Settling trade mark proceedings = no costs

An English court has recently held in a trade mark infringement case that, in circumstances where the parties have reached a settlement before trial, the right approach is to make no order as to costs.

An English court has recently held in a trade mark infringement case that, in circumstances where the parties have reached a settlement before trial, the right approach is to make no order as to costs.

In the case in issue, the Claimant commenced legal proceedings against the Defendant alleging registered trade mark infringement and passing off. In particular, the Claimant alleged that the Defendant was maintaining websites with the word UNITECH in their addresses. The Defendant's defence was that it had been using the name UNITECH some years before the Claimant began using it as a trade mark. The parties subsequently reached a compromise under which the Defendant agreed to cease using the name UNITECH in various forms on its websites. The only remaining issue between the parties was the issue of costs. The parties agreed to abide by any costs order made by the Court.

The Claimant submitted that it should have its costs, since under the compromise agreement it had achieved what it set out to achieve and therefore, in substance, it was the successful party. The Court ruled that, whilst the general rule as set out in the Civil Procedure Rules was that the unsuccessful party to proceedings should be ordered to pay the costs of the successful party, the Court could make a different order. The Court felt that it was not proper to make an order for costs without forming a view in relation to the underlying merits of the case. In the instant case, unless the Court could dismiss the pleaded Defence as having been bound to fail at trial, it could not decide which of the parties would have been the successful one at trial. Accordingly, the right approach was not to make any order as to costs.

Thus, the moral of the story is that if you want to be sure that you will be able to recover your legal costs from the other side, make sure you expressly address the issue in the compromise agreement.