Gs Technology Pty Ltd v Davies Shephard Pty Ltd and Gsa Industries (Aust) Pty Ltd
[2000] APO 49
•31 July 2000
OFFICIAL NOTICE
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Petty Patent : No. 662284 in the name of G S Technology Pty Ltd
Title: Water Meter Assemblies
Action: Application for extension of term under section 69; notices by Davies Shephard Pty Ltd and GSA Industries (Aust.) Pty Ltd under section 28. Costs.
Decision: Issued
Abstract
This matter concerns costs in the stated proceedings. Davies Shephard Pty Ltd and GSA Industries (Aust.) Pty Ltd (the notifiers) had sought an award of costs above, or other than, the scale of costs specified in Schedule 8 of the Patent Regulations. In the decision dated 19 May 2000, in which an extension of the term of the petty patent was refused, submissions on costs were invited.
The findings in this decision on costs were:
Costs awarded in this matter against G S Technology Pty Ltd and in favour of Davies Shephard Pty Ltd and GSA Industries (Aust.) Pty Ltd.
The notifiers are entitled to claim:
· the amount of $540 in total for preparation of the case for hearing;
· the day rate of $810 under item 12 of Schedule 8 for the hearing on 20 July 1999; and
· $480 a day for considering and preparing written submissions in relation to the relevance of the documents the subject of the request to adduce further evidence.
The notifiers are also entitled to claim any other costs specifically available under Part 2 of Schedule 8 of the Patent Regulations.
As the notifiers were represented by the same attorney and relied on similar evidence and submissions, each notifier is limited to 50% of the costs claimable.
Costs claimed in accordance with this decision can be taxed, allowed and certified, by an employee appointed by the Commissioner for that purpose.
PATENTS ACT 1990
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Re:Petty Patent No. 662284 by G S Technology Pty Ltd, application under section 69 for an extension of the term of the petty patent and notices by Davies Shephard Pty Ltd and GSA Industries (Aust.) Pty Ltd under section 28 regarding the petty patent, and costs in the matter.
BACKGROUND
On 19 May 2000 I issued my decision on the patentee's application for an extension of term of petty patent 662284. That decision was to refuse to grant an extension of the term. In that decision I referred to the question of costs in the matter and concluded thus:
"However given that the notifiers have sought and advanced an argument for an award of costs other than costs specified in Schedule 8, and mindful of regulation 22.8(1), I believe that it is appropriate to ensure the patentee has an opportunity to make submissions on this question before I decide on costs. Accordingly I allow the patentee a period of 21 days from the date of this decision to provide any written submissions on costs. I allow the notifiers the same period in which to provide any further written submissions regarding costs. I will decide on costs after the expiration of the period mentioned."
Submissions on costs were thus due by 9 June 2000. No submission has been filed by or on behalf of the patentee. On 8 June 2000 submissions were filed on behalf of the notifiers, namely Davies Shephard Pty Ltd ("Davies Shephard") and GSA Industries (Aust.) Pty Ltd ("GSA"), by their patent attorneys Phillips Ormonde & Fitzpatrick. As each party has had a reasonable opportunity to make submissions on the question of costs, I can now decide on costs.
SUBMISSIONS
The notifiers have sought an award of costs in their favour in these proceedings. More particularly they have requested an award of costs above, or other than, the scale of costs specified in Schedule 8 of the Patent Regulations and have provided reasons in support of that request. In brief the reasons include reference to:
the history of setting this matter for hearing;
the preparation for the originally scheduled hearing set for 11 June 1997, which hearing date was set aside following actions on behalf of the patentee;
the hearing held on 20 July 1999 concerning a request to adduce further evidence raised by the patentee and associated matters;
the preparation of submissions for the substantive s.28 matters; and
inconvenience and expense incurred in dealing with the various series of events leading to the substantive hearing.
In my decision of 19 May 2000 at pages 2 and 3 I have referred to events leading up to the hearing for petty patent 662284 and the further evidence action.
Apart from their submissions of 8 June 2000, the notifiers also rely on their earlier submissions filed on 11 August 1999 (two documents) and a "Bill of Costs" which accompanied their letter of 12 August 1999. Copies of these submissions were forwarded by the Patent Office to the solicitor acting for the patentee on 25 May 2000. I will now refer to the submissions for the notifiers in more detail with reference to the above numbered reasons.
