E.I. Du Pont De Nemours and Company v ICI Chemicals & Polymers Limited and Atofina S.A - [2007] APO 12

ABSTRACTS OF DECISIONS
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Application : No. 686433 and 686434 in the name of E.I Du Pont De Nemours and Company

Title: Constant Boiling Compositions (both applications having the same title)

Action: Costs in respect of oppositions under section 59 by ICI Chemicals & Polymers Limited (in respect of both applications) and Atofina S.A. (in respect of 686434 only)

Decision: Issued 16 March 2007.
Abstract

The basic question is whether the justice of the case requires variation of the schedule.
The main justification relied on for varying the scale is that cross-examination of witnesses took place. Examination of witnesses is permitted under the Act, although it is uncommon in actions before the Commissioner. It has not been shown that there was anything special or unusual about the cross-examination that took place.
The actual costs of counsel far exceeded the amount recoverable under the Schedule. However, the costs awarded are not intended to cover the actual cost of the action.
The presence of cross-examination is not sufficiently special or unusual to warrant departing from Schedule 8.
PATENTS ACT 1990
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Re:Patent Application No. 686433 and 686434 by E.I. Du Pont De Nemours and Company, and an award of costs in respect of oppositions under section 59 by ICI Chemicals & Polymers and Atofina S.A.

