Ninety-five percent of cases never make it to court; but if you fall into one of the 5% of cases where a court action is necessary, what do you need to know?
Firstly, you’ll need a war chest.
Litigation is expensive. Before commencing litigation, you’ll need to satisfy the court that you made genuine steps to settle the matter. This will require sending at least one cease and desist notice.
If you choose to start litigation, it is customary to brief a barrister to provide advice on your prospects of success and to appear in subsequent court hearings. The cost of briefing a barrister and having them prepare the initial court documents is typically at least $10,000. The vast majority of cases settle well before any of the expensive stages of litigation occur. In many cases settlement occurs before or shortly after the first directions hearing. Very few people are willing to risk a judgment going against them when it comes to the crunch. In cases where settlement occurs early, a favourable outcome may be obtained for less then $20,000. However, a hard fought case involving intellectual property infringement can easily cost between $100,000 and $300,000 to take to an ultimate hearing.
In almost all cases a judge will ask the parties to consider a mediation, or potentially order them to attend a mediation.
You can get a litigation funding company to bank-roll your case, but only in exchange for a large percentage of the winnings. Litigation funders generally won’t back you unless there is a good chance of winning at least 6 times the cost of running case (i.e. a potential pay-out of well over $1 million). For this reason, some people get litigation insurance if they think their intellectual property is extremely valuable.
Secondly, costs follow the event.
If you lose, then you will ordinarily have to pay not only your own legal costs, but also a proportion of other side’s costs as well, eg. 55%-65%. However, if the losing side made an offer during the course of the litigation that you did not better at the end of the trial, you could be forced to pay 100% of their costs in addition to your own. It’s a high stakes game.
If you win, you will generally be entitled to the same proportion of costs, e.g. 55-65% of your costs paid by the losing party.
If you accuse someone of infringement and you lose the case, you can be made liable to pay compensation for the damage to your opponent’s business as a result of making threats that are ultimately found by a court to be unjustified.
If your opponent has any evidence to suggest that you could not pay their costs if you lose the case, you could be asked to pay ‘security for costs’. These are most often ordered when the applicant is a small corporation or a foreign entity of some sort. In such cases, the court may make you pay large sums of money (sometimes in tranches of up to $50,000 each) into the court’s back account, just in case you lose and your opponent party needs to access the funds.
Thirdly, even if you win, the other side can appeal to a higher court.
Proceedings can go for three rounds: (1) Federal Court proceedings before a single judge, (2) Full Federal Court proceedings before three judges and (3) High Court proceedings before five judges. Very few cases go that far; but be wary of taking on opponents who can afford to keep appealing when you can’t.