GlaxoSmithKline Consumer Healthcare Investments (Ireland) (No 2) Limited v... [2018] FCAFC 100 | Case summary

INTRODUCTION 1 After the Court ordered that the appeals and cross-appeals be dismissed in GlaxoSmithKline Consumer Healthcare Investments (Ireland) (No 2) Limited v Generic Partners Pty Limited [2018] FCAFC 71 (appeal judgment), the parties were given the opportunity to provide submissions as to costs. Upon consideration of these submissions, the Court provides these reasons for the orders it now makes in relation to the costs of the appeals and cross-appeals. We adopt the same expressions used in the appeal judgment. 2 Apotex and Generic Partners sought orders that GSK pay 70% of their costs of each appeal and cross-appeal. It was contended by Apotex and Generic Partners that the orders they sought took into account their success in maintaining the result below, recognition of the fact that their success was not absolute and the desirability of making a costs order that limited the costs of taxation. 3 GSK submitted that the percentage reduction sought was not based upon a true apportionment of the resources devoted by the parties between the appeals and cross-appeals. GSK submitted that there be no order as to costs, or alternatively costs should follow the event, with GSK paying the costs of each appeal and each respondent paying the costs of their respective cross appeals. 4 GSK brought the appeals to vindicate its position in seeking to permanently prevent the improper supply of its proposed paracetamol Extended Relief product to the Australian market, by appealing the adverse finding on infringement. Apotex and Generic Partners brought their cross-appeals on three discrete issues: fair basis, lack of clarity and failure to disclose the best method. As noted at [141] of the appeal judgment, the ground of lack of clarity was only brought in the alternative to the defence of each appeal, and addressed essentially the same constructional issues raised by GSK in its appeal on infringement. 5 The discretion of the Court in relation to costs is well established. As the Full Court recently observed in Idenix Pharmaceuticals LLC v Gilead Sciences Pty Ltd (No 2) [2018] FCAFC 7 ('Idenix') at [3]: …Section 43 of the Federal Court of Australia Act 1976 (Cth) gives the Court a wide discretion in awarding costs. The exercise of the Court's discretion is not without principles or practices; it must be exercised judicially (Les Laboratoires Servier v Apotex Pty Ltd (2016) 247 FCR 61 at [305] per Bennett, Besanko and Beach JJ). The ordinary rule is that costs follow the event, although a successful party may be awarded less than its costs, or costs may be apportioned, based upon success on the issues (Firebird Global Master Fund II Ltd v Republic of Nauru (No 2) (2015) 327 ALR 192; [2015] HCA 53 at [6] per French CJ, Kiefel, Nettle and Gordon JJ; Les Laboratoires Servier at [297] to [298] and [303]). 6 Every case must be decided on its own facts. There is no doubt that this Court could address the costs of the appeals and the cross appeals compendiously. In Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd (No 3) [2014] FCAFC 126 ('Sanofi-Aventis') the Full Court addressed the costs of the appeal and cross-appeal together at [26], despite Apotex failing in its challenge to validity on various grounds (see at [8]). In Tramanco Pty Ltd v BPW Transpec Pty Ltd (No 2) [2014] FCAFC 58 ('Tramanco') the Full Court similarly dealt with costs compendiously (at [13]), and noted the difficulties with disentangling the costs of different issues (at [12]). 7 Further, a percentage reduction approach may also be appropriate in some cases. Such an approach was adopted in Idenix and in Sandvik Intellectual Property AB v Quarry Mining & Construction Equipment Pty Ltd (No 2) [2017] FCAFC 158. 8 A claim for patent infringement and a cross-claim for patent invalidity are typically treated as separate events upon which the ordinary rule applies as to costs: see PAC Mining Pty Ltd v Esco Corporation (No 2) [2009] FCAFC and Damorgold Pty Ltd v Blindware Pty Ltd (No 2) [2018] FCA 364. Departure from this position is usually taken in complex patent cases where the relevant issues concern a "common substratum of fact" (see eg Les Laboratoires Servier v Apotex Pty Ltd [2016] FCAFC 27 at [306]) or may have been "wrapped up" with other issues (see eg Sanofi-Aventis at [23]-[25]) or could not be "readily disentangled" (see eg Tramanco at [12]). 9 We consider that the appeals and cross-appeals should be treated as separate events. In the appeals and cross-appeals, the issues were relevantly discrete, putting aside the overlap of the construction issue in the appeals and on one aspect of the cross appeals. In GSK's appeals, only one aspect of the primary judge's non-infringement finding was in issue, namely, the meaning of the phrase "the USP type III apparatus, reciprocating basket" in claim 1 of the Patent. 10 Whilst Apotex and Generic Partners were successful in the overall result (as GSK failed to establish an entitlement to a permanent injunction) the cross-appeals were brought and they were unsuccessful. It may well be that the additional costs of the matters raised in the cross-appeals involved a significant increment to the overall costs of the appeals. However, it is impossible for the Court to assess this in any meaningful way. Whilst we accept that mathematical precision is not necessary, there must be some reliable basis to make an assessment of appropriate apportionment. 11 We appreciate that a global approach to the costs of the appeals and cross-appeals was sought to avoid lengthy and expensive taxation. The parties can still achieve this if they can agree upon the appropriate percentage reduction after assessing for themselves the overall costs. However, as we have indicated, we are not in the position to assess (as has been requested) the appropriate percentage reduction and it would be inappropriate for the Court to do so. 12 For these reasons, the Court will order in each appeal that: (1) The Appellants pay to the Respondent its costs of and in connection with the appeal. (2) The Respondent pay to the Appellants their costs of and in connection with the cross-appeal. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Middleton, Nicholas and Burley.

GlaxoSmithKline Consumer Healthcare Investments (Ireland) (No 2) Limited v Generic Partners Pty Limited

At a glance

Court

Decision date

Before

Source

Judgment (26 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (12)

Cited By (21)