Samsung Bioepis AU Pty Ltd v Janssen Biotech, Inc. (Costs)
[2024] FCA 1099
•19 September 2024
FEDERAL COURT OF AUSTRALIA
Samsung Bioepis AU Pty Ltd v Janssen Biotech, Inc. (Costs) [2024] FCA 1099
File number(s): NSD 65 of 2024 Judgment of: DOWNES J Date of judgment: 19 September 2024 Catchwords: COSTS – consent to surrender of innovation patents and discontinuance of proceedings nearly three months before trial – whether costs should be ordered on indemnity basis – application refused
PRACTICE AND PROCEDURE – circumstances where short form reasons are appropriate
Cases cited: James Hardie International Finance BV v CSR Limited [2007] FCA 366 Division: General Division Registry: New South Wales National Practice Area: Intellectual Property Sub-area: Patents and associated Statutes Number of paragraphs: 18 Date of last submissions: 4 September 2024 (Applicant/Cross-Respondent)
11 September 2024 (Respondent/Cross-Claimants)Date of hearing: Determined on the papers Counsel for the Applicant/Cross-Respondent: Mr C Dimitriadis SC and Ms C Cunliffe Solicitor for the Applicant/Cross-Respondent: Maddocks Lawyers Counsel for the Respondent/Cross-Claimants: Mr J Cooke SC and Mr J Elks Solicitor for the Respondent/Cross-Claimants: Davies Collison Cave Law ORDERS
NSD 65 of 2024 BETWEEN: SAMSUNG BIOEPIS AU PTY LTD
Applicant
AND: JANSSEN BIOTECH, INC.
Respondent
AND BETWEEN: JANSSEN BIOTECH, INC. (and another named in the Schedule)
First Cross-Claimant
AND: SAMSUNG BIOEPIS AU PTY LTD
Cross-Respondent
ORDER MADE BY:
DOWNES J
DATE OF ORDER:
19 SEPTEMBER 2024
THE COURT ORDERS THAT:
1.The application be dismissed.
2.The applicant pay the respondent’s costs of the application to be agreed or, failing agreement, to be taxed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
DOWNES J:
This is an application by the applicant/cross-respondent (Samsung) against the respondent/cross-claimants (Janssen) pursuant to orders made on 28 August 2024 which had the effect of bringing this proceeding to an end and requiring (inter alia) that Janssen pay Samsung’s costs of the proceedings. By reason of paragraph 5 of that Order, Samsung seeks orders that its costs be paid on an indemnity basis, or alternatively on the special basis described by Gyles J in James Hardie International Finance BV v CSR Limited [2007] FCA 366 at [8]. For convenience, I will describe the orders sought as being for indemnity costs, notwithstanding that this is not the precise form of order made in James Hardie.
As this is an application for a costs order, the legal principles are not in dispute and there are no factual issues to be resolved, I do not consider that detailed reasons are required.
For the following reasons, the application will be refused. Costs of the application will follow the event.
Background
This proceeding was commenced by Samsung on 23 January 2024 seeking revocation of two certified innovation patents: Australian innovation patent nos. 2023100041 and 2023100042 (the old innovation patents). By its Particulars of Invalidity filed on that date, Samsung cited certain prior art in order to allege lack of novelty and lack of innovative step. Also on that date, Samsung’s solicitors wrote to the Registrar (without prior notice to Janssen) seeking expedition of the proceeding.
On 13 February 2024, Janssen notified Samsung that it would be filing applications for further innovation patents which would not include any of the end points referred to in the prior art cited by Samsung. These patents are Australian innovation patent nos. 2024100006, 2024100007 and 2024100016 (together, the new innovation patents). Janssen indicated that it would request that the new innovation patents be examined and certified on an expedited basis and proposed that the most efficient way to resolve the wider issues in dispute between the parties was to incorporate the new innovation patents into this proceeding.
Over the course of February and March 2024, Janssen provided notice and copies of the new innovation patents as filed and continued to seek Samsung’s consent to incorporate the new innovation patents into this proceeding. However, Samsung did not agree to the incorporation of the new innovation patents into this proceeding. The parties are at odds about whether that could be done prior to certification, being an issue which is unnecessary to resolve. That is because the proposal by Janssen to incorporate the new innovation patents into this proceeding is not conduct which supports the making of an indemnity costs order against it and (at best for Samsung) is a neutral factor.
