A collector’s item

19th Oct 2020

Dewdney Drew shares lessons from his experience of enforcing costs awards.

There was a time when UK IPO costs awards were not a big deal. Plaintiffs held no expectation of recovering their costs, and the defendants did not fear an award. Awards tended to be small, and the logic that the amount was too small to be worth enforcing gave many pessimistic defendants comfort. Now, though, that era is over.

Off-scale costs have been an option since 1993¹ but have become more topical in the wake of the battles between Apple Inc. and Michael Gleissner. For example, in O/118/17, Apple was the beneficiary of an order to the tune of £38,085.

Off-scale costs are there to punish unreasonable behaviour, and rightly so. But preparation is key if you hope to call upon such an order.

Make your markers

If you find yourself up against an unreasonable litigant, it is advisable to lay down suitable markers along the way on which you can rely later. Examples of tactical action include:

Noting and keeping evidence of specific instances of unreasonable behaviour by reply correspondence as and when they occur;
Formally inviting the other side to withdraw an action or request, using the threat of off-scale costs; and
Indicating that you would entertain settlement proposals, and reiterating this as needed.

Corresponding on a “without prejudice, save as to costs” basis exclusively between the two parties is the traditional route. However, with a really obtuse adversary it is sometimes better to lay down the markers in open correspondence, copying in the IPO. This can be more effective because it brings the Hearing Officer (HO) along with you. It can also serve as a course-correction measure, should you be misreading the situation.

If you have laid down the markers correctly and given ample opportunity for the other side to refrain from unreasonable behaviour, the HO should be on the same page as you by the time you submit the request. In an ideal scenario, it is then simply a question of summarising the history and pointing to the markers, and an off-scale award should follow.

Security for costs

The Registrar’s power to award security for costs comes from the Trade Marks Rules 2008, rule 68, which states that:

The Registrar may require any person who is a party in any proceedings under the Act or these Rules to give security for costs in relation to the proceedings; and may also require security for the costs of any appeal from the Registrar’s decision.
In default of such security being given, the Registrar, in the case of proceedings before it, or, in the case of an appeal, the person appointed under s76, may treat the party in default as having withdrawn their application, opposition, objection or intervention, as the case may be.

While the guidance provided in the Trade Marks Manual (Tribunal Section, 5.6) focuses on overseas companies or individuals, a domestic company or individual with insufficient assets is equally susceptible to such an order. In a recent decision, Mr Phillip Johnson noted that while “a request for a security for costs must include material adequate to suggest that a party has insufficient funds to satisfy any costs order, there is a limit to what can be expected”.² In that case, evidence of overdue accounts from Companies House was deemed sufficient and this was regarded as “reflect[ing] what a party can be reasonably expected to produce without going to disproportionate expense (by, for example, instructing inquiry agents)”.

So, if the other side is a company, check Companies House. If the other side is an individual, various public domain checks can be run to determine whether they are bankrupt or have any judgments against them, for example. Prior unpaid UK IPO costs orders (or indeed EUIPO costs orders) could provide convincing evidence.

If you are able to establish a prima facie case, the presiding HO will call for the other side to file evidence in reply, to rebut your claim. If they fail, an order for costs will normally be given (unless there are discretionary reasons not to do so). If the other side does not pay the necessary amount into a UK IPO account, they cannot proceed.

Enforcing orders

Section 68(2) of the Trade Marks Act 1994 provides that: “Any such order of the Registrar may be enforced – (a) in England and Wales or Northern Ireland, in the same way as an order of the High Court; (b) in Scotland, in the same way as a decree for expenses granted by the Court of Session.” Nonetheless, collection agencies often scratch their heads when they are instructed to collect one. The uncertainty extends to High Court Enforcement Officers (for Scotland, Sheriff Officers). This is probably due to the rarity with which these awards are enforced.

This author once had a case where the client felt very strongly about enforcing a small on-scale order against a member of an extremely wealthy family. It took a lot of following up, but the order was paid. Without recommending a specific collection agency, the key to success is persistence. More specifically:

The collection agency needs to be guided into understanding that the order has the same status as a High Court order and should then reassure the enforcement officers that the order has the necessary weight.
It is helpful to have an original (paper) document to pass to the enforcement officers. If you do not have one, the UK IPO can provide one.
Give the collection agency up-to-date details regarding the name, address and contact information of the entity or person against whom the order was made. It’s a simple point, but reducing the complexity when it comes to enforcing an unfamiliar type of order helps a great deal.

In summary, unless you have a client that is happy to spend double or triple the value of an on-scale costs award, it is unlikely to be enforced. The fact that collection agencies seem to be unfamiliar with UK IPO costs awards usually means paying for the Trade Mark Attorney to cajole, inform and chase it.

If you have put in the groundwork for an off-scale award and secured one, the cost-to-benefit ratio may be much more favourable, and enforcement is the way forward. And in this author’s experience, the Trade Mark Attorney is an important link in the chain.

References:

¹ Rizla Ltd’s application, RPC 365

² Appeal from O/261/20, DOUGLAS OF DRUMLANRIG, Decision on security for costs, 20th July 2020