Tuesday 21 December 2010

ACS:Law - at last, a hearing

UPDATE: For professional reasons I won't be commenting on this case for the time being. Please feel free to continue to comment on this post, but don't feel insulted if I do not respond.

After my recent post on ACS:Law's failure to obtain default judgments in some of their claims. Another judgment Media C.A.T Limited v Alan Billington [2010] EWPCC 18 of the patents county court has been pointed out to me.

The facts of the particular case are not particularly crucial. The Defendant, an Aaron Billington, complains amongst other things that there is no "Alan Billington" and that he did not receive a "response pack" (which comes with the Claim Form and which includes a form for acknowledging service). Although he does not say so, there also seems to be a complaint that ACS:Law did not follow good pre-action practice.

What is interesting is that the judge reviewed cases pending before the court (27 in all) and has ordered that a hearing for directions be held at 10:30am on 17th January 2011. At the hearing the court can decide how the cases should be dealt with. Clearly if you are (or know someone who is) one of the defendants and there's a reasonable defence to the claim, or the sum claimed is larger than the claimant is entitled to, then it would be a very good idea to attend the hearing and have your (or their) voice heard.

Although courts do have a power to make orders on their own initiative, without being asked to do so by the parties, many courts do not seem to use this power as much as, perhaps, Lord Woolf envisaged when he created the civil procedure rules. The hearing proves to be interesting as it may give a much broader picture of how ACS:Law are progressing their cases and it may also help the court to tidy up what sounds (from the last judgment anyway) like something of a mess even from a purely technical perspective. Mildly good news I think.


Anonymous said...

The Court does not come out of this very well either. It appears that, when the Court served the proceedings upon Mr Billington, it (a) did not mark the court file to show that it had served him and (b) failed to include the response documents. In the earlier judgment, it appeared that the court had been asked to serve proceedings upon defendants, but either did not do so or did not mark the court file to confirm that the proceedings had been served.

If ACS have their wits about them, they will instruct senior IP counsel to appear at the hearing and will go to the hearing with (i) a witness statement which addresses the issues raised by HHJ Birss QC in the first judgment, (ii) a draft amended pleading which corrects any errors in the first version of the pleading and (iii) a draft directions order.

Francis Davey said...

A better way to put it is that the _court service_ does not make a good showing, rather than the court. Assuming that the court was to serve the claim form, the administration has clearly failed. That is not, I am afraid, at all unknown. I have had hearings adjourned when it transpired that the court had not done what it ought to have done.

I'm not sure why you would need senior counsel to appear at a directions hearing. It sounds a relatively straightforward matter. If the claimant has a good claim, then its simply a matter of making an application to amend, attaching evidence and draft pleading. For financial reasons courts are increasingly requiring a part 23 application rather than allowing counsel to appear at a directions hearing to ask for permission (because the court gets a fee the first way and not the second). I do not know what PCC practice is on this point.

Not having seen the pleadings, I have no idea how it is all going to work out.

Anonymous said...

I would appreciate a summary of what issues will be covered at the hearing, as I'm not familiar with the 'directions hearing' concept. Will cases be decided by the judge? Could default judgments be issued if defendents fail to appear/enter defences?

Anonymous said...

A directions hearing is a hearing at which the judge gives directions (that is, instructions) about the way the litigation is to progress. Typically, the directions will relate to service of statements of case (formerly known as pleadings), disclosure of documents, service of witness statements dealing with factual issues and exchange of reports from experts.

In this instance, there may also be directions relating to (among other things) service of Amended Particulars of Claim (since the existing pleading seems to need some tidying up) and re-service of proceedings (in those instances where there is confusion about whether the Court served the proceedings at all).

No substantive issues are likely to be decided at a directions hearing, which focuses on discussing and deciding the procedural steps necessary to take the litigation forward. If the Claimant's solicitors wish to apply for default judgment, the judge may give further directions about the manner in which and date by which that is to be done.

Other issues which might arise at the hearing would be whether the various claims should be consolidated (that is, joined together) in some way or whether they give rise to any common issues which could be hived off and decided at a relatively early stage.

The Patents Court Guide (which can be found via a Google search) provides further information and includes a draft directions order, which illustrates the sorts of issues which are typically addressed and decided at a directions hearing.

Obviously, anyone who is involved in any of the relevant claims would do well to instruct a lawyer to represent him/her at the hearing. Solicitors are under a duty to give advice on the methods of funding which are potentially available.

