Baygol Pty Ltd v Huntsman Chemical Co Australia Pty Ltd

In the Federal Court of Australia, Baygol Pty Ltd, the patent holder, is suing Huntsman Chemical Co Australia Pty Ltd for infringement of its patent, which relates to methods of constructing building foundations. Huntsman, in addition to defending the claim, has cross-claimed for the revocation of the patent on various grounds. The dispute centers on the quantum of security for costs that Baygol must provide to Huntsman. Baygol contends that an amount of $210,000 is the maximum that could be considered reasonably payable if Huntsman’s cross-claim is included, and $105,000 if it is excluded. Huntsman, however, argues that $75,000, the amount already provided by Baygol, will fall short of the amount required to protect it up to judgment.

The court had to decide several legal issues, including whether the estimate of the amount of costs should be based on Huntsman retaining one counsel or more than one counsel, the likely duration of the hearing, whether the costs of the cross-claim for revocation should be treated separately from the costs of the defence, and the estimates made by the costs experts. The court considered the likely overlap of evidence between this matter and a similar matter between Baygol and Foamex Polystyrene Pty Limited. The court also had to weigh the risk of inadequate security against the potential for excessive security that may not ultimately be required to be paid.

The court determined that it was appropriate to estimate the time period of the hearing at seven days, considering the common factual elements between the two matters and the need for efficient conduct of the proceedings. The court found that Huntsman’s assertion of invalidity should be taken into account as part of the defence for the purpose of determining the proper security for costs. The court rejected Baygol’s submission that the cross-claim should be ignored, noting that it is not a rule of law that security should not be ordered where the proceedings are defensive in nature. The court ultimately determined that Huntsman’s costs up to judgment could reasonably be estimated at $210,000, including the costs of the cross-claim.

The court ordered that Baygol provide security for costs in the amount of $135,000, which includes the $75,000 already provided by Baygol. The court considered this amount to be sufficient to protect Huntsman up to judgment, taking into account the potential for any excessive security to be returned if Huntsman’s costs are eventually taxed and found to be lower than the amount of security provided.