Using after-the-event insurance and conditional fee agreements in defending weak IP claims

Abstract

As the cost of IP litigation increases, the cost of defending a claim can be prohibitive, even if the defendant is ultimately successful. In this article, the authors consider how after-the-event (‘ATE’) insurance and conditional fee agreements (‘CFA’) can be used in IP disputes. The authors describe a recent innovative ATE insurance product, explain how ATE insurance and CFAs can be applied to IP disputes, and explain how a combination of ATE insurance and a CFA can put the defendant in a very strong position, with a high degree of certainty of costs. The fact that a party has obtained offers of ATE insurance and/or a CFA indicates to the other side that (i) its solicitors are confident of succeeding, (ii) it has obtained a favourable counsel's opinion; and (iii) there is likely to be a substantial disparity in each side's potential costs. This gives rise to a useful additional benefit of a tactical advantage given to the defendant, which may lead to an early settlement on terms favourable to the defendant.