Group One Limited v GTE Gesellschraft Für Technische Entwicklungen GmbH

The referee's report 19 Following a brief introduction, the referee described the background to the matter and identified the materials to which he had been referred in preparing the report. The report acknowledged receipt of submissions and evidence from both the applicant and the respondents. 20 The referee noted that the respondents' submissions attempted to re-agitate issues determined by the orders of this Court declaring that the patent had been infringed. As such, the referee observed that the submissions were largely irrelevant to the matters before him. 21 The referee first addressed the loss alleged to have been suffered by the applicant. The referee briefly addressed the relevant legal principles, before turning to consider the applicant's arguments. The referee accepted the applicant's submission that it is entitled to damages under s 122(1) of the Patents Act, and that those losses should be measured by the fees paid by Tennis Australia to the respondents for the Trinity System less the expenses which otherwise would have been incurred by the applicant. The referee accepted the applicant's submission that this would represent the profit that the applicant would otherwise have made in supplying its patented system to Tennis Australia for the Australian Open Tournaments in 2019, 2020, 2021 and 2022. The referee then accepted that, other than certain travel expenses, the applicant would not have incurred any expenses of significance. 22 In respect of the travel expenses, the referee invited further submissions from the applicant and respondents regarding whether Tennis Australia paid the second respondent's airfares (in which case it could be inferred that the applicant would not have been required to itself pay this expense). The applicant responded that it could not obtain further evidence but that "on the balance of probabilities" and in the applicant's experience, such expenses would ordinarily be covered by Tennis Australia. The referee considered the applicant's submissions and the materials provided in detail, and observed that documents provided by Tennis Australia (under subpoena) did not list airfares among the expenses covered. The referee therefore concluded that there was no evidence that Tennis Australia had covered these costs for the second respondent, and reduced the damages award to reflect the cost of airfares, being an expense the applicant would have had to meet had it supplied its patented system for those tournaments. 23 The referee also considered whether a discount should be applied to the damages award to make allowance for the possibility that Tennis Australia might not have contracted with the applicant as it claimed would have occurred but for the respondents' conduct. In order to account for this possibility, the referee applied a discount of 2% and reference was made in the report to Generic Health Pty Ltd v Bayer Pharma Aktiengesellschaft (2018) 267 FCR 428; [2018] FCAFC 183 at [182]-[183] and [186] (Allsop CJ, Yates and Beach JJ). 24 The referee then considered the issue of additional damages under s 122(1A) of the Patents Act. The applicant sought $400,000 in additional damages. After identifying the relevant legal principles, the referee addressed the arguments advanced by the applicant. The referee observed that an award of $400,000 would be "at the high end of awards made in other cases", and concluded that, while an award of additional damages was payable, the nature of the infringement and conduct of the respondents did not justify an award of this magnitude. The referee concluded instead that these damages should be payable in the amount of $100,000. 25 The referee then calculated pre-judgment interest up to 22 December 2022, being the day before the report was delivered. The referee referred to the relevant practice note regarding pre-judgment interest, and calculated interest in the amount of $26,725.96. These calculations were recorded in a table which set out the interest rate per annum and dollar amount that had accrued per day in accordance with that interest rate. 26 The referee then set out the legal principles relevant to awarding costs. Based on the applicant's submissions and evidence, the referee was satisfied that the applicant was entitled to indemnity costs on a lump sum basis. For the most part, the referee also accepted the proposed quantum of costs proposed by the applicant. However, the referee rejected the applicant's submission that it should be awarded a 10% uplift on its professional fees for "skill, care and responsibility".

