Cantarella Bros Pty Ltd v Lavazza Australia Pty Ltd

Federal Court of Australia|2024-04-26|Before: Yates J

The applicant pay 50% of the respondents' costs of and relating to the proceeding on a party and party basis.
In the absence of agreement on the amount of the costs to be paid pursuant to Order 1, the questions of whether costs should be paid on a lump sum basis and, if so, the amount of those costs, be referred to a Registrar of the Court, acting as a referee, for inquiry and report under s 54A of the Federal Court of Australia Act 1976 (Cth).
Orders 1 and 2 be stayed pending the determination of the appeal in proceeding NSD 1549 of 2023. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Introduction 1 These reasons concern a disputed question of costs following the delivery of judgment in Cantarella Bros Pty Ltd v Lavazza Australia Pty Ltd (No 3) [2023] FCA 1258 (Cantarella No 3). They assume familiarity with Cantarella No 3 and the abbreviations used therein. 2 The case on trade mark infringement which was brought by Cantarella against Lavazza did not succeed. This was because the registrations of the marks on which Cantarella sued were not valid. The sole ground on which Lavazza succeeded in that regard was that Cantarella was not, in law, the owner of the ORO word mark. 3 As the successful party, Lavazza seeks an order that Cantarella pay its costs of the proceeding from its commencement (23 August 2019) until 8 July 2021 or, alternatively, until 23 September 2021 on a party and party basis, and thereafter (i.e., from 9 July 2021 or, alternatively, from 24 September 2021), until the delivery of judgment, on an indemnity basis. 4 The significance of 9 July 2021 is that this is the date on which the Court ordered Cantarella to file and serve its further amended defence to cross-claim: see orders made on 24 June 2021. Lavazza contends that this is the date from which it should have been apparent to Cantarella that it should not continue to prosecute its case for trade mark infringement. The significance of 24 September 2021 is that this is the date on which a Calderbank offer made by Lavazza - which Cantarella did not accept - expired. 5 Cantarella accepts that an order for costs on a party and party basis should be made in Lavazza's favour. It contends, however, that the order should be that it pay 30% of Lavazza's costs of and relating to the proceeding. It contends that a significant discount of 70% should be applied to Lavazza's costs because of Lavazza's "failed, but resource-heavy cross-claims and defences". 6 Further, Cantarella contends that the order for costs should be stayed pending the determination of the appeal that Cantarella has commenced from the judgment that has been given against it: Cantarella Bros Pty Ltd v Lavazza Australia Pty Ltd NSD 1549 of 2023. There is no dispute between the parties that a stay is appropriate.

Cantarella's first use of the ORO word mark 7 From the time that Lavazza filed its cross-claim, a critical issue in the proceeding was the date of Cantarella's first use of the ORO word mark in Australia in relation to coffee. It was always Cantarella's onus to establish that date by admissible evidence. 8 In the Modena proceeding, the primary judge (Emmett J) found that Cantarella had first used the ORO word mark in Australia in relation to coffee in approximately 1996, apparently based on evidence given on behalf of Cantarella in that proceeding. It seems that the evidence before his Honour was no more specific than that. His Honour also found that Molinari began exporting coffee products to Australia "in about July 1996" and that these products were distributed by CMS "from July 1996". These findings were based on evidence provided in the Modena proceeding by Mr Giuseppe Molinari in an affidavit made on 13 September 2011 (Mr Molinari's affidavit). 9 The question of Cantarella's ownership of the 098 mark was not in issue in the Modena proceeding and, unlike the present proceeding, the date of Cantarella's first use in Australia of the ORO word mark in relation to coffee was not a critical fact. 10 However, importantly, on appeal, the Full Court found that the registration of the 098 mark was invalid because the ORO word mark was not inherently adapted to distinguish Cantarella's goods from the goods of other persons. As I recorded in Cantarella No 3 at [284], on the day that judgment was given by the Full Court, Cantarella filed its application for the 290 mark. 11 The application to register the 290 mark was an expedient to overcome its (then) loss of the 098 mark. This application was supported by a statutory declaration made by Anthony Satti who was described in the declaration as Cantarella's "In-house Legal Counsel". In his declaration, Mr Satti said: 9. Cantarella commenced using the trade mark ORO in Australia in approximately June 1996 on coffee products. Cantarella continues to sell and promote coffee products under the ORO trade mark. 12 Mr Satti's statement about the date of Cantarella's first use of the ORO word mark in Australia in relation to coffee was not supported by other evidence. It was simply an asserted fact. Mr Satti did not identify the source of his information; nor did he declare that he had personal knowledge of the asserted fact. 13 In the present case, Cantarella initially alleged that it had used the ORO word mark "since at least June 1996". The clear suggestion in Lavazza's submissions on costs is that this date was chosen because of the evidence in the Modena proceeding of Molinari's first use in Australia of the ORO word mark. After some attempts during the first week of the hearing to prove that it had used the ORO word mark in Australia in June 1996, Cantarella finally adduced business records to prove that it had used the ORO word mark in Australia in relation to coffee "from at least 20 August 1996". These records, taken with still later adduced evidence, established, to my satisfaction, that, in fact, Cantarella first used the ORO word mark in Australia in relation to coffee on 20 August 1996: Cantarella No 3 at [537].

