Rakman International Pty Limited v Boss Fire & Safety Pty Ltd

National Practice Area: Intellectual Property

Sub-area: Patents and associated Statutes

Counsel for the Appellants: Mr A Fox SC with Mr Thompson

Counsel for the Respondents: Mr N R Murray SC with Ms F St John

BETWEEN: RAKMAN INTERNATIONAL PTY LIMITED ACN097979685 First Appellant

TRAFALGAR GROUP PTY LTD Second Appellant

AND: BOSS FIRE & SAFETY PTY LTD ACN 136 955 685 First Respondent

AND BETWEEN: BOSS FIRE & SAFETY PTY LTD (and another named in the Schedule) First Cross-Appellant

AND: RAKMAN INTERNATIONAL PTY LIMITED (and another named in the Schedule) First Cross-Respondent

order made by: NICHOLAS, BURLEY AND ROFE JJ DATE OF ORDER: 19 december 2023

1. The appeal be allowed in part.
2. Order 4 made by the primary judge in Proceeding NSD 1589 of 2018 (the Patent Proceeding) be set aside and, in lieu thereof: (a) the applicants/cross-respondents pay the respondents'/cross-claimant's costs of the Patent Proceeding (including the cross-claim) on a party/party basis subject to any order made pursuant to subpara (b) below; (b) the Patent Proceeding be remitted to the Primary Judge for the purpose of determining whether the costs payable to the respondents/cross-claimant pursuant to subpara (a) above should be reduced on account of matters that were either abandoned or decided against them and, if so, by what proportion.
3. The appeal be otherwise dismissed.
4. The costs of the appeal and cross-appeal be paid as follows: (a) the appellants pay the respondents' costs of the appeal; (b) the cross-appellant pay the cross-respondents' costs of the cross-appeal and the notice of contention.
5. The time for any application to the High Court for special leave to appeal from these Orders is to commence on 5 February 2024. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT 1 INTRODUCTION [1] 1.1 The proceedings [1] 1.2 The grounds of appeal, cross-appeal and Notice of Contention [6] 1.3 Approach on appeal [9] 2 THE JUDGMENT [10] 2.1 The patent [11] 2.2 Patent validity [17] 2.2.1 Novelty [18] 2.2.2 Innovative step [26] 2.3 Unjustifiable threats and contravention of s 18 ACL [27] 3 THE ACL CLAIM: Appeal grounds 1 and 2 [38] 3.1 The grounds [38] 3.2 The submissions [40] 3.3 Consideration [43] 4 UNJUSTIFIED THREATS: Cross-appeal ground 1 [67] 4.1 Boss' submissions [67] 4.2 Trafalgar's submissions [75] 4.3 Consideration [77] 5 INNOVATIVE STEP / NOVELTY: Ground 3 of the appeal and ground 2 of the Notice of Contention [102] 5.1 Introduction [102] 5.2 Consideration [106] 6 THE COSTS APPEAL [119] 6.1 The grounds relied upon [119] 6.2 The costs orders made [124] 6.3 The costs judgment [125] 6.4 Consideration [146] 7 DISPOSITION [181]

1.1 The proceedings 1 This appeal challenges findings of the primary judge as to the invalidity of claims 1 - 5 of innovation patent No 2017101778 entitled A Firestopping Device and Associated Method (Patent), findings that the appellants sent letters in contravention of s 18 of the Australian Consumer Law (ACL) (Schedule 2 to the Competition and Consumer Act 2010 (Cth)) (ACL claim) and orders as to costs. Two decisions of the primary judge are relevant: Rakman International Pty Limited v Boss Fire & Safety Pty Ltd [2022] FCA 464 (judgment) and Rakman International Pty Ltd v Boss Fire & Safety Pty Ltd (No 2) [2022] FCA 1113 (costs judgment). 2 The appellants, Rakman International Pty Ltd and Trafalgar Group Pty Ltd, are respectively the patentee and exclusive licensee of the patent. The respondents are Boss Fire & Safety Pty Ltd and its sole director, Mark Prior. 3 In the judgment, the primary judge determined: (1) A patent case (NSD 1589 of 2018) concerning a claim for the infringement, and a cross-claim contending for invalidity, of the Patent which has a priority date of 12 February 2016 (patent proceeding). The primary judge found that although the appellants had established infringement of the five claims of the Patent, the cross-claim for the invalidity of the patent should succeed on the basis that claims 1, 2, 3 and 4 are invalid on the ground that they are not novel and that claim 5 is invalid for want of innovative step. The consequence was that the infringement case failed. In relation to the cross-claim, his Honour also found that letters sent by Trafalgar (all in substantially the same form and referred to collectively as the Trafalgar Letter) contained representations that were misleading or deceptive in contravention of s 18 of the ACL but rejected a contention that the patentee had made unjustifiable threats in breach of s 128(1) of the Patents Act 1990 (Cth). (2) An appeal by Boss from a decision of the delegate of the Registrar of Trade Marks dismissing its opposition to the registration of Trade Mark Application No 1736748 (748 application) filed by Trafalgar for the word FIREBOX (first trade mark appeal) (NSD 641 of 2019). The primary judge found that the appeal should be allowed and that the 798 application should be refused. (3) An appeal by Trafalgar from a decision of the delegate of the Registrar of Trade Marks upholding an opposition by Boss to the registration of Trade Mark Application No 1812214 (214 application) filed by Trafalgar for a composite mark including the word FYREBOX (second trade mark appeal) (NSD 1242 of 2019). The primary judge found that the appeal should be dismissed. 4 In the costs judgment, the primary judge found that the appellants should pay indemnity costs following their rejection of offers that had been made in the patent proceeding and also in each of the first and second trade mark appeals. 5 It was necessary for the appellants to seek leave to appeal because in the course of the management of the case the issues of liability for patent infringement were separated from those concerning quantum. Separation of quantum and liability is a familiar and convenient course in many intellectual property cases and it is generally appropriate for leave to be granted in such circumstances; Airco Fasteners Pty Ltd v Illinois Tool Works Inc [2023] FCAFC 7; (2023) 170 IPR 225 at [2]. Leave was granted at the outset of the hearing.

1.2 The grounds of appeal, cross-appeal and Notice of Contention 6 The appellants rely on the following grounds of appeal (particulars omitted): (1) That the primary judge erred in finding at [486] that the Trafalgar Letter issued by Trafalgar to Boss' customers in September 2018 was misleading and deceptive in breach of s 18 ACL. (2) That the primary judge erred in finding at [495] that Boss had lost the opportunity to supply the "BOSS FyreBox Multi Service Cable & Pipe Transit" (Fyrebox device) to potential customers and had suffered loss and damage. (3) That the primary judge erred in finding at [339] that claim 5 of the patent did not involve an innovative step. 7 Grounds 4 - 7 concern the question of costs, which are addressed separately in Section 6 below. 8 The first respondent, Boss, contends: (1) in its cross-appeal, that the primary judge erred in finding at [499] that the Trafalgar Letter did not contain a threat that engaged s 128(1) of the Patents Act; and (2) in its Notice of Contention, that the orders for the revocation of the patent should be affirmed on the ground that claim 5 is not novel and also on the ground that if the claims of the patent had been valid, Boss would not have infringed any of them.

1.3 Approach on appeal 9 In determining an appeal from a decision involving an evaluative process such as the appeal from the judgment in the patent proceeding, an appellate court should be careful to distinguish between findings of error and disagreements in evaluation. As noted by Perram J in Aldi Foods Pty Ltd v Moroccanoil Israel Ltd [2018] FCAFC 93; (2018) 261 FCR 301 (Allsop CJ and Markovic J agreeing): [49] ... [The court] must be guided not by whether it disagrees with the finding (which would be decisive were a question of law involved) but by whether it detects error in the finding. On the one hand, error may appear syllogistically where it is apparent that the conclusion which has been reached has involved some false step; for example, where some relevant matter has been overlooked or some extraneous consideration taken into account which ought not to have been. But error, on the other hand, may also appear without any such explicitly erroneous reasoning. The result may be such as simply to bespeak error. Allsop J said in such cases an error may be manifest where the appellate court has a sufficiently clear difference of opinion: Branir at 437-438 [29]. [50] There may seem an element of circularity in this, but the sufficiently clear difference of opinion bespeaks not merely that the appellate court has a different view to the trial judge but that the trial judge's view is wrong even having regard to the advantages enjoyed by the trial judge and even given the subject matter: Branir at 435-436 [24]. See also Verrocchi v Direct Chemist Outlet Pty Ltd [2016] FCAFC 104; 247 FCR 570 (Nicholas, Murphy and Beach JJ) at [45] - [47]; Hashtag Burgers Pty Ltd v In-N-Out Burgers, Inc [2020] FCAFC 235 (Nicholas, Yates and Burley JJ) at [8].

2. THE JUDGMENT 10 In this section, we summarise the reasoning of the primary judge insofar as it concerns the issues before the Court on appeal.

2.1 The patent 11 The primary judge noted that the specification describes the invention as relating to the field of passive fire protection, with embodiments of the invention finding application in the construction of buildings such as residential apartment buildings and the like. His Honour noted that the claimed invention in essence is a method of constructing a barrier, typically a wall, and routing services such as electrical cables and water pipes through the wall deploying an element referred to in the specification as a "firestopping device" which is commonly referred to as a "transit" or "fire transit". The firestopping device is fastened to an external object, typically a soffit, and the barrier is constructed around the firestopping device. His Honour observed that it was this feature that was said to distinguish the method of the invention from prior art methods. 12 The part of the patent entitled "Background Art" includes the following, which his Honour quoted: In a typical prior art method for constructing a residential apartment building the walls are constructed prior to installation of the services such as electrical cables, water pipes, etc. In this prior art method, a hole is made in the wall for each of the services, which typically must be separated by a standard separation distance, such as 200 mm for example. This separation distance requires significantly larger overall areas for services, which severely limits the design options for construction. Additionally, the typical prior art method often requires ladders and the like to be set up and moved repeatedly. Each of the individual holes through which the services extend must then be separately sealed in a fire rated fashion, which can be time consuming and expensive. 13 The specification then has a heading "Summary of the Invention" which provides consistory statements for claims 1, 2 and 3. His Honour found it convenient to set out all of the claims, which we do below: 1. A method of constructing a barrier having at least one service routed there through, the method including the steps of: providing a firestopping device including: a first portion formed from a metallic material or a thermally insulative material having formations for fastening of the first portion to an external object; and a second portion formed from a metallic material or a thermally insulative material being separable from the first portion and being mateable to the first portion such that the first and second portions, when mated together, define the firestopping device; wherein the firestopping device has a first opening at a first end, a second opening at a second end and an internal volume intermediate the first and second ends, the internal volume and each of the openings being sized such that at least one service may extend through the firestopping device, and wherein an intumescent material is housed within the internal volume, the intumescent material being responsive to heat so as to swell within the internal volume; fastening the first portion to an external object at a position that straddles the proposed positioning of the barrier; positioning at least one service such that it is adjacent to, or in alignment with, the first portion; positioning the second portion around the at least one service; mating the first and second portions to each other such that the at least one service extends through the firestopping device; and constructing the barrier around the firestopping device. 2. A method according to claim 1 wherein the first and second portions of the firestopping device are mateable to each other by at least one mechanical fastener without the use of any tools. 3. A method according to any one of the preceding claims wherein the first portion of the firestopping device is a planar panel defining a pair of opposite sides each having a side wall extending therefrom. 4. A method according to any one of the preceding claims wherein the second portion of the firestopping device is U-shaped so as to define a base connected to a pair of opposed side walls. 5. A method according to any one of the preceding claims further including the step of marking a line on the external object so as to depict the proposed centre line of the barrier. 14 The specification provides 19 figures which are addressed in the section entitled "Detailed Description of Preferred Embodiments of the Invention". His Honour described the embodiments by reference to the first, which was the most extensively described in the specification. It is of a firestopping device comprised of two separate portions which are mated. These portions are referred to as the first portion and the second portion. The separability of the two portions allows the firestopping device to be used in the method that is claimed. 15 The first portion is a planar panel with a pair of opposing side walls. It is provided with holes to facilitate the fastening of this portion to an external object. The specification explains: … In typical implementations the object to which the first portion 2 is likely to be fastened is an overhead concrete slab, although other possibilities include wooden frame structures, walls, floors, service shafts, etc. Fasteners, in the form of bolts, screws, or the like, extend through the holes 3 so as to fasten into the concrete slab, thereby securing the first portion 2 in place. 16 His Honour went on: [43] The first portion is illustrated in Figures 5 and 6. Figure 5 is an upper perspective view, and Figure 6 is a lower perspective view, of the first portion: [44] The second portion is described as U-shaped, so as to define a base with a pair of opposing side walls. The second portion is illustrated in Figure 7, which is an upper perspective view of that portion: [45] The specification describes features of the first portion and the second portion that provide means by which the two portions can be mated to provide the firestopping device. It is not necessary to dwell on these particular features. They do not feature prominently in the claims. Claim 2, for example, merely requires that the two portions are "mateable" to each other by at least one mechanical fastener, without the use of tools. [46] The first embodiment of the firestopping device is illustrated by Figure 1, which is an upper perspective view of the device: [47] The specification states that, in this particular embodiment, the second portion forms the base and "the majority" of the side walls of the firestopping device. This statement acknowledges that, in this particular embodiment, the side walls of the first portion also define, in part, the side walls of the device. Indeed, as I have noted, the first portion is described as a planar panel with a pair of opposing side walls. Figure 6 shows the opposing side walls by indices 10 and 11. [48] The specification continues: ... in other embodiments the second portion mates with the first portion so as to form one of the sides and/or the top of the firestopping device. [49] This statement discloses that, in other embodiments, the opposing side walls of the first portion provide the side walls of the firestopping device, with the second portion providing one wall of the device, including by acting as a "top" for the device. [50] The specification continues by explaining that, in the described embodiment, the firestopping device has openings (shown by indices 5 and 6 in Figure 1) and an intermediate, internal volume through which at least one service (not illustrated) extends. [51] The specification describes the placement of intumescent material within and outside the device to resist the passage of fire and smoke. [52] The specification then describes a method of constructing a barrier: Either of the above-described embodiments of the firestopping device 1 or 19 may be used in a method of construction of a barrier having at least one service routed there through. For the sake of providing an example, we shall assume that the barrier is a wall. The method commences with the marking of a line 27 on the concrete ceiling 28, which depicts the proposed centre line of the wall. The installer then fastens the first portion 2 to the ceiling 28 at a position that straddles the proposed positioning of the wall. More specifically, the first portion 2 is bolted onto the ceiling such that its intumescent material 15 is centred over, and extends parallel to, the centre line of the proposed wall, as shown in figure 13. Hence the positioning of the first portion 2 on the ceiling 28 provides a visual guide as to where the services are to penetrate through the proposed wall. Next the installer positions the services (not illustrated) such that they are adjacent to, or in alignment with, the first portion 2. More specifically, the services are typically suspended by fastening devices such as clips, clamps, etc., approximately 50 mm below the ceiling so as to extend below the first portion 2 and generally perpendicular to the intumescent material 15 of the first portion 2. Typically, the installer will be supported by a lifting mechanism, such as a scissor lift or the like, whilst running the services. This process doesn't require the threading of the services through a prior art style of firestopping device, which helps ease of running the services and minimises the potential for the services to be damaged by the firestopping device. It is also time efficient and therefore has the potential to yield cost savings for the construction of the building. It also has the potential to assist project managers to coordinate the activities of various tradesmen and sub-contractors. The reduction in required space for the firestopping of these services allows for significantly more flexibility in design, and the application of a multi-service firestopping device provides an "all-in-one" solution, allowing easier certification and compliance procedures. Once the services have been run, the second portion 4 is positioned around the services. That is, the side walls 7 and 8 of the second portion 4 are positioned on either side of the services, with the base 17 of the second portion 4 below the services. The second portion 4 is then slid upwards so as to mate the first and second portions 2 and 4 to each other as shown in figure 14. Hence, the services now extend through the firestopping device 1. It is now possible to construct the wall 30, as illustrated in figure 15, around the firestopping device 1 using standard barrier building techniques. For example, the wall installer may now attach wall engaging formations, in the form of a head track, to the ceiling 28 and to the exterior of the second portion 4, to which a barrier material, such as plaster board for example, may be attached. Additionally, or alternatively, wooden frame work may be constructed, to which a barrier material, such as plaster board for example, may be attached. Alternatively, formwork may be positioned to allow the pouring of a concrete wall. These processes may be assisted with the use of the second embodiment of the firestopping device 19, as illustrated in figures 16 to 19, to which the wall engaging formations in the form of channels 20 are pre-installed. The resulting wall 30 has the firestopping device 1, and the services (not illustrated), extending there through. A number of services may extend together through the firestopping device without requiring the approx. 200 mm separation between each of them that is applicable to some prior art techniques. [53] The specification describes the application of sealant around the inner perimeters of the first and second openings, and the placement of graphite impregnated foam and, optionally, thermally insulative wrap around the services, externally to the device. (Emphasis added.)

