Lucas v Peterson Portable Sawing System Ltd (in liq) HC Auckland CIV 2001-404-3668
[2007] NZHC 1673
•27 February 2007
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2001-404-3668
BETWEEN REX CAMERON LUCAS First Plaintiff
ANDPETERSON PORTABLE SAWING SYSTEM LTD (IN LIQUIDATION) First Defendant
ANDCARL JAMES PETERSON Second Defendant
Hearing: 5 February 2007
Appearances: J G Miles QC for Plaintiffs
C L Elliott for First Defendant
Second Defendant in person
Judgment: 27 February 2007
JUDGMENT OF KEANE J
This judgment was delivered by Justice Keane on 27 February 2007 at 4pm pursuant to Rule540(4) of the High Court Rules.
Registrar/ Deputy Registrar
Date:
Solicitors:
Simpson Grierson, Auckland for Plaintiffs
Gaze Burt, Auckland for First Defendant
Copy to:
C J Peterson, 390 Clayton Road, Rotorua
LUCAS V PETERSON AND ANOR HC AK CIV 2001-404-3668 27 February 2007
[1] On 30 March 2006 the defendants, PPSSL and Carl Peterson, succeeded in the Supreme Court in having declared invalid for lack of novelty and on the ground of obviousness, one claim, claim 7 in what has become known as the Lucas Patent. The Supreme Court remitted the case back to this Court to decide all remaining issues; and having awarded the defendants costs on their appeal and reversed in their favour the Court of Appeal award, left it to this Court to decide what costs they should now be entitled to at first instance. I am to decide that under HCR 48F, instead of Fisher J who has retired.
[2] The defendants seek an award reversing that made against them by Fisher J, when they failed before him to establish the invalidity of claim 7. PPSSL is prepared to see the reversed award reduced by 20 percent. Mr Peterson, who was represented by counsel for PPSSL until late in the hearing, when he withdrew his instructions, does not make that concession. He seeks a full reversal of the award and half awarded to him in effect as damages. The plaintiffs resist any award. Costs they say should lie where they fall. But if any award is made, it ought, they say, relying on HCR 48D(d), to be a fraction of that awarded to them by Fisher J, one- sixth at most. The defendants, they contend, succeeded on the appeal on two only of the issues decided against them by Fisher J, and that apart there are still issues as to the validity of the patent that are unresolved.
[3] The award to which the defendants are entitled is to be decided, I consider, on ordinary costs principles, uncomplicated by s 71 of the Patents Act to which PPSSL’s counsel referred in passing. Section 71, which states the rights to relief of a patentee, whose patent is partly valid and partly invalid, as the plaintiffs say cannot apply. The validity of claims 8 – 19 is still at large. The plaintiffs do not rely on s 71 and the defendants gain no benefit from it either. What must count finally is why Fisher J made the award that he did and how completely his reasons translate to any award now in favour of the defendants. It is not for me under HCR 48F to attempt a complete reappraisal.
[4] Mr Peterson’s entitlement to costs is an issue of an entirely different kind. The award in this Court, made against both defendants, has now to be reversed.
Does Mr Peterson, a late lay litigant, have any right to share in the award? Lay litigants are only entitled to costs in the most exceptional case. In assessing that, I should be clear, I cannot take into account that Mr Peterson has, since the hearing as to costs, applied for orders revoking claims 7 – 19 (so determining any issue of infringement) and ending the interim injunction, in place well before the hearing before Fisher J, that restrains the defendants still from manufacturing or selling the Peterson sawmill. That application, which I referred to counsel for the plaintiffs and PPSSL, and in respect of which I have received one reply, will have to be set down and determined separately.
Decision and award
[5] In his decision, Lucas v Peterson Portable Sawing Systems Ltd [2003] 3
NZLR 361, Fisher J held that the defendants had both infringed claim 7 of the Lucas patent. He dismissed their counterclaim for a declaration that claim 7 was invalid and PPSSL’s counterclaim for a like declaration as to claims 8 – 19. Leaving in place the interim injunction restraining the defendants from infringing the patent by manufacturing the Peterson sawmill, which still continues, he remitted for submissions on the evidence (i) the challenge to the validity of claims 8 – 19 by Mr Peterson, (ii) what remedies should be given for the infringement of claim 7, (iii) reciprocal claims for damages in respect of unjustified threats, and (iv) as he then put it, ‘resolution of all questions of costs down to and including the next hearing’.
