FEDERAL COURT OF AUSTRALIA E I Dupont de Nemours & Company v Imperial Chemical Industries PLC [2002] FCA 459 COSTS – intellectual property – patents – appropriate order as to costs – whether in present case ordinary rule that costs follow the event should be departed from Patents Act 1990 (Cth) ss 40(2), 160 Federal Court of Australia Act 1976 (Cth) s 43 E I Dupont de Nemours & Co v Imperial Chemical Industries PLC [2002] FCA 230 referred to Australian Drainage Modules Pty Ltd v Urriola [2001] FCA 1506 cited Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 applied Patent Gesellschaft AG v Saudi Livestock Transport and Trading Company (1996) 33 IPR 461 cited E I DUPONT DE NEMOURS & COMPANY v IMPERIAL CHEMICAL INDUSTRIES PLC N1248 OF 1999 E I DUPONT DE NEMOURS & COMPANY v IMPERIAL CHEMICAL INDUSTRIES PLC AND INEOS FLUOR HOLDINGS LIMITED N1249 OF 1999 BRANSON J 15 APRIL 2002 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N1248 OF 1999 BETWEEN: E I DUPONT DE NEMOURS & COMPANY APPLICANT AND: IMPERIAL CHEMICAL INDUSTRIES PLC RESPONDENT JUDGE: BRANSON J DATE OF ORDER: 15 APRIL 2002 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The order as to costs made by the delegate of the Commissioner of Patents against the applicant on 11 October 1999 be set aside and in lieu thereof it be ordered that the respondent pay the applicant's costs of the opposition proceeding before the delegate of the Commissioner of Patents. 2. The respondent pay sixty percent (60%) of the applicant's costs of the appeal including reserved costs. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N1249 OF 1999 BETWEEN: E I DUPONT DE NEMOURS & COMPANY APPLICANT AND: IMPERIAL CHEMICAL INDUSTRIES PLC FIRST RESPONDENT INEOS FLUOR HOLDINGS LIMITED SECOND RESPONDENT JUDGE: BRANSON J DATE OF ORDER: 15 APRIL 2002 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The order as to costs made by the delegate of the Commissioner of Patents against the applicant on 11 October 1999 be set aside and in lieu thereof it be ordered that the respondents pay the applicant's costs of the opposition proceeding before the delegate of the Commissioner of Patents. 2. The respondents pay sixty percent (60%) of the applicant's costs of the appeal including reserved costs. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N1248 OF 1999 BETWEEN: E I DUPONT DE NEMOURS & COMPANY APPLICANT AND: IMPERIAL CHEMICAL INDUSTRIES PLC RESPONDENT N1249 OF 1999 BETWEEN: E I DUPONT DE NEMOURS & COMPANY APPLICANT AND: IMPERIAL CHEMICAL INDUSTRIES PLC FIRST RESPONDENT INEOS FLUOR HOLDINGS LIMITED SECOND RESPONDENT JUDGE: BRANSON DATE: 15 APRIL 2002 PLACE: SYDNEY REASONS FOR DECISION BRANSON J 1 On 12 March 2002 I published reasons for judgment in each of these appeals from a decision of the Commissioner of Patents (see E I Dupont de Nemours & Co v Imperial Chemical Industries PLC [2002] FCA 230). In each case I ordered that the proceeding be stood over to 5 April 2002 for the purpose of the making of orders giving effect to my reasons, including orders as to costs. Orders were made on that day which, amongst other things, in each case upheld the appeal and set aside the decision of the delegate of the Commissioner of Patents. Having heard argument with respect to costs, in each proceeding I reserved my decision on costs. 2 For the reasons set out below, I have in each case concluded that the appropriate order as to costs are the orders set out in [12]-[13] below. 3 In matter N1248 of 1999 five substantive issues were raised for consideration. The applicant succeeded in establishing that the patent application was made in respect of an invention that, as claimed in the claims, was not novel when compared with the prior art base as it existed before the priority date of the claims. However, of the six acts of publication upon which the applicant relied, only one was found by me to deprive the invention of novelty. The applicant further succeeded in establishing that the complete specification did not describe the invention fully as required by s 40(2) of the Patents Act 1990 (Cth) ("the Patents Act"). However, the applicant did not succeed in establishing that the invention was not a manner of manufacture within the meaning of s 6 of the Statute of Monopolies, that the delegate had wrongly determined the priority date of the claims of the patent application or that the invention did not involve an inventive step. 4 In matter N1249 of 1999 the same substantive issues were raised as in matter N1248 of 1999. The respondents had conceded ahead of the hearing that if the decision of the delegate as to the priority date of the claims of the patent application was not upheld, with the result that a later date was found to be the applicable priority date, the validity of the patent application could not be supported. In fact I concluded that the decision of the delegate as to the priority date of the claims could not be upheld and that the priority date of the application was a later date. As to the other four substantive issues, the respondents were successful. 5 The applicant has argued that, having succeeded, it is entitled to its costs, including its costs of the opposition proceedings in the Patent Office. The respondent has argued that the circumstances justify a departure from the ordinary rule that costs follow the event and that in each case there should be no order made as to costs leaving each party to bear its own costs. 6 Section 160 of the Patents Act provides that on an appeal from a decision of the Commissioner the Federal Court may, amongst other things, order a party to pay costs to another party. 7 Section 43 of the Federal Court of Australia Act 1976 (Cth) relevantly provides as follows: "(1) … the Court or a Judge has jurisdiction to award costs in all proceedings before the Court … other than proceedings in respect of which any other Act provides that costs shall not be awarded. … (2) Except as provided by any other Act, the award of costs is in the discretion of the Court or Judge." 