Zenith CC&P Current Awareness


27 April 2017

Paul Stephenson

There may be a conflict between working in a field that involves creative and novel thinking with working steady hours in an employed capacity. Imagination does not “kick-in” at 9am only to dissolve at 5pm and being tied to ‘normal’ working hours on projects designated by an employer may be the reason why so many people involved in creating new works choose to go it alone. The creative freedoms that can arise as a result of self-employment come at a price and being a great web-designer or inventor can very well attract attention of the most unwelcome kind: litigation. The forms and causes of litigation are boundless but fall into three main categories. Firstly, an allegation that another party is copying or adapting one’s own work; secondly, that you are copying or adapting work of another; thirdly, disputes with licensees and other contractors.

Whether acting as a claimant or a defendant in litigation, the self-employed person will often find themselves in a David-v-Goliath struggle to finance the assertion (or defending) of claims. Most business people are sufficiently sophisticated to be aware that they need patents to protect their inventions, registered designs to protect new shapes of articles, registered trade marks to protect the signs they affix to goods or under which they supply services or keep a record of their copyright material to assert against those that would copy or adapt such material. However, the possession of the relevant intellectual property registration certificates – often proudly framed and displayed – is a first step to protecting these intangible interests but is far from a guarantee. The real problem arises in financing the assertion of those rights and a valuable resource that is often overlooked is the need for insurance of potential litigation either, more economically Before-the-Event, or sometimes available After-the-Event that is being complained about. Having seen so many of the self-employed being forced into a position of having to face down a national company or multi-national conglomerate, only the bravest will have and maintain the nerve that litigation demands. The cost of starting litigation simply in terms of court fees (ignoring the costs of lawyers) can be up to £10,000 depending upon the value of the claim.

The Courts in England have come to recognize that many intellectual property law cases involve huge disparities in the resources available to one party as against the other and to this end have established the Intellectual Property Enterprise Court as a branch of the High Court with quicker procedures, a “tight ship” approach to the vagaries of litigation and trials normally limited to two days. Generally speaking, the costs payable by the losing party to the winning side are restricted to £50,000. Put those costs in addition to the Court fees, legal costs and expert’s fees where such evidence is needed, a six-figure outlay is sum feasibly to be paid out by the losing side – a potentially life-ruining overhead for many small businesses. 

To level this financially uneven field, all businesses, especially those involved in creative work should approach specialist brokers to negotiate policies with underwriters tailored to meet specific requirements, which can involve litigation internationally. In the writer’s experience costs can start from £4,000 with excesses liable to be paid on claims limited to £5,000. The excess discourages frivolous court actions and insurers will want to be assured of a “good arguable case” in legal terminology – say a 60% chance of winning – before being prepared to underwrite claims. It is often the case in intellectual property litigation that in addition to the company being sued, a claimant will seek to add as a defendant one or more directors being the “directing mind and will” of the allegedly wrongful act. No matter how outrageous the allegation, the stress of having one’s personal assets potentially at stake can be alleviated by an insurance policy that covers directors’ personal liabilities. Licensees and customers of the party being sued will certainly lose confidence, fearing that as potential traders of supposedly infringing products they could be thrown into the fray. Emollient letters will hardly act as reassurance where there are alternative sources of supply whereas litigation insurance could afford appropriate indemnities, product recalls and loss mitigation measures including steps taken to bolster reputation that has been lost even by often absurd claims made against the designer or IP right-holder.

Predicting the outcome of litigation about intellectual property rights can be as difficult to predict as the weather even for the most experienced of lawyers and this is illustrated by a case a few years ago where British Airways sued Ryanair over advertisements placed by Ryanair comparing their prices to BA under the headline ‘EXPENSIVE BA----DS’. The derogatory use and treatment of BA’s registered trade mark was held not to incur liability on the part of Ryanair so even the best advice given by lawyers to BA turned out to be erroneous. Companies the size of BA could doubtless carry the legal bill written off against profits. The same legal costs presented to a small-medium enterprise could be devastating whereas insurance could mitigate the worst effects.

© Paul Stephenson

Barrister, Zenith Chambers, Leeds


Paul Stephenson would like to express thanks to Mr Ross Lewis


Current Awareness

By the CC&P team