England and Wales Patents County Court

IN THE PATENTS COUNTY COURT

		Rolls Buildings 7 Rolls Buildings London EC4A 1NL
		22/03/2012

His Honour Judge Birss QC :

1. This is a trade mark and passing off claim arising from the use of the sign GLEE. The sign is used as the distinctive part of the name of a chain of British comedy clubs and an American television series. The point at issue is an application to transfer the case to the High Court. The defendant wishes to transfer and that is resisted by the claimant. In order to address the question the background needs to be considered.
2. The core of the claimant's business is running comedy venues in England. They are (or have been) called "The Glee Club" / "Glee" and/or "The Glee Comedy Club". Its first venue was opened in Birmingham in 1994. It opened a second venue on Cardiff in 2001. In 2010 venues in Oxford and Nottingham were opened. The extent to which the claimant has used a name other than "The Glee Club" at any material time is in issue but does not matter for present purposes. The claimant's case is that its business is not limited to comedy clubs but extends more broadly. The clubs include live music and cabaret. The claimant has a website at www.glee.co.uk and allows its customers to subscribe to "gleemail" updates by email. It runs comedy tents at festivals and engages in wider marketing activities. The core of the claimant's business is not in dispute. The wider extent of the claimant's business over time is in issue but again that does not matter for present purposes. The claimant has a registered trade mark No. 2,200,698 registered as of 19^th June 1999 for the mark "the glee CLUB" in the form of a device in classes 25 (for various items of clothing) and 41 (for entertainment services, production and presentation of television programmes and other services).
3. The defendant is the world famous film and television company. The defendant produces a very popular television programme entitled "Glee". It is about an American high school glee club. The pilot episode was broadcast in the USA in May 2009 and in the UK in December 2009. The programme is now in its third season. In the USA the 6^th February 2011 broadcast of Glee was seen by an estimated 26.8 million viewers. The second season of Glee in the UK averaged 2.2 million viewers and was the top ranked television series on UK satellite channels. The Glee Facebook page has more than 17 million "likes" from around the world. Songs performed in the show are released through the online iTunes music download store (including iTunes in the UK). UK sales of songs from the show to date are 1.72 million compilation albums and 3.46 million singles. There have been Glee concert tours. The 2011 tour included performances in the UK and Ireland and sold 165,000 tickets in the UK. A film "Glee: The 3D Concert Movie" was released in the UK in August 2011 and DVD and Blu-Ray disks sold in the UK from 5^th December 2011. Glee merchandise including clothing and other products are on sale.
4. The defendant has various registered trade marks. It has a UK registered trade mark No. 2134389 for the word GLEE in classes 3 (for cosmetics, toiletries and similar things), 4 (candles and fragranced oils for burning) and 30 (tea, herbal teas and tea substitutes). The mark was registered as of May 1997 by Vie Cosmetics Group Ltd of Chichester and acquired by the defendant in 2010. It can be seen that the specification of goods is nothing much to do with either party's core business and that is a point to which I will return.
5. The defendant has a group of Community Trade Marks. The earliest is No. E8480601 for GLEE in classes 16 (stationery etc.) 28 (Games etc.) and 41 (for entertainment services in the nature of television series featuring comedy and musical comedy, and other things). The priority date for that mark is 6^th March 2009 and was registered on 22^nd February 2010. A second CTM is E9169038 for GLEE in classes 3, 14, 18, 21 and 25. Its priority date is June 2010 and was registered in October 2010. The specifications of goods include jewellery, leather goods, clothing and other things. Finally the defendant has a pending CTM application E10043644 for GLEE in classes 9, 20, 24 , 29 and 32 with a filing date of 14^th June 2011.
6. The problem is obvious. Both sides use the word "Glee" and even their core fields of activity are not far apart. Whether they precisely overlap, how that position has developed over time and the precise details of the parties' use of the word along with other indicia and so on are all in issue but it is not difficult to see why this case might have arisen.
7. The claimant had been aware of the defendant's television programme since 2010. Yet the proceedings did not start until September 2011. Since the defendant took the point, Mr Tughan, the director and sole shareholder of the claimant, explained why the proceedings had not begun earlier. When he first saw the television programme he had already witnessed how shows such as Disney's High School Musical had started off and flopped. His initial feeling was that this could be possible with "Glee" especially since it had started broadcasting only on the E4 channel and not on mainstream television. He did not think it would be harmless but he thought "Glee" might fade away in a short time and not prove to be an ongoing problem to his business.
8. However the television programme has clearly not flopped. It is very successful. Mr Tughan explains that this has led to clear confusion between his business and the programme. He gives examples in his evidence. The examples are generally of instances in which people assume that his business is linked to the television programme or at least ask if there is a link.
9. The claimant began proceedings in the Patents County Court against the defendant. The action is for trade mark infringement and passing off. Mr Tughan explains that the decision to bring the claim was as a result of the problems he encountered which I have mentioned above. He says (paragraph 16 of his first witness statement) that the decision to bring the claim was not made on the basis of how much money the claimant could potentially receive from Fox as a result of the success of "Glee".
