Coloplast A/S v Salts Healthcare

An issue-based costs order may be appropriate where the successful party lost on a discrete issue which caused additional costs, or where unreasonable conduct materially increased the costs. The court must stand back and decide whether the order is just overall. Patent litigation commonly warrants such orders, but the assessment remains approximate. Where an approved costs budget exists, it is the starting point for an interim payment on account. The court considers the budget for each phase and may make a cautious percentage deduction where evidence of actual expenditure is incomplete.

In the main judgment, the court held that Coloplast’s patent was invalid and dismissed its infringement claim against Salts. This judgment determined the consequential issues of costs, the interim payment on account of costs, interest on costs, and permission to appeal.

The court considered whether Salts, although the overall winner, should lose part of its costs because it had failed on discrete issues, and how the approved costs budget should inform the interim payment.

1. Issue-based costs. Salts was the overall winner and was entitled to its costs in principle under CPR r.44.2(2)(a). However, the court made an issue-based order under CPR r.44.2(4)(b) and CPR r.44.2(6)(f). The relevant question was whether the issue was discrete or distinct, caused additional costs, and whether the resulting order was appropriate and just overall.
2. The approach does not differ in patent litigation, although patent cases often contain numerous discrete issues. Salts was deprived of costs relating to infringement issues, Fischer, novelty, and the unsuccessful AgrEvo and added-matter issues. The court also deducted Coloplast’s costs of the factual infringement issues and Fischer, but not the reasonable construction issues or novelty. The total deduction was 21.9%.
3. Percentage deductions are necessarily rough and ready. The court is not expected to conduct a detailed assessment when determining an issue-based order.
4. Interim payment. Under CPR r.44.2(8), Salts was entitled to a reasonable sum on account of costs. The approved budget was the starting point under CPR r.3.18, considered by phase. Any overspend on one phase could not simply be offset against underspend on another for this purpose; the detailed assessment judge would determine ultimate recovery.
5. Because Salts had provided insufficient phase-by-phase evidence and there was likely underspend on witness statements, the RFI, and experiments, the court adopted a cautious 15% deduction from the approved budget, after the 21.9% issue-based deduction. It ordered payment of £671,628 within 28 days. The claim for interim interest was refused because there was no evidence of when costs were billed or paid.
6. Coloplast was granted permission to appeal because the draft grounds raised issues of law or principle and had a real prospect of success.

The judgment records that the court’s main judgment, [2021] EWHC 3 (Pat), held the patent invalid and dismissed Coloplast’s infringement claim. This judgment dealt with costs and related consequential matters and granted permission to appeal.