Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd (No 3)

Apotex Pty Ltd brought proceedings against Sanofi-Aventis Australia Pty Ltd in the Federal Court of Australia, alleging that Sanofi had infringed certain patents and copyright. Sanofi defended the action and cross-claimed for a declaration of non-infringement and invalidity of the patents and for a declaration that Apotex had not infringed Sanofi’s copyright. Apotex was successful in defending the patent infringement but unsuccessful in its cross-claim for invalidity. Sanofi was successful in defending the patent validity and in upholding the validity of the patents. Sanofi was also successful in the copyright infringement case. The parties appealed to the Full Court of the Federal Court, where Apotex was successful in its appeal on the question of patent infringement but Sanofi was successful in its appeal on the question of patent validity and in the copyright infringement case. The Full Court remitted the matter to the primary judge for determination of damages. Sanofi applied for an order for costs and Apotex cross-applied for costs. The court was required to determine the appropriate apportionment of costs between the parties for both the primary judge’s determination and the appeal to the Full Court.

The court considered the factors relevant to the broad discretion to award costs under section 43 of the Federal Court of Australia Act 1976 (Cth) in complex patent litigation such as this. The court noted that it was not uncommon for a party to cross-claim for revocation of a patent, but that such a claim may have costs consequences. The court distinguished between assertions of lack of novelty and obviousness, which could be considered discrete issues, and lack of fair basis, which may be ‘wrapped up’ in the arguments on construction. The court took into account that Apotex was ultimately successful in defending patent infringement but that its attack on the patent validity failed; Sanofi was successful in upholding patent validity in the face of the attack pressed in the appeal. Sanofi was successful in the copyright infringement case but that occupied a relatively small part of the appeal. The court considered that it was appropriate to make orders for the costs of the appeal compendiously, that is, of the patent case on infringement, the patent case on validity and the copyright infringement case.

Sanofi maintained its right to a separate order for the costs of the copyright claim but, in the alternative, set out its basis for apportionment. It submitted that any award of costs to Apotex for the appeal should be reduced by around 30%, to reflect the time taken for arguments on which Apotex failed. As to the trial, Sanofi submitted that a reduction of the order of 80% would be appropriate, but that this question should be remitted to the primary judge for determination. Sanofi pointed out that the time spent at trial was not all attributable to the patent case and said that the copyright case, on which it was successful, occupied at least 40% of the hearing time at trial and well in excess of 5% of the appeal. The court accepted Sanofi’s submissions and made orders for costs accordingly.

The court ordered that the respondents pay 60% of the appellant’s costs of the patent case at first instance. The court ordered that the appellant pay the respondents’ costs of the copyright case at first instance, subject to a 20% reduction for the period between 29 July 2011 and 18 November 2011. The court ordered that the respondents pay 70% of the appellant’s costs of the appeal. The court remitted the matter to a judge of the Federal Court for an inquiry as to the compensation payable on the respondents’ undertaking as to damages given to support the interlocutory injunction.