10. There was no letter before action. It is clear why this was so. In summer 2011 important rules applicable to the Patents County Court were in the process of being put into force. It had always been envisaged that the new Patents County Court procedures would include a damages cap but for reasons relating to the way in which secondary legislation and rules are enacted, the damages cap had not been implemented in October 2010 along with the rest of the reforms. In April a cap on damages of £500,000 was introduced for the Patents County Court's "special jurisdiction". That is its jurisdiction relating to patents and designs which derives from the Copyright Designs and Patents Act 1988. The power to implement that damages cap was a power in the 1988 Act. Trade marks and passing off are not part of the PCC's special jurisdiction and so that first damages cap would not apply to this type of claim. However it was clear that the corresponding damages cap for the rest of the PCC's jurisdiction (including trade marks, copyright, passing off and so on) ought to be enacted too. The secondary legislation required a different power to be used. It was well known after April 2011 that the damages cap applicable to other cases (i.e. trade marks, passing off, copyright etc.) was coming. That second £500,000 cap was brought in on 1^st October 2011. That is why the claim was issued in September 2011. If the claimant had engaged in correspondence first the claim would have been issued in October and been subject to the £500,000 damages cap in the PCC. By starting in September, the cap was avoided. In fact the needless complexity of the foundations of the PCC's jurisdiction rarely causes problems in practice but this is an illustration of why it would be much better in the long run if the PCC's jurisdiction was put on a proper footing (as was recommended by the report of the Intellectual Property Court Users' Committee which led to the recent reforms in the PCC).
11. Once proceedings were issued the claimant's solicitors wrote to the defendant in California and to the defendant's solicitors in London. The defendant's solicitors replied on 19^th September 2011. Among other things the defendant's solicitors stated that their view was that the case should be transferred to the High Court. They suggested that the value of the claim was very high, that the claim was complex and would require substantial evidence and disclosure and that the outcome is important not least because the claimant had already sought to publicise the claim in the newspapers (the Mail on Sunday).
12. Regrettably in my view the 19^th September letter also stated that although the defendant's solicitors were prepared to accept service of proceedings issued in the High Court they were not prepared to accept service of proceedings in the Patents County Court and so they required the claimant to make an application for leave to serve out of the jurisdiction in that event. The point is regrettable not least because it undermines one of the points made by the defendant later on. The defendant has complained that the claimant had no good reason to attack the validity of its UK cosmetics trade mark No. 2134389 which had been acquired in 2010. The defendant has argued that the trade mark is highly peripheral and the attack on it demonstrates that the claimant is mounting an all out attack on the defendant rather than bringing a focussed and proportionate case. There is force in this point. Nevertheless it was this invalidity attack by the claimant which allowed them to serve the defendant within the jurisdiction at the UK address for service of its UK registered trade mark 2134389. That UK address for service was the defendant's solicitors' address. When the papers were served on the defendant's solicitors, service was not challenged. The attack on trade mark 2134389 is truly peripheral but the defendant's own approach to this litigation does not help.
13. The claimant's solicitors made their client's position on forum clear in correspondence. Their position was that the case is suitable to be tried in the Patents County Court and the issue is about access to justice. Although the defendant can call on vast resources, the claimant cannot. The claimant is an "SME" (small and medium sized enterprise). On that basis they contended the case is appropriate for the Patents County Court.
14. The action proceeded with the defendant serving a Part 18 request on 18^th November which was replied to on 30^th November. Then the defendant's Defence and Counterclaim was served on 19^th December 2011. The counterclaim challenges the validity of the claimant's registered trade mark at least in part on the ground that the term "glee club" is descriptive of choral singing groups and pointing out that the Oxford English Dictionary defines a glee club as a society for singing part-songs. The claimant refers to this graphically as a suicidal submission on the basis of its potential impact on the defendant's own trade marks.
15. The claimant's Reply and Defence to Counterclaim was served in January 2012. The court set a date of 17^th February 2012 for the case management conference and the claimant's solicitors sent draft directions to the defendant's solicitors in early January. On 24^th January the defendant issued an application to transfer this case to the High Court, the application to be heard at the CMC on 17^th February.
16. The matters were heard on 17^th February and on that occasion Denise McFarland instructed by Cobbetts appeared for the claimant and Simon Malynicz instructed by Simmons & Simmons appeared for the defendant. It was plain that the issue of transfer had to be sorted out first before any directions could be considered. At the conclusion of the hearing I indicated that I would reserve my judgment and that the busy nature of the court's diary meant that it would not be ready for at least two weeks. The parties asked for a four week stay of proceedings to discuss settlement in any event and that order was made. In the end the judgment was not ready until now.

