Handi-Craft Company & Anor v B Free World Ltd & Ors

On a renewed application for permission to appeal in a multi-issue intellectual-property action, jointly represented defendants could properly be made jointly and severally liable for an overall costs liability where separate apportionment would be difficult and artificial. A broad-brush costs order must nevertheless fairly reflect success on distinct claims and be adequately explained. Failure to give successful defendants proper costs of a substantial claim may be strongly arguable error. Present costs liability need not await, or be set off against, uncertain damages under a cross-undertaking. A challenge to a substantial-part copyright finding may have a real prospect where only commonplace design features are said to have been copied and original detail differs.

Five defendants sought renewed permission to appeal against orders made by His Honour Judge Fysh QC in the High Court, Chancery Division, Patents Court. The underlying proceedings concerned rival nursing bottles and claims involving patent infringement, copyright infringement, passing off and trade mark infringement. The patent claim failed, while several other claims succeeded and injunctions and costs orders were made. The proposed appeal concerned the finding that the B FREE logo infringed copyright, the joint and several costs order, the treatment of the failed patent claim in the costs assessment, and possible set-off against damages under a cross-undertaking. The central issue was whether the proposed grounds had a real prospect of success.

Application granted in part. Rimer LJ gave the reasons for decision, and Jacob LJ agreed.

1. The challenge to the copyright finding on grounds 1 to 4 raised a real prospect of success. The issue was whether copying the oval form and colour scheme of a simple logo, while using a different written message and style embodying original skill and labour, amounted to copying a substantial part measured by quality rather than quantity. The court did not finally determine infringement, but granted permission on those grounds. The discussion included Designers Guild v Russell Williams Textiles [2001] 1 WLR 2416 and Kenrick & Co v Lawrence & Co (1890) 25 QBD 99.
2. A judge exercising costs discretion was entitled to make defendants jointly and severally liable for the overall costs liability where they had common representation and no separate apportionment had been argued. Any internal allocation would have been difficult and artificial. Permission was refused on that aspect of ground 7.
3. In a case involving distinct heads of claim, it was strongly arguable that costs should be approached on an issue basis. Defendants who succeeded on the patent claim should receive their proper costs of that claim, subject to appropriate discounts, with any set-off dealt with on detailed assessment. The unexplained broad-brush order requiring them to pay two thirds of the claimants’ costs was arguably unjust. Permission was granted on ground 8 and related ground 13.
4. There was no real prospect of success on the complaint that present costs liability should be set off against uncertain future damages under the interim injunction cross-undertaking. The costs liability was presently certain. Ground 11 was therefore refused. Permission on ground 10 had already been granted on paper; ground 12 was abandoned and ground 14 was not pursued.

1. Court of Appeal (Civil Division): On 16 June 2008, the court granted the renewed permission application in part: permission was granted on the copyright grounds and specified costs grounds, and refused on the remaining pursued grounds. [2008] EWCA Civ 1008
2. High Court, Chancery Division, Patents Court: His Honour Judge Fysh QC handed down judgment on 6 September 2007, a costs judgment on 23 October 2007, and made the appealed order on 14 December 2007. The patent claim failed, other intellectual-property claims succeeded in material respects, and injunctions and costs orders were made.