The Calderbank offer 14 Lavazza's Calderbank offer was made in a letter from Lavazza's solicitors dated 9 September 2021. The offer was open for acceptance until 23 September 2021. The letter advocated, in some detail, the strength of Lavazza's position, as it saw it to be. 15 In this regard, Lavazza disputed that it had used the ORO word mark alone in relation to coffee. It argued that, in any event, it could call upon the defences in ss 124, 122(1)(b)(i), 122(1)(e), 122(1)(f), and 122(1)(fa) of the Act. 16 Lavazza also argued that Cantarella's registrations were not valid. Its "primary case" was that the ORO word mark was not inherently adapted to distinguish Cantarella's coffee because it had been, and continued to be, "so commonly used by many other traders in coffee". Its "alternative case" was that Cantarella was not the first user of the ORO word mark in Australia in relation to coffee and not, therefore, entitled to registration of that word as a trade mark in relation to those goods. In this latter regard, Lavazza relied on its own use of the ORO word mark, and also on Molinari's use of the mark based on the Molinari affidavits. These affidavits were to the effect that, contrary to Mr Molinari's affidavit that had been deployed in the Modena proceeding, Molinari had, in fact, supplied coffee to Australia using the ORO word mark as early as September 1995. 17 The Calderbank offer is sufficiently captured in the following passage from the letter: Lavazza is prepared to pursue the relief set out in its cross-claim and will seek an order to recover its costs of doing so. However, Lavazza would prefer, if possible, to reach a commercial settlement of the proceedings which is satisfactory to the parties. Notably, Lavazza is prepared to settle on a basis that would, subject to certain protections of Lavazza, Molinari and Caffè Trombetta, allow Cantarella's 2000 and 2013 ORO Registrations to remain on the Register, which Lavazza imagines is of considerable commercial attraction to Cantarella. On that basis and for purely commercial reasons, we have been instructed to make an offer of settlement on the following terms: 1 Cantarella releases Lavazza and its employees, contractors, agents and customers, jointly and severally from all actions, proceedings, claims, demands, liabilities, costs and expenses, wherever and however arising, known or unknown, out of, or relating to, its use of the word ORO in relation to coffee. 2 Cantarella covenants not to bring against Lavazza or its employees, contractors, agents and customers, any actions, proceedings, claims, demands or suits under the Trade Marks Act relating to its use of any packaging or promotional materials relating to coffee and bearing the word ORO. 3 Lavazza will not oppose, challenge or object, or provide assistance to any third parties to challenge, Cantarella's Australian registered trade mark nos 829098 and 1583290 for ORO, save insofar as it may be compelled to respond to compulsory court processes. 4 Cantarella will consent to registration of the following trade mark applications (the Lavazza Marks) by taking such reasonable steps as it can, including providing letters of consent to the Registrar of Trade Marks in the forms attached, and will not oppose, challenge or object, or assist any person to challenge, Lavazza's use or registration of the Lavazza Marks: (a) Australian trade mark application no 2027189 for the word mark LAVAZZA QUALITÀ ORO; (b) Australian trade mark application no 2036620 for the figurative mark [image inserted]; (c) Australian trade mark application no 2036632 for the figurative mark [image inserted]; and (d) New Zealand trade mark application no 1129912 for the figurative mark [image inserted]. 5 Cantarella will not oppose, challenge or object to any other applications filed by Lavazza in Australia or New Zealand for any trade marks incorporating the words QUALITÀ ORO in relation to coffee. 6 Cantarella will pay Lavazza the sum of A$1.5 million as a contribution towards Lavazza's legal costs incurred in the proceedings to date (Settlement Payment). 7 The Settlement Payment will be made within 28 days of acceptance of this offer. 8 The parties consent to the Court making orders in the form attached to this correspondence once the Settlement Payment is made. 9 Cantarella covenants with Lavazza, and will covenant also by deeds poll in the forms attached, not to bring against either Molinari or Caffè Trombetta (Australia) Pty Ltd, or their respective employees, contractors, agents and customers, any actions, proceedings, claims, demands or suits under the Trade Marks Act relating to their use of any packaging or promotional materials relating to coffee and bearing the word ORO. 10 The terms of this offer will be immediately binding upon the parties upon acceptance. The parties may agree to record, modify or supplement these terms by entering into a more formal settlement deed but if such a deed is not executed, these terms remain binding and actionable. Whether or not the parties enter into a more formal deed, Cantarella will execute, not later than receipt of the Settlement Payment, the deeds poll referred to in paragraph 9 above. The above offer is made in accordance with the principles enunciated in the decision of Calderbank v Calderbank [1975] 3 All ER 333. The offer will remain open for acceptance until 5.00pm AEST [Thursday] 23 September 2021, and thereafter will be immediately withdrawn. In Lavazza's view, based on the current circumstances, it would be unreasonable for Cantarella to reject this Calderbank offer and continue to pursue its claims. In the event that this offer is not accepted, Lavazza reserves the right to rely on the terms of this offer and this letter in any application for indemnity costs. 18 As I have noted, Cantarella did not accept this offer within the stipulated time. Its solicitors nevertheless responded by a letter dated 28 September 2021 stating that, although the time for acceptance had expired, Cantarella would have rejected the offer in any event.