Transfer to the High Court - principles

17. The principles applicable to the Patents County Court as presently constituted were addressed by me in my judgment in Alk-Abello v Meridian Medical Technologies [2010] EWPCC 14 and also in A.S. Watson v The Boots Company [2011] EWPCC 26. They were also considered by Kitchin J (as he then was) in the High Court in Caljan Rite-Hite v Solvex [2011] EWHC 669 (Ch).
18. After dealing with the detailed legislation and various older cases I summarised the factors to be considered in paragraph 30 - 32 of Alk-Abello as follows:

30. Pulling the various factors together, the points to consider are:-

i) the financial position of the parties (s289(2) 1988 Act). This includes but is not limited to considering whether a party can only afford to bring or defend the claim in a patents county court (para 9.1(1) Practice Direction 30). This factor is closely related to access to justice. The Patents County Court was set up to assist small and medium sized enterprises in enforcing and litigating intellectual property disputes. Guidance on the nature of these enterprises can be found from the Commission Recommendation 2003/361/EC.

ii) whether the claim is appropriate to be determined by a patents county court. This involves considering:

a) the value of the claim, including the value of an injunction and the amount in dispute. (para 9.1(2)(a) Practice Direction 30 and CPR 30.3(a))

b) the complexity of the issues (para 9.1(2)(b) Practice Direction 30 and CPR 30.3(d))

c) the estimated length of the trial. (para 9.1(2)(c) Practice Direction 30). Related to this is CPR 30.3(b) - whether it would be more convenient or fair for hearings (including the trial) to be held in some other court.

iii) the importance of the outcome of the claim to the public in general (CPR 30.3(e)) albeit that a case raising an important question of fact or law need not necessarily be transferred to the Patents Court (s289(2) 1988 Act).

31. A factor which does not play a role is the one in CPR Pt 30.3(c) (availability of a judge specialising in the type of claim in question) since specialist judges are available in both courts.

32. Once those factors are considered I must bear in mind what sort of cases the Patents County Court was established to handle and that its role is to provide cheaper, speedier and more informal procedures to ensure that small and medium sized enterprises, and private individuals, were not deterred from innovation by the potential cost of litigation to safeguard their rights. The decision turns on what the interests of justice require, taking into account both parties interests and interests of other litigants.