2.2 Patent validity 17 After addressing the construction of various contentious words in the claims, the primary judge addressed the legal principles relevant to the disputed issues of patent validity, none of which are disputed on appeal.

2.2.1 Novelty 18 His Honour then addressed the lack of novelty arguments, noting that the novelty challenge relied on disclosures made at two meetings, considered separately, which he defined as the Speedpanel meeting and the Seltor meeting ([126]). These meetings concerned the promotion of devices described as the Pass-It Version 1, Pass-It Version 2 and Pass-It with butterfly screws. Only the Seltor meeting is relevant to the appeal. 19 His Honour explained that Seltor Gruppen AS is one of the oldest construction firms in Norway and that Mr Ramunddal is its chief executive officer ([173]). It had purchased mastic and mortar products, used to stop fire passing through penetrations for pipes and cables in fire resistant walls, from Boss since about 2008 to about 2015. The Seltor meeting took place in September 2015 between Mr Ramunddal, Mr Alex Knutson - who was from a subsidiary company of Seltor - and Mr Prior, who is the director and company secretary of Boss. 20 At the meeting, Mr Prior gave Mr Ramunddal and Mr Knutson two samples of the Pass-It, which he called the "Fyrebox" ([177]). The primary judge records his findings as follows: [178] Mr Prior says that, at the Seltor meeting, he described the function and features of the "Fyrebox" and how it could be installed during the construction of a building. The substance of his evidence is that he disclosed the following matters: (a) The "Fyrebox" is installed after the position of the walls is marked out. (b) The "Fyrebox" is installed in a position that straddles the wall. (c) The wall can be built after the "box goes up". The pipes and cables can be installed at any time, so that "scheduling issues" are solved. (d) The intumescent material is in white plastic sleeves inside the "Fyrebox". (e) To install the "Fyrebox", it is first pulled apart and the top part is mounted to the slab with masonry fixings. (f) The other part of the box then slides into the top part and is attached to the top part using the screws provided or a wing nut (which can be provided). (g) The services can then be run through the "Fyrebox" or the wall can be built. (h) If the services are run through the "Fyrebox" before the wall is built, it is possible to remove the lower part to "fit the services through" and then reattach it. It is also possible to install the services after the lower part is attached. (i) Fire resistant brushes are provided at each end of the "Fyrebox". These will be fire resistant for the first 10 minutes of the fire, after which the intumescent material will have activated. The brushes will be burnt away. [179] Mr Ramunddal's evidence is consistent with Mr Prior's evidence. Mr Ramunddal said that, at the meeting, Mr Prior described the following features of the "Fire Box": (a) It replaced traditional mortars and mastics to stop fire passing through penetrations for pipes and cables in fire resistant walls. (b) It had a two-part steel case. (c) The steel case had "four wings of steel" on the upper part, in which four holes were provided to allow that part to be attached to an upper concrete "deck". (d) The lower part could be connected to the upper part by either "normal" screws or wing screws. (e) Brushes are provided to stop dust and other particles getting into the device. (f) Sachets, containing "expanding fire resistant material" were attached to the inside of the steel frame. This material would expand and close the whole box in the event of a fire. (g) The "Fire Box" was installed before the rest of the wall is put in place by removing the lower part and fixing the upper part to the concrete deck using the four wings of steel. (h) The lower part could be attached to the upper part before the pipes and cables are installed or it can be attached after the pipes and cables are installed. (i) If the lower part is attached to the upper part before the pipes and cables are installed, it is necessary for the plumbers and electricians to pull the pipes and cables through the brushes. (j) If the lower part is attached to the upper part after the pipes and cables are installed, it is necessary for the plumbers and electricians to line up the pipes and cables with the pre-installed upper part. (k) Once the lower part is attached to the upper part, the rest of the wall can be built around the completed "Fire Box". 21 Photographs that Mr Ramunddal took of the Fire Box samples were tendered in evidence, which, his Honour explained, shows two samples of the Pass-It Version 2 that were provided at the meeting with what appeared to be a copy of the Firestopit product data sheet (PDS) which depicts the Pass-It product ([141]). The samples were tendered, as was the Firestopit PDS ([181], [182]). 22 At trial, the appellants advanced what the primary judge described as a wide-ranging attack on the veracity of the evidence of Mr Prior and Mr Ramunddal, which his Honour considered in detail and rejected at [184] - [219], concluding at [220] that he was satisfied that the Seltor meeting took place substantially as described by Mr Prior and Mr Ramunddal, that Mr Prior brought two samples of Pass-It Version 2 to the meeting and also a copy of the Firestopit PDS. None of these findings are challenged on appeal. 23 The primary judge was satisfied that at the Seltor meeting, Mr Prior disclosed all the features of the method of claim 1 with reference to the Pass-It Version 2 and all of the additional features in claims 2 and 4 ([223]). 24 In relation to claim 3, the primary judge accepted that the additional integer, where the first portion of the firestopping device is a planar panel defining a pair of opposite sides each having a side wall extending therefrom, was disclosed. In this regard, his Honour read the expression "side wall" to encompass the structure and geometry of short flanges, which he considered was clear from the disclosure of the specification; at [231]. That finding is also not challenged on appeal. 25 In relation to claim 5, his Honour said: [233] Boss submitted that, at the Seltor meeting, the additional feature of the method claimed in claim 5 was disclosed - the step of marking a line on the external object so as to depict the proposed centre line of the barrier. Boss relied on the opinions expressed by Mr Page and Mr Hunter on this matter in Joint Report Part B. [234] Trafalgar's written closing submissions did not address this claim specifically. However, Trafalgar did dispute that Mr Prior gave detailed instructions about the use of the Pass-It Version 2, as Mr Prior and Mr Ramunddal had described. In this context, Trafalgar raised the unlikelihood that Mr Prior gave any instruction about the marking of a centre line. [235] I do not accept that the additional step of claim 5 was disclosed at the Seltor meeting - at least with the sufficient clarity to amount to an anticipation. Importantly, Mr Ramunddal's recollection does not include any statement being made that reflects this step. The highest that Mr Prior's evidence rises in this regard is that he disclosed that, after the walls are "marked out", the device is installed in a position that would straddle the wall. Even if I were to accept this evidence, it falls short of Mr Prior disclosing the step of marking the centre line of the "barrier", and it is not a disclosure of marking such a line on the external object to which the firestopping device is to be attached.

2.2.2 Innovative step 26 In relation to lack of innovative step, the primary judge's reasoning insofar as concerns claim 5 is as follows: [332] Boss's challenge to validity based on a lack of innovative step, as advanced in its closing submissions, focussed on the publication of the Firestopit PDS and claims 1 and 5 of the patent. However, its case on lack of innovative step was not confined to the disclosures of the Firestopit PDS or those claims. Boss also placed reliance on the prior art information on which it relied in its case on lack of novelty, and on other claims. It contended that if, contrary to its case on invalidity based on lack of novelty, the prior art information on which it relied did not disclose the essential features of the claims, then the invention, so far as claimed, only varied only in ways that make no substantial contribution to the working of the invention. [333] Boss's written submissions continued: For example, the specific geometry attributed to each portion in claims 3 and 4 makes no substantial contribution to the working of the invention. All that matters is that there is a first portion fixed to the external object and a second portion position around the services. A comparison between Pass-It Version 1 and Pass-It Version 2 demonstrates the point. If the Court finds that claim 3 or 4 is not anticipated because the claimed geometry is not disclosed, those claims would lack an innovative step. [334] This is as far as Boss's case on lack of innovative step was developed with reference to the prior art information relied on for lack of novelty. … [337] The Court should not be left in this position. It is the task of the party relying on a lack of innovative step to identify each and every variance between the prior art information and the invention as claimed, and to articulate, by reference to the evidence, why that variance does not make a substantial contribution to the working of the invention as claimed. This is the task imposed by s 7(4) of the Patents Act. [338] That said, the outcome of Boss's challenge to the validity of the patent, based on a lack of innovative step, can be found, most directly, in my findings in relation to the disclosures made at the Seltor meeting. I have found that all the features of the method claimed in claims 1, 2, 3, and 4 of the patent were disclosed at that meeting. It follows that, with respect to the prior art information constituted by the disclosures at the Seltor meeting, only the additional, but undisclosed, step in claim 5 - the step of marking a line on the external object to depict the proposed centre line of the barrier (integer 5.2) - now stands to be assessed as to whether that variance does or does not make a substantial contribution to the working of the invention. [339] It should be appreciated at the outset that there is no requirement in the claims that the firestopping device be centred. Claim 1 merely requires the step of positioning the first portion of the firestopping device so that it straddles the proposed positioning of the barrier. "Straddling" the proposed positioning of the barrier is not the same as centring the device on a particular line. "Straddling" may or may not involve centring the device. Claim 5 itself does not require the step of centring the device. It simply stipulates the step of marking the centre line of the boundary on the external object to which the first portion of the firestopping device is to be fastened. I am satisfied that this step does not make a substantial contribution to the working of the invention. It is, truly, a trivial addition to the method that is otherwise described and claimed. But even if claim 5 were to be construed as requiring the step of centring the device on the centre line that is marked, that step would also be a trivial addition to the method that is described and claimed. Therefore, although the invention claimed in claim 5 is novel, it does not involve an innovative step based on the disclosures made at the Seltor meeting and is, accordingly, invalid on that ground.

2.3 Unjustifiable threats and contravention of s 18 ACL 27 The primary judge considered the issues of the unjustifiable threats and contravention of s 18 of the ACL under the same heading, given that both claims stemmed from the sending of the Trafalgar Letter. 28 At [473], the primary judge observed that in September 2018, Trafalgar sent letters to participants in the building industry informing them of its claimed patent rights. As the letters were substantially in the same form, the primary judge set out in full the terms of one letter, sent on 7 September 2018 to John Groom at Hutchinson Builders, as a representative example. Mr Groom was the person at Hutchinson Builders who was responsible for fire compliance matters: Dear John Notice of patent rights- Innovation Patent No. 2017101778 You may be aware that Trafalgar committed substantial investment in developing its innovative FIREBOX range of passive fire protection products. Given the innovative nature of these products, Trafalgar applied for patent protection, and has had granted and certified a patent for the method of constructing a fire barrier using a product with the features of the FYREBOX Slab-Mounted product. Trafalgar became aware of the supply of product by BOSS Fire & Safety Pty Ltd, which BOSS calls the BOSS FyreBox Multi Service Cable & Pipe Transit. It is our firm belief that when the BOSS product is used to construct a fire barrier during building that use of the BOSS product will be use of the method protected by the claims of Trafalgar's patent. Therefore supply of the BOSS product is a supply which infringes our patent rights. Also, the use of the method of construction protected by the Trafalgar patent (eg by installation of the Boss product on Hutchinson Builders sites) will also infringe our patent rights. Trafalgar sought to address these concerns with BOSS last month, but to no avail. On 30 August, Trafalgar issued Federal Court proceedings against BOSS, alleging that BOSS has and will continue to infringe the patent by supply of the BOSS product. We are seeking an injunction restraining further supply of the BOSS product, as well as compensation for the past supply of the product. This letter is intended to provide you with information regarding the Trafalgar patent and we stress that Trafalgar is not intending to assert its patent rights against your use of the method protected by the Trafalgar patent. Rather we are addressing the infringement at the point of supply of infringing products by our Court action against BOSS. If you would like any further information on this matter, please feel free to contact me. 29 The trial judge noted at [474] that the letter was on Trafalgar letterhead and signed by Mr Rakic as Managing Director of the Trafalgar Group. 30 At [478], the primary judge noted that there were a number of things to be said about the Trafalgar Letters. It is useful to set his Honour's comments out in full. [479] First, the letter contains a statement, expressed as a firm belief, that, when the Fyrebox device is used to construct a fire barrier, then that use of the device will be the use of the method claimed in the patent. [480] This statement is a headline statement. It is, to say the least, misleading. It is simply not the case that each and every use of the Fyrebox device to construct a fire barrier is a use of the patent method. The Fyrebox device can be used to construct a fire barrier in numerous ways that do not take the steps of the claimed method. If it were necessary to decide the point, I do not accept that Trafalgar was ignorant of that fact at the time it sent the letter. The fact that the statement is unqualified is important. No reference is made in the letter to, for example, using the device in a particular way, such as in accordance with the Fyrebox installation instructions. It is a generalised, unqualified, and incorrect assertion as to the extent of Trafalgar's patent rights. The statement is no less misleading because it is couched in terms of Trafalgar's "firm belief". Indeed, the expression of that "firmness" would only have served to reinforce, in the mind of a recipient, the correctness of the assertion being made. [481] Secondly, the headline statement is followed by the statement: Therefore, supply of the BOSS product is a supply which infringes our patent rights. [482] This statement is expressed as an unqualified conclusion, and would be understood as such. It is based on the headline statement. It is equally misleading. To start with, the conclusion does not follow from the premise, for the reasons I have given. Further, and importantly, the findings I have made above on the validity of the claims of the patent mean that the unqualified statement of infringement that Trafalgar made in its letter is false because, as events have transpired, Trafalgar does not, and did not, have the rights it asserted. [483] I do not accept that Trafalgar's use of "alleging" in the Trafalgar letter would have been taken as conveying that the lawfulness of Boss's conduct was, realistically, contestable and that Trafalgar's claims against Boss existed only in the realm of mere allegation, as Trafalgar's closing submissions seem to suggest. Trafalgar also took the trouble to state that its patent had been "granted and certified". In all likelihood, the reference to the patent having been "certified" would have conveyed to the recipients that there could be no doubt about the legitimacy of Trafalgar's assertion of patent rights. [484] Thirdly, the Trafalgar letter makes this statement: Also, the use of the method of construction protected by the Trafalgar patent (eg by installation of the Boss product on Hutchinson Builders sites) will also infringe our patent rights. [485] This statement is directed, unequivocally, to the use of the Fyrebox device in accordance with the method of the patent. As events have transpired, this statement is also false, given my findings on the validity of the claims of the patent. But, importantly, it is, according to its own terms, a separate, additional, and different statement to the headline statement. It serves to highlight that, in making the headline statement, Trafalgar was asserting rights of a breadth it never had. 31 At [486], the primary judge found that Boss had established that, by sending the Trafalgar Letter - which was undoubtedly sent in the course of trade or commerce - Trafalgar had engaged in conduct that contravened s 18(1) of the ACL. 32 At [487], the primary judge observed that he was in no doubt that Trafalgar sent the letter to warn off those whom it regarded as likely purchasers, or influencers of purchasers, of the Fyrebox device so that those persons would not purchase, or recommend the purchase of, the product or have any dealings with Boss in respect of that product. The primary judge continued: The letter states that Trafalgar was seeking relief to restrain further supply of the Fyrebox device. This was a clear and intended signal to likely purchasers and other recipients that any dealings with Boss in respect of the Fyrebox device would be in jeopardy and at a real risk of interruption by the action that Trafalgar was taking against Boss. It was also a clear signal that such dealings would likely be viewed unfavourably by Trafalgar in future dealings by the recipients with it. 33 The primary judge considered that the Trafalgar Letter had its intended effect and had resulted in a loss to Boss. He observed that an example was provided by the events that followed the sending of the Trafalgar Letter to Hutchinson Builders. At [492], the primary judge set out Mr Groom's response to receiving the Trafalgar Letter: I've spoken to our legal team and we don't want to get involved in any legal issues with you or Trafalgar. The letter says we could get sued if we use your box. We'd prefer to stay away from it, as it could have additional costs for Hutchinsons. 34 At [495], the primary judge stated that he was satisfied that, as a result of Trafalgar sending the Trafalgar Letter, Boss has lost the opportunity to supply the Fyrebox device to potential customers. He observed that "[i]nstantiations of that lost opportunity are provided by Boss's dealings with Hutchinson Builders and USG Boral. Boss has thereby suffered loss and damage." 35 The primary judge then turned to the issue of whether by sending the Trafalgar Letter, Trafalgar has made unjustified threats that would engage s 128(1) of the Patents Act, concluding, at [499], that he was not persuaded that it had. 36 His Honour observed that the question was to be considered objectively. So considered, he found that the Trafalgar Letter was sufficiently clear that Boss was the subject of Trafalgar's complaint, not Boss' customers. In reaching his conclusion, the primary judge acknowledged both that Mr Groom had interpreted the letter as a threat that Hutchinson might be sued, and that recipients of the letter might be warned off: As I have said, the Trafalgar letter was a clear and intended signal to likely purchasers and others that any dealings by them with Boss in respect of the Fyrebox device would be in jeopardy and at real risk of interruption by the action that Trafalgar was taking against Boss. It was also a clear signal that such dealings would likely be viewed unfavourably by Trafalgar in future dealings with it. 37 Ultimately, the primary judge found at [500] that the Trafalgar Letter stopped short of threatening legal proceedings against the recipients themselves.

