Oxford Nanopore Technologies Plc v MGI Australia Pty Ltd

1. The proceeding be stayed for three months from 4 July 2025.
2. If the prospective applicant commences a substantive proceeding against the prospective respondent within three months of 4 July 2025 (Subsequent Proceeding), then:

(a) the prospective applicant be granted leave to discontinue this proceeding; and

(b) the costs of this preliminary discovery application (including any costs thrown away by the vacation of the hearing on 24 July 2025) be determined by the Judge hearing the Subsequent Proceeding.

1. The question of costs which the prospective respondent claims to have been thrown away by the vacation of the hearing on 24 July 2025 otherwise be reserved.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

1. These proceedings concern an application for preliminary discovery by the prospective applicant (ONT) from the prospective respondent (MGI).
2. At the time the proceeding was commenced, ONT considered that certain of MGI's nanopore sequencing devices and their use may fall within the scope of one or more claims of each of six identified Australian patents owned by ONT, but said that it was not able to decide whether to commence a proceeding for infringement of the patents without materials identified in the application for preliminary discovery. Since December 2024, MGI had refused ONT's requests to provide samples to ONT.
3. Following the commencement of this proceeding, orders were made for the exchange of evidence, and MGI filed its evidence in answer on 28 May 2025. On 20 May 2025, I set aside a notice to produce issued by MGI: Oxford Nanopore Technologies Plc v MGI Australia Pty Ltd [2025] FCA 572.
4. On 26 June 2025, ONT's solicitors wrote to MGI's solicitors and informed them that: (a) ONT had recently been able independently to acquire some (but not all) of the materials the subject of the application; and (b) ONT's consideration of those materials was ongoing, but based on its initial examination, it expected that the materials would provide it with a sufficient basis to commence substantive proceedings for patent infringement.
5. In those circumstances, on 4 July 2025 the parties sent to my Associate proposed orders providing that:

(a) the hearing of the application for preliminary discovery listed for 24 July 2025, and the remainder of the timetabling orders in place for that hearing, be vacated;

(b) the proceeding be stayed for three months; and

(c) in the event that ONT commences a substantive proceeding against MGI within three months of the date of those orders (Subsequent Proceeding or Substantive Proceeding), then:

(i) ONT is to be granted leave to discontinue this proceeding; and

(ii) the costs of the preliminary discovery application be determined by the Judge hearing the Subsequent Proceeding.

1. In addition, MGI proposed (but ONT opposed) that, in addition to those agreed orders, ONT pay MGI's "costs thrown away by the vacation of the hearing of the application for preliminary discovery listed for 24 July 2025". I indicated that I expected to decide whether such an order should be made on the papers, and I put in place a timetable for the exchange of written submissions on the issue. I also confirmed that the hearing on 24 July 2025 had been vacated.
2. As to the proposed order in relation to costs said to be thrown away by the vacation of the hearing, MGI submits that ONT was seeking an indulgence of the Court, and thus would ordinarily be required to pay costs the thrown away by its application. ONT submits that the "costs thrown away" are such costs as have been reasonably incurred that relate to work done and wasted as a result of the successful adjournment application, including costs that have been incurred once and will be incurred again for the purpose of the hearing that is fixed a second time, citing Sobey v Commissioner of Taxation [2008] FCA 1621 at [21] (Kenny J). MGI submits that the vacation of the hearing was not caused by any conduct on its own part. Further, MGI submits that the question of costs thrown away by reason of the vacation of the hearing should not be deferred until the conclusion of the application for preliminary discovery, on the basis that the outcome of the proceedings is not a relevant consideration on the question on whether an order for costs thrown away should be made, citing Sobey at [21]. Further, MGI submits that in circumstances where its conduct has not caused the vacation of the hearing, there is no reason for its costs thrown away to form part of the costs of the preliminary discovery application. MGI does not seek that its costs thrown away be paid forthwith, and thus MGI submits that it is of no consequence that those costs may not be known at this stage, and submits that such costs can be assessed at a later date when the entirety of MGI's costs thrown away are known, at the conclusion of either the preliminary discovery application or the Substantive Proceeding (if commenced).
3. ONT submits that any order for costs thrown away is premature, and should be deferred until either ONT commences the Substantive Proceeding (in which case the costs of the preliminary discovery application will be determined by the Judge hearing the Subsequent Proceeding in accordance with the agreed orders), or ONT does not commence the Substantive Proceeding (in which case the costs of the preliminary discovery application will be determined as part of the disposal of this proceeding). ONT also submits that it is not clear what the proposed "costs thrown away by the vacation of the hearing" would be, or if any such costs have been incurred. In addition, ONT submits that, while it is premature to determine the question, ultimately it is likely that ONT will submit that MGI should pay ONT's costs of the preliminary discovery application, even if ONT does not commence the Substantive Proceeding, particularly in light of MGI's repeated refusal of ONT's requests for samples since December 2024, which would have resolved the need for the preliminary discovery application. ONT submits that MGI has sought to conduct these proceedings as a preliminary trial, contrary to the principle stated in Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd [2017] FCAFC 193; (2017) 257 FCR 62 at [119] and [126] (Perram J, with whom Allsop CJ agreed generally at [2]).
4. I accept ONT's submission that the present application for costs thrown away by reason of the vacation of the hearing date is premature. The particular circumstances of this case involve a sensible agreement between both parties as to the vacation of the hearing date and a three-month stay while ONT considers its future course. That is not properly described as ONT seeking an indulgence from the Court. Rather, in a new set of circumstances which do not appear to have been anticipated when this proceeding was commenced, both parties have acted consistently with the overarching purpose of facilitating the just resolution of the dispute as quickly, inexpensively and efficiently as possible, as they are required to do under s 37N of the Federal Court of Australia Act 1976 (Cth). Whether or not the Subsequent Proceeding is commenced, ONT has indicated that it will seek to rely on MGI's conduct in relation to the preliminary discovery application, which ONT is likely to contend was unreasonable and took the form of preparation for a mini-trial. ONT submits, and I accept, that any such contention (if accepted) may well be relevant to the question of costs said to be thrown away by reason of the vacation of the hearing date. Further, even if the vacation of the hearing date was not directly attributable to MGI, ONT has indicated that it will seek to rely on MGI having resisted ONT's requests to produce the relevant material, thereby necessitating the preliminary discovery application. In my view, it is open to ONT to put that argument. The appropriate course is for ONT's arguments to be considered in all the circumstances in the context of any argument as to the costs of the preliminary discovery proceeding itself.
5. Accordingly, in my view, the question of costs which MGI claims to have been thrown away by the vacation of the hearing date on 24 July 2025 should be reserved for later determination either in this proceeding or in the Subsequent Proceeding (if commenced).

I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jackman.