19. It is quite obvious but bears emphasising that each case must be determined on its own facts. It also bears emphasising that the overriding objective is to deal with cases justly (see in this context Kitchin J in the Caljan case) and that the proper administration of justice is also a factor such that the parties wishes are not necessarily determinative.
20. The two fully contested transfer cases I have dealt with in the PCC which have found their way into published judgments are Alk-Abello v Meridian and A.S. Watson v Boots. They are both cases in which the claims were transferred to the High Court. They are also both cases in which both sides were substantial litigants and in which the consideration of access to justice for SMEs was not a factor at all. In a recent case I considered and refused an application to transfer to the High Court in circumstances in which the claimant was an SME and the defendant a large international company however no transcript of that ruling exists.
21. This case is one in which access to justice for SMEs is raised squarely. It is the key element of Miss McFarland's submissions that her client should stay in the PCC. Mr Malynicz submitted it was in effect just another factor to be weighed up like all the others. (I should note he does not accept the evidence on the point but I will deal with that below.) On the issue of principle, in my judgment Mr Malynicz is wrong. The Patents County Court has a specific role to improve access to justice for smaller and medium sized enterprises in the area of intellectual property. I described access to justice for small and medium sized enterprises as a "decisive factor" in Alk-Abello (paragraph 55) and I stand by that observation.
22. However cases in which an SME seeks to sue a large defendant were always obviously going to present particular problems for a specialist court for small and medium sized enterprises in intellectual property matters. The fact that an IP right is held by a small claimant does not mean that the defendant will conveniently be a small enterprise as well. In the past small claimants were concerned that they could not afford to fight in the High Court and, more importantly, could not afford to lose. The costs order would bankrupt the company. The PCC's cost capping system deals with this problem and caps the claimant's downside costs risk at £50,000. That is one of the ways in which the PCC facilitates access to justice.
23. Many smaller business people perceive that their intellectual property has been stolen by large corporations. Hitherto there was little they felt they could do about it. The PCC is by no means intended to be a panacea but it is intended to be a forum to facilitate access to justice for smaller IP rights holders and for that matter smaller organisations accused of infringing IP rights as well.
24. So what is the court to do when faced with a small claimant suing a large defendant? One thing is plain. As I have said already each case depends on its facts. A small claimant does not have an unfettered right to stay in the PCC regardless of the nature of the case any more than a large defendant has an unfettered right to demand that it be sued in the High Court.
25. Before going any further I should mention another consideration. In a number of cases concerned with the question of transferring a case between the Patents County Court and the High Court (either way) parties have proposed conditions or terms which modify their claim in some way in order to support their case resisting or in favour of transfer. In a proper case such terms can be useful and have an important role to play. I can give two illustrations.
26. First, in the Watson v Boots case (above) the party seeking to keep the case in the PCC offered to cap their damages at £400,000 (this was a trade mark case before the relevant damages cap was in force) and to place some restrictions on the injunctive relief claimed. The details are recorded in paragraph 9 of the judgment. The case was transferred nonetheless but that was not because of its value. It was transferred because it would take much more than 2 days to try and was between two large organisations.
27. Second, in the Liversidge v Owen Mumford case (see paragraphs 1 to 6 of my judgment at [2011] EWPCC 34) a dispute arose about whether the case should be heard in the PCC or the High Court. The claimant claimed that he could not take the risk of losing in the High Court. The dispute was resolved on terms whereby the claimant would seek damages on a specific basis and would not seek a final injunction but damages in lieu. On that basis the defendant agreed to the case remaining in the PCC.
28. Related to this general point is PD 30 paragraph 9.2(1) which provides that where the court orders proceedings to be transferred to or from a PCC it may specify terms for such a transfer. Self evidently that paragraph is not directed to terms on which transfer is not ordered but the point is a related one.

