In the world of intellectual property (IP), litigation is where one party has a claim against another party for doing something that infringes an IP right. For example, the owner of a trade mark may raise a claim against a clothing company that’s used the owner’s trade mark on a clothing design without permission.
The term ‘litigation’ covers this process from start to finish, from sending a cease and desist letter through to a judge giving a judgment.
It’s a big world and things can often go wrong. So, whilst sometimes disputes can be avoided or settled, other times they cannot and we need to venture into the realm of litigation for a resolution. Essentially, IP litigation is about serving justice where justice deserves to be served and resolving disputes relating to IP rights in a formal and comprehensive manner.
The courts have the jurisdiction to determine IP claims, they can award compensation, grant injunctions (to prevent or require someone to do something) and even remove IP rights from the register if they are not valid. It’s for these reasons that IP litigation has a central role in helping to resolve intellectual property disputes – although that’s not to say it’s the only way to resolve a dispute.
Disputes regarding IP can take a number of shapes and forms. Often, at its most basic, it’s about a person or business using something that amounts to an infringement of another party’s IP rights. Okay, I know this doesn’t help too much, so here are some more specifics for the rights we usually litigate over:
This is not an exhaustive list. For example, other types can include patent infringement (relating to inventions or processes being used) and misuse of confidential information.
Quite frankly, the implications for businesses can be vast. In addition to someone ripping off your hard-earned goodwill in a brand or short-circuiting your design process, the infringer also is likely to be profiting from it.
IP rights are there to protect and safeguard innovation, often the creation of goodwill in a brand will cost time and money and it simply isn’t fair to let someone else profit from that. The courts recognise this and they can award what’s called an “account of profits” to successful claimants – this is where the infringer has to pay the profits made from the infringement to the IP rights holder.
Disputes do not often lead to litigation. In most cases, once a round of pre-action correspondence has been exchanged, parties that are well-represented and commercially minded will settle a dispute, meaning that a court claim never needs to be commenced.
This is because litigation is time-consuming, costly and often stressful. It’s better avoided where possible and most people tend to be aware of this. As a result, only a very low number of disputes make their way to formal litigation.
Equally, where a court claim is commenced, and two sides are involved in formal litigation, the number of cases that actually reach a trial is also very low. As things currently stand in September 2023, the Intellectual Property Enterprise Court has handed down 12 judgments (or decisions) and I would bet that a very high number of cases that were commenced in the Intellectual Property Enterprise Court in 2022-2023 have been settled and will never reach a trial.
One of the benefits of litigation is that although a court claim can be commenced, the fact the court claim exists doesn’t prevent the parties from settling their differences outside of court. Indeed, sometimes the mere existence of a court claim can help to push parties towards reaching a settlement.
The court rules explain that before any court claim is commenced, the parties should exchange a letter of claim and a letter of response. A letter of claim is what it says on the tin, it’s a letter that sets out a person’s claim against the other and requests that steps be taken by the other side to settle the matter (such as the ceasing of the infringement and paying compensation). A letter of response is also just that, it should be either an admission of the claim or an explanation of why that side considers they are not liable for the infringement.
More often than not, this is where an IP litigation matter will start and finish. Usually, once an infringer is aware that they have been “caught” and they have infringed they will take steps to remedy the issue.
Pre-action correspondence can be done and dusted very quickly or it can take a few rounds of communication to get a result. Although, if the infringement is ongoing and the matter is not resolved it may be desirable to commence a court claim.
Where a dispute cannot be resolved with pre-action correspondence, the next step to think about is commencing a court claim. This is where the temperature of the dispute gets turned up and the parties are required to complete certain steps to bring the matter to a trial, where a judge will make a decision (unless they settle the claim along the way).
A court claim starts with a claimant “issuing” a claim form with the court. The issued claim form and particulars of the claim are then served on the defendant. The defendant then has to serve a defence (and any counterclaim) and the claimant gets an opportunity to reply to that. Once these “statements of case” have been exchanged, there will then usually be a case management conference in which the court will set out “directions” to trial (a road map of the next steps) which usually include disclosure and the exchange of evidence. Once these steps are done, the case will then usually be in good shape for the parties to prepare for trial.
I have called this step three but really it can happen any time in an IP litigation matter: mediation, or alternative dispute resolution more generally, is where the parties get together (formally or informally) in an attempt to settle a dispute.
Often it can be very beneficial for the parties to jointly instruct an impartial qualified mediator to mediate the dispute. On average most mediations settle and so it’s always worth considering in any IP dispute.
Mediation also has its advantages such as the terms of the matter and settlement being kept confidential, it being more flexible than court and being able to be quickly arranged.
Once the trial has taken place, a judge will usually provide a written judgment that will explain who has won and who has lost and the reasons why.
In IP claims, there can then be a second trial which will be used to assess the level of damages or compensation payable by the losing party – although, again, most disputes are settled before this second trial.
Unfortunately, disputes happen all over the world, especially in the context of intellectual property. Usually, if a claim is not in the UK then we would work with one of our foreign associate lawyers to commence the claim overseas. There are a few factors that come into place here and even if the other side is not based in the UK, it may still be possible to commence a claim in the UK against them.
IP litigation is naturally a contentious area. However, a combination of a good understanding of the legal position and strategy can help to unravel a dispute in an efficient manner. At Briffa, we like to combine our legal and strategic expertise with our client’s desired objectives and outcomes. We understand that IP litigation can be stressful and that’s why we like to assist from start to finish.
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