Oui Oui?...No No: Court dismisses unusual appeal against case management order in a dispute over litter boxes

• In the absence of evidence to show that claim was worth over £10,000, the Court of Appeal upheld the IPEC's decision that the SCT was the appropriate track regardless of the parties being legally represented.
• No general principle of EU law forms part of domestic law after 2023. The IPEC therefore did not err in its lack of compliance with Article 14 of IP Enforcement Directive law and the parties would have to submit to the limited costs recovery available at the SCT. 

Background

The appellant/claimant, Makeality Ltd, issued IPEC proceedings against City Doggo (the respondent/defendant) for trade mark infringement under sections 10(1), 10(2) and 10(3) Trade Marks Act 1994. The claimant owns a trade mark for PIDDLE PATCH for pet litter trays containing real turf, which it claimed the defendant infringed with its competing product called the "Oui Oui Patch" (likely due to the conceptual affinity between "Oui Oui" and "Piddle"). The claimant also complained of the defendant's direct use of "piddlepatch"/"Piddle Patch"/"PiddlePatch" in various ways. The infringement claims were topped off with claims that the use of both amounted to passing off. The defendant, which considered that the claim would not exceed £10,000, applied for the proceedings to be transferred to the SCT.

Generally, the SCT is designed for less complex cases worth £10,000 or less, which usually require no legal representation and can be tried in a day. Though it is not mandatory to have no legal representation in the SCT, this combination of factors makes the court a suitable forum for smaller enterprises to have access to justice in a manner that suits their financial position. The judge therefore granted this order, mainly due to the simplicity of the case and in the absence of any evidence from the claimant that the claim would exceed £10,000. However, it is also noteworthy that both sides being legally represented was not a factor against transfer.

Considering the function of the SCT, its scope for costs recovery is extremely limited - hence the claimant's appeal on:

• Ground 1: The IPEC did not sufficiently consider factors as to the complexity of the case and as such erred in its decision to transfer the case to the SCT; and
• Ground 2: The SCT costs did not comply with Article 14 of the IP Enforcement Directive which requires member states to ensure that reasonable and proportionate legal costs and other expenses incurred by a successful party are paid by the unsuccessful party.

 The Appeal

Upholding the IPEC's decision and dismissing the claimant's appeal, Lord Justice Arnold gave judgment for the Court of Appeal that the IPEC was entitled to allocate the case to the SCT.

The Court of Appeal placed the majority of its reasoning for dismissing ground 1 on the lack of evidence to support the value of the claim exceeding £10,000. The court also concluded that though legal costs are practically irrecoverable in the SCT, it was not a prescribed rule that parties should not be legally represented. Given legal representation is technically "allowed", Lord Justice Arnold reasoned that the inherent simplicity of the case was not masked by the parties' "elaborately pleaded" statements of case. It was this inherent simplicity that satisfied that judge that the trial could be heard in a day and qualified the case for the SCT.  Considering the low value which the claimant was unable prove to the contrary, and despite the costs that would be irrecoverable, the judge concluded that allocating the case to the SCT would better satisfy the courts' overring objective to determine claims at a proportionate cost. Thus the Court of Appeal upheld the IPEC's decision that the SCT was the most appropriate track for the case.

The Court of Appeal also found against the claimant on ground 2. This ground was pleaded on the basis that the IPEC's judgment violated Article 14 of the IP Enforcement Directive which requires that a successful party should be able to recover reasonable and proportionate legal costs from the losing party. Arnold LJ concluded here that Article 14 would not have had direct effect on this case given the IPEC SCT had not existed when the IP Enforcement Directive came into force, and the UK did not implement it into domestic law as it already reflected the practices of the UK courts. As such, any application of Article 14 would be applied using the Marleasing principle, which is designed for courts to indirectly interpret domestic law consistently with EU law.

However, critically, Arnold LJ concluded that given the claim started in 2024, applying the Marleasing principle would not apply here since  the Retained EU Law (Revocation & Reform) Act 2023, designed to move away from retained EU law and assert UK sovereignty of its legal system, meant that there was no requirement for court to decide the appeal in line with the EU Directive.

Comment

Whilst there has been an increase in appeals against IPEC decisions, this is an unusual case given case management decisions are very rarely taken to appeal. In this case Arnold LJ confirmed that case management decisions "can only be overturned on limited grounds" such as where a "judge had regard to a factor that was irrelevant, or failed to have regard to a factor that was relevant, or if the judge's discretion was "clearly wholly wrongly exercised"". This position is reflected by the outcome and puts into perspective the need to sufficiently assess the need for and merits of bringing appeals.

The case also highlights the importance of ensuring that litigants take a realistic view as to the value of a claim – in this case the claimants overcomplicated what should have been a simple claim, which resulted in not only overvaluing the claim but expending significant legal costs to draft complicated pleadings all of which are irrecoverable. Is therefore critical to ensure litigation is managed in a way that limits the overall irrecoverable losses. The decision also significantly curtails the protections that were provided by the UK being bound by EU directives and marks a step away from the applicability of EU legal principles to UK law. Not quite the paws-itive outcome anticipated by the claimant in this case.