The facts relating to transfer

29. The defendant submitted that all or most of the relevant factors militate strongly in favour of transfer. The value of the claim and in particular the value of the injunction, is high. I agree with the defendant's characterisation of the value of the claim. The Particulars of Claim pleads that the broadcasting of the defendant's television programme is an act of trade mark infringement and passing off and seeks an injunction in conventional terms to restrain trade mark infringement and passing off. Thus if the claimant prevails in its claim the television programme at least in its current form would have to be taken off the air. The financial significance of that is plainly very substantial from the defendant's point of view. That is a strong factor in favour of transfer to the High Court.
30. The defendant also submitted that there are numerous legal issues in dispute and a number of hotly contested factual issues and as Mr Malynicz put it "shoehorning this case into a two day window with the streamlined procedure of limited disclosure, cross-examination and written evidence will … prevent proper exploration of these issues and ultimately hamper [the defendant's] defence." That overstates the position. This case is essentially a conventional trade mark and passing off claim albeit substantial in nature. I will examine it in more detail.
31. The trade mark case raises issues of validity and the defendant pleads a defence under s11(2)(b) of the 1994 Act which will require a factual investigation of "honest practices". On that Mr Malynicz cited the recent Samuel Smith v Philip Lee judgment of Arnold J [2011] EWHC 1879 (Ch). There is also the matter of contextual use and Mr Malynicz cited the recent Specsavers v Asda judgment of the Court of Appeal [2012] EWCA Civ 24. The defendant submitted that just these points will require significant evidence and time to investigate and are highly nuanced. I agree that evidence will be needed but I do not agree that the existence of these points either alone or in the context of the case as a whole makes the trade mark case unsuitable for the Patents County Court.
32. A point raised by the defendant which is not a significant factor in my judgment is the potential Europe wide impact of a decision in the case. A number of the trade marks in issue are Community Trade Marks and thus the decision will have a direct impact throughout the European Union. However since the Patents County Court is a Community Trade Mark Court, such an impact is an inherent part of its jurisdiction.
33. Some trade mark cases have a passing off allegation as almost an adjunct, some raise further issues which can be dealt with in a self contained way (e.g. Westwood v Knight [2011] EWPCC 8) and there are also pure passing off cases which are plainly appropriate for the PCC (see e.g. the Redwood Tree Services case [2011] EWPCC 14). However some passing off cases are heavy ones in their own right and this passing off case is one such. The issues of goodwill, misrepresentation and damage are all matters which will involve detailed investigation on the material I have seen so far.
34. What makes this case substantial is the totality of the issues to be addressed – both trade mark and passing off. In my judgment this is a case which could be fairly and properly dealt with within the Patents County Court system but not in a two day trial. There will be disclosure although I doubt as much as the defendant would submit, there will be a need for cross-examination although again the defendant's argument on this is overstated. There will need to be a number of witnesses. If this was a case between two large corporations who could afford to litigate in the High Court then the complexity of it would be a factor firmly in favour of transfer. However if it was a case of modest value between two small parties neither of which could afford the High Court then the complexity is not so substantial as to mandate a transfer in and of itself. The PCC can in appropriate circumstances hear cases that take longer than two days and did so for example in ProTec v Specialised Covers [2011] EWPCC 34.
35. This leads to a key issue, the claimant's financial position and the PCC costs cap. The defendant's likely costs in the High Court are between about £400,000 and £750,000. The claimant makes two submissions. First, Mr Tughan's evidence is that if the defendant obtains a costs order of that magnitude against the claimant it would be devastating for its business. Second the claimant submits that if the matter is transferred to the High Court, the next thing that will happen is that the defendant will seek security for its costs. There, submits the claimant, an order for that security will be likely to stifle the claim because it could not be satisfied. Thus the action would be struck out and the claimant deprived of access to justice. Ms McFarland cited a number of human rights cases concerning a party's right of access to the court under Article 6 ECHR. The cases cited were Tolstoy v the United Kingdom – 18139/91 [1995] ECHR 25, Ait-Mouhoub v France (2000) 30 EHRR 382, Federal Bank of the Middle East v Hadkinson FC3 1999/7560/A2, Kruez v Poland [2001] ECHR 398 (19 June 2001) and Teltronic-CATV v Poland (App no 48140/99) [2006] ECHR 48140/99.
36. The Kreuz v Poland and Teltronic-CATV v Poland cases both concern the question of court fees in relation to the Art 6 ECHR right of access to a court. In my judgment they do not assist in the present case. The others, i.e. Tolstoy, Ait-Mouhoub and Federal Bank, were cited for their consideration of orders for security for costs. These cases show that an order to pay sums by way of security which a litigant lacks the means to pay may amount to a breach of Art 6 ECHR. On the other hand it is clear in English law that when a party seeks to resist an order for security for costs on the ground of their own lack of money, the onus is on them to put proper and sufficient material before the court to prove it, making full and frank disclosure (see the well known case of M.V. Yorke Motors v Edwards [1982] 1 WLR 444).
37. The paradox before me is that the defendant does not accept the claimant's case that it cannot afford to litigate in the High Court. So the defendant points to the claimant's financial statements which show annual turnover figures of between £2.5m and £3.4m in recent years. The evidence of the defendant's solicitor Mr Stone is that the total net asset position of the defendant in 2011 was over £2m, shareholder's funds are £500,000 and the claimant owns 25 year leases on the premises in Cardiff and probably other premises. Mr Stone also suggests that Mr Tughan appears to be personally wealthy and gives evidence about various items of property in Wolverhampton. I will return to the claimant's response to this evidence below. At this stage the point I wish to address is that for the purposes of transfer to the High Court, the defendant's approach is to maximise the claimant's finances. However in argument it became clear that the claimant's fear that the defendant would seek an order for security for costs in the High Court was a real one. It seemed to me to be something the defendant was contemplating.
