GS Technology Pty Ltd v GSA Industries (Aust) Pty Ltd
[2000] APO 12
•8 February 2000
OFFICIAL NOTICE
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Application : No. 32815/95 in the name of G.S.Technology Pty Ltd
Title: Water meter assemblies
Action: Review of taxation of costs
Decision: Issued
Abstract
The taxation of the Taxing Officer was upheld.
The construction of regulation 22.8(2) was considered. The subregulation allows the Commissioner to award costs in respect of (a) any of the items in Part 1 of Schedule 8, or (b) in respect of expenses or allowances incurred. In this context, the "or" means that the Commissioner may award an individual cost item from either category (either (a) or (b)). However, the Commissioner may award as many cost items as are appropriate. This follows from the nature of costs. It follows that the proper construction of subregulation (2) is that the cost items as a whole can come from both paragraphs (a) and (b), and any individual cost item can come from either paragraph (a) or (b).
PATENTS ACT 1990
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Re:Patent Application No. 32815/95 by G.S.Technologies Pty Ltd, and a review of taxation of costs in an opposition by GSA Industries (Aust.) Pty Ltd.
BACKGROUND
G.S.Technologies Pty Ltd (hereafter referred to as GST) is the applicant for patent number 32815/95. The application lapsed due to failure to pay a continuation fee. GST sought to extend the time for paying the continuation fee by an extension of time under section 223. That extension was opposed by GSA Industries (Aust.) Pty Ltd (hereafter referred to as GSA). GST requested dismissal of that opposition, and that request was refused by a Delegate of the Commissioner (see GS Technology Pty Ltd v GSA Industries (Aust) Pty Ltd (1998) 43 IPR 409). The delegate awarded costs against GST.
On 20 May 1999, GSA requested taxation of costs by the Commissioner. On 19 July 1999 the Taxing Officer advised that costs in the amount of $1105.00 would be allowed. On 5 August 1999, GST requested review of the taxation. Both parties have filed written submissions in relation to this matter.
THE RELEVANT LEGISLATION
The power to award costs is found in section 210:
The Commissioner may, for the purposes of this Act: …
(d) award costs against a party to proceedings before the Commissioner.
The award of costs is governed by regulation 22.8. This regulation states:
(1) The Commissioner must not award costs in proceedings to which this Division applies, other than costs specified in Schedule 8, unless each party to the proceedings has had the reasonable opportunity to make a submission on the matter of the award of those costs.
(2) The Commissioner may award an amount:
(a)for costs in respect of a matter specified in column 2 of an item in Part 1 in Schedule 8; or
(b)in respect of the expenses or allowances of a person in relation to proceedings to which this Division applies.
(3) An amount referred to in subregulation (2) must be taxed, allowed and certified, by an employee appointed by the Commissioner for that purpose, in accordance with:
(a) the amount specified in column 3 of that item; or
(b) Part 2 in Schedule 8;
as the case may be.
(4) A taxation is subject to review by the Commissioner.
THE AWARD OF COSTS
The Delegate awarded costs against GST in the following terms:
"GST has been totally unsuccessful in its request for dismissal of the opposition and that being the case I award costs against G.S.Technology Pty Ltd."
In the absence of qualification, this is an award of costs as specified in Schedule 8.
THE TAXATION OF COSTS
The Taxing Officer allowed all costs claimed by GSA. Those cost items were:
Schedule 8, Part 1 Item 11 Preparation of case for hearing $360 Item 12 Attendance at hearing by a patent attorney (1 hour) $180 Schedule 8, Part 2, Division 1 Item 1 Hearing fee $500 Taxing fee $65 Total $1105
The Taxing Officer provided a statement of reasons for his decision which addressed comments made by GST in relation to the costs claimed by GSA. I will quote the reasons of the Taxing Officer where appropriate. All of these costs are in accordance with Schedule 8.
REVIEW OF THE TAXATION
The request for review of taxation dated 5 August 1999 raises a number of general issues that need to be considered before dealing with the correctness of the specific taxation. Many of these points relate to constitutional matters. The constitutional validity of the power of the Commissioner to award costs was considered by the Federal Court in Stack v Commissioner of Patents (1999) 43 IPR 663 (hereafter referred to as the Stack case). That case also relates to the present application, and was a judicial review of the decision of the Delegate that gave rise to the present question of costs. Drummond J held that the power of the Commissioner to award costs is not an exercise of judicial power. The constitutional issues raised by GST in the present matter were not before the Federal Court. The Stack case was appealed to the Full Court of the Federal Court (see Stack v Commissioner of Patents [1999] FCA 1171). The challenge to the validity of the power to award costs was abandoned at the hearing of the appeal, and the Court cast no doubt on any of the comments of Drummond J. I will deal with the general issues first, and consider the appropriateness of the specific items of costs later.
