Infringement and litigation

3.1Enforcing rights

If someone parked a caravan or pitched a tent on your front garden, you would be able to take action for trespass. You would ask the court to grant an injunction requiring them to move. You might claim damages if they had broken down a fence or ruined the lawn. If someone takes your car, you could sue them for its return, though the criminal law might offer more effective redress in such a situation.

Similarly, if someone trespasses on your intellectual property you could take legal action against them. A trespass on intellectual property is called an infringement (the actions for breach of confidence and passing-off, though closely related to intellectual property and giving the same remedies, are different). If your intellectual property rights are infringed, the courts will grant injunctions, award damages (or order an account of profits, which is another way to look at much the same thing), make declarations, make other orders (for example, for seizure or destruction) and take other steps to put the parties in the position they would have been in had the infringement (or passing-off or breach of confidence) not occurred.

Intellectual property being intangible, legal action is the only way to enforce the rights of ownership. Unlike a motor car, you cannot simply take it back. Possession is not a concept that assists. The action for infringement is central to the intellectual property system, which is why intellectual property rights form part of that class of property rights called choses in action. But there are also other matters that can come to court: claims of invalidity, claims for revocation, disputes about ownership. There is also a growing edifice of criminal sanctions bolted on to the intellectual property system.

3.2Criminal offences

The criminal law tends to intervene when there is a wider public problem than the mere infringement of a private property right. It concerns itself with piracy and counterfeiting, neither of which are precise concepts: indeed, car manufacturers (or at least one car manufacture) used to refer to anyone making spare parts for their vehicles as a ‘counterfeiter’, making almost useless through hyperbole a word that has a useful role to play when referring to the mass production of shoddy goods bearing deliberately misleading trade marks. Piracy tends to indicate the unauthorised manufacture and distribution (through car boot sales and latterly on-line auctions) of CDs, DVDs and computer programs which are protected by copyright, though it will frequently also involve the reproduction of trade marks to complete the deception. (Whether anyone is actually deceived is a moot point, given that research shows that an alarmingly high proportion of the British public is indifferent to the problem, preferring to be able to buy what appear to be Louis Vuitton handbags and Burberry apparel at knock-down prices from market stalls.)

3.3The cost of litigation

Litigation is a rich person’s pastime. Intellectual property litigation is for the extremely rich. It has always been cripplingly expensive, and the cost of enforcing one’s rights (on top of the costs involved in securing some of them, especially patents, to start with) is a major limitation on their usefulness. Nearly 125 years ago, in Ungar v Sugg¹ Lord Esher MR famously said:

Well, then, the moment there is a patent case one can see it before the case is opened, or called in the list. How can we see it? We can see it by a pile of books as high as this [holding up the papers] invariably, one set for each Counsel, one set for each Judge, of course, and by the voluminous shorthand notes: we know ‘Here is a patent case.’

Now, what is the result of all this? Why, that a man had better have his patent infringed, or have anything happen to him in this world, short of losing all his family by influenza, than have a dispute about a patent. His patent is swallowed up, and he is ruined. Whose fault is it? It is really not the fault of the law; it is the fault of the mode of conducting the law in a patent case. That is what causes all this mischief.

In the High Court an action will typically cost between £500,000 and £1 million, and in the notorious case of Research In Motion UK Ltd v Visto Corporation², RIM’s legal costs came to around £6m, and Visto’s about £1m. As noted above, the Intellectual Property Enterprise Court operates strict costs limits (in the sense of the costs that the losing party might be ordered to pay), but even they can seem daunting to small litigants. In practice, the cost of litigation (including awards of costs against the losing party) usually have a much greater bearing on the outcome than the substantive law.³

3.4Alternatives to litigation

In recent decades, there has been a great deal of discussion of alternative dispute resolution. Alternative to litigation, that is: remember that litigation was once an alternative dispute resolution procedure, to be used instead of single combat or other violent, and final (no possibility of appeal) means of resolving differences. The high cost of litigation makes it attractive to seek a different way of dealing with disputes, and the globalisation of trade – making it often necessary to enforce IP rights, which are territorial, against the same defendants in several different countries at the same time – adds to the attraction.

