Minnesota Mining & Manufacturing Company v Tyco Electronics Pty Limited

Costs 5 Tyco submitted that, subject to any costs orders already made in the proceedings, costs should follow the event. Since 3M had failed in its application and Tyco had succeeded on the cross-claim seeking revocation of 3M's patent, the appropriate order was that 3M should pay Tyco's costs of the application and cross-claim. 6 3M submitted that there were special reasons for departing from the general rule that costs follow the event. The special reasons lay in the fact that significant portions of the evidence in chief of Tyco's witnesses, were either not read or were rejected. The same was true, so it was argued, of Tyco's evidence in reply on validity. 3M pointed specifically to evidence in reply on validity from Mr Cargnelutti and Mr Stanford, and evidence from Mr Eager which was said to have been abandoned a few weeks before trial. 3M contended that it had been put to unnecessary expense in dealing with the evidence ultimately not read or relied upon. 7 3M also relied on the fact that Tyco's experts had attempted to prove the state of common general knowledge by an impermissible reliance on patents and other documents discovered as the result of literature searches. This was persisted in, so it was said, notwithstanding that 3M had pointed out in advance of the hearing that the evidence was inadmissible. Moreover, Tyco had provided 3M with a number of versions of its Amended Particulars of Invalidity, before settling on a final version on 15 November 2000. Even then, Tyco had not abandoned its misplaced reliance on the fruits of literature searches. Consequently, 3M was put to expense in answering evidence, reliance on which was not abandoned by Tyco until shortly before the trial. Further expense had been incurred in putting on evidence concerning the construction of the patent that was rejected at the trial and in dealing with duplicated or unnecessarily repetitious evidence from five different deponents on the infringement issue. 8 3M submitted that, due to Tyco's conduct of the proceedings, it was entitled to its costs thrown away, on an indemnity basis, in dealing with "(1) the evidence in chief of Professor Samuel, Mr Georgevits and Mr Weir which was rejected or not read; (2) [Tyco's] evidence in reply on validity from Mr Cargnelutti and Mr Stanford; (3) the evidence of Mr Eager which was abandoned a few weeks before trial and which was in substantially the same form as the affidavits of Professor Samuel, Mr Georgevits and Mr Weir; (4) [Tyco's] evidence on infringement in so far as it was unnecessarily repetitious; and (5) [Tyco's] evidence in reply on validity from Professor Samuel, Mr Weir, Mr Georgevits and Mr Hunter…". 3M's alternative submission was that it should not be ordered to pay Tyco's costs in relation to the preparation of Tyco's evidence concerning the above matters. 9 For its part, Tyco submitted that · 3M had chosen to reply to evidence it considered inadmissible and therefore incurred costs by reason of its own forensic decision; · 3M had chosen not to proceed with a motion that might have resolved questions of admissibility in advance of the trial; · there was a genuine dispute as to the admissibility of affidavit material; · Mr Eager's two affidavits had not been read because he was unavailable for cross-examination by reason of overseas commitments; and · the evidence of its expert witnesses had proved to be of assistance to the Court. Accordingly, no sufficient reason had been shown to deprive Tyco of the costs to which it would ordinarily be entitled. 10 The circumstances in which the Federal Court will make an award of indemnity costs have been discussed by Sheppard J in Colgate Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 and by Lindgren J in MGICA (1992) Pty Ltd v Kenny & Good Pty Ltd (No 2) (1996) 70 FCR 236. I think that Tyco's conduct in this case falls well short of circumstances that would justify an award of indemnity costs. While I think that there was some unnecessary duplication of evidence given by Tyco's experts, it is fair to say that each of the experts who gave evidence on Tyco's behalf contributed something to its case. There was a good deal of evidence that Tyco ultimately chose not to rely on, or which was rejected, but I do not think it right to visit Tyco with an order for indemnity costs in respect of 3M's own decision to prepare answering material to evidence which it considered to be inadmissible: cf C A Henschke & Co v Rosemount Estates Pty Ltd (1999) 48 IPR 621, at 623, per Finn J, affirmed C A Henschke & Co v Rosemount Estates Pty Ltd (2000) 52 IPR 42, at 74. Furthermore, an order for indemnity costs in the form proposed by 3M would place an unreasonable burden on the taxing officer. As Tyco pointed out, how would a taxing officer go about determining whether Tyco's evidence on infringement was "unnecessarily repetitious"? 11 There is perhaps more of a case for a modest reduction in the proportion of Tyco's costs that 3M should be ordered to pay. Although it is not easy for me to assess (since the affidavit and documentary material was not read or tendered in the proceedings) my impression is that Tyco prepared and served on 3M a significant amount of evidence that it ultimately chose not to rely on in the proceedings. Tyco abandoned reliance on some of this material only relatively shortly before the trial and, in some instances, only on the first day of the trial. There is no affidavit evidence to support the assertion in Tyco's submissions that Mr Eager's affidavits were not read because of his overseas commitments. This is not a purely formal matter, since Tyco has not sought to clarify whether the difficulties with Mr Eager's evidence could have been detected earlier or could have been addressed in some other way (such as the use of video-link facilities). 12 A successful party who abandons reliance on certain evidence prepared or compiled on its behalf is, however, not necessarily deprived of any of its costs merely because the evidence is not used in the proceedings. On balance I do not think that any adjustment to the usual costs order should be made. Depending on the circumstances, the Court might take into account the desirability of not discouraging parties from refining their cases, even relatively close to a trial. The trial itself was, in my view, conducted reasonably expeditiously and efficiently, not least because Tyco was prepared to recognise that a good deal of material was not relevant to its case. There were, of course, other factors contributing to the conduct of the trial, notably the expertise and common sense of both senior counsel (which is not to say that junior counsel did not also contribute to the orderly conduct of the trial). I do not think that Tyco's conduct of the proceedings was such as to warrant depriving it of portion of its costs. In my opinion, it is appropriate that costs should follow the event. 13 Accordingly, subject to any costs order already made in the proceedings, 3M should pay Tyco's costs of the application and the cross-claim. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice SACKVILLE.

Counsel for 3M: Mr D K Catterns QC with Ms K Howard

Solicitor for 3M: Freehill Hollingale & Page

Counsel for the Respondent: Mr D M Yates SC with Ms A Bowne

Solicitor for the Respondent: Mallesons Stephen Jaques

Dates of Hearing: 2, 3, 4, 5, 6, 9, 10, 23, 24 & 25 July 2001 Date of Last Submissions on Costs: 31 October 2001 Date of Judgment: 16 November 2001