Research In Motion UK Ltd v Visto Corporation

In patent litigation, an issue-based costs order is ordinarily appropriate. A successful party may be deprived of the costs of issues on which it lost and, in an exceptional case, may be ordered to pay the opponent’s costs of those issues without proof of unreasonable conduct.

Proportionality is relevant both to the assessment of costs and, where appropriate, to the costs order itself. The court may cap or reduce recoverable costs where expenditure is disproportionate, although a trial judge should avoid fixing a precise cap without a proper evidential basis. Where the global bill is disproportionate, the costs judge should assess items individually, allowing only necessary and reasonable expenditure.

The judgment determined costs following a patent trial between Research In Motion UK Ltd v Visto Corporation. RIM succeeded in revoking Visto’s patent for obviousness and for relating to a computer program as such, but Visto succeeded on infringement under the construction adopted at trial. RIM’s own patents had been consented to revocation, and RIM had discontinued a declaration of non-infringement claim.

The central issues were the appropriate issue-based allocation of costs, whether RIM should pay Visto’s costs of the infringement, added-matter and insufficiency issues, how proportionality should affect the costs order, and whether an interim payment should be made.

1. Issue-based costs. The court held that an issue-based approach is the norm in patent cases. Under CPR 44.3, the court may deprive a successful party of costs on an issue it lost and may, in an exceptional case, order it to pay the unsuccessful party’s costs of that issue. Unreasonable conduct by the successful party is not an essential precondition. The relevant inquiry asks whether the party won, whether it lost a suitably circumscribed issue so as to lose its costs of that issue, and whether the case is exceptional enough to justify an adverse costs order.
2. Proportionality. Proportionality is relevant at the stage of making the costs order as well as during detailed assessment. The power to reduce costs for disproportionality is not confined to expenditure on a pointless issue. The court must distinguish a pointless issue from an issue having a limited commercial purpose. A trial judge may express a view on disproportionate expenditure, but should not impose a precise cap without sufficient evidence to identify a proportionate level.
3. Assessment. Because RIM’s costs were grossly disproportionate and the court could not determine a reliable precise cap, the Costs Judge was directed to assess RIM’s costs item by item. Items were to be allowed only if necessary and reasonable. Endless prior-art searching was not necessary, save to the limited extent that it uncovered cited prior art unknown to RIM when the action began.
4. Application and orders. RIM’s conduct on infringement justified an order for Visto’s costs of that issue. Visto was also awarded its costs of added matter and insufficiency. RIM was to recover 66% of its total assessed costs, and RIM was to pay 51% of Visto’s total assessed costs. No interim payment was ordered because the scale of RIM’s bill made an interim payment unlikely to assist settlement and no particular hardship was shown.

First-instance costs judgment following the patent trial. The judgment states that RIM succeeded on revocation of Visto’s patent, while Visto succeeded on infringement.