General issues
"the relevant connexion said to exist between s.51(xviii) of the Constitution ie a law about PATENTS and Regulation 22.8 (a Regulation about costs)"
This point raises the question of whether a provision relating to costs has a sufficient connection to the constitutional head of power relating to patents. This point is easily addressed by referring to the comments of Drummond J in the Stack case, that costs are a matter ancillary to the administration of the patent system (at page 671, [34]):
"The principal powers here in question to which the power to order costs under s.210(d) is ancillary are those to which I have referred, ie, those conferred on the Commissioner by the Patents Act which he can only exercise after hearing the persons who have opposing interests in the exercise of the power. They are powers, moreover, which the Commissioner is required to exercise in performing his administrative functions with respect to the grant of patent applications and the maintenance of the Register of Patents containing the matters required by s.187."
The award of costs is ancillary to the operation of the patents power, and there is no reason to question the validity of regulation 22.8.
"the relevant connexion said to exist between s.51(xviii) of the Constitution ie a law about patents and s.71 of the Constitution and the function of the learned taxing officer said on the view of the learned Taxing Officer that he is guided by the practice in the Federal Court where Order 62 rule 19 states:
'On every Taxation the taxing officer shall allow all such charges and expenses as appear to him to have been necessary or proper for the attainment of justice or for maintaining of defending the rights of a party'
and the conclusion asserted by the learned taxing officer therefrom that the costs amount claimed in the present matter are very clearly 'necessary and proper in the circumstances'."
This point relates to one of the reasons given by the Taxing Officer, which was in response to a submission made by GST.
GST stated:
"16. Regulation 22.8(2)(a) and (b) on its ordinary construction is to be read disjunctively where the word 'or' appears --- ie the ordinary required determination is (a) or (b).
The payment of the claimed fee is an optional matter not a compulsory matter, ie it is a matter entirely for GSA as to whether it wished to pay that fee or not."
The Taxing Officer stated:
"The second paragraph of point 16 is not understood. Fees paid under the regulations in relation to proceedings, for example the hearing fee, are not optional. If it can be said that an item claimed by a party was in some way discretionary, then the taxing officer is guided by the practice in the Federal Court where Order 62 Rule 19 states that 'On every taxation the taxing officer shall allow all such charges and expenses as appear to him to have been necessary or proper for the attainment of justice or for maintaining or defending the rights of a party'. The cost amount claimed in the present matter are very clearly 'necessary and proper' in circumstances."
The reference to s.71 of the Constitution is confusing. The Federal Court has clearly stated that the award of costs by the Commissioner is not an exercise of the judicial power. The Taxing Officer has referred to the Federal Court Rules as providing guidance for his practice. This does not indicate that the Taxing Officer considers himself to be a federal court. I consider that it is proper for the Taxing Officer to draw guidance from the practice of the Federal Court where that is relevant, and the award of costs is clearly such a subject. [A similar approach was adopted in relation to the statement of grounds and particulars in Mobay Corporation v The Dow Chemical Company (1992) AIPC 90-895, 24 IPR 379.]
GST also seem to have questioned whether the items allowed by the Taxing Officer were necessary and proper. I will deal this later.
"the relevant connexion said to exist between the wholly invalid award of costs by the learned hearing officer at first instance and the 'taxation of costs'."
It is not clear what part of the reasons of the Taxing Officer this comment relates to. However, it is clear from the Federal Court's decision in the Stack case that the hearing officer had the power to award costs, and in fact made an award of costs. Consequently, the power to tax is enlivened.
The review of taxation is not an opportunity to review the appropriateness of the award of costs.
"To the extent (if any) that the learned taxing officer might have formed an opinion as to the proper construction of Regulation 22.8(2) in either its disjunctive or conjunctive sense my client would humbly seek for such construction as is favoured by the very learned Commissioner to be recorded in writing."
This point seems to relate to following comments by GST and the Taxing Officer.
GST stated:
"16. Regulation 22.8(2)(a) and (b) on its ordinary construction is to be read disjunctively where the word 'or' appears --- ie the ordinary required determination is (a) or (b).
The Taxing Officer stated:
"It is true that Regulation 22.8(2) allows the Commissioner to award an amount in relation to (a) or (b). However, clearly the Commissioner can award more than one 'amount' in relation to proceedings and hence a taxation of costs may include a number of amounts or items relating to either paragraph (a) or (b)."
This is a serious issue of the construction of regulation 22.8(2). GST have pointed out that the structure of the regulation is that the items in paragraphs (a) and (b) are linked by the word "or", which suggests that (a) and (b) are alternative costs that can be awarded. I believe that this construction oversimplifies the subregulation.
