Costs After Mixed Success In Multi-Claim IP Litigation | Applying The Three-Question Test

Late abandonment of substantial claims weighs heavily in identifying the overall winner for costs, though success on a discrete issue may still warrant a separate costs award in favour of the losing party.

GETTY IMAGES (US), INC & ORS V STABILITY AI LTD [2025] EWHC 3419 (Ch)

In Getty Images (US), Inc & Ors v Stability AI Ltd, Mrs Justice Joanna Smith DBE determined costs following a trial where the claimants abandoned three substantial claims and achieved only partial success on trade mark infringement. Applying the Hospira v Novartis issue-based approach, the court held the defendant was the overall winner, having successfully defended the abandoned claims and the secondary copyright infringement claim. As overall winner, the defendant was entitled to general costs. However, the trade mark claim was a suitably circumscribed issue on which the claimants succeeded, obtaining undertakings and an inquiry as to damages. The court held that the defendant should pay 75% of the claimants’ costs attributable to that claim, quantified at 17.5% of total litigation costs, producing a net reduction of 30.6% from the defendant’s recovery. On interim payments, the court awarded 90% of budgeted costs, 70% of incurred costs, 70% of out-of-budget interim application costs, and 20% of the defendant’s budget overspend of £394,985.31.

The claimants ran the three very significant claims to which I have already referred at trial, only to abandon them in their entirety prior to closing submissions... Of the remaining claims, the claimants won the Trade Mark Infringement Claim in part. They lost the Secondary Infringement of Copyright Claim… it is very difficult to see how the claimants can sensibly be regarded as the overall winners... The defendant has substantially denied the claimant the success that it sought in these proceedings… I consider that a 25% reduction should be made to the claimants' costs of that claim, to reflect the fact that they failed on a number of significant issues… Doing the best I can... I am going to take 17.5% as representing the costs of the Trade Mark Infringement Claim... The application of the further 25%... will go some way towards addressing the overlap issues... This means that there will be a 30.6% reduction in the defendant's overall costs.

Citations

Kastor Navigation Co Ltd v Axa Global Risks (UK) Ltd [2004] EWCA Civ 277 Emphasised that the successful party is the party successful in the litigation overall, not merely on isolated issues. Lifestyle Equities CV v Royal County of Berkshire Polo Club Ltd [2023] EWHC 2923 (Ch) [2024] Costs LR 449 Confirmed that an issue-based approach is a standard method for assessing costs in intellectual property cases, subject to the court’s discretion. DSM IP Assets B.V. v Algal Omega 3 Ltd [2025] EWHC 1514 (Pat) Held that the issue-based structure is a flexible analytical tool for costs decisions, stressing appropriateness over exceptionality. Hospira v Novartis [2013] EWHC 886 (Pat) Set out a three-question framework for issue-based costs: identifying the winner, assessing costs on issues lost, and determining appropriateness of adverse costs orders on those issues. Roache v News Group Newspapers Limited [1998] EMLR 161 Provided a test for identifying the winning party based on whether the party gained something of value it could not have obtained without litigation. AL Barnes Ltd v Time Talk (UK) Ltd [2003] EWCA Civ 402 Held that the party liable to pay money to another is normally the successful one in commercial litigation. Illumina v Premaitha [2018] EWHC 180 (Pat) Considered entitlement to an inquiry as to damages as indicative of substantive success in the context of intellectual property litigation. Unwired Planet v Huawei [2016] EWHC 410 (Pat) Clarified that an ‘issue’ for issue-based costs may be considered at varying levels of granularity, depending on the case context. ConvaTec Technologies Inc v Smith & Nephew plc [2015] EWCA 803 (Civ) Demonstrated that costs may be allocated to specific experimental components of a case, even within broader categories like infringement. Pigot v Environment Agency [2020] Costs LR 825 Outlined principles for issuing issue-based costs orders, including discretion to adjust based on whether discrete issues were raised reasonably or unreasonably. Monsanto v Cargill [2008] FSR 16 Held that the overall winner is ordinarily entitled to general costs that are not or cannot be allocated to specific litigation issues. Omnipharm v Merial [2012] EWHC 172 (Pat) Recognised that in some cases the court may determine there is no overall winner, justifying apportionment of costs. Vringo Infrastructure, Inc. v ZTE (UK) Ltd [2014] EWHC 4475 (Pat) Reflected an instance where costs were divided due to a substantive draw across multiple patent claims. Harrison v University Hospitals Coventry & Warwickshire NHS Trust [2017] EWCA Civ 792 Held that departures from an approved costs budget require a “good reason” under CPR 3.18(b), creating a significant constraint on discretion. Walton International Ltd v Verweij Fashion Ltd [2018] EWHC 2315 (Ch) Advised caution in granting interim payments on unbudgeted costs, with the judge awarding only 50% of such costs in the absence of a budget amendment. Montres Breguet SA v Samsung Electronics Limited [2022] EWHC 1895 (Ch) Approved a cautious approach to interim payments of unbudgeted costs, awarding 20% due to limited evidence and lack of a timely cost budget revision.