Ordinarily, a claimant would not instruct leading counsel (that is, a QC) to appear at a directions hearing of this kind. However, there are considerations at play in this instance which would suggest that the claimant's solicitors would be prudent to instruct a QC or a "senior junior" barrister.

Anonymous said...

Thank you. That's very helpful. My interest in the issues stems from a friend's having received a DL letter re a gay pornographic film of which he had no knowledge. Despite a 'bare denial' submitted thru an IP Partner in a large firm, he continued to received correspondence/questionnaires re the threat of proceedings, which was extremely distressing to him and his wife. From what you say, it seems that no substantive issues will be decided at the directions hearing. It will be interesting to see how the Court eventually deals with the 'bare denial' defences, as the onus is on the Claimant to prove the balance of probabilities. I believe they assert that the fact that the Defendant is the subscriber is sufficient proof, which does not follow from my reading of the Statute. Even if default judgments are obtained because Defendants simply fail to respond, I assume that wouldn't add credibility to the evidence, although the Claimant/ACS Law might claim that it did, e.g. "a 100% success rate".

Anonymous said...

Regarding the comments that the Claimant's solicitors would be prudent to instruct a QC etc., what will be the position if the Defendants who put in their own defence, such as Mr.Billington, are not represented by competent IP Counsel. Who will draw the many concerns about the reliability of the evidence to the attention of the judge?

Anonymous said...

The court will make sure that litigants-in-person (that is, litigants who appear in court without legal representation) are not steam-rollered. Moreover, the likelihood is that at least some of the defendants will be represented, with the result that the judge will have a general awareness of the issues.

Having said that, it would be wrong to assume that most of the defendants will not be in a position to afford lawyers. Some of them may find that they have before-the-event insurance (also known as legal expenses insurance ("LEI")), which might cover their defence to a claim. Such insurance is often sold as an add-on to home insurance and motor policies, so defendants should dig out such policies and check whether they include LEI.

The problems with LEI are that (a) LEI will only cover you if you have a better-than-evens chance of defeating the claim, (b) the cover will be limited (usually to £50,000, which includes your potential costs liability to the other side and is not much in the context of litigation), (c) it will not cover you in respect of any damages which you may be ordered to pay and (d) the LEI insurers will typically try to send you to one of their panel solicitors (despite the fact that policyholders have the right to choose their own lawyers under Regulation 6 of the Insurance Companies (Legal Expenses Insurance) Regulations 1990).

The sensible course of action for any defendant is to consult a solicitor - most solicitors will agree not to charge for an initial meeting and one of the solicitors' duties is to check whether the client has any form of insurance which covers the situation.

Anonymous said...

Further to my comment above, I have checked a number of LEI policy wording which are available on the internet and note that some of them expressly exclude cover in respect of claims relating to alleged copyright infringement. The precise terms of the cover provided (and the exclusions to it) will, of course, vary from insurer to insurer.

There seems some doubt about whether Media CAT Ltd is the correct claimant (that is, whether it has vested in it the rights necessary to give it standing to sue for alleged copyright infringement). If it is not the correct claimant, the claimant's solicitors will presumably ask the Court for permission to substitute the correct claimant.

However, if Media CAT Ltd is the correct claimant, one way in which defendants could try to bring these proceedings to a grinding halt would be to ask Media CAT Ltd to provide security for the his costs of defending the proceedings. If no acceptable offer is security is received, the defendant can issue an application for an order requiring the claimant to provide security. The court can make such an order if it satisfied that (a) there is reason to believe that the company will be unable to pay the defendant's costs if ordered to do so and (b) in the circumstances of the case, it is just to make an order requiring the claimant to provide security for costs.

A defendant who was considering requesting or applying for security for costs would need to obtain and examine all of the accounts which the company has filed at Companies House, to check whether the company appears to have the resources to meet an adverse costs order. If he believes that the claimant does not have such resources, he should consider issuing an application for an order requiring the claimant to provide security for his costs. Such an application is usually supported by a witness statement from the defendant (or his solicitor) which (i) exhibits the relevant accounts, (ii) confirms that there is reason to believe that the claimant will not be able to pay the defendant's costs if ordered to do so, (iii) seeks to persuade the court that it would be just to order the claimant to give security (for example, because the claim looks misconceived or weak) and (iv) exhibits a reasoned projection of the costs which the defendant is likely to incur in defending the case.