BACKGROUND

Patent applications 686433 and 686434, both in the name of E.I. Du Pont De Nemours and Company, were the subject of opposition actions by ICI Chemicals & Polymers (in respect of both applications) and Atofina S.A. (in respect of 686434 only). Decisions in the oppositions issued on 5 June 2002 and 19 July 2002. In both cases the oppositions were successful. The applicant appealed to the Federal Court, and was successful. Both patents were sealed on 1 September 2005. The matter of costs before the Commissioner was remitted to the Commissioner for determination.
A Bill of Costs was submitted on 11 October 2005. As this Bill involved the award of costs greater than in Schedule 8, the parties were invited to be heard. All parties were heard on the question of costs on 15 February 2007. The hearing was conducted by telephone. Du Pont was represented by Mr Cameron Moore of counsel, assisted by Dr Elizabeth Houlihan, patent attorney. ICI was represented by Mr David Tadgell, patent attorney. Atofina was represented by Ms Shahnaz Irani, patent attorney.
At the hearing it became apparent that Du Pont was seeking costs greater than those in the Bill of Costs. Du Pont’s position was that the scale of costs should be varied to include the following items:
a)attendance by two counsel rather than one
b)attendance by two patent attorneys rather than one
Du Pont also sought to increase the amounts awarded beyond that specified in Schedule 8 as follows:
i)increase in the amount for preparation for the hearing
ii)increase in the amount for attendance by counsel to the actual cost
iii)increase in the amount for attendance by patent attorney to the actual cost
iv)increase in the payment for witnesses to the actual cost
With regard to point iv), there was agreement that witness expenses should be increased to the actual cost. I am in agreement, and I will not further consider this item.
After the hearing, the parties advised me that ICI and Du Pont had agreed to bear their own costs in relation to the hearing held on 15 February 2007.
DECISION
Du Pont argued for an award of costs far greater than that presented in the original Bill of Costs. No explanation was provided as to why the claim had been varied. It is inappropriate for a party to argue for costs substantially different to those foreshadowed. The major shift in the position of Du Pont is a factor that must be taken into account in deciding whether to exercise the discretion to vary the scale of costs in their favour.
Variation of the scale of costs has been considered by the Commissioner on a number of occasions. The practice that has developed is based on the principles applied by the courts in similar situations. The basic principles, with which both parties agreed, are spelt out in decisions such as Sterling Drug Inc v Boots Company PLC 35 IPR 630 and Super Internet Site System Pty Ltd v Sensis Pty Ltd [2006] APO 27. These cases have adopted the following principles:
a)the scale can be varied if the case is of "unusual complexity or importance", and the scale is inadequate (Willison v Van Ryswyk [1961] WAR 87 at 91, note also Schmidt v Gilmour [1988] WAR 219);
b)it is relevant to have regard to "whether additional work was done, whether that work was necessarily or reasonably done, whether the fees proposed to be charged for such work are reasonable, whether an inadequacy exists, and the principle that an order for costs should enable the successful party to recover costs which have been reasonably and properly incurred" (Collins v Westralian Sands Ltd (1993) 9 WAR 56 at 67);
c)costs on a higher scale are to be allowed in cases where there has been "an extraordinary amount of work and labour" in the preparation and conduct of the case, and should not be imposed as a penalty on the other party for the manner in which they have conducted their case (Nicholson v Colonial Mutual Insurance Co (1887) 13 VLR 58 at 65);
d)when considering the use of more than one counsel, the scale can be varied if a reasonable and prudent, but not overcautious man, in all the circumstances, would seek the services of two counsel, notwithstanding the expense (Stanley v Phillips (1966) 115 CLR 470, Peile v Nobel (Australasia) [1966] VR 433); and
e)costs are not equivalent to damages, and the principle of restitutio in integrum does not apply (Smith v Buller (1875) LR 19 Eq 473 at 475). Costs other than on a party and party basis are warranted "when the justice of the case so requires or where there may be some special or unusual feature of the case" (Re Wilcox; Ex parte Venture Industries Pty Ltd 141 ALR 727).
The basic question is whether the justice of the case requires variation of the schedule. Some specific tests have been used in previous decisions, but these are really just explanations of what the justice of the case requires in those situations. With regard to the use of two counsel, it was suggested that the question to be asked is whether it is reasonable and prudent, not whether the case involves unusual complexity. This is a distinction without a difference. If there were nothing unusual about a case, it is hard to see why it would be reasonable and prudent to use two counsel.
The main justification relied on for varying the scale is that cross-examination of witnesses took place. ICI and Atofina submitted that while this was true, there was nothing that made the conduct of the case unusual or exceptional.
Examination of witnesses is permitted under the Act, although it is uncommon in actions before the Commissioner. I accept that this makes it reasonable for the parties to engage counsel. It is also reasonable that counsel were assisted in taking notes during the examination of the witnesses. The costs of using counsel and a patent attorney can be recovered under Schedule 8 without the need for variation. It has not been shown that there was anything special or unusual about the cross-examination that took place.
The technology of the cases cannot be regarded as complex. The inventions relate to compositions of well known substances. The volume of evidence is not unusually large in comparison to other oppositions in this area of technology.
It was also pointed out that the actual costs of counsel far exceeded the amount recoverable under the Schedule. The costs awarded are not intended to cover the actual cost of the action. In the Super Internet decision the Deputy Commissioner noted that costs under the Schedule were only 1/30 of the actual costs in that case. However, this alone was not enough to persuade the Deputy Commissioner to vary the scale of costs. The gap between the schedule and the actual costs in the present case does not seem unusual in comparison to Super Internet.
The only unusual matter is that cross-examination took place. This matter, both on its own and in combination with the other matters, is not sufficiently special or unusual to warrant departing from Schedule 8.
1. Attendance by two counsel
In a case involving the cross-examination of witnesses, it is readily apparent that the use of counsel would be prudent. However, the use of two counsel is not so apparent. What must be shown is that it was reasonable and prudent to use two counsel and two patent attorneys. I note that the opponents engaged one counsel to deal with the matter. As noted above, it has not been established that the use of two counsel was reasonable and prudent, or that there was anything special or unusual about the present case.
2. Attendance by two patent attorneys
It was suggested that two patent attorneys were needed to balance the two patent attorneys used by the opponents. It must be remembered that there were two opponents, and each opponent had an instructing patent attorney. I am not satisfied that the use of two patent attorneys has been justified.
3. Increase in cost of preparing for hearing
The preparation for the hearing was probably lengthier due to the preparation for cross-examination. However, it has not been established that there was anything special or unusual about the preparation for the present case.
4. Increase in the cost for attendance by counsel
The claim for the actual costs of counsel appears to be a claim for damages rather than costs. I was provided with detailed information as to the costs of counsel, but much less detail as to why those costs should be awarded. It was stated that the schedule provides for recompense of only a small part of the actual costs of counsel. It is clear that this is correct. However, as already noted, it has not been shown that there was anything special or unusual about the present case such as to warrant this variation.
5. Increase in the cost for attendance by patent attorney
For the same reasons as under the point above, this variation is not justified.
6. Conclusion
I am not satisfied that Schedule 8 should be varied. I have not needed to take into account the fact that Du Pont’s claims were different to that in the Bill of Costs. I award costs according to Schedule 8 against the opponents. The items in the Bill of Costs are payable, reduced in accordance with the terms of this decision. I note that Schedule 8 has been amended since the time that the Bill of Costs was submitted, so this will need to be reflected in the final costs.
Insofar as the costs of the hearing of 15 February 2007 are relevant to the matter between Du Pont and Atofina, I find that Atofina have been successful in objecting to the variation of the scale. Costs of that day are to follow the event - costs are awarded against Du Pont.
Dr S.D.Barker
Delegate of the Commissioner of Patents
16 March 2007
Patent attorneys for Du Pont : Houlihan²
Patent attorneys for ICI : Phillips Ormonde & Fitzpatrick
Patent attorneys for Atofina : Spruson & Ferguson