Townsend Controls Pty Ltd v Gilead

In the case of Townsend Controls Pty Ltd v Gilead, the respondents sought security for costs against the cross-claimants in a dispute concerning the infringement of a patent. The Federal Court was tasked with determining the appropriate amount of security for costs and whether the cross-claimants, who were patent holders and residents outside Australia, were the party attacking within the meaning of Federal Court Rules Order 28, rule 3(1)(a). The principal action was initiated under the Patents Act 1990, section 121, due to a threat of proceedings for patent infringement. The cross-claimants brought a cross-claim for damages for infringement, raising questions about the policy behind section 121 of the Patents Act.

The court examined whether the cross-claimants could be considered the party attacking for the purposes of requiring security for costs. The primary focus was on the interpretation of "applicant" in Federal Court Rules Order 28, rule 3(1)(a), and whether this term encompassed the cross-claimants in their role as patent holders. The court considered the policy behind section 121 of the Patents Act, which is designed to provide a remedy for those who have been threatened with patent infringement proceedings. The court held that the cross-claimants were indeed in substance the party attacking and, therefore, required to provide security for costs. The court ordered the cross-claimants to provide security for costs in the amount of $15,000, to cover the proceedings up until 31 July 1989. The form of security was to be agreed upon by the parties' solicitors or, if no agreement was reached, in a form acceptable to the District Registrar. The court also granted the respondents the liberty to apply for further security for costs in respect of proceedings on and after 1 August 1989, subject to the respondents filing and serving their defence and cross-claim for revocation. The cross-claim was to be stayed until the required security was provided. The costs of the present motion were to be considered costs in the substantive proceedings, with liberty to apply for further orders as necessary.

This decision underscores the importance of understanding the implications of seeking security for costs in patent infringement cases, particularly when cross-claimants are involved. The court's ruling emphasised the need to align with the policy behind section 121 of the Patents Act, which aims to protect those threatened with patent infringement proceedings. The court's decision provided clarity on the application of Federal Court Rules Order 28, rule 3(1)(a), and its implications for parties bringing cross-claims in patent disputes.