Allegations that intellectual property law firms earn millions of pounds a year in commissions secretly paid by patent renewal businesses could be examined in court following a ruling last week.
In Commission Recovery Ltd v Marks & Clerk LLP Mr Justice Robin Knowles refused a bid by patent and trade mark firm Marks & Clerk LLP and renewal firm Long Acre Renewals to strike out a group claim brought on behalf of businesses paying renewal fees.
The opt-out action is being brought by Commission Recovery Limited, a company founded by IP enforcement specialist and non-practising solicitor Peter Rouse.
The firm alleges that Marks & Clerk hid commissions paid to secure the business of renewing IP rights annually in jurisdictions around the world. Marks & Clerk and Long Acre Renewals deny any wrongdoing.
In their strike-out application, Marks & Clerk and Long Acre Renewals argued that the potential claimants, mainly small and medium-sized businesses, did not meet the ‘same interest’ requirement needed for group claims. They also argued that the acquisition of the claim amounted to an ‘unlawful champertous assignment’.
Knowles said he was not prepared to strike out the claim on that basis.
‘I ask myself… what purpose is served if the law treats this assignment as unlawful? In my view none,’ said Knowles. ‘If the law treated an assignment of this type as lawful there is no reason why the claim could not proceed in an organised, dignified, way.’
He added that the defendants are ‘fully protected by case management procedures’.
Knowles also rejected a ground for strike-out under the ‘same interest’ requirement of Civil Procedure Rule 19.6. He said that points raised by the defendants ‘will require care but each is capable of resolution and none is fatal on jurisdiction’, and proposed to direct a case management conference within three months.
In an endnote to the judgment, Knowles said: ‘We are still, perhaps, in the foothills of the modern, flexible use of CPR 19.6, alongside the costs, costs risk and funding rules and practice of today and still to come. In a complex world, the demand for legal systems to offer means of collective redress will increase, not reduce.’
Marks & Clerk said: ‘We are disappointed with the judgment. We believe that CRL’s claims are wholly unsuitable to be pursued as a representative action under CPR19.6. The allegations in the claims mischaracterise the work M&C undertakes and its relationship with CPA, and we strongly deny any wrongdoing.’
The firm said it will seek leave to appeal to the Court of Appeal.
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