Winner, J.E. v Morey Haigh & Associates (A'asia) Pty Ltd

[1995] FCA 43

CATCHWORDS

COSTS - patent infringement proceedings - patent revoked in other proceedings - proceedings dismissed by consent - application for payment of costs on indemnity basis.

Colgate Palmolive v Cussons Pty Ltd (1993) 46 FCR 225; 118 ALR 263

JAMES EARL WINNER and ANOR v MOREY HAIGH & ASSOCIATES (A'ASIA) PTY LIMITED

No. NG 619 of 1991
No. NG 848 of 1991

Coram:           Whitlam J

Place:Sydney

Date:              14 February 1995

IN THE FEDERAL COURT OF AUSTRALIA                  )
  )
NEW SOUTH WALES DISTRICT REGISTRY                 )          NG 619 of 1991
  )
GENERAL DIVISION  )

JAMES EARL WINNER

First Applicant

DONNA C WINNER

Second Respondent

MOREY HAIGH & ASSOCIATES (A'ASIA) PTY LIMITED

Respondent

Coram:Whitlam J

Place:Sydney

Date:14 February 1995

MINUTE OF ORDER

THE COURT ORDERS THAT:

1. The applicants pay half of the respondent's costs of the proceeding (including the cross-claim) up to 24 May 1994.

1. The said costs be taxed on a party and party basis.

1. The respondent pay the applicants' costs of the hearing of the notice of motion filed on 9 May 1994.

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

IN THE FEDERAL COURT OF AUSTRALIA                  )
  )
NEW SOUTH WALES DISTRICT REGISTRY                 )          NG 848 of 1991
  )
GENERAL DIVISION  )

JAMES EARL WINNER

First Applicant

DONNA C WINNER

Second Respondent

MOREY HAIGH & ASSOCIATES (A'ASIA) PTY LIMITED

Respondent

Coram:Whitlam J

Place:Sydney

Date:14 February 1995

MINUTE OF ORDER

THE COURT ORDERS THAT:

1. The respondent's costs ordered to be paid on 24 May 1994 be taxed on a party and party basis.

1. The respondent pay the applicants' costs of the notice of motion filed 9 May 1994.

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

IN THE FEDERAL COURT OF AUSTRALIA                  )
  )
NEW SOUTH WALES DISTRICT REGISTRY                 )          NG 619 of 1991
  )          NG 848 of 1991
GENERAL DIVISION  )

JAMES EARL WINNER

First Applicant

DONNA C WINNER
  Second Applicant

MOREY HAIGH & ASSOCIATES (A'ASIA) PTY LIMITED

Respondent

Coram:           Whitlam J
Place:              Sydney
Date:              14 February 1995

REASONS FOR JUDGMENT

By a notice of motion filed on 9 May 1994 in each of these matters the respondent seeks an order that costs to which it is entitled be paid "on a Solicitor/Client or indemnity basis".  The notices of motion have been heard together.

Both proceedings involved anti-theft devices designed to be attached to the steering wheel of a motor vehicle.  In matter no. NG 619 of 1991 the applicants alleged that the respondent infringed patent nos 561885 and 599863 and sought, inter alia, to restrain the sale by the respondent of a product under the brand name "Ezi-Lock".   In matter no. NG 848 of 1991, where the applicants alleged only infringement of patent no.

599863, they sought relief in respect of the sale by the respondent of a product under the brand name "Minder".  In each matter the respondent cross-claimed for the revocation of the patents.
           On 30 June 1992 Sheppard J fixed the matters for hearing together on            2 November 1992.  That hearing date was vacated in September 1992 on the application of the parties in order to await the determination of an appeal against an order in proceedings between the applicants and another party.  In Winner v Ammar Holdings Pty Ltd (1992) 24 IPR 137 Heerey J had made a declaration that patent no. 599863 was invalid and had ordered that it be wholly revoked. That decision was affirmed in Winner v Ammar Holdings Pty Ltd (1993) 41 FCR 205, and the High Court refused special leave to appeal on 17 September 1993 (n. 179 CLR 688).

By consent, I have now made orders dismissing matter no. NG 848 of 1991 generally and matter no. NG 619 of 1991 so far as it concerns any infringement of patent no. 599863.  The applicants will, however, agree only to the usual order for costs.

The ordinary rule is that where the Court orders the costs of one party to be paid by another, they should be taxed on a party and party basis.  The Court ought not usually make an order for the payment of costs on some other basis unless the circumstances of the case warrant departure from that course.  The award of costs on an indemnity basis was discussed by Sheppard J in Colgate Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225; 116 ALR 248. His Honour distilled (at 232-234; 256-257) six principles or guidelines from the authorities.

Counsel for the respondent does not seek to align his client's circumstances with any of those specifically instanced by Sheppard J.  The particular facts upon which he relies are the undertaking given by the respondent and the compliance with the directions of the Court.  This requires a brief examination of the course of events at the directions hearings.