Lavazza's submissions 19 Lavazza contends that Cantarella knew (or ought to have known) as early as 12 March 2014 (the date on which Mr Satti's declaration was lodged in support of the application to register the 290 mark) that it had not used the ORO word mark in Australia in relation to coffee before 20 August 1996. Lavazza contends that Cantarella "undoubtedly knew" that fact since 4 December 2020 (the last business day before the commencement of the hearing of this proceeding). This is because the business records which Cantarella adduced in evidence in the first week of the hearing recorded that fact. Further, the product code for the coffee that Cantarella supplied under the ORO word mark on 20 August 1996 was only created on 2 August 1996. Cantarella only issues manufacturing and production instructions, and processes customer orders, after a product code is created. Therefore, Cantarella could not have supplied coffee under the ORO word mark in June 1996. 20 Lavazza submits that, armed with its knowledge of Emmett J's findings in the Modena proceeding about Molinari's earlier use of the ORO word mark in Australia in relation to coffee, Cantarella must have appreciated, at least from the commencement of the hearing in December 2020, that its case on infringement against Lavazza was on shaky ground given the vulnerability of the registrations on which it was suing. 21 Moreover, on 19 May 2021, while the proceeding was part-heard (the hearing had commenced in December 2020 but had been adjourned to a later date to deal further with the admissibility of Cantarella's then evidence of first use), Lavazza served the Molinari affidavits that it had been able to obtain to prove that Molinari's first use of the ORO word mark in Australia in relation to coffee was in 1995, not in July 1996 - well before Cantarella's first use on 20 August 1996. 22 Lavazza submits that the Molinari affidavits were considered exhaustively during the interlocutory hearing on 8 June 2021: see Cantarella (No 2) at [28] - [34]. Their significance could not have been lost on Cantarella. Lavazza submits that, nevertheless, Cantarella persisted with its claims against Lavazza without regard to, or in spite of, the "significant deficiencies" in Cantarella's own case on first use. 23 Lavazza also criticises Cantarella for contending, in the face of the Molinari affidavits, that, prior to the dates of the registration of the 098 mark and the 290 mark, Molinari had abandoned its use in Australia of the ORO word mark in relation to coffee. As I remarked in Cantarella No 3 at [589], this contention was plainly inconsistent with Cantarella suing Modena for infringement of the 098 mark in 2011. Lavazza submits that, rather than reflecting, at that time, on its entitlement to proprietorship of the ORO word mark, Cantarella "doubled-down" by launching a "self-contradictory abandonment argument". This, Lavazza submits, is conduct that is sufficient to depart from the ordinary rule that costs are awarded against an unsuccessful litigant on a party and party basis. 24 Lavazza submits that, in determining whether the rejection or non-acceptance of an offer to compromise gives rise to indemnity costs, the key question is whether the offeree's rejection or non-acceptance of the offer was unreasonable in light of the prevailing circumstances. In the present case, Lavazza submits that the crucial factor, at the date the offer was made, was Cantarella's prospects of success in light of the Molinari affidavits which, by then, had been served. 25 Lavazza submits: … Cantarella ought to have known that, as at the date of the Calderbank letter, Lavazza had very good prospects indeed of demonstrating that Cantarella was not the owner of the ORO mark in Australia, along with the very considerable risk that, on the balance, Cantarella's attempts to undermine the Molinari evidence would fail, that the cross-claim would be upheld, the infringement case would fail and the ORO registrations would be susceptible to cancellation. Cantarella ought to have known that, upon those events transpiring, it would have no prospect of ever again asserting its mark against Lavazza or any third party. 26 Lavazza submits that it can readily be inferred that Cantarella would have "highly valued" the retention of its ORO trade mark registrations. 27 Lavazza submits, further, that Cantarella ought to have been aware of the "very real" costs risks it then faced. As Lavazza puts it: … At the time of the offer, the matter had been running for some 18 months and had occupied 5 days of hearings and several additional days for administrative and interlocutory hearings. Lavazza, like Cantarella, had engaged 2 senior and one junior counsel and an experienced intellectual property litigation law firm. Significant time and expenses had been incurred, and were to come. Lavazza compromised its position on costs by seeking only a contribution thereto. Following the rejection of the offer, the matter occupied 3 further hearing days, several further days for administrative listings, an interlocutory hearing, and very significant time in re-ordering the written submissions. The litigation was prolonged from 24 September 2021 by Cantarella's unreasonable decision not to accept the offer. It is appropriate in those circumstances that Lavazza be indemnified.

