Costs
16 As was to be expected given her decision, the primary judge ordered the appellants to pay the respondents' costs of the proceeding as taxed or agreed. No party suggested that her Honour's costs orders should not be set aside but there is a dispute as to what costs orders should be made in place of those made by her Honour. There is also a dispute as to what costs orders should now be made in relation to the appeals.
17 The respondents argued that although the claims in suit were found to be invalid, they were successful on a number of issues which took up considerable time both at the hearing of the proceedings before the primary judge and at the hearing of the appeals. In particular, the respondents drew attention to the appellants' lack of success on the issues of lack of inventive step, insufficiency, lack of entitlement and false suggestion, each of which was a ground of invalidity relied upon by the appellants before the primary judge and the Full Court. Similarly, the respondents pointed to their success before the primary judge on the question of infringement even though the only claims which were found to be infringed were held by us to be invalid. On this basis, the respondents submitted that there should be a substantial reduction in the costs to be awarded to the appellants in respect of the trials. In particular, the respondents submitted that they should not be required to pay more than 30% of the party/party costs incurred by the appellants. As to the costs of the appeals, the respondents agree that that they should pay Generic Health's costs but say that the other appellants, Sigma and Alphapharm, should be awarded only 50% of their party/party costs of the appeals.
18 There is no doubt that there were some discrete issues upon which the appellants failed which had nothing to do with characterisation of the invention. This is certainly true of the challenge to validity based upon the alleged lack of entitlement and the alleged false suggestion. It is also true of some aspects of the defence to the infringement case as presented by Alphapharm to the primary judge and the Full Court.
19 Nevertheless, it seems to us that the most important and the most time consuming issue that was agitated both at trial and on appeal concerned the true characterisation of the invention and the implications this had for the challenges to validity which were ultimately successful.
20 In the circumstances, we are of the view that Sigma and Alphapharm should be awarded 80% of their party/party costs of the appeals. It seems to us that this figure allows a reasonable discount in respect of those issues upon which they were unsuccessful and which were not bound up with the characterisation of the invention.
21 In our opinion the same allocation should be made with respect to the costs of the trial. In the result, the respondents should pay 80% of Sigma and Alphapharm's costs of the appeals and 80% of the costs of their proceedings below. The respondents should also pay 80% of Generic Health's costs of the trial.
22 The respondents should also pay Generic Health's costs of its appeal in accordance with an agreement between those parties.
23 Alphapharm also sought an order against Generic Health which would require Generic Health to pay Alphapharm 30% of any difference between the proportion of costs which Alphapharm claimed against Wyeth (100% of its party/party costs) and the proportion of costs actually awarded (80% of its party/party costs). Thus, Alphapharm sought an order which would have the effect of requiring Generic Health to pay Alphapharm 30% of that proportion of Alphapharm's party/party costs that the respondents were not ordered to pay.
24 In support of its submission, Alphapharm referred us to the decision of Goldberg J in Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602. That was a case in which four proceedings were brought by the applicant against four separate groups of respondents. The four proceedings were heard together with evidence in one being evidence in the other. Some of the evidence tendered by the applicants in one proceeding was relied upon against the respondents in the other proceedings. The applicants were successful against some but not all respondents. His Honour said (at [95]):
If it be accepted that it is appropriate to have multiple proceedings heard together, where there are common issues of fact and law involved, for the purpose of reducing costs and having an efficient and economical use of court resources, it is also appropriate to consider whether in such circumstances there should be variations to the usual order as to costs. In particular it is appropriate to give consideration to the apportionment of the costs of an applicant incurred in relation to issues and matters common to those proceedings between those proceedings where the applicant is successful and those proceedings where the applicant is unsuccessful.
We accept, as did his Honour, that where various proceedings against different respondents that involve common questions are heard together, it may be appropriate to consider whether in such circumstances there should be variations to the usual order as to costs. Nevertheless, Alphapharm's application for an order that Generic Health pay a proportion of its costs raises somewhat different considerations.
25 The argument put by Alphapharm in support of such an order was that Generic Health should be required to make a contribution to Alphapharm's costs because it had obtained the benefit of a "free ride" or, as Alphapharm put it, "a seat at the table" at reduced cost to itself.