38. There was an inconsistency in the defendant's approach to the claimant's finances in this case. On the one hand the defendant contended that the claimant was well able to afford High Court litigation and therefore the case ought to be transferred there. However on the other hand, the defendant seemed to wish to preserve the ability to contend, on an application for security for costs once the case is transferred to the High Court, that there was reason to believe that the claimant company would be unable to pay the defendant's costs if ordered to do so (CPR Part 25 r 25.13(2)(c)).
39. I asked Mr Malynicz whether there were conditions his clients would be prepared to accept as conditions of transferring the case to the High Court. The conditions related to security for costs and whether the defendant would accept a costs capping order in the High Court. The High Court has a jurisdiction to make cost capping orders in an appropriate case under CPR 44.18. They would have the effect of capping the future costs which a party may recover pursuant to a costs order subsequently made. The differences between these orders and the Patents County Court £50,000 costs cap are that the order is discretionary and can be set at any level. Although it has not been reported, I understand that there was an application to transfer an action from the High Court to the PCC recently in which, instead of ordering a transfer, the High Court put in place a costs cap for the High Court proceedings. I believe the cap was at a somewhat higher level that the Patents County Court's £50,000 limit.
40. During the hearing Mr Malynicz was understandably without instructions on the issue but afterwards I received a letter from counsel which stated that the defendant was prepared to undertake, as a condition of transfer to the High Court, not to seek an order or orders for security for costs against the claimant exceeding a total of £50,000. As regards a costs capping order, the defendant was not prepared to agree to submit to such an order but was prepared to agree to an order that both parties, within 14 days, provide each other with costs estimates to the conclusion of a High Court trial. That would enable the claimant to see if it was worth making an application in the High Court for a costs capping order under CPR r44.18. The defendant submits that the action is not being defended in a disproportionate or wasteful way and therefore it hopes a High Court costs cap would not be necessary.
41. In reply to this letter Ms McFarland submitted that this did nothing to allay her client's concern and fears. By making clear they would not agree to any costs cap in the High Court, the defendant was entrenching its position that it should recover all of its costs which Mr Stone had estimated at £400,000 - £750,000. This would mean the significant prejudice and risk of an uncapped cost award would remain in place. As regards the £50,000 limit on security, Ms McFarland pointed out that in practice in a case like this one the Patents County Court staged cost system means the capped costs figure is unlikely to rise above £30-35,000, although she accepted this was a relatively minor observation.
42. In my judgment the defendant's offered condition does remove what I regarded as a paradox in their approach and entirely ameliorates the second limb of the claimant's case in resisting transfer, i.e. risk of a security for costs application. Any order for security for costs will be the same whether the case proceeds in the Patents County Court or the High Court.
43. That leaves the first limb and Mr Tughan's evidence that an adverse costs order in the High Court would devastate his business. As I have mentioned above the defendant does not accept that. Mr Stone has sought to analyse the claimant's finances in considerable detail and also raises the possibility of ATE insurance in the High Court. A further suggestion from the defendant is that Mr Tughan himself is a wealthy person who could fund the litigation personally. This all led to a detailed reply from Mr Tughan addressing the various points raised. Much of this latter evidence relates to the amount of debt carried by the claimant. Mr Tughan concludes maintaining his position on finances and stating that on a personal level he is concerned that even if he could fund the litigation personally (which he could not) it would leave him exposed to an adverse cost order personally which would have an adverse impact on his family and other personal circumstances.
44. In my judgment the defendant's approach to the claimant's finances is itself disproportionate. This is not a trial about the claimant's financial position, it is an application to transfer an action between courts, each of which is competent to hear the case. What is at stake is only that. Applications to transfer are not the place to conduct minute analyses of the finances of a party. Moreover in my judgment, unless a statement by one party as to its financial position can be shown to be plainly wrong, an application to transfer should not descend into the sort of evidential trench warfare apparent in this case.
45. Despite the defendant's submissions on finances, it seems to me to be quite evident that the claimant's business is one for which an adverse High Court costs order would be a major blow. However in my judgment the claimant's business and finances are such that the money could and would in all probability be paid in the end albeit only by putting a strain on the business. To say the business would be devastated however is, I believe, an overstatement.
46. There was also detailed evidence about ATE insurance. The defendant contends that the claimant could obtain ATE insurance to cover the risk of paying the defendant's costs. Based on a costs estimate of £500,000, the defendant contends a premium of 45% of the total cost, i.e. £225,000 would be likely. Oddly perhaps the upshot of the defendant's submission is to inflate the potential costs it would have to pay in the High Court if it lost since the ATE premium would then be recoverable from the defendant on top of the claimant's actual costs. In the end the evidence showed that ATE insurance of this kind has a number of uncertainties associated with it and I do not regard the ATE insurance point as helpful one way or the other.
47. Standing back, it seems to me that the position on finances is as follows. The defendant is plainly a huge international organisation which can well afford to litigate in the High Court. The claimant is an SME. I do not believe it would go bust if it lost in the High Court but to do that would put a severe strain on its business. The claimant would plainly benefit from the costs cap.

