JMVB Enterprises Pty Ltd (Formerly A'Van Campers Pty Ltd) v Camoflag Pty Ltd

REASONS FOR JUDGMENT 1 At the end of the argument on the appeal, the parties asked the Court not to deal with the question of costs, either of the proceeding at first instance or the appeal, until after the appeal had been decided. On 29 September 2006, the Court ordered that the appeal be dismissed and directed the parties to make submissions on the question of costs. We have now received written submissions from the parties on the question of the costs at first instance and the costs of the appeal. The parties have indicated that they do not want any oral argument on the question of costs. 2 After ordering that the Patent be revoked, the primary judge heard argument on the question of costs. The appellant, JMVB Enterprises Pty Limited ('the Patentee'), submitted that, even though Camoflag was successful overall, the success was qualified by losses on a number of substantive issues. On the other hand, Camoflag contended that it should have all its costs or that any reduction should be extremely modest. Camoflag also submitted that the costs ordered should be assessed on an indemnity basis because of two offers of settlement that it made to the Patentee. The Patentee resisted that claim on the basis that the offers were made at a time when the particulars of invalidity were very different from the particulars of invalidity formerly relied upon by Camoflag, such that the rejection of the offers could not be said to be unreasonable. 3 The primary judge accepted that there was considerable overlap between the issues in the case before her. In all the circumstances, and after balancing all of the factors that her Honour considered relevant to the exercise of discretion, the primary judge ordered that the Patentee pay 85 per cent of Camoflag's taxed costs. Her Honour did not regard the case as one in which it would be appropriate to award full indemnity costs. On the other hand, her Honour characterised the order as involving 'a modest reduction', in recognition of the fact that there was substantial amendment over time to the particulars of invalidity. 4 Apart from the appeal on the substantive issues concerning validity and revocation, the Patentee also appealed against the order for costs. Whether or not it would be appropriate for the Full Court to interfere with the exercise of discretion by the primary judge as to the order for costs, the conclusions of the Full Court have undermined, to some extent, the basis upon which the primary judge exercised her discretion. Therefore, it is appropriate to reconsider the order for costs made by her Honour. Ordinarily, it may have been appropriate to remit the matter to the primary judge for reconsideration of the question of costs in the light of the outcome of the appeal. That course, however, is not open in the present case. In any event, it is undesirable to incur further costs in relation to the question of costs. The appropriate course, therefore, is for the Full Court to make an appropriate order as to the costs of the proceeding at first instance, as well as deal with the costs of the appeal. 5 There were two substantive issues raised on the appeal. The first was whether there was no patentable invention, by reason of obviousness. The second was whether the Patentee was entitled to the Patent (see [2006] FCAFC 141 at [20]). The Patentee was successful on the first issue but unsuccessful on the second issue. 6 However, there were other issues in the proceeding at first instance, in respect of which the Patentee was successful. Those questions were not raised in the appeal by Camoflag. As the primary judge observed, the Patentee was successful in relation to the following issues raised and prosecuted by Camoflag: · amendment of the Patent; · infringement of the Patent; · novelty challenges to the Patent; · fair basis challenges to the Patent; · claim for unjustified threats. Further, on appeal, the Patentee was successful on the question of obviousness or lack of inventive step. Thus, overall, all questions concerning the invention of the Patent were ultimately decided in favour of the Patentee. The only basis upon which the Patent was revoked was the Patentee's lack of entitlement to the invention of the Patent. While the costs of amendment would normally be borne by a patentee seeking amendment, that principle would not necessarily require that a patentee bear an opponent's costs of opposing amendment. 7 Section 43(2) of the Federal Court of Australia Act 1976 (Cth) confers an unfettered discretion on the Court to make orders as to costs. When results are mixed, it is an appropriate exercise of the Court's discretion to take account of the respective success or failure of the parties in relation to various issues. However, the parties should not be dissuaded, by the risk of an adverse costs order, from canvassing all issues that are material. (see Doric Products Pty Ltd v Lockwood Security Products Pty Ltd (2002) 54 IPR 495 at 497-498) 8 Where substantial costs are incurred as a consequence of questions being put in issue unsuccessfully, that is a factor properly to be taken into account in the exercise of the discretion to order costs. Quite apart from the difficulty of doing so, it is undesirable to endeavour to apportion costs among different issues with any degree of precision. Further, it is often undesirable to formulate costs orders in a way that requires detailed analysis of work done by a taxing officer to determine whether particular costs were incurred in relation to particular issues. Any attempt to do so can involve the incurring of further unnecessary costs. 9 A significant difference between the conclusion reached by the primary judge and the result following the Full Court's decision is that, whereas her Honour found that the Patent was invalid by reason of obviousness, the Full Court found that the Patent was otherwise valid but for the lack of entitlement of the Patentee to the invention of the Patent. While the ultimate result is the same, there is a significant difference in the grounds for revocation. In all the circumstances, the appropriate order in respect of the proceeding at first instance is that the Patentee pay 60 per cent of Camoflag's costs. That figure takes account of the fact that Camoflag was successful in its challenge to a registered design in the name of the Patentee and its challenge on the ground of lack of entitlement. It also takes into account the fact that the Patentee was successful on all other questions concerning the validity of the Patent and infringement. 10 Camoflag was successful in the appeal, although the Patentee was successful on one of the two substantive issues, namely, the question of obviousness. The Patentee has also, in effect, been successful on the appeal in so far as it related to the order for costs. In the circumstances, the appropriate order is for the Patentee to pay 70 percent of Camoflag's costs of the appeal. That figure reflects the degree of success that the Patentee had but also recognises that the appeal was unsuccessful as to the substantive question of revocation of the Patent. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett, Stone & Bennett.