One potentially very significant aspect of the proposed changes is the proposal to empower the CAT to grant injunctions and set up a ‘SME-friendly’ fast track procedure. The fast track is intended to give smaller companies a swift, cheap and cost-capped route to obtain injunctive relief for breaches of competition law. These proposals could affect IP-heavy industries as there is often scope to argue that the ‘legal monopoly’ afforded by copyright, patent, SPC (etc.) has been ‘leveraged’ to the detriment of competition. At present, the cost of bringing such claims before the High Court is prohibitive for small parties without third party funding and cases rarely reach trial. Given the claimant-friendly nature of the fast track, this could all change soon.
As I noted when I previously blogged on the earlier incarnation of these proposals, a key battleground will be the first case management conference (‘CMC’) where the CAT decides whether or not to fast track a case. This CMC will take place after the close of pleadings (potentially within three months of the claim being filed) and the claimant should have already specified at the same time as lodging its claim the reasons why it believes the claim should be fast tracked (in compliance with draft rule 30(4)(c)).
Importantly, under draft rule 57(1)(a) a case must come to trial “as soon as practicable and in any event within six months” of the CAT ordering the fast track procedure. This might mean a substantive hearing within 9 months of the claim being filed. Under draft rule 57(3)(b) it must be possible to determine the issues within a trial of three days or less.
Draft rule 57(3) contains other factors relevant in deciding whether the case is suitable for fast tracking, including: (a) the novelty or complexity of the case; (b) the scope of documentary disclosure required; and (c) the evidence (factual and expert) needed at trial. Of course these factors could be thought of as largely subsidiary to the first two elements mentioned earlier: it’s not going to be possible to try in just three sitting days a complex, novel case requiring extensive disclosure and heavy fact and expert evidence within a six month timetable.
The government hopes that the fast track will learn from the highly successful Intellectual Property Enterprise Court (‘IPEC’). However, at this stage the differences seem almost as great as the similarities. For a start, there is no obligation for an IPEC case to reach trial within six months “in any event”. Although a quick trial is a sensible aspiration, draft rule 57(1)(a) seems overly rigid and might lead to unnecessary costs. Second, the proposed ‘cost-capping’ regime is much less transparent than in IPEC. Recoverable costs for larger IPEC cases are capped at £50,000 for liability issues and £25,000 for quantum disputes on a blanket basis. The proposed fast track allows the CAT flexibility to set a cap (which is to be welcomed) but whether a cap will apply, and the level of the cap, is not determined until the first CMC. This means a claimant may incur significant costs (and adverse costs exposure) before it even knows whether the case will be fast tracked. The government originally proposed that a claimant should have an option to ‘walk away’ without costs exposure to the defendant if the cap were set at a level it was not prepared to accept (see para 4.25 of this paper) but this appears to have been dropped. Finally, there is no capping on the amount of recoverable damages in the fast track in contrast to the IPEC where damages for larger cases are capped at £500,000. The system therefore lacks a natural cut off between fast track and ordinary CAT cases which may mean too many claimants try to squeeze into the fast track.
The consultation closes on Friday, 3 April. Be sure to have your say if you might be affected by these proposals.