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of the Copyright, Designs and Patents Act 1988
at members of the consultation team ...
Lets clear up some misconceptions. Understanding them will come in useful later.
First, when a damages limit is introduced – I should be open-minded and say “if” – that means what it says (mostly at least): it is a limit on recoverable damages. It does not mean that a case in which the value of business is higher cannot proceed in the PCC, but only that if you want damages and the other party does not agree, then the maximum you can recover is £500,000 + interest. An injunction might worth much more than £500,000. That does not mean the judge cannot award an injunction or that the case cannot proceed in the PCC.
Secondly, it does not prevent you from bringing a claim in which the damages are more than £500,000 in the PCC. It just means you will have to abandon the excess and the Court has no jurisdiction to award more – (Copyright Designs and Patents Act (CPDA) s 282(2)).
Building on this, because the power to make the rule comes under the CPDA 1988, the judge does not have a discretion to award a higher amount than whatever limit is put in place, unless the parties agree. In any event it would simply lead to lots of special pleading. But, it is open to the parties to agree a higher limit (CDPA s 288(4)) – all they have to do is to follow the approach in that section.
I should add, to avoid any misunderstanding, that the value of the case may be one of the factors taken into account in considering whether the case is appropriate for the PCC, so the £500,000 limit would not be altogether irrelevant (PD30 9.1(2)(a))
Should the limit be lower? In the writer’s opinion, the answer is a pretty clear no. If it were lower, it would mean that the cap on recoverable costs would start to look disproportionately high for almost all cases in the PCC, and that cases just above the limit would often have disproportionately high costs in the High Court. Let's say that the limit was £250,000. Parties seeking damages of a little more than £250,000 would have to proceed in the High Court, where they could expect costs of, well maybe well in excess of £250,000 (and a possible exposure to the other side's costs of the same magnitude). This does not make sense, even if you factor in the value of an injunction, which in an IP case might be several times the value of damages.
What of a higher limit? The last argument suggests the limit could be much higher. However, in an average intellectual property case with damages of £500,000, the damages might cover a couple of year’s infringement. An injunction could push the total value of the claim quite a lot higher. A lot is at stake. Parties will start to spend more on preparation and strategy, and develop ways of complicating the procedure, and arguing for complicated procedures. That is not an attractive prospect for the PCC, especially at this stage.
There is no perfect answer. One possibility was to look at value. As some commentators have said, it is very difficult to assess value. For that reason opting for a definite figure, albeit imperfect is a good idea.
After all, the new rules make some cases worth litigating when they were not before. They do not stop anything which could have been done before. It's much better to start with a limit which provides a real opportunity for SMEs to bring some of their cases before an affordable court, rather than to clog up the court with applications for transfer and complicated cases with which parties seek to complicate the procedures. That is a view supported by the decision in ALK-Abello v Meridian Medical Technology  EWPCC 014 (noted on PatLit here). Lets give it full support.
My vote is for the proposed limit.
By the way, there is an additional twist. The CDPA 1988 does not allow a limit to be applied to cases which are not patent and design cases. However, it is likely that a power under the Courts and Legal Services Act 1990 will be used to create a corresponding limit on trade mark and copyright (and other IP) cases in the PCC.