If, upon hearing an application for security, the Court is satisfied that an order for security should be made, it will usually order the claimant to pay a certain sum of money into court to provide that security. So, if the defendant's total costs are likely be £30,000, the court might decide to order the claimant to pay £20,000 into court as security for the defendant's costs. The draft directions order which appears in the Patents Court Guide includes a paragraph (paragraph 7) which illustrates the form which an order for security for costs might be expected to take.

I have seen references to defendants being served with a Notice of Funding form. These usually denote that the claimant is pursuing the claim under a no-win-no-fee agreement with its solicitors, though it is not clear whether that is what is happening here. Where there is such an agreement, there is usually also an after-the-event ("ATE") insurance policy, which is intended to provide cover to the claimant in the event that it loses the case and is ordered to pay the defendant's costs.

Where the claimant is an impecunious company and is threatened with an application for security for costs, the claimant's solicitors will sometimes argue that there is no need for the claimant to provide security, because the ATE policy will cover costs orders made against the claimant. That argument is questionable, since the ATE policy will usually contain all sorts of conditions and exclusions: for an example of a court deciding that an ATE policy did not function as adequate security for costs, see Michael Phillips Architects Ltd v Riklin [2010] EWHC 834 (TCC).

Anonymous said...

Assuming they do have ATE insurance, the 27 claims include the 8 where default requests were refused. Is there not a requirement for the insured to update the insurer with anything like that which happens, and would not those refused requests start alarm bells ringing with the insurer.

Anonymous said...

A law firm in Manchester are offering a free assessment and hopefully no win no fee representation for anyone receiving Court papers.


Anonymous said...

According to posts on various forums, the claimant has transferred all pre-action settlement work to a non-solicitor claims handling company called GCB Ltd, and that there are unconfirmed reports that an attempt to discontinue all 27 cases has been denied by the court.

Also, the accountants who are the registered office for GCB Ltd have posted a statement about it on their home page at http://www.mcleanreid.co.uk/ which states that "GCB Ltd was formed by us and appears to be being misused by some third party."

Anonymous said...

In the December 1st judgment, the judge said the following:-

A copyright case can be brought by the owner of copyright or an exclusive licensee (see s101 and 102 of the 1988 Act) but the Particulars of Claim does not allege the claimant is either of those. The allegation is that the claimant "represents" such persons. There is a plea that the claimant has an agreement with the Rights Owner to identify, pursue and prosecute instances of copyright infringement but no plea that the claimant owns the copyright or has an exclusive licence.

And the Particulars of Claim included the following:
The claimant represents various owners or exclusive licensees of copyrighted works

As MediaCAT Ltd. are licensees, the issue has now arisen that the owner(s) of the copyright(s) should have been joined, and there is now the question whether they should be joined to discontinue the case.

Setting aside the question that the licences might be shams anyway as they do not appear to grant rights to deal in the work, a point of concern in the pleading is that some of the parties that MediaCAT Ltd "represents" are not owners but licensees.

I do hope that whoever is tasked with checking the status and terms of those licences does also make sure that the licensor in each case, as regards each work involved, is the actual owner and not a licensee, as to carry a right of action, the licence has to be signed by or on behalf of the actual owner. (1988 CDP Act s92)

Anonymous said...

In years to come, when people still talk about this case, you will be able to say that you were there. And when you start to describe the detail, you will be accused of grossly exaggerating it way beyond anything that could possibly ever happen.

There have been a number of forum posts by people who attended (as public observers) either the January 17th 2010 hearing or the application for a Norwich Pharmacal Order before Chief Master Winegarten on 19th November 2009.

Someone at that NPO hearing said that it had to be adjourned to later the same day because a licence was missing (between MediaCAT Ltd and Sheptonhurst) and that when it was eventually produced, it was dated that day but retrospectively applied to the previous six months or so. Although the Chief Master was said to have "raised his eyebrows" he allowed it.

Taking together the various provisions relating to the right of action that a licensee has, it is arguable that a retrospective right to sue cannot be created like that. Taking the information as to dates mentioned in the December 1st 2010 judgment together with the fact that attendees at the January 17th hearing say that “Sheptonhurst” was mentioned, it is at least possible that some claims may have been wrongly founded on a “retrospective” right of action.

Perhaps those tasked with scrutinising the licences will also check this aspect.

Anonymous said...