The initial directions hearing in matter no. NG 619 of 1991 took place on        7 November 1991.  Although the application filed on 4 October 1991 contained no distinct claim for interlocutory relief, the applicants' solicitors had written to the respondent's solicitor foreshadowing such a claim.  After correspondence between the solicitors, the matter was dealt with by consent on 7 November 1991, when short minutes were handed up containing a timetable of the usual sort preceded by the following paragraph:

"1.Note the respondent's undertaking given to the Court by its solicitor and without admissions that it will, pending the determination of the proceedings or further order, keep a full and accurate account of all sales of the product known the [sic] EZI-LOCK."

The application in matter no. NG 848 of 1991 was filed on 24 December 1991.  It also contained no distinct claim for interlocutory relief, although the applicants' solicitors had previously demanded "written interim undertakings".  The respondent's solicitor had acknowledged this letter by suggesting that there was "little point in instituting proceedings" since the validity of patent no. 599863 was already under challenge in matter no. NG 619 of 1991 and in yet earlier proceedings started by the applicants against a different person.
           Nonetheless, at the initial directions hearing in matter no. NG 848 of 1991 on    6 February 1992, the short minutes containing the orders made by consent included in paragraph 1 an undertaking in respect of the "Minder" product to the same effect as that given on 7 November 1991.  Orders were also made by consent on this occasion in matter no. NG 619 of 1991.

Further directions hearings in both matters were heard together on 10 April 1992 and 29 May 1992.  On each occasion adjustments were made to the timetable by consent.   As I have said, on 30 June 1992 the matter was fixed for hearing.

Counsel for the respondent placed "some emphasis" on the fact that, had the Court granted interlocutory relief to the applicants, they would have been obliged to give the usual undertaking as to damages.  That may be so, but I am not sure where that submission leads.  The fact is that in each matter at the first directions hearing the respondent gave an undertaking, although it had not obtained a cross-undertaking as to damages from the applicants.  This may or may not have been an oversight on the part of the respondent, but it will not warrant the making of an order such as the respondent seeks here.  Indeed, even so far as such damages are concerned, counsel conceded that the keeping of accounts "was not the problem".

The essence of the respondent's case on costs is the proposition that it was put to unnecessary expense preparing expert evidence in both cases after it had proposed that at least matter no. NG 824 of 1991 should be held in abeyance whilst the other matter proceeded as a test case.  The insuperable difficulty with this submission is that
the directions as to affidavits were all made by consent.  Had the respondent wished to press for any of the matters to remain dormant pending the outcome of other proceedings, then it should have raised the suggestion at a directions hearing.  It did not do so.  In the circumstances, the respondent cannot be heard to complain now that compliance with directions made by consent permits a patentee to "terrorise" alleged infringers of its rights.

Counsel for the respondent submitted that allegations of patent infringement were analogous to allegations of fraud.  This was a novel submission for which, not surprisingly perhaps, no authority was cited.  He also contended that the proceedings had been instituted to gain a competitive commercial advantage, although he conceded that the respondent was not able to prove such a contention in an "evidentiary" sense.  The proceedings had, he said, been commenced for a collateral advantage.  Counsel for the applicants submitted, correctly in my view, that there was no evidence whatsoever of collateral purpose or abuse of process.  It was, he submitted, a routine patent infringement case.

In the Colgate Palmolive case Sheppard J dealt with submissions that a case had been "hopeless", presented for commercial advantage and conducted for reasons other than a genuine belief in the validity of the patent or in its infringement.  His Honour had of course, already made an order revoking the patent in question.  However, on this aspect of the costs argument, his Honour said (ALR at 262):

"I think that what [these submissions] overlook is the fact that the first applicant was the registered proprietor and the second applicant the licensee in respect of letters patent which had been granted [to] the first applicant in Australia.  It is difficult in those circumstances to suggest that proceedings brought for the infringement of such letters patent and opposition to an application for the revocation of such a patent have been undertaken for ulterior motives, in particular the confinement or restriction of the respondent in selling a product which the applicants had some ground for thinking was an infringement of their letters patent."

Similar considerations apply here, in my opinion, in relation to the submissions made by the respondent as to the applicants' supposed commercial advantage and alleged collateral purpose.

I am not persuaded that there is any reason to depart from the usual order for costs on a party and party basis.  I shall make orders accordingly, and the respondent must pay the applicants' costs of the notice of motion.

I certify that this and the preceding seven pages is a  true copy of the reasons for judgment herein of the Hon. Justice A.P. Whitlam

Associate:

Date:    14 February 1995

Counsel for the applicants:  DK Catterns QC

Solicitors for the applicants:   Williams Niblett

Counsel for the respondent:  BJ Hess

Solicitor for the respondent:  Alfred Tatlock

Date of hearing:  24 May 1994