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[2008] FCAFC 168
Federal Court of Australia (Full Court)
2008-10-03
Greenwood JJ
Original judgment source is linked above.
REASONS FOR JUDGMENT 1 When we published our reasons for decision in this matter: Polwood Pty Ltd v Foxworth Pty Ltd [2008] FCAFC 9; we indicated in [131] and [132] the orders we were minded to make and invited the parties to make submissions on those orders and on costs.
Orders in the Appeal 2 The appellants were wholly unsuccessful in the two matters they prosecuted on the appeal. The Court rejected Polwood's claim, the subject of the appeal, that it alone was entitled to the grant of the patents. The Court equally rejected the appeal against the primary judge's conclusion that, notwithstanding the respondents' breach of confidence, it was not appropriate to grant the relief sought for that breach. In consequence we will order that the appeal be dismissed. 3 The primary judge found 'inventive contribution' by Foxworth by reason of the contribution of the apparatus with the result that neither Polwood nor Foxworth were entitled to the grant of a patent as sole inventor (at [262] cf [243], [245]). On appeal, this Court rejected Polwood's claim of sole entitlement to the grant of the patent and found no error in the primary judge's finding of joint inventorship. We determined that Polwood and Foxworth as joint inventors are entitled to the grant of the patent (for the purposes of s 15 of the Patents Act 1990 (Cth)) and entitled to an equal undivided share in the patent (s 16 of the Patents Act) (see [66] of the Full Court's reasons). 4 It follows from the primary judge's findings that Polwood (which seems from the primary judge's reasons to be a reference to Polwood Pty Ltd) is an 'eligible person' in terms of s 15 of the Patents Act (and possibly the second defendant/second appellant Rampton) and some one or more of the respondents are eligible persons. No parties sought relief based upon joint inventorship which might explain the lack of precision in the isolation of those individuals or entities said to be eligible persons for the purposes of s 15 of the Patents Act. 5 The appellants seek a declaration that Polwood Aussie Bark Pty Ltd (for the Polwood interests) and Paul David Power (for the Foxworth interests) are entitled to an equal and undivided share in the pending and registered patents listed in Schedule A to the appellants' submissions. The respondents say three things. First, the declaration ought declare those who are the 'sole eligible persons', not simply those entitled to an equal and undivided share in the patent. Secondly, that Peachester Thoroughbreds Pty Ltd and Power are eligible persons on the Foxworth side and Polwood Pty Ltd is the eligible person on the Polwood side, all of which are entitled to registration as co‑owners in equal shares of particular patent applications. Thirdly, as to those applications, the respondents say the declaration ought be confined to those applications referred to in para [5] of the Full Court's reasons (Patent Application No. 2002950316 dated 22 July 2002 (and any Complete Application lodged in reliance upon that provisional application) and International Patent Application No. PCT/AU03/00930 dated 22 July 2003 (and any national phase application which may proceed from that International Patent Application)) which will have the effect, it is said, of extending any declaration so framed to the identified national phase applications and any further national phase application that might be filed in reliance upon the international patent application. 6 The actual identities of the eligible persons were not the subject of conclusive findings by the primary judge. The closest his Honour appears to come to so doing was at [259] to [262] of his reasons: Foxworth Pty Ltd v Polwood Pty Ltd [2006] QSC 185. His Honour said there: [259] Many of the claims concerning the apparatus, however, are in respect of aspects of an apparatus which were not the subject of any communication by Polwood to Foxworth. Polwood is not the inventor of those: Foxworth (or Peachester Thoroughbreds) is the inventor, through its employee Kemp. It is unnecessary for me to determine and I make no findings as to the identity of Kemp's employer. [260] It is not possible however to determine, on a claim by claim basis, who devised the inventive concept contained in it. The approach of both sides was on an all or nothing basis. The possibility that a party on the other side of the record may have been a co-inventor, although raised in the course of the case, was not the subject of submissions. Consequently, the claims were not examined with a view to determining, in each case, the identity of the person or persons who devised the inventive concept. [261] It is sufficient for present purposes to conclude, as I do, that: (a) none of Polwood, Aussie Bark or Rampton devised the inventive concept embodied in a number of the claims; and (b) none of the plaintiffs devised the inventive concept embodied in a number of the claims. [262] For the above reasons neither the plaintiffs nor the defendants are entitled to the relief sought by them in respect of Polwood's patent application. 