Arbitron Inc v Telecontrol Aktiengesellschaft (No 2)
[2010] FCA 713
•25 June 2010
FEDERAL COURT OF AUSTRALIA
Arbitron Inc v Telecontrol Aktiengesellschaft (No 2) [2010] FCA 713
Citation: Arbitron Inc v Telecontrol Aktiengesellschaft (No 2) [2010] FCA 713 Parties: ARBITRON INC v TELECONTROL AKTIENGESELLSCHAFT and AC NIELSEN (HOLDINGS) PTY LTD File number: NSD 627 of 2005 Judge: EMMETT J Date of judgment: 25 June 2010 Date of hearing: 25 June 2010 Place: Sydney Division: GENERAL DIVISION Category: No Catchwords Number of paragraphs: 19 Counsel for the Applicant MR Hall Solicitor for the Applicant Spruson & Ferguson Lawyers Counsel for the First Respondent JR Baird SC Solicitor for the First Respondent Griffith Hack Counsel for the Second Respondent A Fox Solicitor for the Second Respondent Minter Ellison
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 627 of 2005
BETWEEN: ARBITRON INC
ApplicantAND: TELECONTROL AKTIENGESELLSCHAFT
First RespondentAC NIELSEN (HOLDINGS) PTY LTD
Second Respondent
JUDGE:
EMMETT J
DATE OF ORDER:
25 JUNE 2010
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The applicant pay 85% of the second respondent’s costs of the proceeding, excluding the costs of and occasioned by the first respondent’s notice of motion dated 24 May 2006.
2.There be no order as to the costs of the second respondent’s cross-claim.
3.There be no order as to the costs of today.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 627 of 2005
BETWEEN: ARBITRON INC
ApplicantAND: TELECONTROL AKTIENGESELLSCHAFT
First RespondentAC NIELSEN (HOLDINGS) PTY LTD
Second RespondentJUDGE:
EMMETT J
DATE:
25 JUNE 2010
PLACE:
SYDNEY
REASONS FOR JUDGMENT
The substantive issues in this proceeding were resolved by orders made on 31 March 2010. Subsequently, orders were made by consent in relation to costs as between Arbitron and Telecontrol, as well as the Commissioner of Patents. However, questions remain as to the costs as between Arbitron and AC Neilsen.
In the proceeding, Arbitron alleged the infringement of the Patent by Telecontrol and AC Neilsen. Infringement was denied. In addition, both Telecontrol and AC Neilsen raised the validity of the Patent as a defence. They each also filed a cross-claim seeking revocation of the Patent. The substantive issues were resolved on the basis that the Patent is valid, but that there has been no infringement. Accordingly, the proceeding was dismissed and each of Telecontrol’s and AC Neilsen’s cross-claims was dismissed.
Orders were made by consent on 11 June 2010 that there be no order as to Arbitron’s costs of the proceeding against Telecontrol and no order as to Telecontrol’s cross-claim against Arbitron. However, there remains an issue as to the costs of Arbitron’s claims against AC Neilsen and AC Neilsen’s cross-claim against Arbitron, in circumstances where AC Neilsen did not play a substantial part in the proceeding, which included a somewhat lengthy hearing.
Arbitron accepts that it should be AC Neilsen’s costs of the proceeding. AC Neilsen, however, claims indemnity costs in respect of a specific period. Arbitron seeks an order for costs in respect of AC Neilsen’s cross-claim. AC Neilsen resists an order for costs of its cross-claim and says that, if any order is to be made, it should be limited to those costs that are attributable solely to its cross-claim against Arbitron, as distinct from costs that are attributable to issues that were common to its cross-claim and Telecontrol’s cross-claim. However, Arbitron seeks an order for costs that were incurred in relation to issues raised in the cross-claim and in the defence that were identical to the issues raised in Telecontrol’s cross-claim and Telecontrol’s defence.
Indemnity Costs
The proceeding was commenced on 22 April 2005. On 25 July 2005, AC Neilsen filed its cross-claim. On 29 March 2007, AC Neilsen’s solicitors wrote to Arbitron’s solicitors proposing a compromise of sorts (the Proposal). Relevantly, the Proposal involved the following:
(a)AC Neilsen would undertake to Arbitron that, unless and until the Court finds that the sale or supply of Telecontrol’s devices to members of the public in Australia would not infringe the Patent, it would not sell or supply the devices in Australia.
(b)AC Neilsen would withdraw its cross-claim against Arbitron.
(c)AC Neilsen would seek leave to be excused from further hearings of the proceeding, subject to reserving its right to appear and make submissions if material changes are made to the claims made against AC Neilsen or the orders sought, on the filing of any further evidence that materially changed the case against AC Neilsen, and in relation to costs.
(d)If Arbitron is successful in the proceeding, it would not seek costs against AC Neilsen in respect of any action taken in the proceeding.
(e)If Arbitron is unsuccessful in the proceeding, AC Neilsen would not seek costs against Arbitron in respect of any action taken after 6 July 2007, except in relation to any active role in the proceedings that AC Neilsen took in the circumstances outlined above.
Arbitron’s solicitors responded on 30 April 2007, asking for clarification in relation to some aspects of the Proposal. On 22 May 2007, AC Neilsen’s solicitors wrote again to Arbitron’s solicitors to clarify aspects of the Proposal. On 25 October 2007, Arbitron’s solicitors indicated that Arbitron declined to accept the Proposal. On 18 June 2008, AC Neilsen offered an undertaking in the terms of the Proposal in relation to Telecontrol’s devices.