Cantarella's submissions 28 Cantarella submits that it did not act unreasonably in not accepting Lavazza's offer because that offer included terms that were not commensurate with a possible outcome of the proceeding, making it difficult, if not impossible, to determine the reasonableness of its non-acceptance: Centor Australia Pty Ltd v RMD Industries Pty Ltd (No 2) [2013] FCA 1407 at [9]; Merial Inc v Intervet International BV (No 4) [2017] FCA 223; 124 IPR 1 at [54]; Energy Beverages LLC v Cantarella Bros Pty Ltd (No 2) [2022] FCA 394 at [52] - [56]; Firstmac Limited v Zip Co Limited (No 2) [2023] FCA 1074 at [12]; see also the observations of the Full Court in The Agency Group Australia Ltd v H.A.S. Real Estate Pty Ltd (No 2) [2024] FCAFC 44 at [22] - [24]. 29 In this connection, Cantarella points to the fact that Lavazza's offer included terms that Cantarella would consent to Lavazza's trade mark applications in Australia and New Zealand. It also required Cantarella's agreement not to oppose, challenge, or object to any other trade mark applications filed by Lavazza in Australia or New Zealand incorporating the words QUALITA ORO in relation to coffee. Further, the offer included a demand for a covenant and accompanying deed polls not to sue two non-parties to the proceeding. 30 Cantarella also submits that there is no evidence that it would have been in a substantially better position in relation to costs had it accepted the offer instead of continuing to prosecute the proceeding. At the time of the offer, Lavazza did not provide information to show how its claimed costs were calculated or to reveal the basis on which the costs were claimed. In short, Cantarella submits that the evidence does not reveal that the Calderbank offer contained any real compromise on the question of costs. 31 As to the arguments advanced in the Calderbank offer as to why Cantarella's case was unlikely to succeed, Cantarella points out that the offer "relied heavily" on Lavazza's assumed success on issues on which it ultimately failed. The only issue on which Lavazza succeeded was that Cantarella was not the owner, in Australia, of the ORO word mark in relation to coffee (i.e., Lavazza's "alternative case"). Even then, Lavazza only succeeded based on Molinari's earlier trade mark use of ORO (not Lavazza's earlier claimed use). 32 Cantarella submits that it was not unreasonable for it to challenge Lavazza's case based on Molinari's (then) alleged earlier trade mark use of ORO. 33 First, as to the timing of Molinari's then alleged use, Cantarella submits that the Molinari affidavits were inconsistent with Mr Molinari's affidavit that had been deployed in the Modena proceeding. Cantarella submits that, in those circumstances, it was not unreasonable for it to test the correctness of the evidence that was to be given through the Molinari affidavits by cross-examining the deponents of those affidavits. (I point out that, ultimately, the evidence relied on to establish Molinari's earlier trade mark use of ORO was more than the Molinari affidavits themselves. However, at the time of the Calderbank offer, the Molinari affidavits were the key affidavits involved in this part of Lavazza's case.) 34 Secondly, Cantarella submits that it was not unreasonable for it to challenge whether, in fact, the Molinari affidavits established trade mark use of the word ORO. Cantarella points out that in Cantarella No 3 I found that, before 20 August 1996, Molinari had used the word ORO as a trade mark only in relation to the 3 kg packs of CAFFÈ MOLINARI ORO, not the 1 kg packs on which Lavazza also relied. Cantarella also contends that, in light of certain observations by the majority in the High Court in the Modena proceeding concerning marks including the word ORO that did not constitute trade mark use of that word alone, it was not unreasonable for it to also challenge whether, in fact, the 3 kg packs of CAFFÈ MOLINARI ORO did use ORO (simpliciter) as a trade mark. 35 Next, Cantarella contends that, even if, at the time of the Calderbank offer, it should have proceeded on the basis that the Molinari affidavits would establish, or would be likely to establish, prior trade mark use in Australia of ORO by Molinari in relation to coffee, it was not unreasonable for Cantarella to defend the cross-claim on the basis that the Court should exercise its discretion under s 88(1) of the Act not to cancel Cantarella's registrations.