7 What the parties have not done is to provide us, on their respective parts, with satisfactory evidentiary bases which could appropriately justify a declaration in favour of the persons who are now said respectively to be the Polwood interests' eligible person(s) and the Foxworth interests' eligible person(s). If the parties were, respectively, to address this omission - and we would give them 14 days in which to do so - we would be minded to make a declaration, otherwise in the form of the respondents' proposed declaration, in respect of those persons who are in the circumstances the eligible persons, subject to one matter. The respondents' proposed declaration does not make it clear that the co-ownership as is between Polwood on the one hand and Peachester Thoroughbreds Pty Ltd on the other. We propose an amendment to the respondents' proposed declaration to reflect this: That Polwood Pty Ltd (Polwood) on the one hand, and Peachester Thoroughbreds Pty Ltd and Paul David Power on the other (Peachester/Power), are the sole eligible persons within the meaning of the Patents Act 1990 (Cth) and as the other patentee, Polwood on the one hand and Peachester/Power on the other, are entitled to registration as co-owners in equal shares……………… 8 If such a declaration is to be made, we would not make any additional order requiring any eligible person to make contribution in respect of costs said to have been incurred in obtaining and renewing the registration of the patents. The appellants, courageously, have sought such an order though without establishing any proper foundation, in principle or otherwise, for it.
The Cross-Appeal 9 By the cross‑appeal, Peachester (through Kemp) and Power as the authors of the copyright in particular drawings sought to set aside orders of the primary judge dismissing their claims of three‑dimensional copyright infringement by Polwood and Rampton arising out of the construction of a PSU Mark III (sometimes described as the replica PSU). The cross‑appellants were wholly unsuccessful and we have indicated that the cross‑appeal is to be dismissed. We will order accordingly.
The relationship between the issues on Appeal and Cross‑Appeal 10 The Foxworth interests contended before us that although the primary judge found that Polwood was the originator of a key inventive concept of the patent, his Honour also found that Foxworth contributed inventive skill in the design and construction of the PSU Mark II [215], the apparatus described and claimed in the patent application. The primary judge found Foxworth was 'the inventor' of the apparatus [259]. The design of the apparatus and the series of two‑dimensional drawings that are the expression of that inventive contribution are the subject of the copyright claim. In the result, neither the primary judge nor this Court in addressing the cross‑appeal, were satisfied that the three‑dimensional apparatus built and deployed by Polwood and Rampton was a substantial reproduction in three‑dimensional form of those drawings informed by related documents upon which the cross‑appellants relied. Because the drawings contain a two‑dimensional expression of the apparatus which is the subject of Foxworth's inventive contribution, there is inevitably a degree of overlap in the forensic analysis of documents and evidence going to both the quality and character of Foxworth's contribution and its inventiveness on the one hand and the origin and authorship of the drawings for the apparatus, on the other. As we pointed out at [65], the patent application described the apparatus as an aspect of the invention. Polwood did not itself play any part in its design and construction prior to the filing of the patent application. There was no evidence before the primary judge that the concept developed by Polwood was itself sufficient to encompass the apparatus that made the concept ultimately workable. 11 Accordingly, although the causes of action are distinct, the facts going to the nature and character of Foxworth's contribution to the invention involve a consideration of facts going to the authorship of the drawings; whether Polwood's apparatus was a three‑dimensional reproduction of the drawings of Peachester and Power; and whether the Polwood apparatus (PSU Mark III) was constructed through the application of ordinary skill and common general knowledge derived from Polwood's own concept or otherwise.