The history of setting this matter for hearing.
The notifiers' submissions point out that the hearing for the extension of term of this petty patent was initially set for 11 June 1997. This was done at the insistence of the patentee and contrary to the wishes of the notifiers at the time. The notifiers prepared substantial written submissions for use and consideration at the hearing and forwarded them to the Patent Office with a copy to the patentee on 5 June 1997. On 10 June 1997 the notifiers were advised that the scheduled hearing was deferred. The hearing was deferred after the patentee on 6 June 1997 requested the Commissioner to issue a summons to a person for the production of certain documents. The notifiers point out that the patentee, in requesting the issuance of a summons, indicated that without the summons some assertions made in the written submissions by the notifiers dated 5 June 1997 could not be properly dealt with.
The notifiers submit that they incurred considerable expense in preparing their submissions for the initially scheduled hearing. The last minute deferral of the hearing had resulted in substantial inconvenience and additional expense to the notifiers. Also from that time the notifiers were disadvantaged because the patentee had the advantage of being in possession of the notifiers' detailed submissions intended for the initial hearing.
The notifiers further submit that after unsuccessfully pursuing the summons matter, the patentee in January 1999 again requested the section 28 matter be set for hearing. A hearing date could not be set at that time because the court review of the decision of the Commissioner not to issue the summons, as requested by the patentee, had not been finalised - judgement was given on 25 March 1999. The hearing was set for 20 July 1999 in hearing notices issued on 12 April 1999.
The notifiers refer to an approach by the patentee's solicitor to their solicitors, Minter Ellison, on 16 April 1999 indicating a wish to rely on a court exhibit (Exhibit 24 in a court action involving the parties). They say Minter Ellison sought from the patentee's solicitor the purpose intended for the exhibit documents and the particular documents relevant to the matter. They further say that whilst on 14 June 1999 some indication of purpose was provided, relevant documents were not identified.
The notifiers submit that even on 19 July 1999 they understood the hearing of the substantive extension of term matter would proceed the next day even though they assumed the patentee may wish to seek leave of the Commissioner to adduce further evidence into the proceedings.
The preparation for the originally scheduled hearing set for 11 June 1997.
As already indicated under the previous heading, the notifiers prepared substantial written submissions for consideration at the hearing. This they say involved them in considerable expense, and that the last minute deferral of the hearing had resulted in them incurring substantial inconvenience and additional expense. They also say that from this time the notifiers were disadvantaged because the patentee had the advantage of being in possession of their detailed submissions intended for the initial hearing.
The hearing held on 20 July 1999 concerning a request to adduce further evidence.
The events surrounding the hearing on 20 July 1999 are summarised in my decision of 19 May 2000 at page 3.
The notifiers submit that the patentee had forced the deferment of a hearing of the substantive matters for the extension of term action for a second time because of an attempt to introduce further evidence. On both occasions the hearing had been set at the insistence of the patentee and different further evidence was involved in each instance. The submission further notes that the second attempt to introduce further evidence was initiated at a very late stage in the proceedings, and there was no explanation as to why the issue could not have been dealt with much earlier.
Specifically regarding their request for costs above, or other than, scale costs, the notifiers refer to the fact that at the hearing the patentee insisted that all documents of Exhibit 24 (comprising in excess of 500 pages) were relevant to the substantive issues. However, in the course of submissions for the patentee at the hearing, only a few documents were specifically mentioned as vaguely of possible relevance. The notifiers' submission then states:
"8. We are forced to conclude that Mr Abaza either did not wish to give us the benefit of his detailed knowledge of the Exhibit 24 documents, or alternatively did not in fact know whether each document was relevant (as was alleged). If the first of the two alternatives applies, the patentees approach to the matter is objectionable on several grounds, including deliberate obstruction of resolution of this case. If the second alternative applies, the patentee is guilty of misleading both the Commissioner and the Section 28 Notifiers."