Transfer overall

48. I remind myself that the ultimate objective of an order for transfer is to do justice between the parties. The argument that the case should remain in the Patents County Court is a powerful one. Access to justice for SMEs is capable of being a decisive factor having regard to the purposes for which the Patents County Court was set up. The claimant in this case would be severely affected by an adverse costs order in the High Court. However set against that is the nature of this case itself and its value.
49. As to its nature, although I detect in the way the defendant has approached this case a tendency to take every point and increase cost, the claimant also has done the same thing. The claimant has not sought to trim its case to focus down on the essentials. In my judgment the claimant is running this case as if it is a piece of full scale High Court litigation but just covered by a costs cap of £50,000. For example:

i) The claimant is maintaining its passing off and trade mark claim on a broad and unspecific basis despite a proper request for further information. For example paragraph 7 of the Particulars of Claim pleads a case of trade mark infringement based on similar goods (inter alia) but does not say what goods of the defendant are said to be similar to what goods covered by the registration. The defendant asked about this in a Part 18 request but received no substantive answer at all even though the claimant must know at least some of the defendant's goods it alleges are similar to goods in the registration. The answer referred to the defendant's own knowledge but plainly the claimant could have formulated its case more precisely at least in part.

ii) On instances of confusion, the claimant has not pleaded all the instances it relies on and refused to give much further information in response to a Part 18 request. The stance taken is that much of the information sought is premature and detailed information will be addressed in disclosure and/or witness statements. That is not a Patents County Court approach to litigation.

iii) The claimant is putting at the forefront of its case an allegation that the defendant knowingly and calculatingly committed the acts complained of. The point is denied by the defendant. The claimant is entitled to advance this case on proper grounds but it is a highly charged issue which will inevitably require disclosure and no doubt cross-examination and will lengthen the proceedings. Although the issue is now also part of the claimant's reply to the defendant's defence under s11, it was raised at the outset by the claimant in the Particulars of Claim to justify a claim for enhanced damages.

iv) Even though the proceedings are now firmly up and running, the attack the defendant's peripheral UK cosmetics trade mark No. 2,134,389 is being maintained.