In a letter dated 21 March 2024, Janssen’s solicitors noted that if the Court was minded to set the proceeding down for final hearing in late 2024, Janssen would not oppose such a course but reserved its rights in respect of any other patents that are not part of the proceeding that may proceed to certification.
A case management hearing was conducted by Nicholas J on 22 March 2024. At that case management hearing, senior counsel appearing for Janssen reserved Janssen’s position in relation to commencing new proceedings in respect of the new innovation patents. Nicholas J provisionally listed the matter for hearing to commence on 18 November 2024 with the caveat that he would consider changing the trial date if and when the new innovation patents were asserted and any application to amend the pleadings was made.
The new innovation patents were certified on 9 August 2024 and, instead of seeking to amend the pleadings in this proceeding, Janssen commenced separate proceedings in relation to those patents on 16 August 2024 (as it foreshadowed that it would do in March 2024).
On 28 August 2024, I made the orders referred to above.
Consideration
For the following reasons, I decline to order costs on either of the two bases as sought by Samsung. In short, there is no special or unusual feature which would justify such an order.
Samsung filed these proceedings without notice to Janssen and then immediately sought to expedite them to trial. Notwithstanding its awareness that Janssen had filed applications for the new innovation patents, Samsung pressed for the matter to be listed for trial in November 2024 knowing that there was at least a prospect that Janssen would seek to amend its pleadings to include the new innovation patents in this proceeding and that the trial had only been provisionally listed but could be deferred if that occurred. For this reason, Samsung’s complaint that significant time and expense has been accrued in conducting the litigation on an expedited basis does not support an award of indemnity costs.
Samsung complains that Janssen has failed to provide a proper explanation for its decision to surrender the old innovation patents, including the timing of that decision. In effect, it invites me to draw an inference that Janssen appreciated at an early stage that its case in this proceeding was without merit. I decline to draw that inference because an equally available inference is that Janssen filed the applications for the new innovation patents as a safeguard against the prospect of loss in relation to the old innovation patents, and to shore up its position generally.
Further, the correspondence from Janssen’s solicitors earlier this year indicated that Janssen wished to prosecute both the old and new innovation patents in this proceeding, which suggests that the decision to surrender the old innovation patents is a more recent event. In these circumstances, I am not prepared to infer that Janssen prolonged this proceeding when it knew that it would lose or that it persisted with a hopeless or unmeritorious case in relation to the old innovation patents in a manner which would justify an award of indemnity costs.
Samsung relies upon James Hardie to support its claim for a special costs order of the kind ordered in that case. However, that decision did not involve the same facts as this one. In particular, there was no “persistent failure to comply with the orders of the Court or file evidence”.
Samsung complains that Janssen did not suggest that it would seek to rely on the new innovation patents instead of the old innovation patents. It submits that had it done so at an earlier time “things would have been different, and the parties may have been able to resolve this proceeding much earlier”. However, I am unable to infer from the evidence that Janssen always intended to abandon the old innovation patents such that it bore an obligation to disclose that fact to Samsung at an earlier time than it did. Indeed, it is an equally available inference that Janssen took the approach of awaiting certification of the new innovation patents (and thus seeing them in their final form) before deciding to surrender the old innovation patents. That Janssen has decided to take a different approach to that which it indicated that it would take earlier this year does not justify an award of indemnity costs.
Finally, if Janssen had not surrendered the old innovation patents and agreed to orders which had the effect of bringing this proceeding to an end, the counterfactual is that this proceeding would have proceeded to trial in November 2024. Had Samsung succeeded at that trial, it would have been entitled to costs on the standard basis, and there would have continued to be a dispute between the parties relating to the new innovation patents. Such a course would have been undesirable for obvious reasons. Thus, Janssen’s approach in surrendering the old innovation patents and consenting to the discontinuance of this proceeding has assisted both parties to reduce their legal costs and to narrow the issues to be resolved in the wider inter partes dispute. This provides a strong reason to refuse indemnity costs.
Disposition
The application will be dismissed and Samsung will be ordered to pay Janssen’s costs in respect of the application.
I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Downes. Associate:
Dated: 19 September 2024
SCHEDULE OF PARTIES
NSD 65 of 2024 Cross-Claimants
Second Cross-Claimant:
JANSSEN-CILAG PTY LTD
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