3.1 The grounds 38 In ground 1, the appellants contend that the primary judge erred in finding that the Trafalgar Letter, issued by Trafalgar in materially the same form to a number of Boss customers, was misleading and deceptive in contravention of s 18 of the ACL. The particulars appended to this ground provide that the primary judge erred: in construing the letter; in finding that various statements were unqualified and misleading when they were couched in terms of Trafalgar's "firm belief"; in failing to find that the letter conveyed a belief on reasonable grounds on the part of its author that the supply and use of the Fyrebox device infringed the patent; in finding that the letter conveyed the representation that "each and every" use of the Fyrebox device amounted to an infringement (at [480]); in finding that Trafalgar was not ignorant that, at the time the letter was sent, the Fyrebox could be used in numerous non-infringing ways; and in finding that at the time that the Trafalgar Letter was sent the unqualified statement of infringement in the letter was false, because the patent was found to be invalid (at [483]). 39 In ground 2, the appellants contend that the primary judge erred at [495] in finding that Boss had lost the opportunity to supply the Fyrebox device to potential customers and thereby suffered loss and damage.

3.2 The submissions 40 In relation to ground 1, the appellants rely on the authorities concerning the distinction between expressions of fact and expressions of opinion, citing Inn Leisure Industries (Prov liq app) v D F McCloy Pty Ltd (No 1) (1991) 28 FCR 151 at 167 (French J); Cary v Freehills; [2013] FCA 954; (2013) 303 ALR 445 at [295] (Kenny J); Sealed Air Australia Pty Ltd v Aus-Lid Enterprises Pty Ltd [2020] FCA 29; (2020) 375 ALR 324 at [312]-[313] (Kenny J). See also TCT Group Pty Ltd v Polaris IP Pty Ltd [2022] FCA 1493; (2022) 170 IPR 313 at [393] (Burley J); Nine Films & Television Pty Ltd v Ninox Television Ltd [2005] FCA 1404; (2005) 67 IPR 46 at [97]-[99] (Tamberlin J). They contend that legal letters, such as letters of demand, have been found to amount to expressions of opinion that are not found to be misleading if assertions are later found to be inaccurate and that the position in the present case is analogous, citing GM Global Technology Operations LLC v SSS Auto Parts Pty Ltd [2019] FCA 97; (2019) 139 IPR 199 at [592] (Burley J). The appellants also contend that the primary judge erred by relying on three sentences in the Trafalgar Letter to conclude that it contravened s 18(1) which diverted attention away from the letter as a whole and in context, including those parts of the letter that referred to assertions in terms of allegations presently before the Court, that Trafalgar had been unable to resolve its "concerns" with Boss, and that Trafalgar had no intention of taking any legal action against the recipient of the letter. 41 The respondents advance a number of reasons why ground 1 should fail. First, the case advanced on appeal based on the genuine belief of the author of the letter is not available on the pleading. As pleaded and at trial, the case advanced by the appellant in answer to the ACL claim was that the representations were true, because the patent was infringed. If it turned out that the patent was not valid, then the representation case would follow that result. It submits that if the point were permitted to be raised for the first time on appeal, Boss will suffer significant prejudice. Secondly, in any event, the court's task is to examine what the impugned statements conveyed to their audience, citing Forrest v Australian Securities and Investments Commission [2012] HCA 39; (2012) 247 CLR 486 at [33], [36], [38], [45] (French CJ, Gummow, Hayne and Kiefel JJ). Even if the "own opinion" case was open, a misstatement in an opinion will not in every case be immune from a finding under s 18 of the ACL if the content of the letter as a whole is misleading or deceptive. In the present case, factual statements were made that would not qualify as opinion, objectively viewed. Thirdly, considered as a whole, the findings of the primary judge correctly characterised the representations. Fourthly, in any event, Trafalgar knew that there was no adequate factual basis for the representation that the use of the Fyrebox in constructing a fire barrier would infringe the patent and there were no reasonable grounds for Trafalgar to contend that all uses of the Fyrebox device infringed the patent. The primary judge's findings support that conclusion. 42 In relation to ground 2, the appellants submit that the evidence before the Court summarised by the primary judge at [488] - [494] was insufficient to establish the finding at [495] that, as a result of Trafalgar sending the letter, Boss lost the opportunity to supply the Fyrebox device. The respondents defend the reasoning of the primary judge.

3.3 Consideration 43 In relation to ground 1, it is first necessary to make some observations as to how the ACL case was advanced before the primary judge. 44 In its statement of cross-claim, Boss alleged at [14] that five representations were made in the Trafalgar Letter. The first, at [14.1], was that the supply of the Fyrebox device infringed the patent. Another, at [14.2], was that "any method of installation of the [FyreBox device] will infringe the 778 patent". Another, at [14.4], was that the patent is valid. 45 At [15], the cross-claim relevantly said: 15 Each of the Trafalgar Representations is false, in that: 15.1 Supply of the [Fyrebox device] does not infringe the 778 patent; 15.2 Not all methods of installing the [Fyrebox device] infringe the 778 patent. …. 15.4 The 778 patent is invalid. 46 In its defence to the cross-claim, Trafalgar admitted in response to [14.2] that it made a representation "that the installation of the [FyreBox device] will infringe the 778 patent" and pleaded in response to [14.4] that "this alleged representation was correct at the time it was made as the 778 patent was then valid and subsisting". In responding to [15] of the cross-claim, Trafalgar denied the allegations that the representations were false, pleading, in answer to [15.1] and [15.2] "…that the claims 1, 2, 3, 4 and 5 of the 778 patent have been infringed by the cross-claimant" as set out in infringement case and, in response to [15.4] denying that the 778 patent is invalid. 47 It is apparent that, on its pleaded case, the appellants admitted that the Trafalgar Letter represented, as a matter of fact, the allegations made in [14.1], [14.2] and [14.4]. The appellants properly accepted as much in oral submissions. It is also apparent that the respondents prosecuted their ACL claim on the basis that the representations alleged were statements of fact. No application was made to withdraw the admissions made in the defence to cross-claim. Rule 16.03 of the Federal Court Rules 2011 (Cth) (FCR) requires that a party must plead a fact if failure to plead it may take another by surprise. It was not any part of the respondents' case to negative a case of genuinely held belief or reasonable basis. Had it been part of the appellants' case, then it ought to have pleaded it. 48 However, that is not the end of the matter. The appellants' answer to the respondents' challenge was that the respondents acquiesced in a departure from the appellants' pleaded case and that it was therefore open to the primary judge to decide the case based on the arguments that they had put in closing submissions. In this regard, their written closing submissions at trial, at page 67 of 69 pages, made the point now made on appeal. It was encapsulated in [199]: When read as a whole, including the above quoted statements, the letter would be understood to be a statement of firm belief on the part of Trafalgar that supply and use of the Boss Device infringes the Patent, and not a statement of fact. There can be no suggestion that the "firm belief" expressed in the letter is not genuinely held by its author and is not based on reasonable grounds. A truthful statement of opinion and belief as to legal assertions, expressed as it was by a non-lawyer and in circumstances where the letter makes plain that the allegations are presently before the Court, is not misleading and deceptive, even if the belief is ultimately determined by the Court to be incorrect. (see also by analogy GM Global Technology Operations LLC v SSS Auto Parts Pty Ltd (2019) 371 ALR 1 at [706]; Nine Films & Television Pty Ltd v Ninox Television Ltd (2005) 67 IPR 46 at [98]; Darmorgold Pty Ltd v Blindware Pty Ltd (2017) 354 ALR 1 at [399]-[400]). (Emphasis in original. Footnotes omitted). 49 These submissions were handed up in court on the final day of the hearing, after the respondent's closing oral submissions in chief had been delivered in relation to the ACL case. The oral submissions made on the subject were limited to the following: We've teased it out a bit more from what we understood to be the assertions against us, but in the end, one can see in paragraph 198 we make reference to -emphasising in words there words such as "alleging", "it is our firm belief" we say, in those circumstances the letter can't constitute misleading or deceptive conduct. 50 The well-known statement of Issacs and Rich JJ in Gould v Mount Oxide Mines Ltd (In Liq) [1916] HCA 81; (1916) 22 CLR 490 at 517 (Griffith CJ, Isaacs and Rich JJ) provides the legal framework for consideration of this issue: Undoubtedly, as a general rule of fair play, and one resting on the fundamental principle that no man ought to be put to loss without having a proper opportunity of meeting the case against him, pleadings should state with sufficient clearness the case of the party whose averments they are. That is their function. Their function is discharged when the case is presented with reasonable clearness. Any want of clearness can be cured by amendment or particulars. But pleadings are only a means to an end, and if the parties in fighting their legal battles choose to restrict, them, or to enlarge them, or to disregard them and meet each other on issues fairly fought out, it is impossible for either of them to hark back to the pleadings and treat them as governing the area of contest. 51 In Vale v Sutherland [2009] HCA 26; (2009) 237 CLR 638 at [41] (Gummow, Hayne, Heydon, Crennan, and Kiefel JJ), the High Court cited with approval the following statement by Dawson J in Banque Commerciale SA (in liq) v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279 at 296-297 (Mason CJ, Brennan, Dawson, Toohey and Gaudron JJ): But modern pleadings have never imposed so rigid a framework that if evidence which raises fresh issues is admitted without objection at trial, the case is to be decided upon a basis which does not embrace the real controversy between the parties … cases are determined on the evidence, not the pleadings. See also Betfair Pty Ltd v Racing New South Wales and Another [2010] FCAFC 133; (2010) 189 FCR 356 at [51] (Keane CJ, Lander and Buchanan JJ). 52 We are not satisfied that the conduct of the case by the appellants falls within the category of cases that would permit them to depart from their pleadings. No notice was given during opening submissions that they intended to resile from their admission that the relevant representations made were representations of fact. No leave was sought to withdraw their admissions. In the circumstances we have described above, it was not sufficient to hand up in closing written submissions an argument that is contrary to the pleaded position and briefly refer to it in a single sentence, without drawing attention to the fact that it represents a change of position. Nor do we think, with respect, that the respondents should bear responsibility for reviewing their opponent's written submissions after the conclusion of the hearing to check to see if there were any un-pleaded changes to the case advanced in them. One consequence of the "hand up when you stand up" approach to closing written submissions is that some obligation falls to the party speaking to those submissions to identify such issues and identify any material departures from the pleaded case. The respondents were entitled to notice of this change prior to the evidence so that they could have regard to it in cross-examining the author of the letter. As it happens, they were not afforded a fair opportunity to argue that the case was not open to the appellants. 53 Accordingly, we would dismiss ground 1 on that basis. 54 We would separately dismiss ground 1 on a further basis. 55 The relevant findings of the primary judge were as follows: (1) That the Trafalgar Letter contains a statement of firm belief that when the Fyrebox device is used to construct a fire barrier, then that use of the device will be the use of the method claimed (at [479]). (2) That is a misleading statement because it is not the case that every use of the device is a use of the patented method. The Fyrebox device can be used to construct a fire barrier in numerous ways that do not take the steps of the method. Trafalgar was aware of that fact at the time it sent the letter ([480]). (3) The statement is misleading, notwithstanding that it is couched in terms of Trafalgar's "firm belief", the word "firmness" only serving to reinforce in the mind of the recipient the correctness of the assertion made ([480]). (4) Moreover, the statement in the letter "[t]herefore, supply of the BOSS product is a supply which infringes our patent rights" is expressed as an unqualified conclusion, which would be understood as such. It does not follow the premise (of infringement in all circumstances of use). Furthermore, given the findings going to invalidity of the claims, the unqualified statement of infringement is also false because, Trafalgar did not have the rights it asserted ([482]). (5) The same may be said of the allegations that the use of the method by the installation of the Fyrebox product on Hutchinson Builders sites which was made two sentences later and represented a separate statement by Trafalgar, asserting rights of a breadth it never had ([485]). (6) The reference two sentences later to Trafalgar "alleging" infringement against the respondents by supplying the Fyrebox device does not change the position. It would not be taken to convey that the lawfulness of Boss' conduct was merely contestable and subsisted in the realm of mere allegation. Having regard to the references to the patent being "granted and certified", recipients would have understood that it was said that there could be no doubt as to the legitimacy of Trafalgar's assertion of rights ([483]). 56 It is apparent from the foregoing that the primary judge had regard to the submissions advanced by the appellants and rejected them. In our respectful view, he cannot be criticised for doing so having regard to the manner in which the case was advanced. His Honour formed the view that the recipient of the Trafalgar Letter would not consider it to be an expression of contestable opinion, but an assertion of rights. Moreover, the characterisation of rights in the Trafalgar Letter was incorrect for two reasons. First, because the appellants' claim overreached the scope of rights conferred by the patent insofar as it stated that any use of the Fyrebox would infringe when there were uses that would not infringe the method claims. Secondly, because in any event the patent was invalid and could not be infringed. Further, the primary judge rejected the proposition that any belief on the part of Trafalgar as to the first proposition was genuinely held, holding that Trafalgar was aware of the overreach. 57 We see no error in the primary judge's reasoning in this respect. Accordingly, for that reason too, we would dismiss ground 1. 58 Ground 2 concerns the finding that Boss had suffered loss and damage. In this regard, the primary judge found that the Trafalgar Letter was sent to "warn off" likely purchasers, or influencers of purchasers of the Fyrebox device, so that they would not purchase, or recommend the purchase of the product or have any dealings with Boss in respect of that product (at [487]). That finding is not challenged on appeal. The primary judge concluded that the evidence available supported the view that the letter achieved its intended effect. 59 The primary judge provided an example by reference to the events following the sending of the letter to Hutchinson Builders ([488] - [493]): In early 2018, Boss promoted the Fyrebox device to Hutchinson, which expressed interest in using it in a large building project. Meetings took place with Hutchinson throughout 2018 and also with USG Boral, the supplier of a wall system to Hutchinson on this project. By August 2018, negotiations had reached an advanced state. Boss had worked with USG Boral to obtain fire testing of the device with USG Boral's wall system. An initial approval report was issued on 21 August 2018 and USG Boral had expressed an interest in supplying the Fyrebox as part of its own branded product offering. However, in September 2018, after receipt of the Trafalgar Letter by Hutchinson and USG Boral, negotiations between Hutchinson, USG Boral and Boss came to an abrupt end. When the National Sales Manager of Boss, Mr Bacon, expressed to Mr Groom, the person at Hutchinson with responsibility for fire compliance matters, his hope that the Trafalgar Letter would not impact the project, his response was to say: I've spoken to our legal team and we don't want to get involved in any legal issues with you or Trafalgar. The letter says we could get sued if we use your box. We'd prefer to stay away from it, as it could have additional costs for Hutchinsons. 60 The primary judge records that Mr Groom expressed disappointment at that outcome because Hutchinson had spent $30,000 on re-design work to accommodate the Fyrebox device. Boss had also lost contact with USG Boral. 61 Against the background of these findings, the primary judge was satisfied that, as a result of Trafalgar sending the letter, Boss has lost the opportunity to supply the Fyrebox to potential customers. 62 The appellants criticise these findings on the basis that other evidence might suggest an absence of causal connection. They submit that the respondents did not lead any evidence from Boral or Hutchinson that they had ceased commercial discussions as a result of the Trafalgar Letter and refer to evidence of Mr Bacon who confirmed that between February and 21 August 2018 he had no communications with Hutchinson and note that there was no evidence that Boss had any communications with Boral after July 2018 in relation to the device. They also submit that there was evidence that throughout the dealings with Hutchinson, there were adverse fire test reports and "performance issues" with the device of concern to Hutchinson, and that Mr Bacon accepted that it was possible that Hutchinson was considering the use of other devices, which was not taken into account by the primary judge. 63 We do not consider that these criticisms reveal appealable error on the part of the primary judge. The question before him was whether the respondent had established that it had suffered, and continues to suffer, loss and damage as a result of the contravention of the ACL. As pleaded, the respondents contended that, for the purposes of satisfying the requirement of damage under s 18, its loss included the loss of opportunity to sell the Fyrebox device. The quantum of any loss is to be determined at a separate hearing. An enquiry as to damages is to be held at the next phase of hearing. 64 The obligation on the respondents at this stage is to demonstrate that some loss or damage was sustained by showing that the contravening conduct caused the loss of an opportunity which had some value, not being a negligible value, ascertained by reference to the degree of probabilities or possibilities; Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332 at 355 (Mason CJ, Brennan, Dawson, Toohey and Gaudron JJ). 65 The primary judge was satisfied, particularly on the basis of the conversation with Mr Groom, that there was a sufficient causal nexus between the Trafalgar Letter and the cessation of negotiations to indicate that such loss could be found. The value of that loss need not be established to make out the cause of action. We do not accept that, by not referring the evidence advanced by the appellants to which attention has been drawn on appeal, the primary judge did not take that evidence into account. Nor do we accept that the conclusion drawn by the primary judge was not open to him on the evidence available. 66 Accordingly, ground 2 must be dismissed.