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Key Points

The identification of the overall winner of litigation is a matter of substance and reality, focusing on which party has been substantially denied the prize it fought to win, and while the potential for a money transfer is an important indicator, it is not the sole or necessarily determinative measure of success. [18, 19, 32-37]
Where a party is the overall winner of litigation, it is entitled to recover all of its costs which are not, or cannot, be allocated to a specific issue, including general costs and overlapping ‘marginal’ costs. [27, 28, 41]
In applying an issue-based costs approach, a ‘suitably circumscribed issue’ may be a standalone cause of action on which the overall losing party succeeded, and the appropriate order may require the overall winner to pay the other side’s costs of that issue, not merely forfeit its own. [42-46]
Where a party has succeeded on a distinct issue but failed on several significant sub-issues within it, and the issues are overlapping, the court may reflect this by awarding that party only a proportion of its costs of that distinct issue, applying a broad-brush percentage deduction. [48-54]
When determining an interim payment on account of costs for sums incurred above an approved budget, the court will consider whether the paying party is likely to establish a ‘good reason’ for the departure, and may award a cautious percentage (such as 20%) where the evidence suggests a better case for some phases of work than others. [66-74]

"...it is very difficult to see how the claimants can sensibly be regarded as the overall winners. The defendant has substantially denied the claimant the success that it sought in these proceedings... the defendant has denied the claimant: the injunctive relief it sought in relation to Copyright Works ...; the injunctive relief it sought in relation to the importation of Stable Diffusion into the United Kingdom and the possession of Stable Diffusion in the course of its business; the injunctive relief it sought in relation to the extract and/or re-utilisation of a substantial part of the contents of the claimants' database, together with the additional damages that the claimants sought by reason of their allegations of blatant and widespread IP infringement. The defendant has also denied the claimants the opportunity to seek the damages that would have been said to flow from findings of liability in these claims.”

Key Findings In The Case

The Claimants were not deemed the overall winners of the litigation, as they abandoned three substantial claims before closing submissions and succeeded only partially on one of the remaining claims (the Trade Mark Infringement Claim), resulting in the dismissal of four out of five substantive claims and a limited success in one, which the court did not consider sufficient to make them the overall victors [4], [32]–[37].
As the overall winner, the Defendant was awarded its costs for all claims that failed or were abandoned by the Claimants, as well as general costs and overlapping “marginal” costs that could not specifically be allocated to any individual issue [27], [28], [41].
The Trade Mark Infringement Claim was held to be a suitably circumscribed issue on which the Claimants achieved partial success, and the Defendant was ordered to pay 75% of the Claimants’ costs on that specific issue, subject to a 25% deduction to reflect the Claimants’ loss on several important sub-issues within that claim [42]–[54].
The proportion of the litigation costs attributable to the Trade Mark Infringement Claim was determined to be 17.5% of the total costs, following the court’s assessment between conflicting estimates provided by both parties (26.3% by Claimants and 10.9% by Defendant), from which the 25% deduction was to be applied [55]–[59].
The court held that the Defendant was likely to establish a ‘good reason’ to depart from its approved costs budget in some pre-trial phases due to the scale and complexity of the proceedings and awarded a 20% interim payment on account of unbudgeted overspend, adopting a cautious approach in line with established authority [66]–[74].

