PDP Capital Pty Ltd v Grasshopper Ventures Pty Ltd

1. The application by the appellants/cross-respondents to vary Order 5 made on 29 July 2021 be dismissed.
2. The costs in Order 5 made on 29 July 2021 be assessed on a lump sum basis in an amount to be determined by a Registrar of the Court.
3. The Registrar be directed pursuant to r 1.37 of the Federal Court Rules 2011 (Cth) (FCR) to determine the quantum of the lump sum for costs payable pursuant to Order 5 made on 29 July 2021 in such manner as he or she deems fit including, if thought appropriate, on the papers.
4. The Registrar be directed pursuant to FCR 1.37, at the conclusion of the quantification process, to order that the appellants/cross-respondents are to pay whatever sum has been quantified pursuant to Order 3 above within 28 days from the date of the Registrar's order. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

THE COURT: 1 These reasons relate to costs, the final outstanding issue in this matter. 2 In PDP Capital Pty Ltd v Grasshopper Ventures Pty Ltd [2021] FCAFC 128 (judgment) we published reasons explaining why PDP substantially failed in their appeal from the decision of the primary judge in PDP Capital Pty Ltd v Grasshopper Ventures Pty Ltd [2020] FCA 1078. In these reasons we adopt the definitions used in the judgment. 3 We made orders dismissing grounds 1 and 2 of the appeal, with the consequence that the primary judge's conclusion, that Grasshopper had not infringed the WS Device Marks by authorising the use of the New Wicked Mark by the other Valentine Companies, was upheld. As a result, it was not necessary for us to consider ground 3 of the appeal, grounds 1 and 2 of the cross-appeal or ground 1 of the notice of contention. We found that ground 4 of the appeal, which concerned PDP's non-use application in relation to the Wicked Tail Mark, succeeded and that grounds 3 and 4 of the notice of contention failed, with the consequence that the register should be rectified to remove the following goods from the register in relation to that trade mark: Savoury dips, dessert toppings and sauces, including chocolate toppings and sauces, and fruit flavoured toppings and sauces, and confectionery, including chocolates and sweets, but excluding frozen confections. 4 We also found that ground 5 of the appeal, which challenged the primary judge's findings in relation to the removal of the Later Registered WS Marks, failed and that ground 6 of the appeal, which challenged the primary judge's finding that the impugned conduct of Grasshopper was not in breach of the ACL and did not amount to passing off, also failed. 5 In the judgment we expressed the view that Grasshopper has had substantial, but not complete, success in the appeal and that in the circumstances it was appropriate to make an order that PDP pay 90% of the costs of the appeal and cross-appeal (as taxed or agreed) subject to any submissions that the parties wished to make to vary that order. 6 PDP has now filed submissions in which they contend that a further reduction in costs is warranted to take into account the position in relation to Grasshopper's cross-appeal and notice of contention. They submit that the appropriate order is that PDP pay 75% of Grasshopper's costs, as agreed or taxed because Grasshopper introduced and persisted with complex and time-consuming arguments. PDP submit that whilst it was ultimately unnecessary for the primary judge or the Full Court to determine these issues, they were nonetheless compelled to respond to them, and they occupied significant court time in the context of the appeal. They submit, in particular, that Grasshopper advanced defences and cross-claims that turned upon whether the Wicked Tail Mark and the New Wicked Mark were substantially identical for the purposes of s 7(1) of the Trade Marks Act 1995 (Cth) which, having regard to the judgment at [160]-[161], would have failed, and that Grasshopper persisted in arguments about the (alleged) Wicked Word Mark that were unnecessary and costly to address. 7 Grasshopper submits that the order that PDP pay 90% of Grasshopper's costs of the appeal and cross-appeal is appropriate. 8 The principles relevant to the award of costs are settled. As the Full Court in Idenix Pharmaceuticals LLC v Gilead Sciences Pty Ltd (No 2) [2018] FCAFC 7 (Nicholas, Beach and Burley JJ) said at [3]: The power of the Court in relation to costs is well established. 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]). 9 There can be little doubt that Grasshopper enjoyed very substantial success in the appeal, succeeding as it did in resisting the trade mark infringement, ACL and passing off claims. But for a minor adjustment to the goods in respect of which one of Grasshopper's trade marks was to remain registered, the appeal was dismissed in its entirety. We are not persuaded that it is appropriate to allow a substantial discount in the costs because of issues raised in the cross-appeal and notice of contention. Whilst those who raise detailed cross-claims, against the prospect that their primary defences in response to infringement fail, run the risk of bearing cost liability for those, in the present case we consider that an allowance of 10% provides suitable recognition of the fact that PDP had a minor success on its appeal, that an aspect of the cross-appeal failed and that otherwise contingent arguments did not need to be determined. We do not consider that it is appropriate to embark upon an enquiry as to the likely success or failure of those grounds in the context of a costs argument. 10 Grasshopper submits that an order should be made for the costs to be assessed on a lump sum basis, to be determined by a Registrar of the Court. We agree. That approach is in accordance with the Court's general preference (see Costs Practice Note (GPN-COSTS) at [4.1]) and could, as Grasshopper submits, be implemented in combination with an assessment ordered by the primary judge of the costs of the proceedings at first instance, the assessment of which was deferred pending the outcome of the appeal. 11 Accordingly we will make orders as follows: (1) The application by the appellants/cross-respondents to vary Order 5 made on 29 July 2021 be dismissed. (2) The costs in Order 5 made on 29 July 2021 be assessed on a lump sum basis in an amount to be determined by a Registrar of the Court. (3) The Registrar be directed pursuant to r 1.37 of the Federal Court Rules 2011 (Cth) (FCR) to determine the quantum of the lump sum for costs payable pursuant to Order 5 made on 29 July 2021 in such manner as he or she deems fit including, if thought appropriate, on the papers. (4) The Registrar be directed pursuant to FCR 1.37, at the conclusion of the quantification process, to order that the appellants/cross-respondents are to pay whatever sum has been quantified pursuant to Order 3 above within 28 days from the date of the Registrar's order. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Jagot, Nicholas and Burley.