8 The Patents Act does not provide that costs shall not be awarded. Indeed, s 160 provides expressly to the contrary. I conclude that the wide discretion given to the Court by s 43(2) of the Federal Court of Australia Act 1976 (Cth) is applicable in these cases. Further, I agree with the view expressed, as I understand His Honour, by Tamberlin J in Australian Drainage Modules Pty Ltd v Urriola [2001] FCA 1506 at [8] that s 160 of the Patents Act gives to the Court power to vary an order for costs made by the Commissioner. I note that the contrary was not argued. 9 In Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 271-272 the Full Court of this Court observed with respect to the Court's discretion to award costs: "Considerations relevant to the exercise of that discretion were enunciated by Toohey J in Hughes v Western Australian Cricket Association (Inc) (1986) 8 ATPR 40-748 at 48,136: '1. Ordinarily, costs follow the event and a successful litigant receives his costs in the absence of special circumstances justifying some other order … 2. Where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which it has failed … 3. A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other party's costs of them. In this sense, "issue" does not mean a precise issue in the technical pleading sense but any disputed question of fact or of law …' The propositions enunciated in that case are subject to the further consideration that justice may not be served if parties are dissuaded by the risk of costs from canvassing all issues which might be material to the decision in the case: Cretazzo v Lombardi (1975) 13 SASR 4 at 12. In Trade Practices Commission v Nicholas Enterprises Pty Ltd (No 3) (1979) 42 FLR 213; 28 ALR 201, Fisher J regarded the discretion to apportion costs as one to be exercised only in the most exceptional circumstances. Nevertheless he accepted that where a considerable part of the trial is taken up in determining issues upon which a party fails, it is a proper exercise of the discretion to reduce the costs allowed to that party. Generally speaking, and notwithstanding the considerations referred to by Toohey J and the other authorities mentioned above, the demands of the community for greater economy and efficiency in the conduct of litigation may properly be reflected in a qualification of the presumption that a successful party is entitled to all its costs. In Commissioner of Australian Federal Police v Razzi (No 2) (1991) 101 ALR 425 at 430, Wilcox J, after referring to the importance of the general principle enunciated by Toohey J, said: 'But I do not think that courts should be reluctant to recognise the existence of exceptional cases. In these days of extensive court delays and high legal costs the courts should use all proper means to encourage parties to consider carefully what matters they will put in issue in their litigation. If parties come to realise that they will not necessarily recover the whole of their costs, even though they have unsuccessfully raised a discrete issue, they are likely better to consider whether the raising of that issue is a justifiable course to take.' Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion for the trial judge. Mathematical precision is illusory and the exercise of the discretion will often depend upon matters of impression and evaluation. …" 10 The respondent drew attention to the fact, as it appears to be, that the general rule that costs follow the overall event is not uncommonly departed from in patent cases. Indeed in Patent Gesellschaft AG v Saudi Livestock Transport and Trading Company (1996) 33 IPR 461 at 463 Olney J observed that "in patent cases there have been many occasions when courts have exercised a greater than usual degree of creativity in framing costs orders so as to more readily do justice between the parties." However, I do not understand, and I do not understand the parties to have suggested, that the principles which govern the exercise of the discretion to award costs in patent cases are different from the principles which govern the exercise of that discretion in other kinds of cases. It would seem simply to be the case that departure from the ordinary rule is more readily justified in patent cases. This may be because of the discrete nature of the grounds of objection to a patent application and of the grounds of invalidity of a patent and the need, generally speaking, to consider individually items of prior art relied upon for the purposes of determining novelty or the existence of an inventive step. 11 Having regard particularly to the large number of citations unsuccessfully relied upon by the applicant in respect of its claims of lack of novelty and lack of inventive step and the significant amount of trial time taken up by consideration of these citations, I have concluded that these are cases in which a departure from the ordinary rule that costs follow the event is justified. I am not satisfied that these are cases in which the applicant should pay any proportion of the respondents' costs. However, I am of the view that there should be some reduction in the costs allowed to the applicant. Any attempt to achieve precision in apportionment would be futile and so the final result must necessarily be a result of overall impression and very general evaluation of the time spent at trial on the various issues and sub‑issues in dispute. 12 My conclusion is that in matter N1248 of 1999 the following orders should be made: 1. The order as to costs made by the delegate of the Commissioner of Patents against the applicant on 11 October 1999 be set aside and in lieu thereof it be ordered that the respondent pay the applicant's costs of the opposition proceeding before the delegate of the Commissioner of Patents. 2. The respondent pay sixty percent (60%) of the applicant's costs of the appeal including reserved costs. 13 In matter N1249 of 1999, subject to all references to "the respondent" being changed to "the respondents", the same order should be made. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Branson. Associate: Dated: 15 April 2002 Counsel for the Applicant: Mr C A Moore Solicitor for the Applicant: Coudert Brothers Counsel for the Respondent: Mr D K Catterns QC with Mr C Dimitriadis Solicitor for the Respondent: Phillips Ormonde Fitzpatrick Date of Hearing: 5 April 2002 Date of Judgment: 15 April 2002