“Standing back, and always appreciating that this approach is, of necessity, as I have made clear, somewhat crude, I must ask myself whether this analysis has produced the right result and whether it reflects the overall justice of the case. In my judgment, having regard to all the features that I have identified already, it does and I shall make an order accordingly.”

The High Court’s decision in Getty Images (US), Inc & Ors v Stability AI Ltd [2025] EWHC 3419 (Ch) provides authoritative guidance on applying issue-based costs principles where a party loses overall but achieves commercial success on a standalone claim.

Background

The proceedings involved claims for trade mark infringement, secondary copyright infringement, and database rights infringement brought by six Getty Images entities against Stability AI Ltd. The claimants alleged that the defendant’s Stable Diffusion AI image-generation models infringed their intellectual property rights. A trial on liability took place. Shortly before closing submissions, the claimants abandoned three substantial elements of their claim: the Training and Development Claim, the Outputs Claim, and the Database Rights Infringement Claim [§3]. These abandoned claims were subsequently dismissed by order [§3].

The remaining live issues for determination were the Trade Mark Infringement Claim, a related Passing Off Claim, and a Secondary Infringement of Copyright Claim [§4]. In its judgment of 4 November 2025 ([2025] EWHC 2863 (Ch)), the court found that the claimants succeeded in part on the Trade Mark Infringement Claim in respect of Stable Diffusion Models v1.x and v2.x, leading to the defendant offering undertakings and submitting to an inquiry as to damages [§7, §42]. The court found it unnecessary to determine the Passing Off Claim [§4]. The defendant succeeded on the key issue of statutory construction in the Secondary Infringement of Copyright Claim [§4].

Following the substantive judgment, the parties were unable to agree on costs, leading to a separate hearing to determine that issue [§6]. Each side filed evidence, including analysis attempting to quantify the proportion of total costs attributable to the Trade Mark Infringement Claim [§12].

Costs Issues Before the Court

The central dispute was identifying the overall winner of the litigation for the purposes of costs, given the mixed outcome. This determination would govern the entitlement to ‘general costs’ – those not attributable to a specific issue [§27]. The specific costs issues for determination were:

1. 1. Whether the claimants or the defendant was the overall winner of the litigation.
  2. If the defendant was the overall winner, whether the Trade Mark Infringement Claim constituted a ‘suitably circumscribed issue’ on which it lost, warranting a departure from the general rule.
  3. If so, what costs order should be made in relation to that issue, considering the claimants’ partial success and failures within the claim.
  4. The appropriate percentage of total costs attributable to the Trade Mark Infringement Claim.
  5. Disputes regarding the interim payment on account of costs, specifically the rate to apply to out-of-budget interim application costs and the treatment of costs incurred by the defendant in excess of its approved budget [§63–74].

The claimants accepted that, on any analysis, they would be liable to pay the defendant’s costs for the claims on which they lost (the three abandoned claims and the Secondary Infringement claim), resulting in a net payment from claimants to defendant [§9].

The Parties’ Positions

The Claimants’ Position: The claimants contended they were the overall winner [§7]. They argued they had obtained substantive, valuable relief in the form of a finding of trade mark infringement, resulting in undertakings and an inquiry as to damages, which they could not have achieved without a trial [§7]. They submitted that the potential for a money transfer was the surest indicator of success, relying on AL Barnes Ltd v Time Talk (UK) Ltd [2003] EWCA Civ 402 [§19]. In the alternative, they argued that if there was no overall winner, general costs should be apportioned [§8]. Their fallback position was that even if the defendant was the overall winner, the Trade Mark Infringement Claim was a discrete issue on which the claimants had won, entitling them to their costs of that claim [§8]. They acknowledged that the issues within the trade mark claim were overlapping, making a more granular issue-based deduction impracticable [§48].

The Defendant’s Position: The defendant contended it was the clear overall winner [§11]. It had successfully defended four out of five main claims, with the claimants abandoning three significant claims very late [§33–34]. It argued that the claimants’ success on the Trade Mark Infringement Claim was extremely limited and historic, and that they had lost on many issues within that claim [§11, §50]. The defendant submitted that as the overall winner, it should recover all of its costs, including general and overlapping ‘marginal’ costs, relying on Monsanto v Cargill [2008] FSR 16 [§27–28]. It opposed any order requiring it to pay the claimants’ costs of the trade mark claim [§11]. On interim payments, it argued for a 70% rate on out-of-budget interim application costs and sought an interim payment for budget overspends, asserting there was good reason for the departure [§70–73].

