Costs - Assessment - Defendants involved in sale of other wine cooling bag
Gimex International Groupe Import Export v The Chill Bag Company Ltd and others: Patents County Court (Judge Birss QC): 20 September 2012
In the instant action, the claimant company (the company) contended that the five defendants were liable for infringement of a Community Registered Design as a result of sales of a product called 'the Chill Bag'. The first and second defendant companies dealt in the Chill Bag. The third, fourth and fifth defendants did not themselves deal in the Chillbag but the company contended that they were personally liable for the acts of the companies. The defendants all denied that the Chill Bag was an infringement and contended that the design was invalid.
In its judgment (see  All ER (D) 255 (Jul)), the Patents County Court (PCC) held that the registered design was valid and that the Chill Bag product was an infringement. The instant matter concerned the issue of costs. The actual costs incurred by the company in the proceedings were about £119,000. That was a single bill attributable to the proceedings as a whole.
An issue of principle arose in respect of the costs cap pursuant to Civil Procedure Rule 45.42(1), which provided that: 'Subject to rule 45.43 the court will not order a party to pay total costs of more than (a) £50,000 on the final determination of a claim in relation to liability; and (b) £25,000 on an inquiry as to damages or account of profits.' The company contended that in the circumstances, since it was litigating against defendants who divided into two camps, it was entitled to apportion the total costs between the two camps of defendants and then have each portion assessed by applying the various stages of the appropriate PCC scale. The costs against each camp would be covered by the £50,000 cap under CPR 45.42(1). Accordingly, the company sought about £45,000 from each camp. Thus the total award to the company would be about £90,000.
The court ruled: The words of CPR 45.42(1) were clear. The court would not order a party to pay total cost of more than the capped sum. Accordingly, a litigant in the PCC had the security of knowing that subject to certain exceptions, the costs cap would protect their exposure to the other party's costs (see  of the judgment). That interpretation of CPR 45.42(1) facilitated access to justice for smaller and medium-sized enterprises. Ultimately, the reason for making costs orders was to compensate the winning party to some degree for their expenditure of legal costs. Only a party's reasonable costs were provided for in the normal costs system. The PCC cap system did not mean a party could recover costs it had not incurred.
It included a measure of cost recovery. Although it was capped there was no doubt that the costs to be paid retained a compensatory element. In many smaller cases, a party’s actual costs in the PCC were well within the PCC scales and below the £50,000 cap. On the other hand the consideration of certainty played an important part in the PCC costs regime. A small claimant who believed its intellectual property rights had been infringed could write a letter before action to a potential defendant which included a credible contention that, if the matter could not be resolved, the claimant would take proceedings in the PCC.
A defendant who might think they had infringed the intellectual property right but in the past would have thought the claimant would never risk the costs and complexity of legal proceedings, was now in a position to know that legal proceedings were a realistic possibility. The defendant could not expect to avoid litigation because it would be too expensive for the claimant to fight.
The same principles also applied to a small potential defendant. If it received a letter before action making a claim for intellectual property infringement which the small defendant could not in the past have afforded to defend regardless of its merits, with the PCC regime in existence, the small defendant could reply denying the claim and making clear it wished to be sued in the PCC and, if the claimant chose not to, to have the matter transferred there (see - of the judgment).
In the instant case, If the company had lost, even though it had been suing two separate camps of defendants, G’s costs liability would have been capped at £50,000 by CPR 45.42(1). Therefore, there was no justification for allowing G to take the approach it proposed and share out its single costs bill as between two sets of defendants and thereby recovering more than £50,000 in costs (see  of the judgment). The key submission on behalf of the claimant would be rejected (see  of the judgment).
Per curiam: The effect of the court's decision on the meaning of CPR 45.42(1) may mean that in a multi-party case, the costs recovered by a winning defendant may be reduced. There are all kinds of different possible scenarios which might arise. One aspect of this case was that the presence of two separately represented groups of defendants did not increase the claimant’s costs to any significant extent over and above those which would have been incurred against a single defendant (or single set of defendants represented together).
But in future there may be different cases. What if two sets of defendants wish to run very different defences? What happens if one camp of defendants wins but the other loses? Concerns of this kind, and there may well be others, are matters which may have a bearing on case management and should be raised at the CMC (see  of the judgment).
Hugo Cuddigan and Chris Aikens (instructed by Collyer Bristow) for the claimant; The first, second and third defendants did not appear and were not represented; Matthew Kime (instructed by Ormrods) for the fourth and fifth defendants.