England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
INTELLECTUAL PROPERTY

		Royal Courts of Justice Strand, London, WC2A 2LL
		14 April 2011

Mr. Justice Kitchin:

1. I must now deal with the costs of these actions. Kingspan submits that it should be awarded all of its costs because it is the successful party. It estimates those costs at almost £1,142,000.
2. Rockwool submits there should be no order as to costs. If there is to be an order as to costs, then it should be an issue-based order to reflect the relative successes and failures of the allegations made by both sides. If there is to be an issue-based order it will need to be the subject of a detailed assessment. It says that this is the correct approach for the following reasons:

(i) Kingspan failed in its claims for malicious falsehood and did not pursue its claims for declarations under the Comparative Advertising Directive and the UK Business Regulations and, in the result, only succeeded in its claim for trade mark infringement and particular declarations of fact.

(ii) Kingspan only formulated the claim for declarations of fact at the trial.

(iii) Kingspan's claims in respect of the 2007 road shows and 2007 Video were only introduced by way of amendment in September 2010 and Rockwool should have its costs of and occasioned by those amendments in any event.

(iv) Rockwool's costs attributable to the malicious falsehood claim and Kingspan's amendments are nearly £1 million; that is to say, not significantly less than the total costs incurred by Kingspan in relation to the whole of both actions.

3. The general principles the court should apply in deciding how to exercise its discretion in relation to costs are well known and set out in CPR 44.3. So far as relevant to the present actions, those principles are as follows. If the court decides to make an order about costs, the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party but the court may make a different order. In deciding what order to make about costs, the court must have regard to all the circumstances, including the conduct of the parties. The conduct of the parties includes whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue; the manner in which a party has pursued or defended his case or a particular allegation or issue; whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim. The orders which the court may make include an order that a party must pay a proportion of another party's costs; a stated amount in respect of another party's costs; and costs relating only to a distinct part of the proceedings. Where the court would otherwise consider making an order in relation to a distinct part of the proceedings it must instead, if practicable, make an order that one party pays to the other party a proportion of or a stated amount in respect of that other party's costs.
4. In SmithKline Beecham v. Apotex (No. 2) [2005] FSR 24, Jacob LJ provided the following further guidance at paragraphs [24] to [26]:

"24. In respect of all intellectual property matters the general rule is that the CPR and associated practice directions apply, unless a rule in Part 63 or its practice direction provides otherwise (CPR 63.2). There is no such rule. So, subject to the two statutory provisions discussed above, the general rules apply as much to patent actions as to any other action.

25. It follows that all the factors and matters set forth in CPR 44.3 apply to how the court should exercise its discretion as to costs. Prior to the CPR a party who was successful overall was not normally deprived of its costs of an issue it took unsuccessfully unless it has done so unreasonably, see Re Elgindata (No. 2) [1992] 1 WLR 1207. But since the CPR a more issue-by-issue approach is appropriate, see Summit Property v Pitmans [2001] EWCA Civ 2020, applied in a patent action, Stena v Irish Ferries [2003] EWCA Civ 214. Even before the CPR an issue-by-issue approach was, as an exception to the Elgindata approach, applied in patent actions because of the 'large number of issues and the very extensive costs that can be incurred' per Aldous LJ in Rediffusion v Singer Link [1993] FSR 369 at 410.

26. An issue-by-issue approach is therefore one that should be applied so far as it reasonably can. On the other hand such an approach is not the be-all and end-all. Whether or not 'it was reasonable for a party to raise, pursue or contest a particular allegation' remains a relevant factor to be taken into account as part of the conduct of the parties (see CPR 44 rule (3)(a) and (5)(b)."

5. Often it is convenient to ask these questions: Who has won? Has the party that won lost on an issue which is suitably circumscribed so that it should be deprived of its costs of that issue? Is the case an exceptional one such as to lead to an adverse costs order on that issue in favour of the losing party? See, for example, RIM v Visto [2008] EWHC 819 (Pat) at paragraph [7].
6. I must now apply these principles in the context of the present case and, in my judgment, the following points are material.
7. First, I do not believe there can be any doubt that Kingspan is the overall winner. I have found that each of the road shows and videos contained a series of false representations and these were the issues which lay at the heart of the dispute between the parties and of the actions.
8. Second, the allegation of malicious falsehood was made in respect of the Second Video and the threatened publication of the First Video. In the context of this case, the allegation raised, in substance, two issues, namely, whether the First and Second Videos contained false representations and whether those false representations were made maliciously. Kingspan won on the issue of false representations but lost on the issue of malice. Therefore, it is not right to say, as Rockwool does, that the allegation failed entirely. Moreover, I had to decide whether or not the First and Second Videos contained false representations in any event because they formed the basis of the declarations sought in the actions and, in the case of the First Video, this was central to Kingspan's allegations of trade mark infringement.
9. Third, in my judgment the allegation of malicious falsehood was an entirely reasonable one for Kingspan to make and it was pursued in a proportionate manner.
10. Fourth, Kingspan estimates that it incurred no more than £10,000 in relation to the issue of malice itself. Rockwool says it incurred £665,000 in relation to the allegation as a whole but does not say what proportion of these costs were incurred in relation to the issues of misrepresentation, on the one hand, and malice, on the other.
11. Mr Silverleaf QC, who appears on behalf of Rockwool, submits, however, that I can assess for myself the weight of the evidence that was adduced in relation to the issue of malice and, had the allegation not been raised, the evidence and conduct of the trial would have been very different. I think he recognises that it would not be right to attribute the full sum of £665,000 to the issue of malice but says that I should attribute a significant proportion of that figure to this issue. In my judgment, Mr Silverleaf is right in that the shape of the case would have been somewhat different if the allegation of malicious falsehood had not been raised and I believe that this is a matter to which I should have regard.
12. Fifth, so far as the costs of and occasioned by Kingspan's amendments are concerned, Rockwool seeks to recover not just the costs of dealing with the applications and making any consequential amendments to its own case, but all the costs incurred in relation to the issues raised by the amendments, including disclosure and evidence, amounting to in excess of £300,000. In my judgment, that is not appropriate and it is not something which Kingspan agreed to when it agreed to pay the costs of and occasioned by the amendments in any event.
13. Finally, it is true to say that Kingspan did not pursue its claim for declarations under the Comparative Advertising Directive and the UK Business Regulations, but that claim had, at its heart, the same issues as those raised by the claims for declarations which were in issue throughout, namely that the road shows and videos contained the series of misrepresentations which I have addressed in my judgment.
14. Weighing all these matters together, I have reached the conclusion that Kingspan should have its costs of the action subject to a discount to reflect its loss on the issue of malice and, consequently, the failure of the allegation of malicious falsehood. Doing the best I can on the evidence before me and taking into account my own impressions of the case, I think that discount should be 10%. Therefore, Kingspan is entitled to 90% of the costs of the actions.
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