Costs of the Appeal and the Cross-Appeal 12 Both the appellants and the cross-appellants were unsuccessful in their respective appeals. Ordinarily, orders would be made for costs to follow the event in each instance. However, we consider it appropriate in this matter to deal with the costs of the appeals in a composite way acknowledging their interconnectedness. We consider it to be undesirable for there to be, potentially, separate taxation of the costs of the appeal and of the cross‑appeal which may well give rise to unnecessary disputes about whether a particular letter, telephone call or attendance was a cost in the appeal or the cross‑appeal. The order we propose to make is that the appellants pay 50 per cent of the respondents' costs of the appeal and cross‑appeal in the aggregate rather than two separate costs orders to the effect that the appellants pay the respondents' costs of the appeal and the cross‑appellants pay the cross‑respondents' costs of the cross‑appeal. An alternative order might have been an order that the costs be determined on the footing that the appellants pay a percentage of the respondents' costs of the appeal with no order as to costs on the cross‑appeal. Such an order would in effect represent a discount of the costs awarded on the appeal so as to reflect Polwood's success on the Foxworth cross‑appeal in relation to the copyright claims. However, such an order would also involve potential disputes between the parties as to whether a particular step, letter, telephone call or attendance was taken in the appeal (and if so the cost of such a step would be within the recoverable costs) or whether the particular step was a step taken in the cross‑appeal and thus outside the taxation. 13 Accordingly, we think that it is more desirable to frame the costs order on the footing that the party and party costs incurred by Foxworth both in the appeal and cross‑appeal ought to be assessed, in effect, in the aggregate and the appellants be ordered to pay 50 per cent of those aggregated costs. That would simply result in a possible argument between the parties as to whether a particular item of cost is a party and party item but remove any dispute as to whether an item of cost is either a cost of the appeal or cross‑appeal. While the percentage figure adopted must necessarily be regarded as impressionistic, it reflects in our view a fair and efficient balance overall between the respective likely costs outcomes of the appeal and the cross‑appeal should a conventional order be made that the costs of each appeal be awarded to the successful party in each appeal.
Costs before the Primary Judge 14 The appellants by their notice of appeal sought an order that the respondents pay the appellant's party and party costs of the trial. That order is not pressed in the appellant's written submissions. The respondents in their notice of cross‑appeal seek an order as to the costs of the trial and such an order is pressed in the written submissions. The primary judge dealt with the costs of the trial (Foxworth P/L & Ors v Polwood P/L & Ors (No. 2) [2007] QSC 403) on the footing that although the plaintiffs (i.e. the Foxworth interests) had limited success at trial (success on claims 1 and 2 only and failure on claims 3 to 8), the defendants abandoned during the trial five of their seven cross‑claims and pressed only two claims, namely, a declaration in respect of patent entitlement and recovery of a deposit. The defendants succeeded on the deposit claim. The primary judge made these findings: [10] Neither party succeeded on its patent claims but the facts found in that regard were more beneficial to the plaintiffs than the defendants and vindicated an alternative position foreshadowed by the plaintiffs at the commencement of trial. [11] The defendants contend that the plaintiffs' copyright case was 'clearly the predominant unit of litigation in the proceeding'. In terms of monies claimed, that assessment would seem to be accurate and there was also a substantial body of evidence adduced in that case. That evidence, however, to a substantial degree, was relevant to other aspects of the case, including the patent case. And, of course, the evidence was relevant to the defendants' late abandoned copyright claims. [12] The plaintiffs had a measure of success also in relation to their misrepresentation and Trade Practices Act claims and were not alone in advancing claims and evidence which attracted adverse findings. In all of the circumstances my conclusion is that the just result is that the costs lie where they fall. 15 His Honour concluded that he was not attracted to the notion that the parties should be exposed to a potentially lengthy and expensive costs assessment and thus elected to make no order as to costs. There is, therefore, no subject matter on appeal. 16 In any event, we can not identify any basis for taking a different course.
Conclusion 17 The orders of the Court are that the appeal be dismissed and the cross‑appeal be dismissed. The Court orders that the appellants/cross-respondents ( Polwood) pay 50 per cent of the respondents/cross-appellants' (Peachester Thoroughbreds Pty Ltd and Paul David Power) costs of the appeal and the cross‑appeal. Further, the parties have fourteen days from the date of these reasons to file and serve evidence upon which they intend to rely (if any) and to make submissions in relation thereto (if any), concerning the making of a declaration of right such as is referred to in [7] of these reasons. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Finn, Bennett and Greenwood
Associate: Dated: 3 October 2008 Counsel for the Appellants: Mr M P Amerena
Solicitor for the Appellants: Deacons
Counsel for the Respondents: Mr A Musgrave
Solicitor for the Respondents: Hawthorn Cuppaidge & Badgery
Date of Primary Hearing: 19 February 2007, 20 February 2007
Date of Receipt of Final Submissions on Costs: 19 March 2008
Date of Judgment: 3 October 2008
Polwood Pty Ltd
Foxworth Pty Ltd