The Court’s Decision

The court applied the well-established three-question approach from Hospira v Novartis [2013] EWHC 886 (Pat): (1) identify the overall winner; (2) determine if the winner lost on a suitably circumscribed issue; (3) decide if it is appropriate to make a costs order on that issue [§17].

On the first question, the court found the defendant to be the overall winner [§32]. Applying the test from Roache v News Group Newspapers Ltd [1998] EMLR 161 – “who, as a matter of substance and reality, has won?” – the court held that the defendant had substantially denied the claimants the success they sought [§18, §35]. The claimants had abandoned three substantial claims and lost on the Secondary Infringement claim [§33–34]. The relief obtained on the Trade Mark Infringement Claim, while valuable, did not outweigh the defendant’s success in substantially denying the claimants the wider injunctive relief and additional damages they had originally sought across multiple claims [§35–37]. The court rejected the suggestion that this was a “score draw” of the type identified in Vringo Infrastructure, Inc. v ZTE (UK) Ltd [2014] EWHC 4475 (Pat) [§40].

On the second question, the court held that the Trade Mark Infringement Claim was a suitably circumscribed issue [§42, §45]. It involved standalone causes of action, and the claimants had achieved a measure of commercial success, including undertakings and an inquiry [§42].

On the third question, the court considered it appropriate not merely to deprive the defendant of its costs of that issue, but to order it to pay a proportion of the claimants’ costs [§46]. The court reasoned that if viewed as a standalone claim, the claimants would have been the overall winner of the Trade Mark Infringement Claim, albeit with failures on several issues [§43]. To reflect justice, the defendant, as overall winner, would recover all general costs pursuant to Monsanto v Cargill [§41, §47], but the claimants should recover a portion of their costs specifically attributable to the trade mark claim [§46–47].

The court then had to quantify this. It rejected the claimants’ argument that they should recover 100% of the trade mark claim costs, as this would ignore their significant failures within that claim [§49]. These failures included losing on models SD XL, XL Turbo, and v1.6; infringement of the GETTY IMAGES mark for model v1.x; infringement of the iSTOCK mark for model v2.x; their main economic case; and their entire case under section 10(3) of the Trade Marks Act 1994 [§50]. In the absence of detailed evidence on apportionment, the court, using its knowledge of the trial, applied a 25% reduction to the claimants’ recoverable costs of the trade mark claim to reflect these failures [§54].

On the percentage of total costs attributable to the Trade Mark Infringement Claim, the court noted the parties’ widely differing estimates. The claimants originally calculated 26.3%, revised to 20.3% after stripping out general costs [§57–58]. The defendant calculated approximately 15% using a weighted mean [§58]. Doing the best it could, the court took a figure of 17.5% [§59]. Therefore, the defendant’s recoverable costs were reduced by 17.5% (the costs of that issue it could not recover) and by a further approximately 13% (representing 75% of the 17.5% attributable to the claimants’ costs) [§61]. This resulted in a total reduction of 30.6% from the defendant’s overall costs [§61].

The court stood back to assess whether the result reflected the overall justice of the case and concluded that it did [§62].

Interim Payment on Account

Regarding the interim payment, the court ordered [§63–74]:

- - Costs within the budget: 90% of budgeted costs and 70% of incurred costs [§63].
  - Out-of-budget interim application costs: an interim payment of 70%, rejecting the claimants’ submission that 50% was appropriate [§64–65].
  - Budget overspend: The court accepted the defendant was likely to establish ‘good reason’ for some overspend, particularly in pre-trial phases, due to the unprecedented case management, frequent pleading amendments, and evolving nature of the litigation [§71–73]. Adopting a cautious approach similar to that in Montres Breguet SA v Samsung Electronics Ltd [2022] EWHC 1895 (Ch), it awarded an interim payment of 20% of the claimed overspend of £394,985.31 [§74].

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