Only fools and IPEC proceedings

Many litigants want to have intellectual property (IP) arguments in the Intellectual Property and Enterprise Court (IPEC).  This can often be for a number of reasons, but the fact that the IPEC offers a quick and cost effective venue to hear IP claims is generally at the top of the list. The IPEC has a very strict costs and damages cap, it means that litigants are protected from huge adverse costs consequence as the maximum recoverable amount of legal costs on the IPEC are £50,000.

Because the IPEC offers this costs cap, litigants can be safe in the knowledge that if things go wrong the maximum orders that can generally be made against it are legal costs of £50,000 and damages of £500,000 – whilst still huge amounts they are much lower than the equivalent sums in other parts of the High Court. This is great for a SME with limited resources but what about bigger entities with not so limited resources, well they may want to litigate in the High Court as there is no cap on recoverable damages and a longer trial can be had.

Furthermore, whilst most often the claimant will choose where to try the claim, the court does have some discretion: this is where the title of this blog comes into play.

Shazam Productions Ltd v Only Fools the Dining Experience Ltd & Ors 2020 is a copyright infringement and passing off claim. John Sullivan OBE was responsible for the Only Fools and Horses British sitcom, Shazam Productions Ltd was incorporated to manage his copyright and following his death in 2011 is now controlled by his family.

As the name suggests, Only Fools the Dining Experience Ltd (OFDE) is a company set up to put on an interactive theatrical dining experience called Only Fools The (cushty) Dining Experience. Shazam Productions claims this activity is an infringement of the copyright it owns and further that OFDE is liable under the laws of passing off (unregistered trade mark infringement).

On the face of it, this claim appears to be a David and Goliath classic, Shazam Productions in its most recent accounts shows a balance of over £8 million, OFDE on the other hand is in the red. Shazam Productions issued its claim in the High Court, meaning that the potential monetary awards it could receive would not be capped as such. This could also give Shazam Productions a tactical litigation advantage in that OFDE may not have sufficient money available to fund a High Court action.

OFDE went onto issue an application to have the claim transferred down from the High Court to the IPEC, in this application it submitted the actual value of the claim was below the £100,000 High Court minimum and that the defendants were unable to afford the costs of defending a High Court claim.

Shazam Productions countered by submitting that the claim was too complex to be heard in the IPEC’s 3 day trial time limit. Rather, it was more suited to an 11 day High Court trial owing to the vast quantity of evidence.

Master Teverson heard the application, he began with an overview of the claim and by then reviewing the law in this area. The law says that a court will consider the value and complexity of the claim, along with the parties’ financial means, to determine whether a claim should be transferred to the IPEC. The Master considered the case of Kogan v Martin 2019 in which the judge explained “The rationale for the creation of the IPEC and its predecessor was to provide access to justice for individuals, and small and medium sized enterprises, who would not be able to pay the costs normally associated with intellectual property litigation in the High Court under the CPR.”

The defendants managed to demonstrate that they would be unable to pay the costs associated with defending a High Court claim (I don’t blame them, I wouldn’t be able to afford them either!), the Master also found that the levels of evidence were not as the claimant had submitted and that a 3 day trial would be possible. Overall, the Master considered that there was a real risk of access to justice being denied for the defendants if the claim was not heard in the IPEC.

In light of that, the Master ordered that the claim be transferred to the IPEC. From our perspective, this is a welcome decision that provides guidance on the reasoning as to when and why a court may order a claim to be transferred to the IPEC. Just because a claimant issues court proceedings in the High Court doesn’t mean that it is the best place to hear the claim, the Master considered that access to justice was a compelling reason to transfer the claim down to the IPEC.

This will also be an interesting claim to watch: if Shazam Productions is successful in the copyright claim, it will mean that the scope of copyright protection may be extended – this is as none of Mr Sullivan’s text has actually been used by the defendants.

The IPEC can be a great place to litigate, it is cost effective and offers a swift and efficient mechanism to hear IP claims. As a result of the active case management and costs caps, litigants on both sides can have a clear understanding of what their overall exposure is likely to be. Why not contact one of our expert lawyers today for a free consultation to see what the IPEC (or High Court) can offer you.

Written by Sam O’Toole, Solicitor