The notifiers also submit that the patentee, by not identifying relevant documents, had "unfairly and improperly transferred the burden of determining relevance onto the Section 28 Notifiers and the Commissioner". The submission then mentions that during the period 21 to 27 July 1999, the notifiers set about to analyse the Exhibit 24 documents and provide written submissions on relevancy of the documents and whether the Commissioner should permit them into the proceedings. They say that that analysis revealed that very few of the documents could be seen as of any relevance to the s.28 matters and apart from that, many were available to the patentee by other means and could have been lodged as evidence earlier if they were believed relevant. Moreover the notifiers continued to analyse the documents in the absence of being informed by the patentee that it was withdrawing the request to introduce Exhibit 24 as further evidence (the patentee's letter to the Commissioner dated 22 July 1999 and received on 26 July 1999 contained the withdrawal).
The notifiers' submissions point out that they have incurred unnecessary expense in considering the relevance of all documents of the Exhibit. The notifiers submit that the request to adduce further evidence "was completely devoid of redeeming quality", but they had to laboriously study the documents to fully comprehend the lack of merit in the request. The notifiers had completed part of their written submissions as to relevance of Exhibit 24 documents before being aware that the request had been withdrawn - this part completed submission had been filed with the Commissioner on 28 July 1999 and was evidence of the effort expended and perceived lack of relevance of most of the documents. They submit an award of costs be set at a level sufficient to cover actual (attorney client) costs as distinct from scale costs. They further submit that the "Bill of Costs" filed on 12 August 1999 is a "suggested minimum rather than as an indication of an acceptable level of costs" for this matter.
The preparation of submissions for the substantive s.28 matters.
Matters relevant to this aspect have already been covered in the second heading.
The inconvenience and expense incurred in dealing with the various series of events leading to the substantive hearing.
The notifiers point to the series of events and actions on the part of the patentee leading to the eventual hearing date of 16 August 1999 as causing a great deal of expense and inconvenience to them. They submit that substantial expense "might have been avoided had the patentee given appropriate attention to the seriousness of this matter during the latter part of 1996. It is evident that, at that time, the patentee took an extraordinarily casual approach to the matter of evidence, and that was in spite of having suffered the consequences of inadequate evidence in the matter of petty patent 645740."
The notifiers refer to the Federal Court judgement in Yates Property Corporation Pty Ltd v Boland (1997) 147 ALR 685 as a guide to how the Commissioner might view a request for above scale costs.
The liable parties
The notifiers also submit that costs be awarded against Mr G Stack and G S Technology Pty Ltd jointly and severally, as was done in the Deputy Commissioner's decision of 27 February1996 concerning petty patent 645740. Their reasons for this include the following:
a) Petty patent 662284 was granted to Stack on 24 August 1995.
b) Section 28 notices were filed 23 July 1996.
c) Assignment of the patent to G S Technology Pty Ltd was recorded on 20 September 1996 on the basis of a document dated 24 August 1995.
d) The apparent interest Stack has in relation to patents and applications in the name of G S Technology Pty Ltd, reference being made to an action in the Federal Court concerning a related patent application 32815/95 in the name of G S Technology Pty Ltd where it seems Stack was considered to have a relevant interest.
e) The likelihood of G S Technology Pty Ltd not being able to meet an award of costs. The notifiers refer to the judgement in G S Technology Pty Ltd v Commissioner of Patents (1997) 39 IPR 583 at page 589.
f) Evidence that Stack is still behind continuance of the patentee's case. The notifiers refer to a letter of 6 June 2000 from Mr Abaza to their solicitors indicating that Mr Abaza has received instructions from his clients "G S Technology Pty Ltd and Mr G Stack" to appeal the decision of 19 May 2000 on petty patent 662284. They submit that the decision in Yates v Boland (at page 695) indicates that "in the circumstances of the present case 'it would be contrary to the interest of justice for (Mr Stack) …... to be shielded from (a costs) liability ….' "(sic). I note that in the mentioned decision the corresponding words of the quote are "… to be shielded by the applicant from any liability for the respondents' costs of the proceeding."
DECISION
Under s.210(d) of the Patents Act 1990 the Commissioner is empowered to award costs against a party to proceedings before the Commissioner. Given my decision of 19 May 2000 where I refused to grant an extension of term of petty patent 662284, following the usual practice that costs should follow the event I believe that the notifiers are entitled to an award of costs in their favour in the proceedings. The question remains whether they are entitled to an award other than costs specified in Schedule 8 of the Patent Regulations.
