Intellectual Property Enterprise Court

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
INTELLECTUAL PROPERTY ENTERPRISE COURT

		Royal Courts of Justice, Rolls Building Fetter Lane, London, EC4A 1NL
		10/04/2014

Judge Hacon :

1. Following my judgment dated 18 March 2014 I have to settle the form of Order. Two points are in dispute: costs and permission to appeal. The parties have requested that I settle the approach to costs, specifically whether the defendant should have an award of costs, if so whether there should be a discount and if there is to be a discount how it should be applied, before submission are made as to quantum. On the basis that this might save time and unnecessary costs, I will do so. I will use the same abbreviations for the trade marks as used in my earlier judgment.

Costs

2. In my view the Defendant is the overall winner and is entitled to an award of costs. The Claimant's claim for (i) infringement of TM 258, (ii) infringement of copyright and (iii) passing off all failed. In addition the Defendant's counterclaim for revocation succeeded in full in relation to TMs 351 and 710, and in substantial part in relation to TM 722.
3. The Defendant's counterclaim failed in relation to the following matters that were contested at trial:

(i) a declaration that all four of the Claimant's TMs were invalidly registered on the ground of bad faith;

(ii) an order for the revocation of all four TMs (in practice only TM 258 and the remainder of TM 722 were at stake) for non-use on the ground that insofar as they were used, they were not used as trade marks.

4. The Defendant concedes that because of the matters referred to in paragraph 3 above there should be a discount on the costs awarded to the Defendant. He also submits that the discount should be assessed on a stage by stage basis, to be applied only where appropriate to a particular stage. That approach was rejected by HH Judge Birss QC in BOS GmbH & Co KG v Cobra UK Automotive Products Division Limited [2012] EWPCC 44; [2013] FSR 39, at [32]:

"Mr Pritchard submitted I should apply the discount only to certain PCC stages. I reject that. It seems to me that the discount is one which can only be sensibly applied overall and I have done so. The discount approach is itself a fairly rough and ready approximation and to start applying it only to certain costs and not others cuts across the rationale for the discount in the first place."

I agree.

5. The starting point in BOS v Cobra was the relevant principles established in MMI Research Ltd v Cellxion Ltd [2012] EWCA Civ 139 and the cases there cited, to which was applied the issue based approach to costs in the PCC. In summary, this involved the following steps:

(1) Identify the party who is the winner overall.

Assuming there is an overall winner,

(2) identify any sufficiently circumscribed issues in relation to which the winner should be deprived of his costs, having lost on those issues;

(3) identify any other issues sufficiently exceptional such that the winner should pay the loser's costs of those issues;

(4) taking into account (2) and (3), assess an overall discount to be applied to the award of costs to the winner (any issues falling under (3) will usually count double so that, for instance, if an issue accounts for 10% of the total costs, the net effect of the winner paying the loser is to reduce the award to the winner by 20%);

(5) make a summary assessment of the costs that would be awarded for each stage identified in Table A of PD 45 Section IV without taking into account the cost caps for each stage;

(6) apply the overall discount to each of those summary assessments;

(7) compare the result in each case with the corresponding cost cap in Table A (or Table A as it applied up to 30 September 2013, as appropriate);

(8) make an award for each stage by reference to that comparison;

(9) add together those stage awards to reach a final total.

This final total will be the award in costs, subject to the overall cap of £50,000.

6. I propose to do the same. Because of the way the parties prefer to approach costs, at this point all I need to do is identify the overall discount to be applied.
7. The Claimant points out that the part of the counterclaim on which the Defendant succeeded was not contested at trial and submits that the part on which he failed took up more time and research and was commercially more significant than the claims of the Claimants. The Claimant further points out that I asked the parties to consider an IPO Practice Note which was relevant only to the part of the counterclaim on which the Defendant lost. The Claimant submits that there should be no order as to costs or alternatively there should be a 75% discount applied to the Defendant's costs.
8. The Defendant submits that although he lost in relation to the part of the counterclaim contested at trial, in relation to TM 258 this was part of his defence to the claim; similar arguments raised against the other three TMs were prudent in the circumstances and added nothing of significance to the costs. The costs of the Part 20 proceedings have been settled as between the Defendant and the Third Party – no order as to costs – but the Defendant submits that the Claimant should pay its costs of the Part 20 proceedings since they arose as a direct consequence of the Claimant's claim.
9. The Defendant argues taking all this into account, a discount of 25% should be applied to an award of costs in its favour, but only in relation to some of the stages of Table A. As I have indicated, I reject this to the extent that I will apply a single overall discount to all stages.
10. In my view none of the issues on which the Defendant lost were so exceptionally unmeritorious that the Defendant must pay the Claimant's costs in relation to them. The Defendant's counsel has calculated that the issues in relation to the validity and revocation of the trade marks in relation to which the Defendant lost took up around 20% of the pleadings and skeletons for trial. That may be right but the best of my recollection these issues took up more time at the trial itself, around half. The Defendant is entitled to the general costs of the action being the winner, although it is not easy to say what proportion of the total costs this comprises. I do not take the Part 20 claim into account.
11. In the round it seems to me that the appropriate discount to apply to the Defendant's award of costs is 40%.

Permission to appeal

12. The Claimant seeks permission to appeal on the ground that my findings of fact should have led to the result that the Defendant consented to the use of the Claimant's logo in the Salisbury Advert and in the website set up for the Defendant by BT. This either constitutes an attempt to have the findings of fact revisited or, to the extent that there is a point of law raised by the Claimant – which so far, anyway, has not been clearly identified, then there is no real prospect of success in the appeal. I do not give permission to appeal.

Form of Order

13. The Defendant should now within 7 days of the date of this order file with the court and serve on the Claimant its schedule of costs and a breakdown of those costs by reference to Table A. The Claimant should within 4 working days of service file and serve its comments, if any, on the Claimant's schedule.
14. The parties should also file an agreed Minute of Order. Any points in the Minute about which agreement cannot be reached should be signalled by alternative proposed wording.