9.7.4 Costs award and assessment
At the consequentials hearing, the trial judge will usually be asked to determine how the costs of the proceedings are to be apportioned. The starting point for the judge will be to assess which party was the overall winner from a commercial perspective and to award that party its costs. However, an issue-by-issue approach is often applied, with the result that the overall winner may not be awarded its costs in relation to certain issues on which it fought but did not succeed and may even be required to pay the costs of the losing party in certain circumstances.154 Thus, for example, a party may challenge the validity of a patent on grounds of anticipation (novelty), obviousness and insufficiency but may prevail only on the issue of obviousness. In these circumstances, the challenging party will have succeeded in its goal of invalidating the patent but may well not be awarded its costs of the anticipation and insufficiency issues. Further, if the judge considers that the challenger was unreasonable to have run such challenges, it may be that the challenger will be ordered to pay the patentee’s costs of these challenges.
The trial judge will usually not determine the amount of costs payable from one side to the other. This will be held over to a detailed assessment (discussed further below in Section 9.7.5) if not agreed upon by the parties. However, the trial judge may order that the paying party should pay a set percentage of the receiving party’s costs, taking a broad approach based on the principles described above and setting off the costs of one issue against another. This guidance from the judge is often helpful in encouraging the settlement of costs issues. The exception to this rule is where the parties have been required to prepare costs budgets (see Section 9.6.5.3.1 above). Assuming that the winning party has adhered to its costs budget, the trial judge may direct for all or substantially all of the costs of the winning party to be paid by the losing party.
In general, the court may award costs on what is known as a standard basis or on an indemnity basis. The standard basis excludes the costs of the lawyers advising their client and helping the client to understand the proceedings. Therefore, costs on a standard basis normally amount to about 65 percent to 75 percent of the actual costs incurred. Costs on an indemnity basis amount to around 90 percent of the actual costs but are awarded very rarely and only in circumstances where the court is satisfied that some sort of penalty ought to be imposed for some reason on the paying party (e.g., if they have behaved in a particularly egregious manner in relation to an issue or issues in the case).
Having determined which should be the receiving party and which should be the paying party, the trial judge will usually order an interim payment on account of costs to be paid by the paying party to the receiving party. This sum will be more than an irreducible minimum amount that the paying party is likely to recover, and the trial judge, again using a broad approach, may typically award approximately 60 percent of the expenses that the party has incurred.155 Thus, if a party has, using an issue-by-issue approach, been awarded 70 percent of its costs, the trial judge may order that it should receive 60 percent of those costs by way of an interim payment. For example, if the receiving party had incurred costs of GBP 1 million, then the interim payment – 60 percent of 70 percent of 1 million – is GBP 420,000.