Under Part 1 of Schedule 8 to the regulations, two matters and their scheduled cost amounts which need to be considered in this matter are:
11. Preparation of case for hearing $360 12. Attendance at hearing by registered patent attorney $180 an hour or $810/day.
In Sterling Drug Inc v Boots Company PLC (1996) 35 IPR 630, the delegate of the Commissioner referred to, and indicated that he believed he could apply, principles relevant to the exercise of discretion by the courts concerning costs, and concluded that in relation to regulation 22.8:
"the scale of costs can be varied to allow the recovery of costs reasonably and properly incurred, if the scale provides inadequate recompense."
And in J L Swanson & C V Hardy v K J Mellett Nominees Pty Ltd [1997] APO 35 (1 August 1997) the delegate of the Commissioner concluded that regulation 22.8 "also allows the Commissioner to consider awarding costs for matters other than those provided within the express terms of schedule 8". Nevertheless I believe the Commissioner should not lightly depart from the scheduled costs and needs to be satisfied that a variation is justified in the circumstances. I believe relevant factors to consider when deciding to vary the scale of costs include whether the matter involved unusual complexity, the importance of the matter, whether additional work was needed and done, the conduct and interest of the parties, and the nature of the schedule of costs in the legislation. I will consider these factors when reviewing the reasons advanced by the notifiers as enumerated above.
1. The history of setting this matter for hearing.
5. The inconvenience and expense incurred in dealing with the various series of events leading to the substantive hearing.
These two reasons cover similar material and I believe should be considered as one.
There is no doubt that the path to the hearing for the extension of term action was other than smooth. It is significant that each time the matter was set for hearing, it was at the specific request of the patentee. Each time the hearing of the substantive matters (the validity issues and whether an extension of term was appropriate) was deferred it was due to procedural actions initiated by the patentee. It is clear to me that those procedural actions were attempts to place additional evidence before the Commissioner to support the patentee's case in the matter. Why these procedural actions were not initiated at earlier times is not apparent. These attempts can be viewed against the background that the period allowed to the patentee to file evidence answering the s.28 notices and associated evidence had long passed and the patentee had chosen to file only one declaration in that period, on 1 November 1996. It is interesting to note that the patentee had in fact filed significantly more evidence for a similar action for the related petty patent 645740 that went to hearing in November 1995 with decisions issuing in January and February 1996.
I accept the submissions by the notifiers that they were inconvenienced and incurred additional expense because of the actions in getting to the hearing on the substantive matters. I think it is clear that the actions and conduct of the patentee gave rise to the delays and hence any inconvenience to the notifiers. However I am not convinced that the conduct of the patentee of itself can be considered as a basis for a variation of costs unless that conduct is clearly linked to additional work which was required to be performed by the other parties. It seems that most of any additional work performed by the notifiers was in relation to the request to adduce further evidence and I will discuss that separately.
2. The preparation for the originally scheduled hearing set for 11 June 1997.
4. The preparation of submissions for the substantive s.28 matters.
These two reasons are linked and I believe should be considered as one. The notifiers prepared for the originally scheduled hearing, preparing submissions for the substantive s.28 matters. Two years later they needed to again prepare for the hearing. The evidence on which to base their submissions had not changed. Essentially it appears that they could have relied on the work and submissions they had previously prepared. However the delay in the hearing allowed them an opportunity to revise or elaborate on their earlier submissions as they saw fit - in my view that approach was quite understandable in the circumstances especially given knowledge they may have gained from events concerning the related petty patent 645740 in the intervening period. In any event the notifiers had to twice prepare for the hearing at times more than 2 years apart. Whilst it seems the second preparation was not as involved as the first, given the same evidence, some work was still required and justified in the circumstances. Thus I believe the notifiers are entitled to costs at a level more than that provided by item 11 of Schedule 8, being the scheduled costs for preparation of the case for hearing. A variation from the Schedule 8 scale is justified for this purpose. I believe an appropriate variation is to allow costs of 1.5 times the item 11 amount in total for preparation of the case for hearing to cover all preparations before both scheduled hearings. Accordingly I award costs of $540 in total for preparation of the case for hearing.
