Seasons changing: mists, mellow fruitfulness and litigation

We are into autumn and the start of the new English Courts’ term is on 2^nd October. Another litigation season is due to emerge from its summer hibernation.  A couple of points to have in mind when reviewing clients’ potential claims in the English Courts:

1. New fixed recoverable costs regime

The procedure for the recovery of legal costs in the English Courts is that generally the loser of a claim is ordered to contribute (in practice maybe 75%) to the winner’s legal costs. That means that the quantum of costs to be paid by the losing party is currently assessed on a time and materials basis by reference to the work actually done which is proportionate and reasonably incurred.

Claims for less than £25,000 are allocated to the Fast-Track, and currently more complex or higher value claims are allocated to the Multi-Track pathways.

But from 1st October 2023 onwards a new, expanded, fixed recoverable costs regime will take effect and apply to almost all disputes of lower complexity of up to £100,000 which will be allocated to a new Intermediate-Track pathway.

This means that in claims of lower complexity (with value up to £100,000) issued on or after 1 October 2023, the amount of legal costs which a winning party can recover from a losing party at different stages of the litigation, from pre-issue to trial, is to become fixed by scale under the Court Rules and only in limited circumstances can the Court deviate from these prescribed limits.

The Intermediate-Track itself has 4 bands of complexity, and the fixed costs recoverable are determined by the complexity band that a claim falls into.

Its intent is to bring certainty to the costs of the litigation process in the English Courts – the winning party will know exactly how much they can recover from the losing party, with the losing party knowing exactly how much they have to pay.

However, the main drawback (for confident claimants) of this is that the amount of costs which the winning party is going to be able to recover from the loser in these Intermediate-Track claims (maybe only 50% of actual costs) is likely to be a lot less than that which is likely recoverable under the existing Rules (maybe 75% of actual costs).

Practically, the cost of the time and resources which need to go into trying to win a claim already exceeds that which the winner can recover from the loser (generating a shortfall for the client on their recovery), but under these new Rules that shortfall is likely to be much greater because of the application of the new scale fees recoverable.

So it is expected that there will be a rush to issue new claims by 30^th September 2023 so that the winner can recover their legal costs under the existing, more favourable to them, Rules. Conversely, defendants can be expected to delay and prevaricate so as to keep claimants from issuing their claim before the drop-dead 30^th September date.

Fixed recoverable costs will not apply to Multi-Track (the more complex) cases. Proceedings for intellectual property rights infringement (where an injunction is the primary relief sought) are also excluded from the new regime.

These changes are still notionally in draft form and have not yet been promulgated in final form so it is possible, though not currently expected, that variations to the above may be published before 1^st October.

It is prudent for a Claimant to engage solicitors who is familiar with the new Rules, the relevant exceptions, and how, where possible, to change bands, as these new Rules may make good cases, uneconomically viable for a Claimant to pursue.

2. Section 48 UK Trade Marks Act 1994

And here’s another thing – inaction on trade mark registrations.

Under Section 48 UK Trade Marks Act 1994, where the proprietor of an earlier registered trade mark has knowingly acquiesced for a continuous period of five years (from the date of registration but see also below) in the use of a later registered trade mark for particular goods or services in the UK, that earlier proprietor will then lose the right to invalidate or object to or successfully sue for infringement by reason of the use of that later trade mark, the Court of Appeal confirmed in Combe International LLC and Ors v Dr August Wolff GMBH & Co and Ors  [2022] EWCA Civ 1562 at the end of last year.

This five-year period starts to run when the proprietor of the earlier mark is, or can reasonably be expected to be, aware of the use of that later registered mark.

These Combe proceedings form part of a long-running international war between the parties across various territories, including Australia, New Zealand and the US. While the rulings from other jurisdictions focus on the likelihood of confusion between the 2 marks at issue, this Court of Appeal decision confirms and clarifies the interpretation of acquiescence provisions in England and Wales.

The Court held that an invalidity “step” taken against the later registration did not stop the five-year clock running. Actual infringement proceedings needed to be issued to stop the clock.

So the threshold of what a claimant needs to do to negative a contention by the defendant that the claimant has acquiesced to its registration of a later trade mark is confirmed as being onerous – mere threats of proceedings in correspondence and even the issue of UKIPO invalidity proceedings are insufficient to stop the clock. The position under English law is confirmed as close to that of the EU General Court, that an action with legally binding effect (e.g. an administrative or court action) is needed to negative the acquiescence defence.

Clients owning UK registered trade marks becoming aware of a conflicting registration by another party against whom they have not issued proceedings for infringement are well advised to consider issuing infringement proceedings early, so as to negative a defence of five years’ statutory acquiescence to the later registration.

Failure to do so may be a trap for the unwary.

Humphreys Law has an experienced team dealing with all litigation and IP matters.  For further information or support you are welcome to get in touch with our team.

All the thoughts and commentary that HLaw publishes on this website, including those set out above, are subject to the terms and conditions of use of this website.  None of the above constitutes legal advice and is not to be relied upon.  Much of the above will no doubt fall out of date and conflict with future law and practice one day.  None of the above should be relied upon.  Always seek your own independent professional advice.

Humphreys Law