26 It is necessary to provide some additional background to Generic Health's role in the proceedings heard by the primary judge. In April 2009 Sigma commenced its proceeding against Wyeth seeking (inter alia) orders for revocation of the relevant claims of the Patent and Alphapharm did the same in June 2009. It was not until October 2009 that Generic Health commenced it own proceeding seeking substantially the same relief as that sought by Sigma and Alphapharm. In support of its claim for orders for revocation Generic Health relied upon substantially the same grounds as those which were relied upon by Sigma and Alphapharm.
27 It appears that preparations for the proceedings between Sigma, Alphapharm and Wyeth were well advanced at least by the time the pleadings in Generic Health's proceeding closed. In particular, the proceedings commenced by Sigma and Alphapharm had already been fixed for trial commencing in April 2010. On 18 December 2009 the primary judge made an order by consent that all three proceedings be heard together and that evidence on validity in the proceedings brought by Sigma and Alphapharm be evidence in the proceeding brought by Generic Health. A similar order was made in relation to evidence on infringement.
28 The primary judge also noted, as recorded in the relevant minute of order, that "Generic Health does not intend to file any evidence or make any submissions in respect of its claim for revocation of [the] Patent …". Generic Health agreed, in effect, to submit to the same orders as might be made in the other proceedings in so far as they challenged validity.
29 In support of its application that Generic Health pay a portion of its costs Alphapharm relied upon a letter from its solicitors to Generic Health's solicitors dated 1 December 2009 which was admitted into evidence before us subject to relevance. This letter, written some weeks before the consent order to which we have referred was made, included the following:
It seems to our client that, if your client does not adduce its own evidence on invalidity, and there is no order made that evidence in the Alphapharm or Sigma proceedings is also evidence in your client's proceeding, there is a risk that, even if Alphapharm and/or Sigma is successful in revoking Wyeth's patent, your client's cross-claim will be dismissed (although the costs consequences for your client may be negligible). More significant, though, is the prospect that if your client chooses not to run an invalidity case, and Alphapharm and Sigma were to settle the proceedings with Wyeth at a late stage, your client may be left in the position of not being able to rely on an invalidity case (either as a revocation action or as a defence to infringement).
Accordingly, it seems likely that, if your client's cross-claim is to be listed for hearing in April (as it is very likely to be), your client will require an order that validity evidence in the Alphapharm and/or Sigma proceedings be validity evidence in your client's proceeding.
The letter then addressed the question of infringement evidence. It relevantly concluded:
Please let us know if your client is willing to make some form of financial contribution to the combined effort against Wyeth, in addition to cooperating more generally. While our client will of course respect your client's decision in this regard (it would not, for example, consider a refusal to contribute financially to jeopardise the parties' ability to cooperate fruitfully), we note for good order that, if your client does not wish to offer a contribution and our client obtains a successful outcome in the proceedings, our client reserves its rights to seek, at the conclusion of the proceedings, an order that your client contribute a reasonable proportion of its incurred costs.
30 There was no evidence before us of any response by Generic Health to the letter but it may be assumed that it declined to make any contribution to Alphapharm's costs. Generic Health did not file any expert evidence of its own and instead left it to Sigma and Alphapharm to establish the invalidity of the relevant claims.
31 Alphapharm's application for an order requiring Generic Health to make a contribution to its costs raises the question whether it was unreasonable for Generic Health to decline to make any such contribution. We are not satisfied that it was. The letter that Alphapharm has tendered falls short of what would be required to establish that Generic Health acted unreasonably in declining to accept Alphapharm's proposal which was, after all, completely silent on the extent of costs incurred up to that time, what further costs it anticipated would be incurred thereafter and what role, if any, Generic Health might play in the preparation or presentation of the invalidity evidence.
32 In any event, it seems to us that this is not a case in which it would be appropriate to make the order sought by Alphapharm. Once Generic Health agreed to submit to orders on the terms set out in the consent orders of 18 December 2009, the extent of the challenge to invalidity and the manner in which it would be conducted was left to Sigma and Alphapharm to determine. We do not see why Generic Health should be required to contribute to costs incurred by Alphapharm in respect of challenges to validity which were unsuccessful where Generic Health had no say in what challenges were pressed by Alphapharm. The mere fact that Generic Health might have benefited if these challenges had succeeded is not to the point. There may have been other manufacturers which also stood to benefit if Alphapharm were successful. That Generic Health was a party raises the possibility of an order of the kind sought being made against it but is not of itself sufficient to justify the making of the order.
33 For the above reasons, we do not think this is an appropriate case for making an order of the kind sought by Alphapharm.