AC Neilsen took no further substantive steps in the proceeding after 29 March 2007. On 20 June 2008, the Court granted leave to AC Neilsen to discontinue its cross-claim with costs reserved and excused AC Neilsen from further attendance in the proceeding.
AC Neilsen says that, in the circumstances, the conduct of Arbitron in declining the Proposal was unreasonable. It says, therefore, that Arbitron should bear AC Neilsen’s costs of the proceeding on an indemnity basis from 30 March 2007 to 19 June 2007.
I do not consider the Proposal was an offer of compromise that it was unreasonable for Arbitron not to accept. It certainly involved an element of compromise, but, on the other hand, AC Neilsen was keeping its options open. I do not consider that it is appropriate to order indemnity costs.
AC Neilsen’s Cross-claim
It is possible to identify three categories of costs involved in the cross-claim, as well as in Telecontrol’s cross-claim, as follows:
(a)Costs attributable solely to Telecontrol’s cross-claim;
(b)Costs attributable solely to AC Neilsen’s cross-claim; and
(c)Costs that were common to both cross-claims, which were also common to the two defences.
The second question concerns that third category.
Putting aside any question of AC Neilsen’s failure to participate in the hearing, Arbitron’s costs of dealing with issues that were common in both cross-claims and to both defences, being the issues as to the validity of the Patent, would ordinarily be borne jointly by those who raised the issues, namely AC Neilsen and Telecontrol. However, the position has been complicated by the arrangement entered into between Arbitron and Telecontrol in relation to the costs of those parties. The specific orders made on 11 June 2010 were as follows:
2.There be no order as to costs as between Arbitron and Telecontrol in relation to the application.
3.There be no order as to costs in relation to Telecontrol’s cross-claim.
Apart from those orders, Telecontrol and AC Neilsen would be expected to have had a concurrent liability for the costs that were common to both their cross-claims and to their defences. If an order were now made against AC Neilsen in respect of those costs, AC Neilsen may have a right to contribution from Telecontrol. In those circumstances, Telecontrol has an interest in the order now sought by Arbitron against AC Nielsen. For that reason, Telecontrol was permitted to make submissions in relation to the orders now sought by Arbitron.
Specifically, Telecontrol suggested that Orders 2 and 3 of 11 June 2010 represented a compromise as between Arbitron and Telecontrol involving a set-off of costs for which each might have been liable. Telecontrol says that, if an order were now made in Arbitron’s favour that AC Neilsen pay any part of the costs presently in issue, being the costs that were common to both cross-claims, there would be a double recovery by Arbitron. That is to say, Arbitron has had full recovery by reason of the set-off, but would now recover, additionally, costs for the same matters from AC Nielsen.
AC Nielsen has had the benefit of the defences raised by it, albeit that the factual burden in relation to those defences was undertaken by Telecontrol. Similarly, until it discontinued, AC Nielsen had the benefit of the cross-claim for revocation, albeit again that the factual burden of establishing invalidity was borne by Telecontrol. Those considerations lead to the conclusion that there would ordinarily have been an order for costs against AC Nielsen in respect of the common costs and expenses of something significantly less than joint liability with Telecontrol. I consider the appropriate proportion would be in the vicinity of 25%, to reflect the fact that, although AC Nielsen sought to obtain the benefit of the defence and cross-claim, it did not in fact participate to any significant extent in the allegation of invalidity in relation to the Patent.
The complication that arises concerns the effect of orders 2 and 3 of 11 June 2010. I would be disposed to limit AC Nielsen’s proportion of costs only on the basis that it sought no contribution from Telecontrol in relation to that liability. If it seeks contribution, then the proportion would be significantly higher to reflect any proportion that it might actually recover from Telecontrol. On the other hand, Telecontrol, as I have said, maintains that any order for costs would involve double recovery by Arbitron.
As an alternative, therefore, both AC Nielsen and Telecontrol suggest that, rather than ordering Arbitron to pay AC Nielsen’s costs of the application, and ordering AC Nielsen to pay a proportion of Arbitron’s costs of the issues that were common to the cross-claims and the defences, a more convenient order would be to order Arbitron to pay something less than 100% of the costs of the proceeding, and to make no order as to the costs of the cross-claim. I am attracted to that course in order to reach some finality. However, I have not had a great deal of assistance, particularly from Arbitron, in arriving at an appropriate proportion.
There is no material before me at the moment that enables any sort of accurate assessment as to how 25% of the costs in question in relation to the cross-claim would relate to the costs of the proceeding for infringement. AC Nielsen has suggested a figure of 90%. Arbitron declined to propose any figure. I consider that it is highly desirable to achieve some finality in relation to this matter. In the absence of any material that indicates the quantum of the costs or what would be an appropriate proportion, I consider the appropriate approach is to make no order as to the common costs of the cross-claim. I propose to order Arbitron to pay 85% of AC Nielsen’s costs of the proceeding and that there be no order as to the costs of AC Nielsen’s cross-claim.
There was, in the early stages of the preparation for the proceeding, a significant dispute as between Arbitron and Telecontrol concerning access to confidential material. AC Nielsen did not participate in that dispute and it would not be entitled to any costs of that dispute, assuming it incurred any.
I will not make any orders as to the costs of today.
I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate:
Dated: 7 July 2010
0
0
0