Thousands of UK SMEs grossly overcharged by unlawful secret commission scheme orchestrated by IP firms, lawsuit claims
· Collective proceedings launched on behalf of thousands of SMEs that were severely overcharged for intellectual property (IP) renewals as part of an alleged secret commissions scheme.
· Commission Recovery Limited (CRL) has been set up to hold IP law firm Marks & Clerk (M&C) and its affiliated partnership to account and seek redress for the thousands of affected businesses.
· While many SMEs are already struggling as a result of Covid-19, their advisers have been receiving thousands of pounds in undisclosed secret commissions.
· If successful, affected businesses could be entitled to the repayment of these secret commissions, which allegedly earned M&C millions of pounds in profits to date.
Monday 12 April 2021 (London) – Today, a representative action was filed in the London High Court on behalf of thousands of businesses that have been grossly overcharged for intellectual property (IP) services, as part of a secret commissions scheme.
The claim alleges that IP law firm Marks & Clerk (M&C) referred their clients’ patent, design and trade mark renewals work to CPA Global, an IP management organisation, in return for secret commissions. These referred clients – who are overwhelmingly SMEs – were unaware of these commissions and subsequently paid far more for the services than they should have. Evidence suggests that secret commissions paid to M&C are likely to be more than 20% of the total amount paid by clients to CPA Global for renewal services in some cases.
The action has been launched by Commission Recovery Limited (CRL), which was founded by Peter Rouse, an IP enforcement specialist, and set up specifically to help affected businesses seek justice and compensation. If successful, affected businesses could be entitled to the repayment of the commissions.
It is believed that these secret commissions have earned M&C between £2-3 million per year in the UK – with the total figure likely to exceed £50 million. This is money that was taken from the pockets of hardworking SMEs without their knowledge.
SMEs are the backbone of the UK economy. They account for 99.9% of the business population (six million businesses) and support 16.8 million jobs. These businesses make up nearly nine in ten of the businesses that are potentially affected by these secret commissions, spanning all sectors including manufacturing, retail and technology.
Christopher Langham, former Managing Director of The Bambach Saddle Seat, an affected business, said:
“As a small business owner, our resources are often scarce and we tend to instinctively put our full trust in suppliers that are recommended to us by our advisors.
We expect these suppliers to respect us and our business, and not knowingly steal from us, with no remorse. I believe that over half of the nearly £30,000 I was charged by CPA Global in renewal fees was inflated. Without this action, I would still be completely unaware of Marks & Clerk’s secret commissions scheme.”
Being overcharged could seriously endanger the survival of affected SMEs, who have been disproportionately affected by the Covid-19 pandemic. Gross lending to SMEs in 2020 was more than double the annual total in 2019, indicating the financial difficulty many SMEs face as a result of the pandemic. This financial pressure has been exacerbated by paying thousands of pounds in secret commissions which most can scarcely afford.
Nicholas Rutter, Chief Product Officer at FireAngel Safety Technology, an affected business, said:
“Investments in Intellectual Property (IP) protection are typically dependent on a business’ finances – we file as much as we can afford. If the cost of maintaining our IP rights is artificially inflated, businesses are either going to file less patents or protect them across fewer jurisdictions. Such implications are even more severe for SMEs.
This has a knock-on effect for UK innovation and the UK economy, and it is not what you expect from your trusted advisors.”
CRL believes the system of secret commissions and overcharging was put in place partly to exploit the vulnerabilities of SMEs, many of which would not have in-house resources to conduct the due diligence on legal expenses such as IP renewals.
Similarly, these SMEs would not by themselves have the means to pursue legal recourse against a large organisation like M&C. This claim provides the mechanism to support and empower SMEs to seek justice.
Peter Rouse, Founder of Commission Recovery Limited, said:
“It is simply unacceptable that a firm like Marks & Clerk would develop a secret commissions scheme, solely designed to line their own pockets while exploiting the very businesses they claim to serve.
We want to provide a mechanism for affected businesses – who have been taken advantage of for years – to seek the justice and compensation they deserve. The potential damages owed could be the difference between survival and insolvency for SMEs across the country.
CRL are committed to holding M&C and other professional organisations to account for their actions and prevent the future exploitation of vulnerable businesses.”
Daniel Spendlove, Partner, Signature Litigation, said: (to be included primarily for trade outlets)
“Marks & Clerk’s actions clearly conflict with the fiduciary duties of loyalty that they owe their clients. By not disclosing their secret commissions scheme to their clients, we believe the payments made amount in law to bribery.
Representative actions such as this are an essential mechanism to enable claimants to seek redress on a collective basis. Through strength in numbers, we are able to help businesses hold powerful and well-resourced organisations to account.”
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Notes to editors
Contact
For further information, please contact: Kirsty.macintosh@portland-communications.com
Commission Recovery Limited
Commission Recovery Limited has been established in order to pursue recovery of commissions, made by CPA Global to Marks & Clerk LLP and other firms, whose details were not disclosed to clients. Further information about Commission Recovery Limited and the claim can be found at www.commissionrecovery.com.
Peter Rouse
Peter Rouse began investigations into the charging practices of CPA Global, in relation to its IP renewals payment services, in 2015. Since then, he has assisted law firms and IP owners with analysis of invoice data, addressing recovery of unauthorised charges and finding alternate suppliers.
As founder of Commission Recovery Limited, Peter brings his knowledge of the IP renewals sector, and of CPA Global’s charging practices, to bear on behalf of clients of patent, trademark and law firms who have been paid fees by CPA Global calculated by reference to the value of business referred.
Peter is an IP enforcement specialist with an exceptional record of success in dealing with apparently intractable problems involving complex issues and multiple jurisdictions. During his long career Peter has worked with and on behalf of WIPO; WCO; EPO; and UNECE and is a former Chair of INTA’s Anti-Counterfeiting Committee.
Signature Litigation
Signature Litigation is a London law firm founded in 2012 by senior lawyers with many years’ experience in leading practices, specialising in high value commercial litigation and arbitration. It has extensive experience in group litigation.
Representative actions
A representative action offers an efficient and cost-effective route to a court decision. It is a type of collective action where the representative claimant brings a claim on behalf of a group of individuals with a shared grievance or interest. This means that members of the class can have their claims determined by the court without each member having to bring their own individual claim. Representative actions often allow SMEs and individuals to bring a claim against powerful organisations where they would not otherwise be able to. This means that the case has strength in numbers, and those affected do not have to do anything at this stage.