Alternative dispute resolution usually means arbitration and mediation. They are more suited to some types of dispute about intellectual property than others. If the dispute concerns a licence, given that the parties have already made an agreement once they may be prepared to make a new one and compromise their dispute. If it involves a conflict between two trade marks mediation may help the parties find an arrangement that allows them to co-exist. If infringement is alleged, a compromise might be possible. If it involves the validity of the registered IP rights, however, arbitration or mediation might not be the answer.

3.4.1Arbitration

Just considering expense, time and appealability explains a lot about the attraction of arbitration. The fact that the parties can keep proceedings secret, unlike litigation which takes place in public, is another significant advantage. An arbitrator expert in a particular field of technology will need less expert evidence than a judge, however clever he or she may be. Draconian disclosure obligations such as those in the U.S.A. can be avoided.

The importance of confidentiality may lie in the secrecy of the process or product involved – a patent application might have been filed but not yet published. Commercially-sensitive information may be involved. The parties can create far-reaching protection for confidential information, including by adopting arbitration rules that specifically address this issue (as the WIPO Arbitration Rules do).

In many jurisdictions, however, disputes involving public policy issues may not be arbitrated, and on these grounds a few jurisdictions may prohibit arbitration of intellectual property dispute, or limit the type of dispute which may be dealt with this way. IP disputes frequently engage the public interest as well as the interests of the parties, but arbitration is unsuited to dealing with public interest matters. This is particularly troublesome where the dispute involves the validity of the rights, and invalidity arises in many situations – in infringement claims, where the alleged infringer wishes to get rid of the right concerned, and in licence disputes where invalidating the licensed IP would solve the licensee’s problems, to mention just two examples. An arbitrator, unlike a judge, cannot invalidate a patent or trade mark. In the UK, it is generally accepted that issues of invalidity can be arbitrated but since the award only binds the parties arbitration cannot be determinative. If arbitrability of invalidity claims is a problem, it might be circumvented by asking a tribunal to make findings of non-enforceability rather than invalidity.

This limitation of arbitrability of invalidity issues is, in fact, one of the possible attractions of arbitration to IP owners. They can safely submit to arbitration without putting their rights in jeopardy, as they would be in litigation.

Apart from the question of whether an intellectual property dispute may be arbitrated at all, there is another question about enforceability. The New York Convention deals with this area, and contains an exception on public policy grounds (Article V.2). National courts usually interpret exceptions narrowly, and generally require a violation of fundamental principles of justice or morality, so in reality very few awards are successfully challenged on public policy grounds. But even so, the public policy dimension that is so often present in private disputes over intellectual property makes arbitration

3.4.2Mediation

In mediation, a neutral party helps the parties to the dispute to find a way to settle it. In the UK, the Intellectual Property Office has for some years offered mediation services at a reasonable cost. The parties to the dispute, which may for example concern a conflict between trade mark rights, will for most of the time be placed in separate rooms and the mediator will shuttle between them with suggestions from the other party. If there is a will to reach a compromise, this can be a highly effective way to resolve the dispute, so if the situation is one in which the rights involved can somehow be shared it might well work. If however the dispute is between two owners with competing rights – for example, there could be very similar or even identical trade marks registered for similar or identical goods or services – there may be no scope for compromise and both parties may be determined to hang on to their property intact.

1(1892) 9 RPC 113 at 116-117.

2[2008] EWCA Civ 153 (6 March 2008).

3The high cost of litigation is partly offset by the availability of actions for damage suffered as a result of groundless threats of proceedings, available in patent, designs and trade mark cases. Following a Law Commission report, a bill was introduced into Parliament in early 2016 to extend the remedies available.