Secretary of State for Education and Skills v Frontline Technology Ltd.

Costs should reflect the issues on which each party succeeded, rather than mechanically applying the general rule that the unsuccessful party pays. Where a case involves distinct issues, the court may make separate costs orders and may apportion costs by reference to the time spent on each issue. In an exceptional case, an unsuccessful party may recover the costs of an issue from the generally successful party without a finding of unreasonable or improper conduct. A party succeeding on one validity objection will not ordinarily recover the costs of unsuccessful objections unless the issues are closely connected. Unreasonably pursued or duplicative issues may justify a costs order against the party raising them.

The claimant challenged the validity of patent claims concerning radio attendance registration systems. In an earlier judgment, claims 1 and 2 had been held invalid for lack of inventive step in view of Kingshurst, while claim 7 remained valid. The claimant did not seek permission to appeal. The court then heard submissions on the appropriate costs order, including the parties’ relative success, the time spent on distinct issues, duplicated attacks, unsuccessful prior-art citations, intervening use, and costs arising from evidential applications.

1. Approach to costs. The court adopted the approach stated by Pumfrey J in Apotex Europe Ltd v Smith Kline Beecham [2004] EWCH 964 (Ch). The starting point was the general rule in CPR rule 44.3(2), but all the circumstances had to be considered, including conduct and the extent of success. Costs could be apportioned by issue and expressed as a percentage of the reasonable costs.
2. The court also adopted the principle stated by Longmore LJ in Summit Property Ltd v Pitmans [2001] EWCA Civ 2020: in a suitably exceptional case, an unsuccessful party may recover the costs of a distinct issue from the party generally successful in the litigation, without a finding that the latter acted improperly or unreasonably. The approach reflected the observations of Lord Woolf in Phonographic Performance Ltd v AIE Rediffusion Ltd [1991] 1 WLR 1507, and the principles identified in Johnson Estates (1990) Ltd v Secretary of State for the Environment [2001] EWCA Civ 6535.
3. The claimant succeeded on claims 1 and 2 but failed on claim 7 and on numerous other grounds. The SIMS attack was duplicative of Kingshurst and should have been abandoned; the claimant therefore had to pay the defendant’s costs of that issue. The claimant also had to pay costs relating to unsuccessful documentary prior art and most of the intervening-use issues. No order was made for costs concerning SYMBOL and common general knowledge.
4. The defendant’s late concession concerning the independent validity of claims 3 to 6 justified a special costs order. The defendant also had to pay specified costs arising from evidential applications and an experiment found to have no probative value. The claimant’s challenge to Mr Wright’s evidence was rejected; his evidence was not duplicative and had materially assisted the court.
5. The net order was that the claimant pay the defendant 8 per cent of the defendant’s reasonable costs, subject to specified deductions and taxation if not agreed. There was no order as to the costs of the costs hearing.