FEDERAL COURT OF AUSTRALIA Bristol‑Myers Squibb Co v F H Faulding & Co Ltd [2000] FCA 902 BRISTOL‑MYERS SQUIBB COMPANY v F H FAULDING & CO LIMITED VG 385 OF 1998 BLACK CJ, LEHANE AND FINKELSTEIN JJ 7 JULY 2000 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VG 385 OF 1998 On appeal from a single judge of the Federal Court of Australia BETWEEN: BRISTOL‑MYERS SQUIBB COMPANY Appellant AND: F H FAULDING & CO LIMITED (ACN 007 870 984) Respondent JUDGES: BLACK CJ, LEHANE AND FINKELSTEIN JJ DATE OF ORDER: 7 JULY 2000 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The appellant pay two thirds of the respondent's costs of the appeal. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VG 385 OF 1998 On appeal from a single judge of the Federal Court of Australia BETWEEN: BRISTOL‑MYERS SQUIBB COMPANY Appellant AND: F H FAULDING & CO LIMITED (ACN 007 870 984) Respondent JUDGES: BLACK CJ, LEHANE AND FINKELSTEIN JJ DATE: 7 JULY 2000 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 On 22 March 2000 the Court published reasons for judgment and ordered that the appeal be dismissed. No orders were made, however, on the question of costs. Instead, given the appellant's success on a number of issues, we directed the parties to file and serve submissions on that aspect of the matter. Each party has done so. 2 It is unnecessary once again to describe the background or to state the facts in detail. The appellant sued the respondent, alleging infringement of two petty patents of which the appellant was the proprietor. The respondent, by cross–claim, sought revocation of the petty patents on numerous grounds. The trial judge reached conclusions favourable to the respondent on all those grounds and on questions relating to infringement. Accordingly, the cross‑claim succeeded and the application failed. The appellant was ordered to pay the respondent's costs. 3 On appeal, the appellant was successful as to a number of the grounds on which the trial judge had held the petty patents to be invalid but failed, crucially, on the issue of novelty. Although the appellant succeeded, assuming validity, on the questions raised by the infringement claim, the result of our conclusion on novelty was that the appeal was dismissed. Each party has, in its written submissions, provided a tally of success and failure on the various issues. The true position lies between them and may be summarised as follows. The appellant was generally successful on the question whether a method of medical treatment of the human body is patentable; it was generally successful also on the question of the threshold test posed by the opening words of s 18(1) of the Patents Act 1990 (Cth) and, as a result, in its submission that the trial judge's conclusions on obviousness could not stand. (But for the respondent's success on the question of novelty, the issue of obviousness would have been remitted for further consideration). As to novelty, the appellant succeeded as to all alleged anticipations but one, which may be referred to as the ten Bokkel Huinink abstract – the ten Bokkel Huinink abstract, however, was held to be an anticipation which deprived the claimed inventions of novelty. We did not find it necessary to reach a final conclusion on the claims of contravention of s 40, but the joint judgment of Black CJ and Lehane J, with which Finkelstein J substantially agreed, made it clear (par 81) that, at least on one aspect of the s 40 claims, the respondent's position was very strong. The appellant was successful on the issues going to infringement. 4 It is true, as the appellant submits, that by far the greater part of the hearing time on the appeal was devoted to issues on which the appellant succeeded: particularly, the Statute of Monopolies issues. But certainly it is not the case, in our view, that the respondent acted unreasonably in relying, at trial, on any of the grounds which it pursued or in supporting, on the appeal, any of the trial judge's conclusions. On the question of the patentability of a method of treatment, the appellant had the advantage of being able to rely upon the views of the majority of the Full Court in Anaesthetic Supplies Pty Ltd v Rescare Ltd (1994) FCR 1; but plainly, in our view, the point was one which the respondent was well entitled to raise and to pursue on the appeal. The "manner of new manufacture" question was one of real difficulty. It could not have been regarded as self evident that the claims based on alleged anticipations other than the ten Bokkel Huinink abstract would necessarily fail. The respondent's position was strong, as we have mentioned, in relation to s 40. And, on infringement, the respondent's position was supported by the only authority directly in point, Anaesthetic Supplies. 5 In addition, the appellant must have appreciated that its task, in order to succeed on the appeal, was a formidable one. It was not merely a matter of succeeding on one or two complex and difficult points; the appellant had to succeed on all points including the point on which it failed, namely the question whether the ten Bokkel Huinink abstract amounted to an anticipation. True it is that very little time was occupied by argument about the ten Bokkel Huinink abstract; but it presented a serious obstacle (and, as we held, a fatal one) to the appellant's success, an obstacle which had already played a significant part in the appellant's undoing in the English decision of Bristol‑Myers Squibb Co v Baker Norton Pharmaceuticals Inc [1999] RPC 253 declaring invalid a patent for the same claimed invention. 6 In our view, the position may thus fairly be described in this way. The respondent had obtained a judgment which, if in certain respects its correctness was at least arguable, it was entitled to be confident, overall, of holding. The appellant, when it decided to appeal, faced a daunting task. It failed. Having instituted the appeal, it could hardly have expected that the respondent would merely concede a number of difficult and arguable points on which it had succeeded before the trial judge. Those circumstances are, we think, significant in assessing the weight to be accorded, on the question of costs, to the length of time spent, at the hearing of the appeal, on the various issues. 7 It is unnecessary, we think, to embark on a consideration of the authorities concerning the exercise by the Court of its broad discretion under s 43 of the Federal Court of Australia Act 1976 (Cth). The principles are well established. In the circumstances which we have described, we think this is a proper case for some apportionment of the costs of the appeal. It is not a proper case, in our view, to disturb the order for costs made by the trial judge. Still less is it appropriate to disturb an order for the payment of the costs of an earlier application by the appellant for interlocutory relief. Nor, in our view, should the respondent be required to pay any of the appellant's costs of the appeal. The appellant's success on those issues on which its arguments prevailed should, in our opinion, be recognised by some relatively modest reduction in the amount of the respondent's costs of the appeal which the appellant should be required to pay. 8 In our view it is appropriate that the appellant be required to pay two thirds of the respondent's costs of the appeal. We so order. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Chief Justice Black and the Honourable Justices Lehane and Finkelstein. Associate: Dated: 7 July 2000 Counsel for the Appellant: Dr J McL Emmerson QC Mr B Caine Solicitor for the Appellant: Minter Ellison Counsel for the Respondent: Mr R C Macaw QC Mr B J Hess Solicitor for the Respondent: Freehill Hollingdale & Page Date of Submissions: 14 April 2000 Date of Judgment: 7 July 2000