4.1 Boss' submissions 67 Boss is critical of the primary judge's reasons in finding, at [499], that the Trafalgar Letter did not make a threat that engaged s 128(1) of the Patents Act, in three respects. None of which were said to involve an error of principle. 68 First, by finding on the text of the Trafalgar Letter that there was no relevant threat made. Referring to the decisions in U & I Global Trading (Australia) Pty Ltd v Tasman-Warajay Pty Ltd [1995] FCA 794; (1995) 60 FCR 26 at 31, CQMS Pty Ltd v Bradken Resources Pty Ltd [2016] FCA 847; (2016) 120 IPR 44 at [170] and [186] and Liberation Developments Pty Ltd v Lomax Group Pty Ltd [2019] FCA 1180; (2019) 144 IPR 413 at [147] - [149], Boss submits that a threat does not need to be express. 69 Boss submits that Trafalgar's personalised allegation of infringement by customers: "the use of the method of construction protected by the Trafalgar patent (e.g. by installation of the Boss product on Hutchinson Builders sites) will also infringe our patent rights", in the context of litigation against a supplier, would inevitably raise in the recipient's mind, their own potential liability for their separate infringement. 70 The statement at the end of the Trafalgar Letter that "Trafalgar [was] not intending to assert its patent rights" against the recipient's use, rather than a more certain "we will not assert our rights against you" would not dispel the impression in recipient's minds that Trafalgar considers customers to be infringing its method. Boss submits that that impression is reinforced by the wording: "Trafalgar is not intending to assert its patent rights against your use of the method protected by the Trafalgar patent. Rather we are addressing the infringement at the point of supply…". (Boss' emphasis) 71 Secondly, by giving insufficient weight to the evidence about how customers in fact interpreted the letter. In oral submissions, Boss drew attention to the fact that each Trafalgar Letter was personally addressed to its intended recipient, and, at least in the exemplar letter, mentioned the particular construction site relevant to that recipient. 72 Mr Rakic, the director and company secretary of Trafalgar, accepted in cross examination that in writing the letter his purpose was to discourage builders and sub-contractors from using the Fyrebox, and that he had hoped, in sending the letter to surveyors and certifiers, that they would consider informing builders that there might be a problem with the Fyrebox, and would discourage industry participants from using the product. 73 Boss submits that Mr Rakic's familiarity with the fire protection industry and the participants in it enabled him to tailor the letter to its recipients and gave him a good understanding as to how those recipients would read and understand it. Mr Rakic conceded that he could see how a person might think that the reason the letter referred to the use of the Fyrebox on builders' sites was to sow a seed of fear in builders that they might be dragged into legal trouble. That was relevant evidence as to formulating the reaction of the hypothetical recipient of the Trafalgar Letter. Whilst the primary judge made reference to the evidence of Mr Groom's response to receiving the Trafalgar Letter: "the letter says we could get sued if we use your box", Boss submits that the primary judge erred by giving that evidence insufficient weight. 74 Thirdly, by not applying the reasoning in CQMS in circumstances where the Trafalgar Letter was very similar to a communication in that case which was found by Dowsett J to be a threat.

4.2 Trafalgar's submissions 75 Trafalgar emphasises the words of s 128 and submits that, considered objectively, the language of the Trafalgar Letter does not communicate any threat to commence proceedings of any kind against any person other than the manufacturer of the Boss Fyrebox. Quite the opposite. Trafalgar highlights the final part of the Trafalgar Letter which it submits could not have been clearer in stressing that Trafalgar had no intention of bringing infringement proceedings against the recipient of the letter: This letter is intended to provide you with information regarding the Trafalgar patent and we stress that Trafalgar is not intending to assert its patent rights against your use of the method protected by the Trafalgar patent. Rather we are addressing the infringement at the point of supply of infringing products by our Court action against BOSS. 76 Trafalgar submits that the correspondence in CQMS is distinguishable from the Trafalgar Letter and observes that Dowsett J's comments about the letter in CQMS have not been adopted in later decisions, including those of Damorgold Pty Ltd v Blindware Pty Ltd [2017] FCA 1552; (2017) 354 ALR 1 and Liberation Developments.

