Ranbaxy Australia Pty Ltd v Warner-Lambert Company LLC

REASONS FOR JUDGMENT 1 The effect of my decision in Ranbaxy Australia Pty Ltd v Warner-Lambert Company LLC (No 2) [2006] FCA 1787 ('Ranbaxy (No 2)') is that the applicant/cross-respondent, Ranbaxy Australia Pty Ltd ('Ranbaxy'), has obtained the relief it sought by its amended application, and the first respondent/cross-claimant, Warner-Lambert Company LLC ('Warner Lambert') has obtained the primary relief it sought by its cross claim. After I delivered judgment, I invited the parties to make submissions on the issue of costs and other orders.

Costs 2 The general principles governing the question of costs are not in doubt: see Doric Products Pty Ltd v Lockwood Security Products Pty Ltd (2002) 54 IPR 495 at 497-498 [10]; and Koninklijke Philips Electronics NV v Remington Products Australia Pty Ltd (1999) 45 IPR 634 at 639 [17]. In the absence of special circumstances, the ordinary rule is that the costs of each claim should respectively follow the event of each claim. 3 Ranbaxy accepts that the ordinary rule should apply to Warner-Lambert's cross claim in respect of which I have made an injunctive order. Accordingly, I will order that Ranbaxy pay Warner-Lambert's costs of and incidental to Warner-Lambert's cross claim. 4 With regard to Ranbaxy's amended application, Ranbaxy concedes that there are special circumstances that warrant a departure from the ordinary rule that costs should follow the event. In the days immediately preceding the commencement of the trial, Ranbaxy advised Warner-Lambert that it was abandoning three of the grounds on which it contended that Australian Letters Patent No 628198 ('the Enantiomer Patent') was invalid: namely obviousness, lack of inventive step and lack of fair basis. By that time, both parties had filed a considerable body of affidavit evidence going to these issues. 5 Ranbaxy accepted that costs were thrown away as a result of this abandonment. It submitted that, as a result, the appropriate order should be that Warner-Lambert pay 70 per cent of Ranbaxy's costs of its amended application. Warner-Lambert opposed any order that it pay Ranbaxy's costs of its amended application. Alternatively, Warner-Lambert submitted that if a costs order were to be made in favour of Ranbaxy, it should be discounted by a factor of 50 per cent. 6 Warner-Lambert contended that Ranbaxy had failed in its basic objective of getting its product on to the market in Australia. It submitted that in order for Ranbaxy to market its product, it had to achieve two things by this litigation. First, it needed to establish that its product did not infringe Australian Letters Patent No 601981 ('the 981 Patent'); and secondly, it needed to establish that the Enantiomer Patent was invalid because its product admittedly infringed claim 6 of the Enantiomer Patent. 7 Warner-Lambert submitted that as Ranbaxy had failed to achieve the first of these steps, it had failed to achieve its commercial objective. It said that this overall commercial objective should be regarded as the relevant 'event' for the purposes of costs. Consequently, Warner-Lambert submitted that it should not be ordered to pay any of Ranbaxy's costs. 8 I do not agree with Warner-Lambert's submission that Ranbaxy's overall commercial objective should be regarded as the relevant 'event' for the purposes of costs. Ranbaxy's application for an order revoking the Enantiomer Patent was a separate and distinct proceeding brought by its amended application. It has succeeded on that claim. The revocation of the Enantiomer Patent has real value in the sense that the Enantiomer Patent was granted some three years after the 981 Patent. 9 Having regard to the parties' submissions, I consider that the appropriate order to take account of the costs thrown away by Ranbaxy's late abandonment of three grounds of invalidity is that its costs should be reduced by a factor of 40 per cent. In my opinion, it is preferable to make an adjustment of this kind, rather than make orders that Warner-Lambert pay Ranbaxy's costs of the amended application coupled with an order that Ranbaxy pay Warner-Lambert's costs thrown away by reason of Ranbaxy's late abandonment of the three grounds. 10 In providing for an adjustment of 40 per cent, I have taken account of the costs thrown away that otherwise Ranbaxy would be ordered to pay. I have also taken into account the fact that Warner-Lambert tendered the whole of the affidavit evidence it had prepared, even though extensive passages in that evidence were directed to questions of obviousness and inventive step, as it relied on parts of that evidence in relation to the manner of manufacture argument: see Ranbaxy (No 2) at [166]-[222]. Ranbaxy failed to establish its case on manner of manufacture, although it succeeded on the other grounds of false suggestion or representation and lack of utility. 11 Senior counsel for Warner-Lambert also sought the costs that had been reserved in respect of several notices of motion. The first notice of motion was dated 20 October 2005 and sought an interlocutory injunction. The motion was not ultimately contested, having regard to the fact that Ranbaxy gave undertakings that would ensure there was no attempt to import or sell its product in Australia prior to the determination of these proceedings. The second notice of motion was dated 18 April 2006, and concerned an application by Warner-Lambert for further and better particulars of the ground concerning fair basis. That notice of motion resulted in consent orders of 21 April 2006. Subsequently, Ranbaxy abandoned the ground concerning fair basis. In my opinion, Warner-Lambert achieved substantial success in a practical way on each of these notices of motion and it is appropriate that it should have the costs of each of the notices of motion which were reserved. 12 Warner-Lambert sought the costs of a third notice of motion dated 24 May 2006. That notice of motion resulted in consent orders of 20 July 2006. The subject matter of the notice of motion was an attempt to obtain production of certain documents held in the United States by Ranbaxy's US parent or related companies, and over which those companies were known to claim privilege. The motion did not result in the production of any documents. Privilege was, in fact, claimed. 13 I am not prepared to make an order that the reserved costs of this notice of motion should be paid by Ranbaxy to Warner-Lambert. I am not satisfied that the motion achieved any practical success as the US companies had already claimed privilege in similar proceedings in the United States. In the circumstances, I propose to include the costs of the notice of motion of 24 May 2006 in the order concerning the costs of the amended application brought by Ranbaxy. 14 Warner-Lambert sought costs arising from two other matters. The first concerned a notice of motion taking objection to various parts of the affidavit evidence of Gregory Ralph Tye. The notice of motion was not, in fact, formally listed. The question of the admissibility of Mr Tye's affidavits was dealt with in the ordinary course in the conduct of the trial: Ranbaxy Australia Pty Ltd v Warner-Lambert Company LLC [2006] FCA 1353. In my opinion, the arguments concerning the admissibility of his evidence were simply part of the normal cut and thrust of the trial proceedings and I do not propose to make any order concerning those costs. 15 The same position obtains in relation to the evidence of Dr Perlmutter. Ranbaxy filed affidavit evidence from Dr Perlmutter but, in the course of the trial, it elected not to rely upon that evidence. Again, I regard this decision as one of the vicissitudes of the trial process. I do not consider that any special order should be made in relation to any costs that Warner-Lambert incurred in answering Dr Perlmutter's affidavit evidence. There was no suggestion that Dr Perlmutter's affidavit evidence dealt with separate or discrete issues that did not otherwise arise.