[6] On 3 July 2003 Fisher J deferred issues (i) – (ii) and dealt with issues (iii) – (iv). He granted an injunction to restrain PPSSL and Mr Peterson from unjustifiably threatening an action for patent infringement against those potentially interested in purchasing the Lucas product. He decided costs.
[7] Fisher J accepted that the case warranted an award of costs in category 3B, as Rodney Hansen J had decided in 2001, but decided instead to increase that to category 3C because, as he held, ‘the defence has been responsible for continuing procedural difficulties’. He awarded the plaintiffs $137,935 costs and $60,862.72 disbursements and witnesses expenses, in total $198,797.72; a sum that has never been paid. In making that award Fisher J was not deterred by the fact that Mr
Peterson’s challenge to the validity of claims 8 – 19 had still to be decided. He directed that the costs he had awarded be paid before any hearing as to the merit of that challenge. As he said at para [21]:
There does remain the question of the validity of claims 8 – 19 as between the plaintiffs and the second defendant. However, the costs that I have just ordered are intended to relate to matters down to the present date and do not seem to me to be affected by any determination as to claims 8 – 19 which will be addressed on its own merits with its own costs consequences at some time in the future.
Quite what this statement implies is one way of expressing, though elliptically, the issue I am asked to resolve.
Stance of Lucas interests
[8] The award Fisher J made against the defendants, it is contended for the plaintiffs, Rex Lucas and G W Lucas and Sons Proprietary Limited, cannot just be reversed. The defendants, they say, may have succeeded in having claim 7 ruled invalid for lack of novelty and for obviousness. The dimensions of the case before Fisher J went much wider and that is reflected, if implicitly, in his award.
[9] The hearing, the plaintiffs contend, was never confined to claim 7. Claims 8
– 19 were also challenged. The challenge narrowed to claim 7 only once the evidence was complete. Moreover, the attack on the validity of the patent was not confined to novelty and obviousness. It was mounted also on the grounds of ambiguity, insufficiency, and a lack of fair basis for the claim. The evidence given by each side, the plaintiffs contend, was correspondingly wide, extending to all claims and from every perspective.
[10] Not one of the defendants’ challenges, the plaintiffs point out, was sustained by Fisher J or in the Court of Appeal; and that Court only allowed the lack of novelty and obviousness challenges to go to the Supreme Court. There were other issues relating to infringement and groundless threats. Only one-sixth of the evidence, the plaintiffs say, went to the issues on which the defendants succeeded. The fact that
they succeeded only to the extent they did indicates how finely balanced the ultimate decision was.
[11] It would be unjust, the plaintiffs say in short, to award any costs to the defendants. The costs Fisher J awarded to them, they say, cannot be taken as a guide. He made that award because they had succeeded completely and his decision remains undisturbed except as to two issues. A fair result in this Court would be that each bear their own costs, or if not that, that the defendants receive no more than one-sixth of the original award.
Issues in this Court
[12] This submission has, however, to be assessed against Fisher J’s decision in this Court founding the award he ultimately made. And it is no accident that Gault J began the judgment in the Supreme Court presuming that the key to the resolution of the dispute lay in whether claim 7 was invalid on the grounds of lack of novelty and obviousness. It is that insight, it seems to me, that informs Fisher J’s judgment.
[13] The primary issue he had to decide must always have been the validity of claim 7. The plaintiffs had never claimed that the defendants had infringed claims 1
– 6, a discrete group each in some way a variant of the first. Their validity was never in issue. The plaintiffs’ claim was that the defendants had infringed claims 7 – 19, a second discrete group most generally defined in claim 7, on which claims 8 – 19 were dependent. Whether there had been any infringement, therefore, depended principally if not exclusively on whether claim 7 was valid. Claims 8 – 19 could be and were deferred to another day.