Subregulation (2) allows the Commissioner to award costs in respect of (a) any of the items in Part 1 of Schedule 8, or (b) in respect of expenses or allowances incurred. In this context, the "or" means that the Commissioner may award an individual cost item from either category (either (a) or (b)). However, the Commissioner may award as many cost items as are appropriate. This follows from the nature of costs. The Delegate of the Commissioner has made an award of costs in a global manner, rather than identifying the individual items of the costs. This is the normal practice of the Commissioner. The allowability of any particular cost item is properly determined by the Taxing Officer.
It follows that the proper construction of subregulation (2) is that the cost items as a whole can come from both paragraphs (a) and (b), and any individual cost item can come from either paragraph (a) or (b).
"To the extent (if any) that the learned taxing officer might have formed an opinion as to the connexion said to exist between the construction of 22.8(2) (a) or (b) or both and that which appears to have been determined by the learned hearing officer in that no such view appears to have been formed my client humbly seek for such, the reasons, to be recorded in writing."
These issues are discussed in point 4 above.
"To the extent that the learned taxing officer might have formed an opinion that the Federal Court Rules might be resorted to 'to fill in the gaps appearing in the decision of the very learned hearing officer at first instance' my client would humbly seek for the reason and basis of reference to the Federal Court Rules to be recorded in writing."
It is not apparent what document is being quoted, or what the "gaps" might be. Whatever this matter might be, it does not seem to be relevant to the question of taxation. The remaining issues are discussed in point 2 above.
"The learned Commissioner is requested to consider the proposition which my client with great respect views as self evident and as Truth that Chapter III powers have nothing whatever to do with s.51 powers."
This is not relevant to the question of taxation, so there is no issue here for me to decide. However, the Federal Court has clearly stated in the Stack case that the mere power to award costs does not confer judicial power on the Commissioner.
"The learned Commissioner is requested to consider the proposition which my client with great respect views as self evident that Regulation 22.8 has nothing whatever to say about the purported dismissal of a request under Regulation 5.5(1)(a) and therefore the purported taxation is entirely null and one where the learned taxing officer is without any lawful jurisdiction whatever in the performance of the function."
The review of taxation is not an opportunity to review the appropriateness of the award of costs. However in this case the award of costs was reviewed by the Federal Court in the Stack case, where Drummond J stated clearly (at page 669, [21]):
"The proposition that no costs are provided for in respect of a request to dismiss a notice of opposition pursuant to reg 5.5(1)(a) for the purposes of s 210(d), so no order for costs can be made, is manifestly untenable".
There is no issue here for me to decide.
"The learned Commissioner is requested to consider the proposition which my client with great respect views as self evident that the purported determination in the first instance is not one about PATENTS and has no relevant connexion to any law about patents --- and therefore the purported taxation is entirely null and one where the very learned taxing officer is without any lawful jurisdiction whatever."
This issue is discussed in point 8 above.
"The very learned Commissioner is requested to consider the proposition which my client with great respect views as self evident there is no jurisdictional basis for such 'taxation' as has occurred unless there be a relevant connexion between the power in s.51(viii) and costs which there is not."
This issue is discussed in point 1 above.
Conclusion
I conclude that the Taxing Officer has the power to tax. In undertaking this task, he or she can draw guidance from the Federal Court Rules.
Review of the specific cost items
I will now consider the appropriateness of the items that were allowed by the Taxing Officer. Point 2 above relates to this question in general terms. GST filed a letter dated 2 September 1999 which refers to the review of costs, but the submissions relate to the substance of extension under section 223.
Preparation of case for hearing
A hearing of the dismissal was held on 7 October 1998. The attorney for GSA appeared by telephone and made submissions. It was necessary and proper to prepare for the hearing. Consequently, it is reasonable to allow the cost of preparing for the hearing.
Attendance at the hearing by a patent attorney (1 hour)
GSA were represented at the hearing by a patent attorney, and the hearing required 1 hour. It was necessary and proper to appear at the hearing. Consequently, it is reasonable to allow the cost of attendance.
Hearing fee
The hearing fee was paid by GSA on 22 September 1998. This fee is prescribed by the Regulations and is necessary in order to be heard by the Commissioner. It was necessary and proper to pay the hearing fee. Consequently, it is reasonable to allow the cost of the hearing fee.
Taxing fee
The taxing fee was paid on 21 May 1999. This fee is prescribed by the Regulations and is necessary in order to obtain a taxation by the Commissioner. It was necessary and proper to pay the taxing fee. Consequently, it is reasonable to allow the cost of the taxing fee.
Conclusion
The Taxing Officer was correct in his taxation. Costs are allowed in the amount of $1105.00. A certificate of costs for that amount will now issue.
Dr S.D.Barker
Delegate of the Commissioner of Patents
Solicitor for the patent applicant : Andrew P. Abaza, Brisbane
Patent attorneys for the opponent : Phillips, Ormonde & Fitzpatrick, Melbourne
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