Finding 36 I am not persuaded that it would be appropriate to make an order for indemnity costs. 37 Although I am satisfied that, as at June 2021, Cantarella was well aware of the significance of the evidence to be adduced through the Molinari affidavits in relation to the question of Cantarella's trade mark ownership, I accept that, in light of Mr Molinari's affidavit in the Modena proceeding, it was not unreasonable for Cantarella to seek to test the correctness of that evidence. The statements in the Molinari affidavits as to the first use by Molinari of the ORO word mark in Australia in relation to coffee were clearly inconsistent with Mr Molinari's evidence that Molinari commenced exporting products to Australia "in or about July 1996". Furthermore, the first invoice that Mr Molinari produced in his evidence was dated 18 September 1996 (i.e., after Cantarella's first use of the ORO word mark as found in Cantarella No 3 at [537]). The date of this invoice certainly qualified the meaning to be given to "in or about July 1996" as used by Mr Molinari. Just as importantly, the first invoice was for 1 kg packs of CAFFÈ MOLINARI ORO which (on my findings) did not use the ORO trade mark. 38 In these circumstances, I do not think that Cantarella is to be criticised for persevering with its case against Lavazza for trade mark infringement from 9 July 2021, it being remembered that, apart from the question of its ownership of the ORO word mark for coffee, Cantarella succeeded on all other issues in the case it had brought. Although I think that Cantarella's contention about Molinari's alleged abandonment of its use of the ORO word mark in Australia was misconceived (Cantarella No 3 at [589]), the fact that Cantarella raised that matter does not lead me to a different conclusion. 39 Further, even if, as at June 2021, one were to accept, without testing, the cogency of the evidence to be given through the Molinari affidavits, this would not inevitably lead the Court to the outcome that Cantarella's registrations of the 098 mark and the 290 mark would be cancelled, given the discretion under s 88(1) of the Act which was available to be exercised in Cantarella's favour. 40 Some aspects of Cantarella's contentions on the question of the exercise of that discretion were not developed in closing submissions. I have in mind, in particular, Cantarella's assertion that it had adopted the ORO word mark honestly and in good faith. Cantarella adduced no evidence of that fact and did not address it in closing submissions beyond making the assertion that it had so adopted the mark. But, in the end, it was not necessary for me to make a finding - and I did not make a finding - on that matter. This is because, for other reasons, I was not persuaded that the registrations should not be cancelled. 41 The point of present significance is that, even though Cantarella failed to persuade me to exercise the discretion in its favour, it does not follow that it was unreasonable for it to attempt to defend the cross-claim on that basis. 42 Further, I am not persuaded that Cantarella's non-acceptance of Lavazza's Calderbank offer is a separate reason for awarding indemnity costs against it. The offer required Cantarella to accept a number of terms that were not reflected in any relief that Lavazza could possibly obtain in the proceeding. A party to litigation should not be visited with indemnity costs simply because it is not prepared to accede to settlement terms which seek to secure a collateral commercial benefit for the offeror which is extraneous to the litigation itself. This is even more so when the terms that are offered also seek to secure commercial benefits for others who are strangers to the litigation. And, as I have already found, it was not unreasonable, in the circumstances, for Cantarella to persevere with its case against Lavazza. Given this conclusion, it is not necessary for me to address Cantarella's submission about whether the costs component of the Calderbank offer represented a real compromise.

