Particulars of Claim were served. In its offer the defendant had proposed

(1) to change its name to a name which didn’t include the word ‘Boca’,

(2) that it would not use the name Boca as part of its trading style in Bristol or the surrounding areas, and

(3) that it would surrender its UK trade mark registration. The defendant had then asked for 9 months to implement these proposals.

The claimant rejected the proposal, arguing in its skeleton that the offer made no contribution to costs incurred in the case and that, in relation to the timing issue, the defendant ”demanded” a “wholly unreasonable 9 months” in which to re-brand, when all that needed to be done was repaint the signage, reprint menus and update the restaurant websites’.

Daniel Alexander QC did agree that there was some merit to the claimant’s arguments, but ultimately found that the offer that had been made by the defendant was not materially worse than the sums which the claimant eventually received in the first judgment. In its final decision, the court stated that the approach it should take would be for the claimant to have

‘(1) 100% its costs relatively generously assessed (by IPEC standards) down to the date of the Defendant’s offer in December 2012, (2) ... a reasonable proportion of its costs, but not all of them, after the date of that offer’.

(In the court's assessment, this was 50% of their costs from that date). Additionally the claimant should not have to bear any of the defendant’s costs.’ Some of the factors the court took into consideration included the well reasoned case put forth by the claimant in its Particulars of Claim, the defendant’s 2012 offer, and ‘striking the balance between providing a fair level of recovery of costs for meritorious claimants, while encouraging early resolution of proceedings without a trial.’

The court awarded the final amount of £10,750 in costs to the claimant. In his judgment, Daniel Alexander QC added:

‘... overall, the sum I am awarding provides a reasonable sum by way of costs to the Claimant (it is about 50% of its total costs ignoring photocopying) but it does not unjustly penalize the Defendant by awarding full costs against it, having regard to their offer’.

This Kat believes this was a reasonable and fair approach to take and one which was wholly in the spirit of the new remit of the IPEC.

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The spectre of Specsavers, or The Cost of Costs ...

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The saga of Specsavers v Asda has been told thrice already on this weblog, once when it turned out that the defendant's lawyers couldn't prepare their client's case because they were busy filling their client's shelves (see here and here), once when the trial judge got it mainly wrong and once when the Court of Appeal got it more or less right and referred some questions to the Court of Justice of the European Union (CJEU) for a preliminary ruling, to be on the safe side..

Now, bobbing up and down in the tide of litigation, Specsavers International Healthcare Ltd Specsavers BV Specsavers Optical Group Ltd Specsavers Optical Superstores Ltd v Asda Stores Ltd [2012] EWCA Civ 494 has surfaced again since the Court of Appeal (Sir John Thomas, Lady Justice Black and Lord Justice Kitchin) found themselves facing some pressing submissions on the subject of costs (there was also some discussion over the scope of the injunction -- but that's not discussed in this note).

Having expended a good deal of money in seeking to enforce its trade marks against a defendant which was sailing too close to the wind and capsized, Specsavers wanted to see some of it come back in the form of costs. This didn't look as though it was about to happen in the immediate future since the case was still far from over. Apart from the reference of some questions to the CJEU for a preliminary ruling, which could be reckoned to add a couple more years to the final outcome if the action, Asda had also sought to appeal to the Supreme Court. The Court of Appeal refused permission to appeal, so Asda proposed to apply to the Supreme Court for leave to appeal to it.

The Court of Appeal took pity on Specsavers and decided that it could have some money on account. In particular, the court held that

It was not appropriate to reserve all the costs pending Asda's application to the Supreme Court for permission to appeal. In this context, the general principles applicable to patent actions -- which occur far more frequently than trade mark actions and are therefore handy precedents -- were equally applicable to proceedings for infringement of registered trade marks, Under the circumstances, Specsavers was entitled to have its costs of the appeal, subject to a substantial discount to reflect the issues upon which it lost.
What about the costs attributable to the issues referred to the CJEU? Well, said the Court of Appeal, they did have to be reserved.
As for the costs that Specsavers was going to receive, a fair and proportionate result would be achieved by awarding them 40 per cent of their overall costs of the appeal. As for the costs of the trial at first instance, a fair and just result would be achieved by awarding Specsavers 50 per cent of their costs.
The court had jurisdiction to order a payment on account even though the costs had not been assessed. On the facts here, it was appropriate to make an order for a payment on account of 50 per cent of the costs which S was entitled based on estimates of costs provided.

The IPKat notes that this ruling was preceded by three days in court, back in October. He wonders whether the parties, neither of which is exactly impoverished (Specsavers' revenue topped £1 billion in 2008/9 and Asda is the local presence of Walmart), needed to spend so much cash and effort in tussling over the sums involved here -- and whether there were better things for the Court of Appeal to be getting on with.

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It is not always reasonable to pursue all reasonable points

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Nine man years for a five-day trial

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You just can't keep a good litigant out of court, it seems, and RIM is just one of those enthusiasts. Research in Motion UK Ltd v Visto Corporation [2008] EWHC 335 (Pat) is a decision of Mr Justice Floyd, in the Patents Court of England and Wales. Yesterday he had to give a ruling on the costs incurred by one of RIM's earlier excursions.

Right: "There's gold in tham thar bills ..."

On 28 February 2008 Floyd J held that, overall, RIM was victorious as it had succeeded in revoking Visto's patent for lack of inventive step and because it related to a computer program as such (see earlier IPKat post here). If the patent had been valid, though, Visto "won" because RIM would have been held to have infringed it. And Visto claimed two more victories in respect of patents that RIM conceded to be invalid. Subsequently in relation to costs, the issue of proportionality arose. RIM had spent almost £5.2 million while Visto spent a mere £1 million.
There was no dispute that RIM's costs should be reduced by a percentage to reflect Visto's ultimately unsuccessful success. But how much should Visto get?

Floyd J ruled as follows:

* It was uncontroversial that the it was the court's job to prevent the recovery of unnecessary and unreasonable costs. On that basis a court could deploy the notion of proportionality in deciding whether a party should recover costs of a particular issue;
* a trial judge who saw a figure for costs before the process of assessment was embarked on by a costs judge was often in a good position to express a view as to whether the bill represented a disproportionate expenditure -- and he was certainly entitled to express that view for the benefit of the costs judge;

* in this case the sums expended by RIM were disproportionate to what was at stake and there was no justification for costs rising above what would commonly be expected for an action typical of the one before the court. This being so, RIM's conduct in relation to the issue of infringement deserved to be marked by an award of costs in Visto's favour;

* in real terms Visto should pay 66% of RIM's total assessed costs on all three patents, and RIM should pay Visto 51% of its total assessed costs expended on all three patents.

The IPKat was fascinated by the gory details: the judge observed that Allen & Overy, for RIM, notched up nine man-years' worth of work for the five-day trial, with one senior associate spending 2,291 billable hours in pursuit of a successful outcome (Taylor Wessing represented the other side). A&O's side of the story is worth contemplating though: for the firm Nicola Dagg pointed out that her instructions were to leave no reasonable stone unturned; the legal costs incurred were also a tiny proportion of the value of RIM's business, which Visto's patent put under threat. Merpel says, it's cheap compared with the £182 million representing the cost of the British government's Bloody Sunday inquiry, or even the mere £10 million cost to the British taxpayer of the recent inquiry into the death of Diana, former Princess of Wales.

See the coverage of this case by Intellectual Asset Management, The Lawyer and Financial Times.