Nutrasweet Australia Pty Ltd v Ajinomoto Co Inc (No 4)

[2008] FCA 876

FEDERAL COURT OF AUSTRALIA

Nutrasweet Australia Pty Ltd v Ajinomoto Co Inc (No 4) [2008] FCA 876

COSTS – successful party confined its case to one point – unsuccessful party argued it should only pay costs incidental to that point – successful party likely to be successful on points not contested – successful party should have its costs – indemnity costs order refused

NUTRASWEET AUSTRALIA PTY LTD v AJINOMOTO CO INC

VID 174 of 2002

FINKELSTEIN J
12 JUNE 2008
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 174 of 2002

BETWEEN: NUTRASWEET AUSTRALIA PTY LTD
Applicant

AND: AJINOMOTO CO INC
Respondent

JUDGE:	FINKELSTEIN J
DATE OF ORDER:	12 JUNE 2008
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1.The respondent pay the applicant’s costs of the motions filed on 22 October 2004, 16 March 2007 and 22 March 2007, such costs to be taxed on a party and party basis.

Note:   Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 174 of 2002

BETWEEN: NUTRASWEET AUSTRALIA PTY LTD
Applicant

AND: AJINOMOTO CO INC
Respondent

JUDGE:	FINKELSTEIN J
DATE:	12 JUNE 2008
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1. Following the delivery of the judgment in which I found Ajinomoto’s patent to be invalid for obviousness, Ajinomoto applied to me to recall the judgment and reopen the case for further argument.  Earlier it had applied to amend the claims of the patent.  That application was stood over and heard together with the application to reopen the case.  Each application was dismissed.  Nutrasweet seeks the costs of both applications and applies for an order that those costs be taxed on an indemnity basis.

2. The costs incurred in the amendment application are significant.  The proposed amendments fell into several categories.  First, some were sought to repair clerical errors.  Secondly, general amendments were made to existing claims to narrow their scope.  Finally new claims were sought to be added.  In no small measure the costs incurred in the amendment application were significant because the parties had geared up to have determined whether the proposed new claims also failed for lack of inventive step, or were bad for lack of fair basis and lack of utility. 

3. Initially Nutrasweet had objected to the proposed amendments on a number of grounds. There was a complaint that several were not allowable under s 102 of the Patents Act 1990 (Cth). Any deficiencies were cured by changes in the language of the proposed amendments. There was also an objection based on the usual discretionary grounds. Ultimately, that was not pressed.

4. Nutrasweet took the position that I was required to find each of the claims (that is both the proposed amended claims and the proposed new claims) were invalid by reason of my finding that the purported invention was obvious.  However, if that finding did not prevent Ajinomoto from asserting that the new claims were inventive, Nutrasweet filed expert evidence to tender at the hearing.  The evidence was from the witnesses who had given evidence at trial.  Ajinomoto also filed evidence relating to obviousness.

5. Ajinomoto had adopted the position that if an estoppel operated it was confined to the old claims.  Insofar as the proposed new claims were concerned, Ajinomoto contended that it would be necessary to look afresh at the question of inventive step.  It made clear that it was going to invite me to reconsider my previous ruling and the findings I had made in that regard.  In separate written submissions Ajinomoto put it this way:  (1) “The [amendment application] requires the Court to conduct a retrial on the inventive step question, albeit limited to the proposed new claims”; (2) “The reopening [application does] require a reconsideration of the existing evidence on the inventive step issue.” 

6. Now, as events turned out, once the hearing commenced each party changed position. First of all Nutrasweet indicated that following changes to the drafting of the new claims, it was no longer pressing an objection on discretionary grounds or under s 102. Later it indicated that it would not call its expert evidence. Its sole opposition to the proposed amendments was that the application that they be made was an abuse of process.

7. To be fair to counsel for Nutrasweet, the transcript suggests that the reason he put all his eggs in one basket was because, in light of how his argument was progressing, he thought it likely he would succeed upon the abuse ground. 

8. I said that each side gave ground.  For its part Ajinomoto dropped its contention that it would, in relation to the proposed new claims, reargue the invalidity finding that had gone against it at trial.  I do not mean to suggest that Ajinomoto conceded that in point of law it was prevented from arguing that the new claims were not obvious.  It simply decided that it would not argue the point.

9. Ajinomoto contends that because in the end Nutrasweet confined its objection to the amendments on the sole ground of abuse of process Nutrasweet should not recover the costs it incurred in preparing the other grounds.  Those costs would include discovery, the preparation of affidavits and the travel and accommodation of witnesses.

10. I am of the firm view that I should not adopt Ajinomoto’s approach.  I might have been inclined to do so had I thought the points raised by Nutrasweet and then abandoned were bad points.  But I do not think they were.  The formal objections were cured by Ajinomoto’s decision to amend the proposed claims.  The fight on inventiveness did not proceed because Nutrasweet withdrew from the contest.  But had it gone ahead it is likely that Nutrasweet would have been successful.

11. The result of each side giving ground was that an already prolonged piece of litigation was brought more rapidly to an end.  As a result Ajinomoto’s and Nutrasweet’s costs were significantly reduced.  But that is not a reason for Ajinomoto to get a discount on the costs that it should otherwise pay.  One should not lose sight of the likelihood that had the case gone ahead on all grounds Ajinomoto would have been liable to pay much higher costs. 

12. The only issue that has caused me difficulty is whether Nutrasweet should have its costs on an indemnity basis.  I need not discuss the applicable principles for they are well known.  In short, the cases say that a court should only depart from requiring costs to be paid on a party and party basis if the interests of justice require it.  One circumstance in which an indemnity order is made is if the case had no chance of success; that is, that the action was hopeless.

13. It cannot be said that the application to reopen the case was hopeless.  It had one point in its favour.  On the amendment application I was going to be asked to reconsider inventiveness and that left open the possibility of inconsistent findings if I had changed my mind.  That is sufficient to suggest there was some merit in making the application to reopen the case.  In any event I do not think that application added greatly to the costs that were otherwise incurred. 

14. I will decline to make an indemnity costs order on the amendment application for a different reason.  It was not until 20 March 2007, some six days before trial, that Nutrasweet amended its grounds of objection to include as a ground abuse of process.  By that time the case was ready for trial and most of the costs of the parties had been incurred.  If notice of this ground had been given earlier, Ajinomoto would have had time to give it due consideration and, if it had then decided to proceed, there might have been some basis for seeking indemnity costs.  But I would not accede to the application in a case where the successful ground was first raised immediately before trial. 

15. For the foregoing reasons Nutrasweet should have its costs of both the application to amend and the application to reopen, such costs to be taxed on a party and party basis.

I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein.

Associate:
Dated:       12 June 2008

Counsel for the Applicant:	B Caine SC H Rofe
Solicitor for the Applicant:	Allens Arthur Robinson
Counsel for the Respondent:	B Hess SC L Duncan
Solicitor for the Respondent:	Griffith Hack Lawyers
Date of Hearing:	31 March 2008
Date of Judgment:	12 June 2008