4.3 Consideration 77 Section 128(1) of the Patents Act provides: 128 Application for relief from unjustified threats (1) Where a person, by means of circulars, advertisements or otherwise, threatens a person with infringement proceedings, or other similar proceedings, a person aggrieved may apply to a prescribed court, or to another court having jurisdiction to hear and determine the application, for: (a) a declaration that the threats are unjustifiable; and (b) an injunction against the continuance of the threats; and (c) the recovery of any damages sustained by the applicant as a result of the threats. 78 Section 131 of the Patents Act provides: 131 Notification of patent not a threat The mere notification of the existence of a patent, or an application for a patent, does not constitute a threat of proceedings for the purposes of section 128. 79 At [208] - [211] of her reasons for judgment in JMVB Enterprises Pty Ltd v Camoflag Pty Ltd [2005] FCA 1474; (2005) 67 IPR 68, Crennan J identified the following propositions arising from s 128: (a) The threat must be made in Australia, in that it must be received in Australia and relate to an Australian patent or design: for an example in the context of a patent, see Townsend Controls Pty Ltd v Gilead (1989) 16 IPR 469 at 474. (b) A threat arises where the language, by direct words or implication, conveys to a reasonable person in the position of the recipient that the author of the letter intends to bring infringement proceedings against the person said to be threatened: U & I Global at 31. (c) A threat may arise without a direct reference to infringement proceedings: Lido Manufacturing Co Pty Ltd v Meyers & Leslie Pty Ltd (1964) 5 FLR 443 at 450-451. (d) However, a communication merely notifying a person of the existence of a patent or a patent application, together with a statement that any suggestion that the recipient is entitled to replicate the invention is not maintainable, or a communication seeking confirmation that no improper or wrongful use or infringement of the patent has come to the recipient's attention is not a threat: see s 131: Australian Steel Co (Operations) Pty Ltd v Steel Foundations Ltd [2003] FCA 374; (2003) 58 IPR 69 at [17]. (e) Once a threat has been established, it is prima facie unjustifiable unless the person making the threat establishes that it was justified. The court may grant the relief applied for unless the person threatening infringement proceedings establishes that the relevant conduct infringes or would infringe a valid claim of a patent: s 129. (f) A threat can be made by means of a letter from a legal representative: Sydney Cellulose Pty Ltd v Ceil Comfort Home Insulation Pty Ltd [2001] FCA 1350; (2001) 53 IPR 359 at 374. 80 Whether a communication amounts to a threat to commence infringement proceedings against the person said to be threatened for the purposes of s 128 is determined objectively. In U & I Global at 31, Cooper J accepted that the test is whether the language would convey to any reasonable person that the author of the letter intended to bring proceedings for infringement against the person said to be threatened and that it is not necessary that there be direct words that action would be taken. Cooper J relied upon the observations of McLelland CJ in equity, to that effect, in Lido Manufacturing at 450 - 451. We agree. 81 The conclusion of whether a document amounts to a threat of patent infringement proceedings is essentially one of fact; Occupational and Medical Innovations Limited v Retractable Technologies Inc [2007] FCA 1364; (2007) 73 IPR 312 at [9] citing Brain v Ingeldew Brown Bennison & Garrett (A Firm) (No. 1) [1996] FSR 341 at 349 where the Court of Appeal observed: It is a jury-type decision to be decided against the appropriate matrix of fact. Thus a letter or a statement may on its face seem innocuous, but when placed in context it could be a threat of proceedings. The contrary is less likely but could happen. 82 Although each case is specific to its own factual matrix, both parties sought to highlight similarities and differences with the wording of the Trafalgar Letter to the letters considered in the authorities to which the primary judge had regard to advance their case. 83 In JMVB, three letters were sent by the patentee's solicitors to dealers of the respondent's campervans. Each of the letters contained paragraphs which essentially said: If your client does not agree to the demands contained in the first two abovementioned paragraphs [which required the recipient of the letter to immediately cease distributing, offering for sale or selling the allegedly infringing campervan] within the time specified our client will commence proceedings against your client forthwith. Should the latter information and declarations not be provided by [a particular date] our client reserves the right to commence legal proceedings against your client immediately after that date. 84 At [211] - [212] Crennan J was satisfied that the letters amounted to threats, noting that the conditional reservation of rights was a threat to sue for infringement on a future occasion. However, her Honour was not persuaded that the threats were unjustified in the circumstances as the only threats made were contained in solicitors' letters sent prior to commencement of the action. 85 In Occupational and Medical Innovations, two letters sent by the US attorneys acting for the respondent to the applicant were claimed to constitute unjustified threats. Only the first was found to constitute an unjustified threat. The first set out in full in the reasons at [3] was a personally addressed and individually tailored letter, which stated that the sender "is prepared to take any legal action necessary to protect its patented and unpatented technology". That letter made no attempt to identify any relevant patent but demonstrated that the recipient was in the same industry as the sender, with potentially competing products. The respondent led evidence which it said was relevant to the applicant's understanding of the letter in the normal course of business, in particular that the applicant did not yet have a product on the market, which would make the applicant less likely to construe the letter a threat. 86 At [16] Dowsett J rejected the respondent's attempt to narrow the operation of s 128 to cases in which there are already competing products in the market place. At [19] Dowsett J found: The reference to the respondent's patent rights clearly raises the possibility of infringement, suggesting that it holds a relevant patent. One would infer that the letter was dealing with conduct or potential conduct by the applicant, at least some of which would occur in Australia. A further available (and probable) inference is that if, as it implied, the respondent had a relevant patent, it was enforceable in Australia, and therefore probably an Australian patent. 87 Dowsett J observed at [20] that s 128 is, at least in part, designed to discourage allegations of infringement based on construction of a patent which is too wide, noting that over-generalization will often be an element of an unjustified threat. At [23] Dowsett J held the first letter to constitute an implied threat: I am satisfied that a recipient in the position of the applicant would have understood the letter to threaten enforcement or similar proceedings in Australia, pursuant to an Australian patent held by the respondent, in connection with the import into Australia and/or other exploitation in Australia of retractable needles manufactured in China. I do not accept that the absence of any reference in the applicant's letters to such threats detracts significantly from that construction. 88 The Trafalgar Letter contained overgeneralised assertions of infringement. The primary judge held that in making the headline statement, Trafalgar was asserting rights of a breadth it never had. Mr Rakman conceded that he knew when he sent the Trafalgar Letter that not all methods of installation of the Fyrebox Device would infringe the Patent. 89 In CQMS, which Boss identified as being the closest in circumstances to the present case, the respondents sought relief in respect of a series of letters said to constitute unjustified threats following Dowsett J's finding there had been no patent infringement. The series of letters comprised the following (set out at [158]): i. Letter from the [applicants'] patent attorneys, Fisher Adams Kelly, to the [respondents], dated 30 September 2013, which alleged the infringement of: a. claims 1, 10 and 20 of the 400 Patent and "many claims dependent thereon", which are not specified in the letter; and b. claims 1, 3 and 5 of the 615 Patent and "many claims dependent thereon", which are not specified in the letter. ii. Letters from the [applicants'] legal representatives, Thomsons Lawyers, to the [respondents'] legal representatives, Jones Day, dated 18 and 23 October 2013. iii. Emails from the [applicants] dated 6 or 7 November 2013 and 8 September 2014 to the [respondents'] customers and potential customers that the [respondents'] products infringe the 400 Patent and the 615 Patent. 90 Boss submitted that the Trafalgar Letter was similar to one in the series, the email to "customers" sent on 6 November 2013 (the CQMS email), which was found by Dowsett J at [170] to be a threat of future action against customers; persons who could be expected to purchase products from the applicants or the respondents. Boss highlighted the following passage from the email, which took the form of a general notice to customers, the terms of which were set out in CQMS at [168]: CQMS Razer commences court proceedings against Braden for patent infringement CQMS Razer Pty Ltd, and its related entity CQMS Pty Ltd (CQMS), have today filed patent infringement proceedings in the Federal Court of Australia against Bradken Resources Pty Limited and Bradken Limited (BKN). CQMS is the owner of a number of patents relating to ground engaging tools (GET) and manufactures steel engineered wear parts for the mining industry, including GET. BKN, also manufactures a variety of engineered steel products for the mining industry, has recently introduced a range of GET branded Penetrator Max into the mining sector. CQMS believes some of these products infringe two of its patents. After issuing a letter and attempting to resolve the dispute, CQMS commenced the proceedings against BKN alleging that: Certain Penetrator Max products directly infringe CQMS' registered patents. Specifically, the system that the relevant products use to affix the GET to mining machines, infringes the patents; By selling certain components of the Penetrator Max products to its customers to be used as GET, BKN has infringed, and authorised the infringement of, the patents. However, CQMS' dispute is with BKN not with the customers who use the GET. CQMS has taken this action as a last resort as it believes it is necessary to protect its intellectual property rights. The proceedings are scheduled for a first directions hearing in the Federal Court of Australia (Queensland Division) on 13 December 2013. (Bold in original, italic emphasis added.) 91 In relation to the CQMS email, Dowsett J observed at [170] that the indication (in italics above) that the existing dispute was between the applicants and the respondents may have offered some reassurance, but the threat was still present. Dowsett J took into consideration, the effect of the letter on the recipient, to find that the email constituted a threat to customers: …Fairly clearly, the authorized infringements were by the respondents' customers. The alleged infringement by customers, in the context of litigation against a supplier, would inevitably raise, in the minds of the customers, their own potential liability, should the applicants decide that such litigation was necessary in order to protect their intellectual property rights. The indication that the existing dispute was between the applicants and the respondents may have offered some reassurance, but the threat was still present. That the applicants chose to offer such reassurance suggests that they expected that the email would come to the attention of the respondents' customers. A customer (actual or potential) would inevitably wonder about the reason for sending such a notice. At the very least, that customer would conclude that any future acquisition of one of the respondents' products would be risky. I have no real doubt that the applicants intended that the email produce that effect. It is the effect on the reasonable recipient which is [relevant]. I have identified that effect. I find that the notice was a threat to the customers. 92 Likewise, in the present case the primary judge was in no doubt that the purpose of the Trafalgar Letter was to warn off those whom Trafalgar regarded as purchasers, or influencers of purchasers, of the Fyrebox Device so that those persons would not purchase or recommend the purchase of the product or have any dealings with Boss in respect of that product. The Trafalgar Letter was a clear and intended signal to likely purchasers that any dealings with Boss in respect of the Fyrebox Device would be in jeopardy at a real risk of interruption by the action that Trafalgar was taking against Boss. 93 Dowsett J then considered the letters in light of the Genuine Steps obligations imposed by s 6(1) of the Civil Dispute Resolution Act 2011 (Cth), concluding at [186] that the CQMS email, sent after the commencement of proceedings, was clearly not a genuine step towards resolution of a dispute: Although the letter asserts that any dispute is with the respondents, and not with the customers, one must wonder why the email refers to the sale of infringing products. One must also wonder why it was written at all, unless it was intended to make purchasers and potential purchasers aware of the proceedings. Undoubtedly, the applicants hoped that at the very least, it would discourage potential customers from buying the respondents' products. It could only do so by creating in the customers some apprehension of possible disadvantage to them, should they do so. The only apparent source of such disadvantage was infringement proceedings against them. In my view the email of 6 November 2013 was a threat of future action against customers. 94 Despite his similar findings as to the purpose of the Trafalgar Letter and its effect on the recipients, the primary judge reached a different ultimate conclusion to that of Dowsett J in CQMS. 95 In Damorgold, Vertilux the exclusive licensee, placed notices in the trade publication "Window Furnishings Australia". The notices identified the patent and informed the reader that Vertilux, was "committed to enforcing its rights" and had recently taken action for infringement against one supplier of blind components. The notices included the statement that "further action will be taken by Vertilux against other infringers if necessary". Middleton J characterised the notices as "a general warning to the addressees against infringement" which did not amount to an unjustified threat within s 128. 96 In Liberation at [170], Greenwood J considered a personally addressed letter which included the statement: "Currently the dispute is confined to Titan and Lomax. Titan sincerely does not want to involve any other persons in this dispute" (the letter was reproduced in its entirety at [141]). The letter was sent following a telephone conversation between the sender and recipient. Greenwood J held that the looking at the letter in the context of the telephone call he was not satisfied that the letter conveyed a threat to bring patent infringement proceedings. His Honour noted that the letter may contain an observation that the senders of the letter might need to consider their position according to changing circumstances but it did not contain a direct or indirect threat to the recipient of infringement proceedings against that recipient. 97 At [155], Greenwood J observed that the letter did not contain "the more emphatic reassurance given by CQMS" (which he noted was nevertheless found to be insufficient to avoid a conclusion that a "threat was still present", in the circumstances of that case), that "CQMS' dispute is with BKN not with the customers who use [the patented tools]". Commencing at [165], Greenwood J set out the features of the correspondence in CQMS, that the applicant said distinguished it from the letter in his case, including: [165] First, they say that the email in CQMS was a general notice to the industry and not, as here, a single letter sent to one person following a phone call. The letter in CQMS was sent without prior warning to industry participants who may have been unaware of the infringement proceedings before receipt of the letter. [166] Second, the email in CQMS expressly referred to the use of the impugned product by customers as an infringement in circumstances where, as Dowsett J held, it was fairly clear that the "authorised infringements" were by the respondents' customers. The applicants say that in contrast, nothing Mr Bloom said refers to the "liability" of installers or customers of the Lomax Hoarding System. 98 Like Trafalgar, the patentee and exclusive licensee in Liberation submitted their case was much closer to the circumstances arising in Damorgold. 99 The circumstances in CQMS and the present case share some similarities. Both the CQMS email and the Trafalgar Letter were sent after infringement proceedings had been commenced against the supplier. Both contained over generalised assertions of infringement, and were sent for the purpose of discouraging customers from buying the products in question from the supplier. In contrast to the CQMS email, the Trafalgar Letter was personally addressed and individually tailored to each recipient. The other difference lies in the form of the indication in each letter that the target of infringement proceedings was the supplier, not the customer. 100 As Trafalgar submitted, the italicised indication in the CQMS email (at [89] above) can be distinguished from the "we stress" indication found in the Trafalgar Letter. The Trafalgar indication is more extensive than that of the CQMS email. The Trafalgar indication in combination with the sentence that follows it: "[r]ather we are addressing the infringement at the point of supply of infringing products by our court action against BOSS", places emphasis on supply of the Fyrebox Device. That emphasis brings the potential for disrupted supply due to the proceedings against Boss into focus as the primary source of apprehended disadvantage to the recipient of the Trafalgar Letter, rather than infringement proceedings against the recipient. 101 The conclusion as to whether a particular letter in all the circumstances of a case constitutes an unjustified threat of patent infringement proceedings is one on which minds may differ. In our view, the Trafalgar Letter skated close to the edge of the precipice beyond which unjustified threats lay. Whilst the Trafalgar Letter was undoubtedly a threat, which appeared to achieve its intended aim- to scare away Boss' customers, it was not a threat of patent infringement proceedings against those customers as required by s 128. No error has been demonstrated in the reasoning of the primary judge or his finding, having regard to the context facing the recipients, that the Trafalgar Letter stopped short of threatening legal proceedings and did not constitute threats of patent infringement proceedings for the purposes of s 128.

5. INNOVATIVE STEP / NOVELTY: Ground 3 of the appeal and ground 2 of the Notice of Contention

5.1 Introduction 102 Claim 5 is for a method in accordance with any of the preceding claims "including the step of marking a line on the external object so as to depict the proposed centre line of the barrier". 103 In ground 3, the appellants contend that the primary judge erred in finding that claim 5 lacked an innovative step. The particulars appended to this ground raise three points: that the presumption in s 7(4) of the Patents Act is that an invention involves an innovative step unless the revoker establishes otherwise; that having found at [337] that Boss had not developed its assertion that claim 5 lacked an innovative step and leaving the Court 'to its own devices' the primary judge ought to have found that Boss had not discharged its onus to establish the ground; and having found at [339] that claim 5 was novel, the primary judge erred in finding that the step added in claim 5 was a 'trivial addition' that did not make a substantial contribution to the working of the invention, absent evidence to that effect. 104 The appellants contend that neither party led expert evidence which was directed to whether the step of marking on the external object the proposed centre line of the barrier made a substantial contribution to the working of the invention. They submit that, from the perspective of the person skilled in the art, the step of marking a line on the external object to depict the proposed centre line of the barrier may make a real functional contribution to the working of the clamed method, since the barrier would not otherwise be installed accurately in the required position, and the respondents failed to establish otherwise. 105 The respondents drew attention to evidence which, they submit, put the primary judge into a position to understand what claim 5 added to the method of the preceding claims.

5.2 Consideration 106 We do not consider that the primary judge erred in reaching the conclusion that claim 5 lacks an innovative step. 107 For the purposes of the Patents Act, an invention is to be taken to involve an innovative step, when compared with the prior art base, unless the invention would, to a person skilled in the relevant art, in light of the common general knowledge before the priority date, only vary from certain kinds of information, in ways that make no substantial contribution to the working of the invention; s 7(4). These kinds of information are prior art information publicly available in a single document or through doing a single act or prior art information made publicly available in two or more related documents or through doing two or more related acts, if the relationship between them is such that a person skilled in the art would treat them as a single source of information; s 7(5)(a) and (b). 108 The primary judge said the following about the test for innovative step, noting that the approach that was taken by Gyles J to the construction of s 7(4) was not disturbed on appeal in Dura-Post (Aust) Pty Ltd v Delnorth Pty Ltd [2009] FCAFC 81; (2009) 177 FCR 239 at [73] - [79] and [91]: [111] The approach to determining whether an innovative step is present was discussed by Gyles J in Delnorth Pty Ltd v Dura-Post (Aust) Pty Ltd [2008] FCA 1225; 78 IPR 463. At [52] - [53], his Honour said: [52] There is no need to search for some particular advance in the art to be described as an innovative step which governs the consideration of each claim. The first step is to compare the invention as claimed in each claim with the prior art base and determine the difference or differences. The next step is to look at those differences through the eyes of a person skilled in the relevant art in the light of common general knowledge as it existed in Australia before the priority date of the relevant claim and ask whether the invention as claimed only varies from the kinds of information set out in s 7(5) in ways that make no substantial contribution to the working of the invention. It may be that there is a feature of each claim which differs from the prior art base and that could be described as the main difference in each case but that need not be so. Section 7(4), in effect, deems a difference between the invention as claimed and the prior art base as an innovative step unless the conclusion which is set out can be reached. If there is no difference between the claimed invention and the prior art base then, of course, the claimed invention is not novel. [53] The phrase "no substantial contribution to the working of the invention" involves quite a different kind of judgment from that involved in determining whether there is an inventive step. Obviousness does not come into the issue. The idea behind it seems to be that a claim which avoids a finding of no novelty because of an integer which makes no substantial contribution to the working of the claimed invention should not receive protection but that, where the point of differentiation does contribute to the working of the invention, then it is entitled to protection, whether or not (even if), it is obvious. Indeed, the proper consideration of s 7(4) is liable to be impeded by traditional thinking about obviousness. [112] At [54], his Honour turned to consider the proper meaning of "substantial" as used in s 7(4): did it mean "great" or "weighty", or did it mean "more than insubstantial" or "of substance"? After considering certain secondary materials, and earlier case law dealing with the expanded view of novelty expressed in Griffin v Isaacs (1938) 1B IPR 619 - which is the provenance of the expression "make no substantial contribution to the working of the invention" as used in s 7(4) - Gyles J held (at [61]): [61] In my view the provenance of the phrase "make no substantial contribution to the working of the invention" indicates that "substantial" in this context means "real" or "of substance" as contrasted with distinctions without a real difference. That confirms my impression from construction of the words of the section itself. 109 None of these propositions is disputed on appeal. 110 The primary judge correctly observed at [339], that the requirement of claim 5 is simply that a line be marked on the external object (we interpolate, such as a soffit) to depict the proposed centre line of the barrier (such as a wall). None of the earlier claims require the fire stopping device to be located in any particular position in relation to the line, other than the requirement of claim 1 that the first portion "straddles" the proposed positioning of the barrier. Claim 1 also provides that the barrier must be "around the firestopping device". 111 In considering novelty, the primary judge was satisfied, having regard to the evidence of the Seltor meeting, that in the discussion between Mr Ramunddal and Mr Prior all of the elements of claims 1 - 4 of the patent were disclosed. He was not satisfied that the additional integer of claim 5 was present because he considered that the highest Mr Prior's evidence went was to the point that he gave instructions that after the walls were "marked out", the device is installed in a position that would straddle the wall; at [235]. His Honour noted that this evidence fell short of disclosing the step of marking the centre line of the barrier, which is the requirement of the claim. The primary judge also found that Mr Ramunddal's recollection did not extend to any statement that reflected such instructions being given, thereby sounding a note of caution in accepting that the disclosure of that integer had been made. 112 In such circumstances, the primary judge was not prepared to accept that the integer of claim 5 had been disclosed with sufficient clarity to amount to an anticipation. In this regard, his Honour had earlier noted that in cases where a prior use is alleged, the Court must exercise caution because of the fallibility of human memory and the danger that the memory of witnesses may be influenced by other products seen in the meantime and reflect reconstruction on the basis of these later observations, citing Old Digger Pty Ltd v Azuko Pty Ltd [2000] FCA 676; (2000) 51 IPR 43 at [156] (Von Doussa J) and what Jagot J referred to as a form of "self-reinforcing tapestry" in Fieldturf Tarkett Inc v Tigerturf International Ltd [2014] FCA 647; (2014) 317 ALR 153 at [95], [98]. 113 The primary judge's reasoning to this effect is challenged by Boss in its Notice of Contention. Boss argues that his Honour ought to have found that claim 5 also lacked novelty. However, that contention must fail. Having regard to the evidence given by Mr Prior, it was open to his Honour, and correct, to observe that the findings of fact that he made at [178] of his reasons as to the disclosure from Mr Prior to Mr Ramunddal fell short of disclosing the integer required by claim 5. 114 Nor, in our view, does the fact that Mr Prior's written evidence in chief was "… you would mark out where your walls will be, then you would install your Fyrebox in a position that would straddle the wall" enhance Boss' position. For the reasons given by his Honour, that evidence also does not meet the claim. Straddling the wall is not equivalent to providing the centre line of claim 5. Nor, having regard to the evidence of different methods of marking walls (to which we refer below) can it be said that the instructions as recited have the inevitable result that the claim would be met. 115 Returning to the question of innovative step, we note that the expert evidence included Mr Page's observations that in order to install any firestopping devices of the prior art, there must be some form of marking or indication on the soffit to show an installer where the wall is to be located, so that it can be located in the correct position straddling the wall. In his experience one way of marking centre lines of the walls was to use chalk lines, but by 12 February 2016, this method had been superseded by a method whereby the centre lines would be marked on the floor or datum points in dots be marked on the wall and the installer would use a rotary laser to project a laser line aligned with the centre line of the wall, as marked either on the floor or the datum points. He gave the opinion that it makes no significant contribution to the working of the device and the construction of the wall which method is used in the sense that in each case, installers and trades have a clear indication of the centre line of the wall on the soffit. 116 In oral evidence, Mr Page elaborated on how the chalk mark would be applied to the centre line, if the worker installing the device did not have a laser marker. Mr Hunter, whose experience (unlike that of Mr Page) did not lie in the building of apartments, did not demur. 117 In our view, this evidence supplied ample basis for the primary judge to conclude, as he did, that as a matter of evaluation, the step of marking the centre line of the barrier does not make a substantial contribution to the working of the invention. Whilst the prior disclosure of the Seltor meeting did not specify for the marking of the centre line of the barrier, the person skilled in the art would understand that this is required and that the use of a physical line - as opposed to other common general knowledge methods of laser marking or datum points - is, as his Honour concluded, no more than a trivial addition to the method that is described and claimed. 118 Accordingly, we dismiss ground 3 of the appeal and reject the second ground in the Notice of Contention. In light of our conclusions, we do not consider it necessary to address Boss' further contention which is to the effect that the primary judge erred in failing also to find that the claims of the patent were not infringed.

