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Spiralling costs in the IPEC - judge states "outcome is much to be regretted"

Written by Aasim Durrani on 01 October 2015

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The Intellectual Property Enterprise Court (IPEC) decision in NOCN (formerly National Open College Network) v Open College Network Credit4Learning [2015] EWHC 2667 (IPEC) was recently published. The claim centred around allegations of trade mark infringement and passing off and was uncontroversial in the sense that it reiterated established legal principles on the matters in dispute.

Perhaps most interesting in the judgment of His Honour Judge Hacon was the final post script paragraph, which revealed startling facts about the litigation:

"I have one final observation which I think should be expressed even though it is self-evident. I now know that between them the parties, both charities, have incurred well over £400,000 on fees in this litigation. A very strong recommendation to settle at the case management conference was not taken up. The laudable cause of encouraging adult education will presumably have to endure an equivalent cut in funding solely because this dispute was not resolved at an early stage. Such an outcome is much to be regretted."

As an overview, the IPEC exists to settle intellectual property disputes in a cost-effective manner. The court, and its predecessor, the Patents County Court, were established to assist litigants who might otherwise be reluctant to enforce their rights as a result of concerns relating to costs and complexity. To this end, the IPEC caps costs aggressively and limits the amount a successful claimant may recover. In doing so, it provides a forum which is invaluable to many SMEs, who might otherwise not have bothered to enforce their IP rights.

The post script judgment emphasises the benefit in settling matters at an early stage, as well as the need for parties to manage costs and keep sight of wider commercial considerations where early settlement is not possible. The combined expenditure of £400,000 by the parties is clearly disproportionate, particularly since the bulk of those costs will not be recoverable.

As a matter of good practice, litigants in the IPEC (and any court, for that matter) should take stock regularly and consider the costs they are incurring in relation to the benefit they can reasonably expect to realise. Spiralling costs are a common problem in litigation, which highlights the benefit in settling early. This case serves as a particularly blunt reminder, given that both parties were charities and whose charitable objects are likely to suffer to the tune of around £400,000.

The judgment does not state how or why costs in this case escalated in the way they did, and there may be underlying facts which are not apparent from the judgment alone. However, few people would dispute that those costs would have been better spent in advancing adult education.

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