Industrial Galvanizers Corporation Pty Ltd v Safe Direction Pty Ltd (No 2)

Industrial Galvanizers Corporation Pty Ltd (Ingal) sued Safe Direction Pty Ltd (Safe Direction) and Mr Wallace (collectively the respondents) for patent infringement, breach of the Australian Consumer Law, and other related claims. Ingal alleged that Safe Direction infringed a patent held by it by making and selling the RamShield product. Safe Direction denied infringement and brought a cross-claim challenging the validity of the patent. The primary judge found the patent invalid and dismissed Ingal's claims, finding Safe Direction substantially successful. The parties agreed on most orders, but disputed the costs. The respondents argued that Ingal should pay their costs as successful parties. Ingal argued for an apportionment of costs due to Safe Direction's late abandonment of certain claims and its denial of infringement until late in the proceedings. Mr Wallace sought indemnity costs based on a without prejudice offer.

The court considered the discretion to award costs on an issues basis in complex intellectual property cases. The Full Court in Servier and the High Court in Firebird Global Master Fund II Ltd v Republic of Nauru (No 2) had noted that a successful party might not recover all its costs if it was unsuccessful on certain issues. The court also considered the public interest in revoking invalid patents and the need to discourage parties from invoking unmeritorious objections. The court noted that although costs usually follow the event, the wide discretion in awarding costs could lead to circumstances where a successful party who failed on certain issues might be ordered to pay the other party's costs.

The court ordered that Safe Direction pay the costs thrown away by amending the cross-claim to abandon certain claims. Ingal was ordered to pay Safe Direction's costs on a party/party basis for costs incurred before 7 July 2017, and on an indemnity basis for costs incurred on and after that date. Ingal was also ordered to pay Mr Wallace's costs on a party/party basis for costs incurred before 7 July 2017, and on an indemnity basis for costs incurred on and after that date.