3. The hearing of the 20 July 1999 concerning a request to adduce further evidence.
As I have already mentioned I believe that most of any additional work performed by the notifiers was in relation to the request to adduce further evidence. Had such a request been allowed, the notifiers would have been confronted with a case in answer to their notices different from that previously in evidence. Thus the notifiers clearly had an interest in the request and were entitled to provide submissions to the Commissioner on whether the request should be allowed. The relevance of documents sought to be adduced by further evidence into proceedings is an important factor and in providing submissions the notifiers were at liberty to give due consideration to that aspect. It was impractical for the notifiers' attorney at the hearing to be in a position to properly address submissions in this regard due to the numerous documents the patentee foreshadowed as relevant and the fact that the attorney for the notifiers had insufficient awareness at that time of the documents. It is worth noting here that the 500 pages of the exhibit sought to be advanced as further evidence compares with the 13 page sole statutory declaration with no exhibits which was already in evidence for the patentee.
The task for the attorney for the notifiers considering written submissions on the relevance of the documents was not helped by the claim by the patentee's solicitor at the hearing that all documents were relevant to the proceedings. However only somewhat general submissions as to possible relevance of some of the documents were provided by the patentee's solicitor at the hearing. Thus, not only did the notifiers' attorney have to review and understand the nature and content of the documents in the exhibit, essentially unaided he also had to search for matters of possible relevance to the proceedings. Given the number of documents to be considered, I am not surprised that the notifiers' attorney had not finalised written submissions when advised by the Patent Office that the patentee had withdrawn the request. Also the failure by the patentee or its solicitor to inform the notifiers' attorney immediately when the decision had been made to withdraw the request led to unnecessary work being performed on behalf of the notifiers.
In my view the matter of the request to adduce further evidence in this case involved a matter of unusual complexity, given the volume of documents and limited indications of relevance, and resulted in an unusual amount of additional work for the attorney on behalf of the notifiers. The manner in which this request was advanced on behalf of the patentee contributed to the matters mentioned. It is a situation where I believe the award of costs should allow the notifiers to recover costs reasonably and properly incurred. Accordingly, in the light of all the circumstances of this matter, I consider that a variation from the scale of costs is justified.
The "Bill of Costs" provided by the notifiers on 11 August 1999 lists one item as follows:
"Preparation for the hearing scheduled for 20 July 1999, attendance at the hearing, and studying and reporting on the relevance of Exhibit 24: $5000."
This they suggest as a "minimum" level of costs for the matters mentioned and they also submit that costs be set at a level sufficient to cover actual (attorney client) costs. They have not indicated any breakdown of the amount between the matters. However I have already considered separately the matter of costs regarding preparing for the hearing which is included in this "Bill of Costs".
Schedule 8 at item 12 provides for costs associated with attendance at hearing by registered patent attorney. The request to adduce further evidence arose at the hearing and was the subject of verbal submissions before I adjourned the hearing to allow the notifiers' attorney to prepare further written submissions on that issue. Given that there is no costs item in Schedule 8 specific to requests to adduce further evidence, an award for this issue could be based on a variation of item 12 or as a cost other than specified in the schedule either separate from or additional to item 12. However I am not inclined to consider costs associated with work to provide written submissions as being at the same level as those for attendance at a hearing. It seems to me that participating in a hearing would generally require a higher level of involvement and activity compared to reviewing material and providing written submissions. The scale of costs in Schedule 8 seem to account for such differences when the scheduled costs ($480) for an action such as (preparing) evidence in support, which could be an involved, complex and time-consuming task, is compared to the item 12 amounts. Thus I will consider costs for considering and preparing written submissions regarding the request for further evidence separate from item 12. The notifiers are however entitled to an award under item 12 for the day of the hearing, and since the hearing time spanned 4 hours 50 minutes, the day rate of $810 applies.