6.1 The grounds relied upon 119 The appellants rely on the following grounds on the question of costs. 120 In ground 4, the appellants contend that the trial judge erred in failing to invoke FCR 1.35 to make an order inconsistent with the consequences of FCR 25.14(2) (which concerns the costs consequences where an offer is not accepted) because each respondent abandoned or failed in significant parts of its case in each proceeding. The particulars appended to this ground provide that FCR 1.35 should have been invoked in respect of Offers 1, 3 and 4, which the primary judge recognised were significant aspects of each respondent's case that had been abandoned or failed, and to relieve an injustice caused by the indemnity cost orders which entitled each respondent to recover all costs associated with those abandoned components on an indemnity basis. 121 In ground 5, the appellants contend, in the alternative, that the costs orders made by the primary judge in each proceeding did not meet the justice of the case, or prevent injustice as between the parties, when effecting the broad discretion as to the award of costs under ss 43(2) and (3) of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act), and repeated the particulars appended to ground 4. 122 In ground 6, the appellants contend, in the alternative, that in finding that FCR 25.14(2) applied to Offer 1, the primary judge erred in finding at [46] of the costs judgment that it "raised" a genuine compromise. The accompanying particular provides that the trial ought to have found that Offer 1 was not a genuine compromise because it offered discontinuance of the claim and cross-claim, which would not have brought about a final resolution of the dispute. 123 In ground 7, the appellants contend, in the alternative, that in finding that FCR 25.14(2) applied to Offers 1 and 4, the trial judge erred in finding at [48] and [78] of the costs judgment that Trafalgar's failure to accept Offers 1 and 4, at the time those offers were received, was "unreasonable" within the meaning of FCR 25.14(2). The first particular provided that the primary judge erred in finding that it was not unreasonable for Trafalgar to reject Offer 1 at the time it was received because the proceedings were at a relatively preliminary stage and the offer did not account for the issues in respect of which Trafalgar ultimately succeeded or which were abandoned and the offer only offered discontinuance. The second particular provided that the primary judge erred in finding at [76] of the costs judgment that Trafalgar acted unreasonably in failing to accept Offer 4 having regard to the evidence that Boss had filed and served in the first trade mark appeal, and because at the time the offer was made, the pleadings in the second trade mark appeal had not closed.

6.2 The costs orders made 124 The primary judge made three costs orders: (1) In the patent case, he ordered that the appellants pay the respondents' costs of the proceeding, including the cross-claim to date: (a) Up to 11am on 30 July 2019 on a party-party basis; and (b) From 11am on 30 July 2019 on an indemnity basis. (2) In the trade mark appeal concerning the FIREBOX trade mark application (ie the first trade mark appeal), he ordered that Trafalgar pay Boss' costs of the proceeding: (a) Up to 11am on 30 July 2019 on a party-party basis; (b) From 11am on 30 July 2019 on an indemnity basis. (3) In the trade mark appeal concerning the FYREBOX trade mark application (ie the second trade mark appeal), he ordered that Trafalgar pay Boss' costs: (a) Up to 11 am on 24 September 2019 on a party-party basis; and (b) From 11 am on 24 September 2019 on an indemnity basis.