Perhaps it's now clear why, in my posts of 22 and 24 December, I said that there were considerations in play which might make it prudent for the claimant to instruct leading counsel. Putting in 27 notices of discontinuance and leaving junior counsel without adequate instructions (as seems to have occurred) was never likely to go down well with the court. For an even more extreme example of a last-minute notice of discontinuance going down badly with a court, see Wates v HGP Greentree Allchurch Evans.

In the absence of a transcript of the last hearing, it's not clear to me why the judge refused to allow the notices of discontinuance. Prima facie, the claimant has the right to discontinue and does not need the court's permission to do so; if the defendants regard the discontinuance as an abuse, they can apply to set it aside. The suggestion that the correct claimant should be joined before the action can be discontinued seems very odd (and assumes that the correct claimant knew about the action in the first place) and appears to me to involve a misunderstanding of that part of Rule 38 which refers to the consent of another person being necessary. There is not much point adding another party as claimant if the proceedings are then going to be discontinued immediately. If the judge's aim is to make the correct claim susceptible to some kind of costs order, that can surely be achieved through the rules relating to non-party costs orders (provided, of course, that the defendants can show that the case is a suitable one for a non-party costs order).

The real issue is (I assume) likely to be wasted costs against the claimant's solicitor. Tactically, the claimant's solicitor should put in a highly apologetic witness statement which says "mea culpa" and accepts that he is going to have to pay the costs thrown away personally. The court could then "allow" the discontinuances, leaving it open to the defendants to apply to strike out (as an abuse of process) any new proceedings which the correct claimant then brings in respect of the same alleged infringement of copyright.

The alternative is presumably for the correct claimant to be substituted in place of the current claimant and for the actions to continue (subject to an appropriate order in respect of the costs thrown away to date). Of course, that assumes that the correct claimant knows what is going on and does indeed wish to sue.

I would have thought that the defendants should speak to the claimant's representatives before the next hearing and agree not to object to a discontinuance, provided that the claimant's solicitor undertakes to pay the entirety of the defendants' costs on the indemnity basis (such costs to be assessed forthwith and with an agreed payment on account to be made within seven days in any event), on the understanding that they reserve the right to apply to HHJ Birss QC to apply to stay or strike out any subsequent proceedings which any entity may bring in respect of the same alleged copyright infringement. That will be a much quicker and more economic solution than making various applications for non-party/wasted costs orders, which will inevitably be adjourned off to one or more later hearings.

Anonymous said...

I think that the Judge is concerned that the plan is to drop those cases and migrate pre-action settlement claims work to a limited company that is safely out of reach of the SRA.

Incidentally, according to Companies House, GCB Ltd, a company apparantly set to fulfil that role, is now the subject of a proposal to strike off.

The other issue is whether the party that the claimant "represents" is actually the owner of the title. A poster on one forum is stating that his son did download the work in question as alleged, but that he paid the costs of having the title of the work searched and found that it was a Dutch company in liquidation and not the "client" that the claimant "represented."

The other problem is that if the true owner is a remote party like that, then why should they be deprived of the rather hypothetical bite of the cherry that they are entitled to, on the basis that another party tried to take a bite who was not entitled to.

For a case with unusual features, this must be getting hard to beat.

Anonymous said...

The correct claimant should not be deprived of the right to sue in respect of an infringement of its copyright. Given that the correct claimant was not a party and was not represented during the recent hearing, I don't see how the judge could properly make an order shutting the correct claimant out from suing. The way to deal with that is for the judge to "accept" the discontinuances of the existing claims(and make an indemnity costs order against Media CAT), leaving it open to defendants to (a) apply (in the discontinued proceedings: see Hoist UK Ltd v Reid Lifting Ltd [2010] EWHC 1922 (Ch))) for non-party/wasted costs orders in the event that Media CAT does not meet the costs order and (b) apply for any subsequent proceedings (brought by the correct claimant) to be stayed or struck out.

I suspect that the judge will confine his judgment to the procedural issues, while making some comments about the way the litigation has been conducted. I cannot see him making any findings about anyone's bona fides, however tempted he may be to go into that issue, because (so far as I can discern), there was no order to show cause and he has not heard enough evidence to make such findings.

Anonymous said...

I am unfamiliar with court procedure but have read the most recent judgment. By way of education, can someone summarise the options now open to the Defendants (assuming the copyright owners are not to be joined) between now and 16 March. Will any of these options require hearings?