The notifiers have submitted that costs be set at a level sufficient to cover actual (attorney client) costs. They have referred to the Yates v Boland case (supra) as a possible guide in this respect. That case refers to Colgate-Palmolive Co and another v Cussons Pty Ltd (1994) 28 IPR 561 and summarises from that case grounds where a court may depart from the usual rule of costs on a party to party basis. Those grounds include particular misconduct that causes loss of time to the court or to other parties, commencement or continuation of proceedings for some ulterior motive or in wilful disregard of known facts or clearly established law, or making of allegations that ought never to have been made or the undue prolongation of a case by groundless contentions. Viewed against those grounds, for this case there was certainly some loss of time and costs incurred by the notifiers when the patentee did not timely advise the notifiers' attorney that the further evidence request was to be withdrawn. It may not have been misconduct on the part of the patentee or its solicitor but at least it would seem to qualify as inappropriate conduct in all the circumstances. In relation to the other two grounds, the notifiers' submissions tend to suggest that the patentee introduced the request to adduce further evidence without regard to established law and requirements for possible allowance of such a request, particularly when the request was based on all the documents of the exhibit. The course of the hearing on 20 July 1999 tends to give weight to the point embraced by the notifiers' line of submission since the patentee's solicitor seemed unsure and unfamiliar with the requirements needed to support and justify to the Commissioner the allowance of a request to adduce further evidence. However I have no basis to conclude that the patentee's solicitor acted with wilful disregard of the requirements or was otherwise acting with some ulterior motive in mind. Although the timing and manner in which the request to adduce further evidence was introduced and argued for the patentee at the hearing, as well as the circumstances in which it was withdrawn, do not reflect well on the patentee and its solicitor, I do not consider that an award of costs based on actual costs is justified.
Following the hearing the attorney for the notifiers spent, it seems, up to five days (not counting the weekend) considering the documents and preparing written submissions before being informed by the Patent Office that the request had been withdrawn. An award of costs for the actual days spent is I believe appropriate in all the circumstances. Given the award amounts against matters listed in Part 1 of Schedule 8 of the Patent Regulations, I believe that an award of $480 a day is an appropriate amount to apply in this instance. This represents a level of costs at 60% of the day rate for the attendance of a patent attorney at a hearing. This would seem to provide an adequate recompense for costs involved at a party to party level for this particular costs matter. Accordingly I award costs at $480 a day for considering and preparing written submissions in relation to the relevance of the documents the subject of the request to adduce further evidence. In a claim for these costs, the notifiers will need to indicate the actual days or part days spent devoted to considering and preparing those written submissions and claim accordingly.
Other costs
The notifiers are also entitled to claim any other costs specifically available under Part 2 of Schedule 8 of the Patent Regulations.
The liable parties
The notifiers have submitted that costs should be awarded against Mr Stack and G S Technology Pty Ltd jointly and severally. They have provided a number of reasons why this should be. Whilst it is true that Stack was the patentee of record at the time the s. 28 notices were filed, the petty patent had been previously assigned to G S Technology Pty Ltd, the assignment being registered subsequent to the filing of the notices. G S Technology Pty Ltd had applied for the extension of term of the petty patent.
There is little factual information before me to know whether G S Technology Pty Ltd would be able to meet an award of costs, or whether it can be regarded as "a man of straw" shielding other persons from liability. There is also limited information as to the involvement and or interest of Stack in the present proceedings. On that basis I do not believe that I can justify awarding costs other than against G S Technology Pty Ltd. Accordingly I award costs against G S Technology Pty Ltd.
CONCLUSION
I have awarded costs in this matter against G S Technology Pty Ltd and in favour of Davies Shephard Pty Ltd and GSA Industries (Aust.) Pty Ltd.
I have decided that the notifiers are entitled to claim:
the amount of $540 in total for preparation of the case for hearing;
the day rate of $810 under item 12 of Schedule 8 for the hearing on 20 July 1999; and
$480 a day for considering and preparing written submissions in relation to the relevance of the documents the subject of the request to adduce further evidence.
The notifiers are also entitled to claim any other costs specifically available under Part 2 of Schedule 8 of the Patent Regulations.
As the notifiers were represented by the same attorney and relied on similar evidence and submissions, each notifier is limited to 50% of the costs claimable.
Costs claimed in accordance with this decision can be taxed, allowed and certified, by an employee appointed by the Commissioner for that purpose.
Trevor Bruhn
Delegate of the Commissioner of Patents
Solicitor for the patentee : Andrew A Abaza, Brisbane
Patent attorneys for the notifiers : Phillips Ormande & Fitzpatrick, Melbourne
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