Lavazza's submissions 43 Lavazza submits that the finding that Cantarella was not, in law, the owner of the marks in suit was not only dispositive of the cross-claim but of the entire proceeding. It submits that it should not be denied its costs of that event simply because part of its cross-claim (based on s 41 of the Act) failed. 44 In this connection, Lavazza relies on a number of cases which advance the general principle that a successful party is entitled to its costs even though, in achieving success, it fails on some issues which it had advanced: Firebird Global Master Fund II Ltd v Republic of Nauru (No 2) [2015] HCA 53; 327 ALR 192 at [6]; Les Laboratoires Servier v Apotex Pty Ltd [2016] FCAFC 27; 247 FCR 61 at [303]; Marmax Investments Pty Ltd v RPR Maintenance Pty Ltd (No 2) [2015] FCAFC 155 at [16]; The State of Victoria v Sportsbet Pty Ltd (No 2) [2012] FCAFC 174 at [7] - [8]; Cretazzo v Lombardi (1975) 13 SASR 4 at 16; Australian Conservation Foundation v Forestry Commission [1988] FCA 225; 81 ALR 166 (Australian Conservation) at 169; Inn Leisure Industries Pty Ltd v D.F. McCloy Pty Ltd [1991] FCA 45; 28 FCR 172 at 173 - 174; Griffith v Australian Broadcasting Corporation (No 2) [2011] NSWCA 145 at [19] - [20]; [38] - [39]; Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service (No 2) [2011] NSWCA 171 at [9] - [10]. 45 Lavazza submits that this general principle is of particular significance for a successful defendant who, in its defence of an (ultimately) unsustainable claim, is entitled to raise reasonable points of defence regardless of their fate. 46 Lavazza also relies on the fact that its defence, based on the validity of the marks in suit, transcended its private rights and brought into consideration the wider public interest in the purity of the Register of Trade Marks. It submits that it should not be penalised for advancing grounds under both ss 41 and 58 of the Act when, in the result, Cantarella's infringement proceedings failed, the registrations of the marks in suit were declared invalid, and their cancellation consequently ordered pursuant to one of those grounds. It therefore submits that it should have its costs without reduction.