[14] The defendants, it is true, subjected the validity of claim 7 to a sustained enfilade, completely unsuccessfully before Fisher J, and that must have informed the award he made. But in order to rule on any of five the challenges on which infringement was conceded necessarily to hinge, particularly those most broadly based, the two on which the defendants succeeded in the Supreme Court, Fisher J had to set out at length the background of facts. He had to identify the principles for interpreting a specification and to make his own analysis of the Lucas patent, dealing
in passing with the first of the challenges, ambiguity, simply to know what the specification meant. Only then was he equipped to rule on the four challenges constituting the central elements of the attack.
[15] Two of those challenges, that claim 7 was insufficient and was not fairly based, were highly particular and Fisher J swiftly disposed of them. The two remaining challenges, on which the defendants succeeded in the Supreme Court, called for much closer analysis. Fisher J’s ruling on the lack of novelty challenge, in which he had to compare the Lucas specification and four designs said to anticipate it, may appear succinct. But that is only because he had already narrated in some detail earlier how the Lucas design had evolved relative to one or more of the others. His ruling on the challenge for obviousness, by contrast, had to be and was much more extensive.
[16] I accept, therefore, the defendants’ argument that in those two challenges, in which it succeeded in the Supreme Court, lay, as Gault J then remarked, the weight of the case; and that an award related to but discounted from that made by Fisher J is called for. I will come to that in a moment. I need first to speak about Mr Peterson’s entitlement.
Peterson claim
[17] Mr Peterson looks for a complete reversal of the award in 2003. The Supreme Court decision was enough, he contends, to invalidate the entire specification and dispose of any question of infringement. He claims the right to share equally in any costs awarded because, as a co-defendant, he was forced to place all his resources behind the PPSSL defence. He went without salary or wages for two years. He used up his personal line of credit and was left in significant debt.
[18] Mr Peterson’s claim for costs faces this formidable difficulty, that in New Zealand a lay litigant is not entitled, except perhaps rarely, to recover costs, though disbursements may be allowed. Affirming that rule, the Court of Appeal in Re Collier (A bankrupt) [1996] 2 NZLR 438 remarked at 441:
There are obvious difficulties in a policy that would allow a lay litigant to be paid for his time and trouble not least the basis on which such expenses should be calculated but there may arise cases where such course is justifiable remembering always that the present rule is a rule of practice and not a rule of law.
The only category of case in which the Court thought an award might conceivably be justified cannot, however, assist Mr Peterson. It is where a lay litigant without seeking personal advantage, seeks to advance the welfare of the public. Mr Peterson’s interest in this case, and I say this in no sense pejoratively, could not be more directly personal.
[19] A second reason why Mr Peterson cannot have costs in this Court is that until relatively late in the hearing his case and that of PPSSL, in which he had until then held I understand a controlling interest, were advanced as one. It was only late in the hearing, I understand, that he withdrew his instructions from counsel, whom they had until then shared, who continued to conduct the case for PPSSL. His claim, if he did have one, would be negligible.
[20] In this I do not overlook the personal cost to Mr Peterson of sustaining PPSSL, and himself, in each phase of the case. That cost has been obviously considerable and in every sense. It cannot, however, qualify Mr Peterson for costs on ordinary principles. What he seeks is in the nature of damages, and whether he has any basis for such a claim against the plaintiffs lies beyond the scope of this present issue as to costs.
Award
[21] PPSSL cannot be given, as it accepts itself, the full award made by Fisher J, which he set at category 3C because of the way in which it had conducted its case. The highest category at which PPSSL might have a right to costs is category 3B, as originally envisaged when the case was set down, and PPSSL has itself accepted that the original award might be reduced by 20 percent. I do not know which would result in the lesser amount of costs but, whichever it is, that I consider is what PPSSL is entitled to. I award PPSSL costs either in category 3B or fixed at 20
percent less than those awarded by Fisher J, whichever is the lesser, and
disbursements as fixed by the Registrar.
Keane J
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