Intellectual property disputes relate to the scope of rights enjoyed by an owner, whether the conduct of a third party infringes those rights and/or the appropriate remedy to be granted.
Courts and tribunals
Most intellectual property cases are heard in the High Court. The District Court has jurisdiction to handle certain intellectual property disputes up to $350,000, but it does not having jurisdiction over trade mark matters. The Disputes Tribunal expressly does not have jurisdiction over intellectual property disputes.
The Intellectual Property Office of New Zealand (IPONZ) is responsible for maintaining registers of patents, trade marks, designs and plant variety rights. Where there are disputes regarding the registrability of those rights, those matters are determined by an Assistant Commissioner under the delegated authority of the Commissioner.
The Employment Relations Authority has exclusive jurisdiction over litigation arising from the employment relationship. This can include breach of confidence claims against former employees, although such claims can be brought in the High Court in some circumstances.
The Copyright Tribunal has a relatively limited jurisdiction over two categories of cases: file sharing allegations (with limited remedies) and disputes over licence terms.
The remedies commonly sought for infringement for intellectual property rights are a permanent injunction, damages, and an account of profits. It is possible to obtain awards of additional or exemplary damages in some cases, but as with the general law the Courts are very reluctant to avoid damages for such amounts (and even when awarded, the amount awarded tends to be quite low).
There are also urgent remedies available sought quite commonly in intellectual property disputes. First is an interim injunction, which is brought by way of an interlocutory application. In assessing whether to grant an injunction to prevent a defendant from engaging in particular conduct until there can be a full hearing of the proceeding, the Court looks at:
- Whether there is a serious question to be tried (i.e. a potential tenable legal claim);
- The balance of convenience (including the adequacy of damages as a remedy if the defendant is not restrained but the plaintiff succeeds at trial, the ability of the defendant to be compensated by an award under the undertaking as to damages if it is improperly enjoined until the full hearing, the impact on third parties etc., or the relative impact on the parties of the orders being granted or declined); and
- The overall justice of the case.
In exceptional circumstances, a plaintiff may also seek a search order under part 33 of the High Court Rules. A search order (formerly known as Anton Piller order) permits a plaintiff’s representatives to enter a defendant’s premises to cease relative evidence. It is a similar equivalent of a search warrant, and given its intrusive nature the Courts have developed a number of safeguards.
A search order will only be granted in the most serious of cases where there is a likelihood of evidence being destroyed. Since a search order is made on a “without notice” basis, when the order is served the defendant will have an opportunity to obtain legal advice before the search is executed.
Search orders arise most commonly in breach of confidence cases.
Although IP disputes cover a wide range of matters, there are some common features.
Intellectual property can form a large part of the value of the business, particularly matters such as customer information, know-how, goodwill and brand. In extreme cases (but not infrequently), unauthorised use of intellectual property can threaten a business’s viability.
While IP disputes tend to occur with a low frequency from the perspective of an individual business, they have the potential for a high impact on the business when they do arise.
Given the importance, IP disputes are often dealt with on an urgent basis.
This means clients will be stressed when IP disputes arise. In turn this means pressure to take action in a hurry, and to cut corners if necessary. The best strategy is to take stock and develop a strategy as the first step, to ensure that the correct decisions are made at the outset which do not undermine the future conduct of the litigation.
There will often be uncertainty as to what precisely the other party is doing, and (therefore) which rights are being infringed. When coupled with the importance of the issue and the urgency, this can mean needing to make decisions about issuing proceedings based on incomplete information.
The case may be built on shifting sands. The alternative is to wait for matters to become clearer, but often the urgency means that this is not a viable option. The aim should therefore be to obtain as much information as possible at the early stages.
Delay might not always clarify matters. There can be detection difficulties which mean that the true extent of the conduct is not known until discovery. Pre-commencement discovery is an option, but usually an application for interim injunction will be preferable.
There is often bad blood in intellectual property disputes. In most cases the parties will be competitors. They may have worked together in the past, either as joint venture partners, suppliers or even as employer/employees. This can lead to anger and a sense of betrayal (and equally perceptions of mistreatment which lead to the other party leaving) which affect the dynamics of the case.
There will also be concerns about whether the other party is telling the truth, particularly if the details of the conduct have emerged slowly or inadvertently or there has been deception along the way.
A particular course of conduct may infringe various different intellectual property rights. There will also often be several options available to the complaining party. Getting specialist advice on the best options to take and the rights to focus on is crucial.
Concessions and settlement
IP disputes often settle. Anecdotally, settlement in IP cases occurs at a higher rate and more promptly compared with general commercial disputes. A defendant might not have taken advice before embarking on their course of conduct, and will often be advised that the plaintiff will succeed either ultimately or at the interim injunction stage. Defendants will often make the pragmatic decision to avoid the cost of defending a case. Given this, it is important that clients put their best foot forward at the start.