Cantarella's submissions 47 Cantarella submits that it was "wholly successful" in its infringement claim against Lavazza. Lavazza failed on all the defences to infringement that it had raised under ss 122 and 124 of the Act. Lavazza also failed on its "primary cross-claim" being that based on s 41 of the Act. As to this ground, Cantarella submits that Lavazza filed an "inordinate amount of evidence". Further, Cantarella submits that Lavazza succeeded in only "one iteration" of its s 58 ground, being that based on the Molinari evidence (which, as I have said, was more extensive than the Molinari affidavits themselves). 48 In terms of proportionality, Cantarella contrasts the number of paragraphs in Cantarella No 3 that addressed the Molinari evidence and its significance on the question of ownership, with the total number of paragraphs in the reasons (146 of 655). Cantarella points to the fact that, in terms of hearing dates, the Molinari evidence was not in issue until Lavazza's interlocutory application on 8 June 2021. All hearing dates prior to that time were devoted to matters in respect of which Cantarella was "wholly successful". 49 Cantarella attributes the necessity for it to lead evidence (through Mr Audi) of its first use of the ORO word mark in Australia on Lavazza's failed attempt to tender certain documents during the first week of the hearing to establish prior use: see, in that regard, Cantarella Bros Pty Ltd v Lavazza Australia Pty Ltd [2020] FCA 1895. I should say at once that I do not accept this submission. Mr Audi's evidence was adduced because the evidence advanced by Cantarella to prove its first use was plainly inadmissible. As I have said, it was always Cantarella's onus to establish the use on which it relied. 50 Cantarella also points to the fact that it was successful in its interlocutory application on 30 May 2022 to re-open its case to raise a further claim of infringement in respect of Lavazza coffee capsules that had been imported and supplied by Lavazza after judgment had been (initially) reserved. 51 As to the (original) Court Book, Cantarella argues that one volume contained Cantarella's evidence and the relevant court documents. Six other volumes contained Lavazza's evidence other than the Molinari evidence. 52 Cantarella submits that: … in circumstances where Lavazza advanced multiple grounds of invalidity … which occupied the majority of the hearing time, submission time, evidence and the Liability Judgment, as well as the re-working of the parties' submissions, it would be unjust to hold that Lavazza should not only be relieved of paying Cantarella's costs of dealing with Lavazza's failed cross claims, but also to have its own costs of such claims, would be to depart from the ordinary rule.

Finding 53 I am satisfied that this case is one where the costs awarded to the successful party should be discounted. 54 Notwithstanding the ultimate result that Lavazza achieved, it raised, as significant elements of its case, a number of issues on which it could not succeed. 55 Whilst I recognise the cogency of the contention that a defendant is not to be forced, at its peril in respect of costs, to abandon every defence to a claim that it is not sure of maintaining (Australian Conservation at 169), the cross-claim that Lavazza advanced in reliance on s 41 of the Act, insofar as it was based on the "Du Cros point", was not a ground of cancellation that was available to it in light of the majority decision of the High Court in the Modena proceeding, as I explained in Cantarella No 3 at [403] - [416]. Further, Lavazza's reliance on s 41 of the Act, based on descriptiveness, proceeded on a misapplication or a misunderstanding of the test in Clark Equipment, as I explained in Cantarella No 3 at [417] - [433] and [455] - [468]. A large body of evidence was called on these matters, and there was a need to address the issues raised by this evidence in detail in the closing submissions, notwithstanding that the case advanced under s 41 of the Act could not succeed as Lavazza chose to present it. 56 Lavazza also raised a large number of defences which, on proper analysis, had no reasonable prospects of success in the event that infringement was otherwise established. 57 I do not accept that the deep discount sought by Cantarella is appropriate. Nevertheless, a substantial discount is warranted. In my view, the just result is that Cantarella should pay 50% of Lavazza's costs of the proceeding (i.e., of the claim and cross-claim).

Lump sum award of costs 58 Lavazza seeks an order that costs be awarded on a lump sum basis. There is much to commend that approach, particularly in light of my conclusion that Cantarella should pay 50% of Lavazza's costs of the proceeding. In the absence of agreement on the amount of costs to be paid, I will refer the questions of whether costs should be awarded on a lump sum basis and, if so, the amount of those costs to a Registrar of the Court, acting as a referee, for inquiry and report under s 54A of the Federal Court of Australia Act 1976 (Cth).

Disposition 59 Orders will be made accordingly. However, in accordance with the parties' agreement, those orders will be stayed pending the determination of the appeal in NSD 1549 of 2023. I certify that the preceding fifty-nine (59) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Yates.

Trade Marks Act 1995(Cth)ss 41, 58, 88, 122

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