50. It seems to me therefore that the claimant is seeking to have its cake and eat it. An SME wishing to take on a large defendant in a case of high value in the Patents County Court has to approach the matter in a realistic manner.
51. As to value, the evidence made extensive references to settlement negotiations which the claimant indicated it was keen to enter into. Mr Tughan's evidence emphasised that the claimant had repeatedly stated its desire to explore settlement right from the beginning. Also in evidence was a newspaper article which attributed statements to Mr Tughan about what he would be prepared to settle for. I take his evidence to be that he said words to the effect that he would be unwilling to settle the claim for a trivial sum of money.
52. Since settlement was being canvassed in the evidence I asked Ms McFarland what her client's position was in relation to the claim for an injunction. The point was that the claimant was making much of a possible settlement and that self-evidently the defendant was not going to settle the claim on the basis that it took the television programme off the air. Plainly the only realistic settlement in this case is one which would leave the defendant where it stands but with a payment to the claimant. I therefore asked the claimant whether it would be prepared to withdraw its claim for an injunction as a condition of the case remaining in the Patents County Court. Counsel was in a position to take instructions and confirmed that the claimant was not prepared to do that. I should also record that the defendant's position was that it did not accept that such a concession would justify the case staying in the Patents County Court.
53. I do not have to decide whether withdrawing the claim for an injunction would justify the case remaining in the PCC because that is not on offer. However I will make these observations. Despite the defendant's stance on the point, it seems to me to be something which is capable of having a significant impact on the balance of factors because it would mean that the defendant was not facing an order with the consequences an injunction would have. I entirely follow why, as a bargaining chip, a rights holder wishes to maintain a claim for injunctive relief but a party who wishes to take advantage of the Patents County Court system needs to consider carefully what relief it is seeking and the consequences of that relief. In my judgment the claim for injunctive relief in this case significantly increases the value and importance of the claim as compared to a claim which was couched solely as a claim for damages or damages in lieu of an injunction. Mr Stone's (unchallenged) evidence describes the injunction as potentially catastrophic for the defendant's UK business and puts its value at many millions if not tens of millions of pounds.
54. There is no easy answer to this application. Important factors in favour of the High Court are the value of the claim and the fact that the case cannot be tried in two days under the PCC system. A strong factor in favour of the PCC is the size and financial strength of the claimant but this is not a case in which the claimant would be simply unable to cope with High Court costs. It may be an appropriate case for a High Court costs capping order but that remains to be seen. Were it not for the fact that it seems to me the defendant has a tendency in this case to use its commercial strength as a weapon I would have fewer qualms about transferring the case to the High Court.
55. I believe the decisive factor in this case is the claimant's approach to the litigation despite its being an SME. The claimant is not approaching the case as if it is a Patents County Court claim. The claimant's approach has been to run this case as a full scale High Court style action with a claim for an injunction with catastrophic consequences for the defendant. Since that is the claim the claimant wishes to advance, the correct forum in which to do it is the High Court.
56. I will transfer this case to the High Court on the conditions indicated by the defendant. So there will be an undertaking relating to security for costs as I have indicated and there will be an exchange of costs estimates which will facilitate an application for a High Court costs cap under CPR r44.18 if appropriate.
57. I will also include a further term in the order for transfer pursuant to PD30 paragraph 9.2(1) namely that the costs incurred in these proceedings prior to transfer will be assessed in accordance with the Patents County Court scale in any event. Such an order is not appropriate in every case but it is appropriate here. That is because in the circumstances of this action the defendant could and should have applied to transfer the case immediately after being served with the Particulars of Claim. Accordingly it is fair that the costs incurred up to now, when the action was in the PCC, are assessed on the PCC scale.