Proportionality in IP Claims

Valuing intellectual property claims is always a difficult thing to do from the outset.  Unlike a debt claim, it is difficult for a party to determine the true value of a claim unless the infringing party provides accurate information relating to the infringement.  At the beginning of a dispute, it is unlikely to be the case.  Nevertheless, The Intellectual Property and Enterprise Court (IPEC) has signalled the importance of proportionality in IP litigation. Makeality (appellant) v City Doggo and Laurencia Walker-Fooks is a claim concerning allegations of trade mark infringement and was issued in IPEC.

Makeality offers a biodegradable grass litter box for pets named Piddle Patch.  City Doggo began promoting a product under the brand name ‘Oui Oi Patch’.  It was claimed that City Doggo misled consumers by use of the name PIDDLE PATCH.  The Defendants denied liability and removed any use of the sign ‘Piddle Patch’.  The Defendants argued that the claim, originally issued in IPEC Muti Track forum, should be allocated to the Small Claims Track due to its low value.  Generally, any IP claims of a value of less that £10,000 are to be allocated to the Small Claims Track (subject to certain conditions i.e. it is not a claim involving patents, registered designs).  Importantly, a claim issued in the Small Claims Track means that the winner will not be entitled to its costs which is an incentive for many claimants to issue its claims in Multi-Track.

HHJ Hacon ordered the dispute to be transferred to the IPEC Small Claims Track.  This decision was appealed by Makeality.  Lord Justice Arnold upheld HHJ Hacon’s decision and provided several points as to why he did not defer from HHJ Hacon’s decision.

1. Neither the Claimant nor Defendants provided financial evidence to support allocation to the multi-track.
2. Makeality failed to provide evidence that potential damages exceeded the £10,000 threshold.
3. HHJ had rightly assessed that the points in dispute could be dealt with in one day.
4. HHJ Hacon has applied the correct the legal tests and had no erred in law

This case further emphasises the importance of trying to value claims proportionately prior to issuance.  It is important to be able to evidence quantum, and not simply just speculate or infer.