Legal principles 27 Section 54A(3) of the Federal Court of Australia Act empowers the Court to deal with the report as it thinks fit, including by adopting it in whole or in part, or varying or rejecting the report. 28 Pursuant to r 28.67 of the Federal Court Rules, a party may, after a report has been given to the Court, ask the Court to, amongst other things, adopt the report in whole or in part and give judgment or make an order in relation to the proceeding or question. 29 The principles relevant to the Court's discretion in an application under r 28.67 of the Federal Court Rules were referred to by Cheeseman J in Quach v MLC Limited [2022] FCA 586 at [8] (themselves taken from Gulf Conveyor Systems Pty Ltd v Gulf Integrated Systems Solutions Pty Ltd [2020] FCA 1245 at [13]-[21] (Katzmann J)) as follows: (1) The application is not an appeal. The Court does not conduct a hearing de novo or a rehearing. A party who is dissatisfied with a referee's report is not entitled to require the Court to reconsider and re-determine afresh matters, whether of fact or law, which the party wants to contest. (2) The discretion to adopt, vary or reject a referee's report is to be exercised in a manner consistent with the context and purpose of the relevant rules. The purpose of the Rules is to provide, where the interests of justice so require, a form of partial resolution of disputes alternative to orthodox litigation, and it would frustrate that purpose to allow the reference to be treated as a rehearsal for the real contest. (3) If the source of a party's dissatisfaction with a report is a question of law, or the application of legal standards to established facts, a proper exercise of discretion requires the judge to consider and determine that matter afresh. (4) If the referee's report reveals some error of principle, absence or excessive jurisdiction, patent misapprehension of the evidence or perversity or manifest unreasonableness in fact finding, that would ordinarily be a reason for rejection. In this context, "patent misapprehension of the evidence" means a lack of understanding of the evidence and not the weight attributed to it; and "perversity or manifest unreasonableness" means a conclusion that no reasonable tribunal of fact could have reached. (5) In general, the referee's findings of fact should not be re-agitated before the Court. The Court will not reconsider disputed questions of fact where there is factual material sufficient to entitle the referee to reach the conclusions he or she did, particularly where the disputed questions are in a technical area in which the referee has expertise. It is not enough for an aggrieved party to point to errors of fact which would be amenable to correction by an appellate court. (6) Even if it were to be shown that the Court might have come to a different conclusion in some respect from that reached by the referee, absent any error of the kind referred to above, it would not be a proper exercise of the discretion conferred by r 28.67 of the Rules, to allow matters agitated before the referee to be re-explored so as to lead to qualification or rejection of the report. (7) The Court is entitled to consider the futility and cost of re-litigating an issue determined by the referee where the parties have had ample opportunity to place before the referee the evidence and submissions upon which they wish to rely. (8) Although the reasons given by the referee may appear to be adequate, where the party challenging the report contends that they are not because the referee did not deal with "very significant evidence", the Court may examine the evidence to see whether the reasons were in fact inadequate because they omitted to refer to such evidence.

Consideration and disposition 30 By its application, the applicant seeks an order that the report be adopted in whole. However, the applicant's submissions include many of the same contentions that were partly accepted and partly rejected by the referee. 31 On 18 April 2023, the applicant was invited by my chambers to address the inconsistency between its application and its submissions. On 19 April 2023, the applicant's solicitors confirmed that the applicant seeks an order that the whole of the report be adopted by the Court and that additional interest and costs be payable as articulated in the submissions (which I have interpreted as being a reference to interest and costs between the date of the report and judgment). 32 As the application seeks adoption of the report "in whole", and the applicant confirmed that this was sought by it when asked for clarification, I do not regard the applicant's submissions as seeking an order that any aspect of the referee's report be varied or rejected. 33 In any event, even if the applicant was seeking such an outcome, it would be insufficient for that outcome to be achieved by the repetition of the same arguments as were rejected by the referee, without more. Such an exercise would amount to a hearing de novo, which is not the correct approach for an application of this kind: Quach at [8]. 34 In particular, no basis was identified by the applicant as to why any aspect of the report should be varied or rejected having regard to the principles applicable to an application under r 28.67, as identified above. 35 The respondents' submissions do not address whether this Court should adopt the referee's report. Rather, like the submissions put before the referee, the respondents' submissions seek to re-agitate whether there has been patent infringement. However, those submissions are not relevant to this application, and are not accepted for this reason. Additionally, the respondents' submissions do not challenge the applicant's entitlement to or calculation of interest and costs. 36 Having regard to the report, it is apparent that the referee understood the scope of the inquiry and the nature of the task, and accorded procedural fairness to the parties. In particular, the referee did not address any questions beyond those posed by the Court's referral and addressed each of the matters for determination in detail and by reference to relevant law, which was applied to the facts as found by him. 37 For these reasons, an order will be made that the report be adopted in whole. 38 It follows that it is also appropriate to make orders which accord with the conclusions reached by the referee. 39 As the respondents did not challenge the applicant's claimed entitlement to costs that have accrued since publication of the report, and I accept that the applicant will have incurred legal costs associated with bringing this application, the applicant is entitled to be paid those costs by the respondents on an indemnity basis as is sought. In the circumstances and to avoid additional costs being incurred through the taxation process, such costs should be quantified in a lump sum in the amount of $5,000.00. These costs will be added to the costs which were assessed by the referee. 40 As to the question of additional pre-judgment interest for the period since the report, there was no challenge to the claim by the applicant for interest at the rate of $58.70 per day. Applying that rate, the applicant is entitled to $7,161.40 for the period between 23 December 2022 and 23 April 2023 in addition to the interest calculated by the referee. I will include that additional amount in the award of interest. I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Downes.