6.3 The costs judgment 125 In the costs judgment, the primary judge summarised his findings in the patent proceeding, namely: that Boss' cross-claim alleging patent infringement succeeded and that all of the claims of the patent were invalid; that it followed that Trafalgar's claim of infringement against Boss could not be established; that had the claims not been invalid, Trafalgar's infringement case against Boss, but not its director, Mr Prior, would have succeeded; and that Boss' cross-claim alleging that Trafalgar had contravened s 18 of the ACL succeeded, but its cross-claim alleging that Trafalgar had made unjustifiable threats within s 128 of the Patents Act failed. His Honour also noted that in the first trade mark appeal he had found that Boss' appeal succeeded and that in the second trade mark appeal, he had found that Trafalgar's appeal did not succeed. 126 The primary judge summarised the terms of four offers of compromise that were made by Boss, three of which are presently relevant. 127 Offer 1 was made in the patent proceeding on 26 July 2019 and proposed that the claim and the cross-claim be discontinued, and that Trafalgar pay 80% of Boss' party and party costs up to the date of the offer, which at that point were $459,427.33. By the date of judgment on 29 April 2022, those costs were $2,257,693.37. 128 Offer 3 was made in the first trade mark appeal on 20 September 2019 and proposed that the appeal be discontinued, that Trafalgar withdraw the 784 application (for the registration of the word FIREBOX) and that Trafalgar pay 80% of Boss' party and party costs in the opposition before the Registrar, which at that date were $219,545.37. We note that the costs order made in the first trade mark appeal appears to be in error insofar as it requires the appellants to pay costs on an indemnity basis from 30 July 2019 rather than 24 September 2019 (cf judgment at [70]). 129 Offer 4 was made in the second trade mark appeal on 20 September 2019 and proposed that Trafalgar's appeal be dismissed and that Trafalgar pay 80% of Boss' party and party costs in the second trade mark appeal and 80% of Boss' scale costs in the opposition in respect of the 214 application (being Trafalgar's application for registration of the FYREBOX composite mark). 130 The primary judge set out the relevant provisions of the Federal Court Act and FCR as follows. 131 Section 43(1) relevantly provides: (1) The Court or a Judge has jurisdiction to award costs in all proceedings before the Court (including proceedings dismissed for want of jurisdiction) other than proceedings in respect of which this or any other Act provides that costs must not be awarded. This is subject to: (a) subsection (1A); and (b) section 570 of the Fair Work Act 2009; and (c) section 18 of the Public Interest Disclosure Act 2013. 132 Sections 43(2) and (3) direct attention to the discretionary nature of an award of costs in the manner in which the power to award costs can be exercised: (2) Except as provided by any other Act, the award of costs is in the discretion of the Court or Judge. (3) Without limiting the discretion of the Court or a Judge in relation to costs, the Court or Judge may do any of the following: (a) make an award of costs at any stage in a proceeding, whether before, during or after any hearing or trial; (b) make different awards of costs in relation to different parts of the proceeding; (c) order the parties to bear costs in specified proportions; (d) award a party costs in a specified sum; (e) award costs in favour of or against a party whether or not the party is successful in the proceeding; (f) order a party's lawyer to bear costs personally; (g) order that costs awarded against a party are to be assessed on an indemnity basis or otherwise; (h) do any of the following in proceedings in relation to discovery: (i) order the party requesting discovery to pay in advance for some or all of the estimated costs of discovery; (ii) order the party requesting discovery to give security for the payment of the cost of discovery; (iii) make an order specifying the maximum cost that may be recovered for giving discovery or taking inspection. Note: For further provision about the award of costs, see subsections 37N(4) and (5) and paragraphs 37P(6)(d) and (e). 133 FCR 40.01 provides: If an order is made that a party or person pay costs or be paid costs, without any further description of the costs, the costs are to be costs as between party and party. Note: Costs as between party and party is defined in the Dictionary. 134 Part 25 of the FCR concerns offers to settle. FCR 25.01 provides for offers of compromise: (1) A party (the offeror) may make an offer to compromise by serving a notice, in accordance with Form 45, on another party (the offeree). (2) The notice must not be filed in the Court. 135 FCR 25.02 to 25.05 provide for the form, timing, and content of such offers. 136 FCR 25.14 provides for the consequences of not accepting an offer of compromise: (1) If an offer is made by a respondent and not accepted by an applicant, and the applicant obtains a judgment that is less favourable than the terms of the offer: (a) the applicant is not entitled to any costs after 11.00 am on the second business day after the offer was served; and (b) the respondent is entitled to an order that the applicant pay the respondent's costs after that time on an indemnity basis. (2) If an offer is made by a respondent and an applicant unreasonably fails to accept the offer and the applicant's proceeding is dismissed, the respondent is entitled to an order that the applicant pay the respondent's costs: (a) before 11.00 am on the second business day after the offer was served - on a party and party basis; and (b) after the time mentioned in paragraph (a) - on an indemnity basis. (3) If an offer is made by an applicant and not accepted by a respondent, and the applicant obtains a judgment that is more favourable than the terms of the offer, the applicant is entitled to an order that the respondent pay the applicant's costs: (a) before 11.00 am on the second business day after the offer was served - on a party and party basis; and (b) after the time mentioned in paragraph (a) - on an indemnity basis. Note 1: Costs on an indemnity basis is defined in the Dictionary. Note 2: The Court may make an order inconsistent with these rules - see rule 1.35. 137 FCR 1.35 provides: The Court may make an order that is inconsistent with these Rules and in that event the order will prevail. 138 The primary judge noted that the discretion conferred by s 43(2) is unfettered except by the principle that it be exercised judicially and, as the Full Court observed in Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International N.V. (No 2) [2007] FCAFC 121 at [6] (Black CJ, Allsop and Middleton JJ), in the absence of circumstances justifying some other order, costs ordinarily follow the event and a successful litigant is entitled to an order for its costs. 139 The primary judge then summarised the law relevant to the implications of FCR 1.35 in respect of the application of FCR 25.14 by reference to the decision of the Full Court in Sydney Equine Coaches Pty Ltd v Gorst [2017] FCAFC 34 at [14] - [24] (Rares, Flick and Bromwich JJ), none of which is challenged in the present appeal. Paragraphs [19] - [22] of that decision are set out below: [19] The provisions of r 1.35 are remedial in character. They, like r 1.34, enable the Court to make an order that is inconsistent with the Rules. The purpose of the broad power in a provision such as r 1.35 is to relieve against injustice: FAI 165 CLR at 283. Parties can expect that r 25.14(1) provides for the costs consequences that in the ordinary course of litigation will flow from the non-acceptance of an offer of compromise made under Pt 25 of the Rules where the offeree obtains a less favourable result than the one made in the offer. Nonetheless, the purpose of r 1.35 is to allow the Court to make an order that is inconsistent with what r 25.14 prescribes would otherwise occur, so as both to meet the justice of the case or to prevent injustice and to give effect to the Court's broad discretion to make orders for costs conferred in s 43(2) of the Federal Court Act. [20] Justice Hely said in Port Kembla Coal Terminal Ltd v Braverus Maritime Inc (No 2) [2004] FCA 1437 at [17], (2004) 212 ALR 281 at 284 that: Once an offer is made, and a judgment no less favourable obtained, a rebuttable presumption in favour of indemnity costs is created. It then becomes incumbent on the defendant to show reason why the presumption should not crystallise. … the prima facie position should only be departed from for proper reasons which, in general, only arise in an exceptional case. [21] In Lodestar Anstalt v Campari America LLC (No 2) [2016] FCAFC 118 at [27] Allsop CJ, Greenwood, Besanko, Nicholas and Katzmann JJ said: … the power to make an order inconsistent with the Rules should be exercised for proper reasons which will generally only arise in exceptional circumstances. [22] It follows that there is power to make an order inconsistent with r 25.14 where there is reason to do so, including in those cases where the application of r 25.14 would lead to or cause injustice or not meet the justice of the case. Such an order inconsistent with r 25.14 would, in such circumstances, be an "exception" to the prima facie presumption. Care must nevertheless be exercised to ensure that the use of such phrases as "proper reasons" or "exceptional circumstances" do not operate as a gloss to constrain the otherwise broad discretionary power conferred by r 1.35: Shin Kobe Maru 181 CLR at 421. Rather, expressions such as "exceptional" or "show reason why" that Hely J and other judges have used in explaining occasions on which it is open to a Court to make orders inconsistent (under r 1.35) or relieving compliance (under r 1.34) with the provisions of the Rules, should be understood as simply conveying the notion that a reason or reasons must be shown for departing from the prima facie position set forth in r 25.14. That is because, unless there is a feature of the occasion that calls for an exception to be made, the prima facie position prescribed by r 25.14 will apply. 140 The primary judge said that that he would approach the question of costs by considering, first, whether, and to what extent, FCR 25.14 applies and then, subject to that determination, what costs should be awarded. 141 In relation to Offer 1, the primary judge concluded that the costs of the patent proceeding should fall as provided by FCR 25.14(2) and that the prima facie position under that rule should not be displaced under FCR 1.35. In so concluding, he made the following relevant findings: (1) The offer was served approximately 11 weeks after Boss served its evidence in support of its case that all of the claims were invalid for want of novelty based on the disclosures at the Seltor meeting. (2) The evidence included the relevant affidavits of Mr Prior and Mr Ramunddal which included digital images of the samples that were demonstrated at the meeting and the Firestopit PDS. Also exhibited were the actual samples of the Pass-it Version 2 that were demonstrated. The physical samples were inspected by Trafalgar's solicitors on 29 May 2019. (3) Some seven months earlier, Boss' cross-claim had given particulars of its novelty case based on the Seltor meeting and that Boss' case on lack of innovative step was also based on those disclosures such that Trafalgar was clearly on notice of the challenges being made based on the Seltor meeting. (4) Trafalgar must have realised, or at least ought to have realised, that if the Court accepted the evidence of Mr Prior and Mr Ramunddal of the Seltor meeting, then claims 1 - 14 were anticipated and that claim 5 was vulnerable on the ground of lack of innovative step, noting that Trafalgar itself did not call evidence to demonstrate that claim 5 added an innovative step but rather advanced its case on the basis of whether Boss had discharged its onus. (5) At trial, Mr Prior's and Mr Ramunddal's evidence was read without objection. Trafalgar's challenge to this aspect of the case was to attempt to impugn their credit and to contend that various items of evidence had been fabricated. The primary judge then set out [217] - [219] of the judgment, which are as follows (emphasis added): [217] Trafalgar's challenge to the veracity of the evidence given by Mr Prior and Mr Ramunddal in relation to the Seltor meeting really amounts to an allegation of fabrication that involves both Mr Prior and Mr Ramunddal. Trafalgar's submissions were laced with the suggestion that, because of their relationship, Mr Ramunddal was a witness who would be prepared to conspire with Mr Prior to give false evidence at Mr Prior's behest. I reject that suggestion. I have no reason not to accept Mr Ramunddal as an honest witness. [218] To summarise, according to Trafalgar the Firestopit PDS shown in the digital image is not a genuine document and, as at September 2015, the products shown in the image did not exist. Further, Trafalgar contended that the image was staged and that some unknown person purposely altered the date setting on the camera to record an event that did not take place. [219] On the evidence before me, this scenario is fantastical. It is based on theories which are not established by the evidence and which, taken as a whole, lack coherence. It also seems to envelope Mr Atkinson's evidence concerning the creation of the Firestopit PDS and the date when the Pass-It Version 2 was first manufactured by FSi. However, I also accept Mr Atkinson as an honest witness. As explained in the next section of the reasons, I accept that the Pass-It Version 1 and the Pass-It Version 2 commenced to be manufactured by FSi in the period late 2014 to early 2015. I do not accept the likelihood that Mr Atkinson was mistaken about that matter. And, as I have said, I am not persuaded that the Firestopit PDS is not a genuine document. Indeed, it was not even put to Mr Ramunddal that he was not given a copy of the Firestopit PDS at the Seltor meeting. (6) In failing to accept Offer 1, Trafalgar elected to go to trial, hoping to persuade the Court that it could not be satisfied that the disclosures relied upon at Seltor meeting had not been made. There was nothing on the face of the affidavits relied upon that would suggest that the meeting did not take place or that the disclosures had not been made. As his Honour said at [39]: Having elected to put Boss to proof, and to chance its arm in persuading the Court not to accept Mr Ramunddal's and Mr Prior's evidence, Trafalgar must assume the costs consequences of its own forensic decision. (7) His Honour noted Trafalgar's submission that Boss had advanced an "expansive case" in its cross-claim, where most of the costs of the patent proceeding had arisen and that that Boss achieved success only because of the findings from the Seltor meeting which was but one of a "sea of issues" raised by Boss, the balance of which either were abandoned or did not succeed. In rejecting that submission, the primary judge said (emphasis added): [41] It is undoubtedly true that, ultimately, a number of the issues pleaded in the cross-claim, insofar as they were directed to claim validity, were abandoned by Boss or failed. In the normal course of events, this circumstance might justify a discount being applied to the costs to which Boss is entitled. But it is equally true that Trafalgar raised a great many factual issues that were directed to establishing that Boss's evidence had been fabricated. The alleged fabrications found a particular focus in the evidence of the Seltor meeting: whether the Pass-It Version 2 was in existence at the time of the Seltor meeting; whether the Firestopit PDS was a genuine document; whether the photographic images of the samples and the Firestopit PDS that were displayed at the Seltor meeting had been falsified. These challenges raised myriad sub-issues. Trafalgar even went so far as to challenge whether the Seltor meeting had taken place. [42] All of these challenges by Trafalgar were fruitless. All added significantly to the complexity of the case - complexity that was not otherwise present in this part of the cross-claim. All added considerably to the volume of evidence that Trafalgar called at the hearing. And all added to the intricate web of factual issues that, ultimately, fell for determination. Had these unsuccessful challenges not been made, much of the factual complexity attending the question of claim validity would have been avoided, and the hearing of the cross-claim considerably shortened. (8) The primary judge noted that Boss' success on the cross-claim inevitably meant that Trafalgar's case on infringement could not succeed. In this regard he noted that the infringement case was a very small part of the overall patent proceeding that turned on limited questions of claim construction and that the claim against Mr Prior personally, which was a significant part of its factual case on infringement, would have failed regardless of the outcome of the cross-claim. He also noted that Boss had succeeded in its case based on unjustifiable threats and that, whilst it failed in its ACL claim, both relied on common facts and concerned different legal characterisations of the same conduct. (9) The primary judge found that Offer 1 raised a genuine compromise saying: [46] … By that offer, Boss signified its preparedness to give up its claim for damages arising out of Trafalgar's wrongful conduct in sending the letters in September 2018 (a claim which it will now pursue), and a not insignificant proportion of its costs, assessed on a party and party basis. It also signified its preparedness to give up its claim to revoke the patent. Had it accepted Offer 1, Trafalgar would have insulated itself from Boss's claim for damages; its costs burden would have been reduced; and it would have kept its patent. My conclusion that Offer 1 raised a genuine compromise is not gainsaid by the fact that the offer involved discontinuance of the claim and cross-claim. 142 The primary judge then noted Trafalgar's contention that its failure to accept Offer 1 was not unreasonable, in accordance with FCR 25.14(2). He rejected that submission first, because a subsequent amendment to the particulars of invalidity simply had the effect of bringing the pleading into line with the affidavit evidence that had been filed and served ([49]); secondly because Trafalgar's wish to take steps, such as by discovery and requesting the issue of subpoenas, to challenge Mr Ramunddal's and Mr Prior's evidence, signified that Trafalgar had already made, and wished to persevere with, the forensic decision to contest whether the Seltor meeting had taken place as Mr Ramunddal and Mr Prior had deposed. This was so in circumstances where there was nothing on the face of Mr Ramunddal's affidavit, or on Mr Prior's affidavit, to suggest that the Seltor meeting did not take place, or that the disclosures, to which Mr Ramunddal and Mr Prior had deposed, were not made. Further, the discovery sought and subpoena issued did not result in the production of documents that assisted, a fact known by Trafalgar prior to the issue of Offer 1 ([50]); thirdly because it was no excuse that the time had not passed for Trafalgar to file its evidence in answer, given that the opinions of experts of the kind called in the present case could not assist in informing it of the significance of the disclosures at the Seltor meeting ([51]). In any event, Trafalgar did not seek additional time to consider Offer 1, but simply did not respond to it; finally, the primary judge rejected the argument that as Boss merely offered discontinuance, it was not unreasonable to reject the offer because Boss could turn around and commence proceedings for the revocation of the patent (and the ACL and unjustifiable threats case) against Trafalgar afresh ([53]). This, his Honour considered, was no more than a theoretical argument that, having been sued and extricated itself from the proceedings, Boss would turn around and raise the same claims afresh. His Honour did not think that there was any rational basis for this concern which, in any event was unsupported by any evidence ([53]). 143 Ultimately, the primary judge was satisfied that the costs of the patent proceeding should fall as provided by FCR 25.14(2) and that the prima facie position should not be displaced under FCR 1.35 ([54]). 144 In relation to Offer 3, the primary judge noted that it was made in the context of Boss's unsuccessful opposition to the 748 application. Boss relied on FCR 25.14(3) - an offer made by an applicant that is not accepted by a respondent. At the time that the offer was made, Boss had filed and served its affidavit evidence in support of its appeal and Trafalgar had filed and served its evidence in answer by mid-September 2019. The primary judge found that the effect of the application of the rule to Offer 3 was that Boss is entitled to its costs on a party and party basis up to 11am on 24 September 2019 and thereafter on an indemnity basis. He rejected the contention advanced by Trafalgar that the evidence that Boss served in support did not vary significantly from the evidence that was led before the delegate. He also considered that Boss had raised grounds based under ss 41, 42(b), 58, 59, 60, 62 and 62A of the Trade Marks Act 1995 (Cth) but narrowed its case to rely only on the ground that Trafalgar was not the owner of the 748 mark pursuant to s 58. He concluded at [69] of the costs judgment that Boss' decision in final submissions to confine the appeal to the issue of greatest relevance did not stand as a sound reason to displace the application of FCR 25.14(3), because the main thrust of Mr Prior's affidavit of 30 August 2019 concerned Boss' first use of FIREBOX and FYREBOX as a trade mark in respect of the relevant goods. This affidavit was available to be used in relation to the other grounds of opposition pleaded. 145 In relation to Offer 4, the primary judge noted that the second trade mark appeal was brought by Trafalgar and that it sought to persuade him to find that the offer made by Boss was not unreasonably refused by it pursuant to FCR 25.14(2). His Honour found: [74] Offer 4 was made on 20 September 2019, at the same time as Offer 3 was made. By that time, the Court had made orders that evidence in the first trade mark appeal would be evidence in the second trade mark appeal. However, pleadings in the second trade mark appeal had not closed. [75] Notwithstanding the fact that pleadings in the second trade mark appeal had not closed, the fate of the second trade mark appeal rested on the fate of the first trade mark appeal in that if, in the first trade mark appeal, Boss established that Trafalgar was not the owner of the FIREBOX trade mark - but that Boss was - then the second trade mark appeal could never succeed given Boss's reliance on s 58 as a ground of opposition in that appeal. In short, Trafalgar could not claim to be the owner of FYREBOX as a trade mark for the purposes of the Trade Marks Act. The reality of that position was properly accepted by Trafalgar in closing submissions: [685] of the principal reasons. [76] Given the affidavit evidence that Boss had filed and served in the first trade mark appeal, I am satisfied that Trafalgar acted unreasonably in failing to accept Offer 4 made in the second trade mark appeal.

6.4 Consideration 146 The costs appeal concerns whether the primary judge erred in making indemnity costs orders in light of the offers made by Boss. Grounds 4 and 5 concern the exercise by the primary judge of the discretion conferred respectively by FCR 1.35 and s 43 of the Federal Court Act. 147 The appellants accept that the principles in House v The King [1936] HCA 40; (1936) 55 CLR 499 at 504 - 505 (Dixon, Evatt and McTiernan JJ) apply insofar as its arguments arise from grounds 4, 5 and 7 but contends that it does not apply insofar as ground 6 is concerned. As we note below, that proposition is consistent with authority. 148 In Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd [2018] FCAFC 6; (2018) 259 FCR 514 (Nicholas, Yates, Beach JJ), the Full Court noted that in determining whether FCR 25.14(2) applies, it is not a question of whether to exercise a discretion to apply FCR 25.14(2), but whether it has any application to the facts of the case. There, as for ground 6 here, the question was whether the appellant's failure to accept the offer of compromise was unreasonable, which required an evaluative judgment to be made. In such circumstances, the trial judge will usually enjoy a distinct advantage which would not be set aside on appeal unless the appellate court is satisfied that there was material error, or it was of the clear opinion that the conclusion reached by the primary judge was wrong; Anchorage Capital at [224]. 149 In relation to grounds 4, 5 and 7, it will not suffice for the purposes of an appeal from a discretionary judgment for this Court to conclude that it would have exercised the relevant discretion differently had it been in the position of the primary judge: House v The King at 504 - 505. There is a strong presumption in favour of the correctness of the decision appealed from in a discretionary judgment and the decision should be affirmed unless the appeal court is satisfied that it is clearly wrong; Samsung Electronics Company Ltd v Apple Inc and Another [2011] FCAFC 156; (2011) 217 FCR 238 at [39] (Dowsett, Foster and Yates JJ), citing Australian Coal and Shale Employees' Federation and Another v The Commonwealth and Others [1953] HCA 25; (1953) 94 CLR 621 at 627 (Kitto J) and Mallet v Mallet [1984] HCA 21; (1984) 156 CLR 605; at 634 (Wilson J). 150 Their Honours Dixon, Evatt and McTiernan JJ explained in House v The King at 505: If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred. Unlike courts of criminal appeal, this court has not been given a special or particular power to review sentences imposed upon convicted persons. Its authority to do so belongs to it only in virtue of its general appellate power. But even with respect to the particular jurisdiction conferred on courts of criminal appeal, limitations upon the manner in which it will be exercised have been formulated. 151 It is convenient to consider the grounds of appeal separately as they apply to Offers 1, 3 and 4. 152 In relation to Offer 1, the appellants make three substantive submissions. First, that the primary judge ought to have found that it was not unreasonable for it to reject the offer (ground 7), secondly, the primary judge erred in concluding that offer 1 was a genuine offer in circumstances where it offered only a discontinuance (ground 6) and thirdly the primary judge erred in failing to take into account Boss' failure in or abandonment of significant parts of its case with the result that the awards of indemnity costs led to Boss being rewarded with indemnification of its costs despite the fact that large parts of its case were either abandoned or unsuccessful at trial (grounds 4 and 5). The appellants submit that at least a discount ought to have been made of the costs in respect of which the indemnity costs order was made, such as was made in Aristocrat Technologies Australia Pty Ltd v Konami Australia Pty Ltd (No 4) [2022] FCA 1501 (Nicholas J); see also Bryant, Gunns Ltd (In Liq) v Bluewood Industries Pty Ltd (No 2) [2020] FCA 1082 at [23] (Davies J). 153 In developing their first argument, which is based on ground 7, the appellants contend that the primary judge ought to have found that it was not unreasonable for it to reject Offer 1 because: (a) the proceedings were at an early stage, with Trafalgar yet to provide its evidence in answer; (b) assessed at the time, Boss' case was legally and factually complex and involving a large number of issues pleaded and witnesses giving evidence of events dating back to 2014 and 2015 in Australia and Norway; (c) the offer "did not account for" significant issues on which Trafalgar ultimately succeeded or which were abandoned by Boss; and (d) the offer merely offered discontinuance, which meant that it was not a genuine offer of compromise. This aspect of ground 7 overlaps with ground 6. 154 In relation to the appellants' contentions (a) and (b), it is plain from the primary judge's detailed and careful costs judgment that the primary judge took into account the stage of the proceedings and concluded that Trafalgar was on notice of the case it had to meet and, in the light of the evidence, ought to have known that the claims of the patent were vulnerable to revocation in light of that evidence. That conclusion was plainly open to him, especially given that Mr Ramunddal's and Mr Prior's evidence was neither particularly technical nor difficult to understand, as his Honour noted at [34] - [39] and [49] - [52]. By the time of Offer 1, Trafalgar had had this evidence for 11 weeks. 155 In relation to the argument in (c), FCR 25.14(2) provides that if an offer is made by a respondent and an applicant unreasonably fails to accept the offer, and the applicant's proceeding is dismissed, the respondent is entitled to indemnity costs after the date of the offer. The question of the reasonableness of the refusal to accept the offer is primarily to be determined from the date of the rejection, not looking at the ultimate conclusion of the proceeding, which is a circumstance that may be taken into account in considering the application of FCR 1.35. The question that matters most in this context is whether, given the information then available to the appellants, they should have known that their case was likely to fail; Anchorage Capital at [239]. The primary judge's reasoning, which we have summarised above at [141], addresses this question in detail. We do not consider that error has been demonstrated in that reasoning. 156 At the time of the offer, the primary judge found that the appellants were armed with the information necessary for it to assess that, unless the evidence of Mr Ramunddal and Mr Prior was rejected, the patent would likely be found to be invalid. They decided nonetheless to take a chance at a speculative attack on the evidence, contending that much of it was pure fabrication. On the face of their affidavits, the evidence was credible and potent. Such investigations as were produced in evidence by the appellants concerning the challenge to the veracity of the digital image of the Firestopit PDS leading to the contention that the image was staged and the evidence given by the witnesses was false were described by the primary judge as "fantastical". 157 The appellants' contention (d) is that the offer of discontinuance was not an offer at all. This argument is also the subject of ground 6. The point made is that by offering discontinuance, Offer 1 did not bring about a final resolution of the dispute and required, in substance, capitulation on the appellants' part. 158 His Honour found that the offer of discontinuance, instead of dismissal, did not render the refusal less unreasonable because his Honour could think of no rational basis for Boss to raise the same claims (of patent invalidity and wrongful threats or breaches of the ACL) having been the party that was originally sued (at [53]). The primary judge was satisfied that the offer raised a genuine compromise saying at [46]: … By that offer, Boss signified its preparedness to give up its claim for damages arising out of Trafalgar's wrongful conduct in sending the letters in September 2018 (a claim which it will now pursue), and a not insignificant proportion of its costs, assessed on a party and party basis. It also signified its preparedness to give up its claim to revoke the patent. Had it accepted Offer 1, Trafalgar would have insulated itself from Boss's claim for damages; its costs burden would have been reduced; and it would have kept its patent. My conclusion that Offer 1 raised a genuine compromise is not gainsaid by the fact that the offer involved discontinuance of the claim and cross-claim. 159 In The Uniting Church v Takacs (No 2) [2008] NSWCA 172 (Hodgson JA, McColl JA agreeing), the Court of Appeal concluded that an offer by a defendant to settle a personal injury case for $20,000 plus costs, without admission of liability, was not a genuine offer of compromise having regard to the size of the offer, but "more of a procedural move" to trigger the costs consequences of the offer in the event that the defendant succeeded. The Court considered that it was not unreasonable to refuse the offer; at [13] - [15]. That is not to say that all low offers should be viewed as not amounting to a genuine offer of compromise. In each case, it will be a question of fact; Sagacious Legal Pty v Wesfarmers General Insurance Ltd [2011] FCAFC 53 at [137] - [139] (Besanko, Perram and Katzmann JJ). 160 In Brookfield Multiplex Limited v International Litigation Funding Partners Pte Ltd (No 4) [2009] FCA 803, Finkelstein J summarised the position in the case before him concerning the proposal of a "drop hands" or "walk away": [12] The offer in this case may loosely be described, and in some cases has been described, as a "walk away" offer. A "walk away" offer may or may not constitute an offer for purposes of O 23 and Calderbank. The starting point is that "an offer which does not involve a real and genuine element of compromise, will not be taken into account in relation to costs": The Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) (2006) 67 NSWLR 706, 708; see also Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358, 368 ("Compromise connotes that a party gives something away. A plaintiff with a strong case, or a plaintiff with a firm belief in the strength of its case, is perfectly entitled to discount its claim by only a dollar, but it does not in any real sense give anything away, and I do not think that it can claim to have placed itself in a more favourable position in relation to costs unless it does so"). [13] It is therefore necessary to determine whether the defendants' "walk away" offer was a genuine offer of compromise. One can easily envisage circumstances where a "walk away" offer must be regarded as a genuine offer of compromise. Take for example a case that has progressed for some time and the parties' costs are quite high. In that event an offer to walk away may, in a business sense, be a significant offer: see for example Commissioner of Taxation v Evenfont (No 2) (2009) 223 FLR 28 at [31]. [14] Conversely there are circumstances, and this case is an example, where an offer to walk away does not involve any real give and take. Here the offer was made some 12 days after the last appearance was filed, and some allowance must be made for the Christmas period when little work is done. I accept that up to the time of the offer the defendants had incurred some costs. But probably not a lot. Certainly the amount was not proved in evidence. On this view indemnity costs should not be awarded. 161 The Full Court in Sagacious at [130] adopted this summary as correct, accepting the further observations of Greenwood J in Clark v Commissioner of Taxation [2010] FCA 415; (2010) 222 FCR 102 at [90]: [T]he notion that the applicants are giving up nothing of substance by offering to compromise on the footing that they will absorb the recoverable costs incurred to the date of the offer misunderstands the lay community's concerns about legal costs and therefore the concerns lay litigants hold about costs. Costs do not lie at the margins for litigants. They are real and of value. When a party elects as part of its offer to abandon a claim to recoverable costs (which in the circumstances must be taken to be a good claim) in the order of $123,000 or $153,000 or possibly $184,000, a real concession arises. 162 Offer 1 involved an offer that the appellants and respondents discontinue, respectively, the claim for patent infringement on the one hand and cross claim for invalidity, wrongful threats and breach of the ACL on the other and that the appellants pay 80% of the respondent's costs. 163 In Anchorage Capital, the primary judge considered the application of FCR 25.14(2) to the facts of that case, where the respondent to a claim for trade mark infringement offered a compromise whereby the claim and a cross-claim for the revocation of the trade mark be discontinued and the applicant pay 50% of the respondent's costs to date, which amounted to a discount of $285,000. The primary judge found that the costs element was not of relevance, because the best the respondent could achieve in relation to the applicant's claim was that it be dismissed with costs, and the amount of costs that it would eventually receive would in any event not be much more than $285,000. He found that the only element of compromise was the discontinuance of the cross-claim as a result of which the applicants would have been able to maintain their registrations. He recognised that it remained possible that the matter might be revisited in the future, but it was nonetheless the abandonment of something valuable. 164 On appeal, the Full Court disagreed, saying of the offer: [242] …It required the appellant to pay a substantial portion of the respondents' costs but offered the appellant little in return for that payment. The mutual discontinuances proposed by the respondents would have permitted the respondents to bring a fresh proceeding for cancellation of the appellant's registered marks at any time in the future and without any contractual restraint upon their right to do so or their right to use the US ANCHORAGE names in Australia. The underlying commercial dispute would have been left entirely unresolved. 165 In our view, the position in the present case in relation to Offer 1 is similar to that in Anchorage. The costs offer may hardly be said to amount to a compromise in circumstances where typically party and party costs are significantly taxed and often end up amounting to about 66% of actual costs. The offer merely to discontinue the cross claim served to leave the validity of the patent at large, with no contractual obligation on the respondents not to bring fresh proceedings for cancellation. Whilst there was no evidence to say that Boss would resurrect its cross-claim alleging the invalidity of the patent, there was no legal impediment to Boss doing so. Whilst, for the reasons set out by the primary judge at [53], that might not have eventuated, we consider that those advising the appellants were entitled, if not obliged, to take that fact into account and to conclude that an offer merely to discontinue the proceedings may not quell the controversy between the parties. We respectfully consider that the primary judge erred in discounting the difference between the offer to discontinue the claim and the cross-claim and a dismissal of both. 166 In light of these matters, in our respectful view, the primary judge erred in concluding that it was unreasonable for the appellants to reject Offer 1. Even if they were armed with information indicating that they were not likely to succeed in their case, the appellants were entitled to regard the offer to discontinue as unsatisfactory and unlikely to resolve the commercial dispute. As a result, in our view, the appellants succeed in relation to grounds 6 and 7 of the appeal insofar as they concern Offer 1. 167 Trafalgar submitted to the primary judge that, if FCR 25.14(2) did not apply, Trafalgar should be awarded 90% of its costs of the infringement claim and that Boss should only be awarded 30% of its costs of the cross-claim. The primary judge said at [55]: It is not necessary for me to address in any detail Trafalgar's contentions that, absent the application of r 25.14(2), it should be awarded 90% of its costs of the infringement claim and that Boss should only be awarded 30% of its costs of the cross-claim. I will simply note that, had I been persuaded that r 25.14(2) should be displaced in respect of the patent proceedings, I would not have awarded costs on this basis. In particular, I would not have been persuaded that Trafalgar should necessarily have an order for costs in its favour in respect of the infringement claim and I would not have been persuaded that Boss's costs of the cross-claim should be subject to the very deep discount that Trafalgar seeks. 168 In our view, the discount proposed by Trafalgar was manifestly excessive. In saying that, we are mindful of his Honour's observations concerning Trafalgar's case and the many factual issues it raised directed to establishing that Boss' evidence had been fabricated, that the infringement case formed a very small part of the patent proceeding and that much of the factual complexity attending the questions of claim validity would have been avoided and the hearing of the cross-claim considerably shortened, were it not for Trafalgar having raised such issues. 169 Nevertheless, given we have found that FCR 25.14(2) did not apply, it seems to us that it may be appropriate to apply some discount to the costs to be awarded to Trafalgar in the patent proceeding to take account of costs it incurred in respect of issues which were either abandoned by Boss or not pressed by it. In saying this, we are not to be taken as suggesting that a discount should be necessarily allowed. However, it seems to us given our conclusion in relation to the application of FCR 25.14(2), that the parties should be given an opportunity to make further submissions to the primary judge on that issue. In our opinion, it is an issue best considered by the primary judge who presided at the trial and who is in a far better position than we are to determine what discount (if any) is appropriate. We therefore propose to remit this issue to the primary judge for determination. 170 Offer 3 was made by Boss on 20 September 2019 in the first trade mark appeal and proposed that the appeal be discontinued, that Trafalgar withdraw the 784 application (for the registration of the word FIREBOX) and that Trafalgar pay 80% of Boss' party and party costs in the opposition before the Registrar, which at that date were $219,545.37. 171 In ground 4, Trafalgar contends that the primary judge erred by failing to invoke FCR 1.35 when considering the application of FCR 25.14(3) because of the fact that Boss had abandoned or failed in significant parts of its case when determining that FCR 25.14(3) should have application. Trafalgar refers to an aide-memoire in the form of annexure A to the Notice of Appeal, setting out grounds pleaded, the evidence relied upon and its assessment of the success or failure of the ground. 172 The question of the application of the discretion conferred by FCR 1.35 falls within House v The King. It is apparent that the primary judge took into account the abandoned grounds in considering FCR 1.35; see [68], [69]. His Honour was persuaded that the 30 August 2019 affidavit of Mr Prior was primarily directed to the use of the respective trade marks in issue, which was mainly relevant to proprietorship in the context of establishing first use, but which was also available for use in the context of the other grounds pleaded. We do not consider that the primary judge erred in the exercise of his discretion. 173 In ground 5, Trafalgar contends that the costs orders made did not meet the justice of the case or prevent injustice as between the parties when effecting the broad discretion as to the award of costs under ss 43(2) and (3) of the Federal Court Act. Trafalgar relies on the same basis for ground 5 as it does for ground 4. For the reasons we have given in relation to ground 4, we consider that Trafalgar must fail on this ground also. 174 None of grounds 6 and 7, nor the particulars to those grounds, make any reference to error arising from the primary judge's treatment of Offer 3. In its written submissions, Trafalgar repeats the criticism of the reasoning on the basis that the primary judge did not correctly treat the abandonment of grounds of appeal, apparently in the context of making an order under rule 14(3). This point was not developed in oral submissions. We are not satisfied that Trafalgar has demonstrated error on the part of the primary judge. 175 Offer 4 was made in the second trade mark appeal on 20 September 2019 and proposed that Trafalgar's appeal be dismissed and that Trafalgar pay 80% of Boss' party and party costs in the second trade mark appeal and 80% of Boss' scale costs in the opposition in respect of the 214 application (being Trafalgar's application for registration of the FYREBOX composite mark). 176 In ground 4, Trafalgar contends that the primary judge erred in failing to invoke FCR 1.35 to make an order inconsistent with the consequences of FCR 25.14(2) by reason of the abandonment by Boss of grounds of its appeal. However, this ground is incoherent in the context where it was Trafalgar who was the opponent to the registration of the trade mark. Moreover, the primary judge's reasons were directed to the question of whether or not it was unreasonable for Trafalgar to reject the offer, a point with which ground 4 does not engage. Similar observations may be made in relation to ground 5, which must also be dismissed insofar as it concerns Offer 4. 177 Ground 6 does not refer to Offer 4 and Trafalgar has made no written or oral submission relevant to its application. 178 In ground 7, Trafalgar contends that the primary judge erred in finding that the refusal to accept Offer 4 was unreasonable within FCR 25.14(2). In the particulars appended to the ground, Trafalgar asserts that the primary judge erred because, at the time Offer 4 was made, the pleadings in the second trade mark appeal had not closed. It submits that in the earlier proceedings Trafalgar had succeeded in its opposition to the mark. It also repeats its point about abandoned grounds, which must be rejected for the same reasons as identified above. 179 The primary judge addressed the first point at [74] - [76] where his Honour noted that the fate of the second trade mark appeal overlapped with that of the first insofar as it concerned a contest as to which of the parties had first used the FIREBOX or FYREBOX trade marks. In this regard, in [62] - [67], his Honour observed that the additional evidence of Mr Prior and Mr Falkiner had a significant bearing on the question of use, and that this evidence had been supplied to Trafalgar by the time that Offer 4 had been made. His Honour found that this evidence was sufficient to dispose of Trafalgar's claim to proprietorship and there was nothing on the face of those affidavits to suggest that they were not to be accepted. In those circumstances, amongst others, the primary judge found that it was a forensic decision on the part of Trafalgar to challenge the veracity of this evidence. Whilst it was entitled to do so, his Honour was not persuaded that it rendered as reasonable the decision of Trafalgar to refuse the offer. 180 We see no error in his Honour's reasoning in this regard. Ground 7 must also be dismissed.

7. DISPOSITION 181 For the reasons set out above, we have concluded that the appellants have had partial success in relation to grounds 6 and 7, insofar as they concern the award of indemnity costs in respect of the patent proceeding arising from Offer 1. We have also concluded that the patent proceeding should be remitted to the primary judge for the purpose of determining whether the costs payable to the respondents/cross-claimant should be reduced on account of matters that were either abandoned or decided against them. We have rejected the balance of the grounds of appeal. We have also rejected the cross-appeal and ground 1 of the Notice of Contention. We have found it unnecessary to determine ground 2 of the Notice of Contention. 182 Although the appellants have had some success in relation to the award of indemnity costs in the patent proceeding, they have failed on all other issues raised in their appeal. However, the first respondent/cross-appellant was also unsuccessful in the cross-appeal and (to the extent it was necessary for us to consider it) the notice of contention. In circumstances where the appellants' challenge to the primary judge's finding of invalidity was rejected, we consider that the respondents should have their costs of the appeal and that the appellants should have their costs of the cross-appeal and the notice of contention. The costs order to be made in relation to the appeal and the cross-appeal will be that the appellants pay the respondents' costs of the appeal and that the cross-appellant pay the cross-respondents' costs of the cross-appeal and the notice of contention. I certify that the preceding one hundred and eighty-two (182) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Nicholas, Burley and Rofe.

SCHEDULE OF PARTIES NSD 883 of 2022

NSD 928 of 2022 Cross-Appellants Second Cross-Appellant: MARK PRIOR Cross-Respondents Second Cross-Respondent TRAFALGAR GROUP PTY LTD