FEDERAL COURT OF AUSTRALIA Bradken Resources Pty Ltd v Lynx Engineering Consultants Pty Ltd (No 2) [2012] FCA 1478 Citation: Bradken Resources Pty Ltd v Lynx Engineering Consultants Pty Ltd (No 2) [2012] FCA 1478 Parties: BRADKEN RESOURCES PTY LIMITED (ACN 098 300 988) v LYNX ENGINEERING CONSULTANTS PTY LIMITED (ACN 059 949 469) File numbers: NSD 439 of 2007 WAD 212 of 2009 Judge: MCKERRACHER J Date of judgment: 21 December 2012 Catchwords: COSTS – settling of final orders and costs following delivery of substantive reasons – application of principles in exercise of discretion conferred pursuant to s 43(2) of the Federal Court of Australia Act 1976 (Cth) – large scale commercial patent litigation – multiple issues in suit – respondent successful on most but not all major substantive issues – application of a 15% discount of party and party costs Legislation: Federal Court of Australia Act 1976 (Cth) s 43(2) Cases cited: Bradken Resources Pty Ltd v Lynx Engineering Consultants Pty Ltd (2012) 97 IPR 424 Bradken Resources Pty Ltd v Lynx Engineering Consultants Pty Ltd (2010) 187 FCR 476 Bradken Resources Pty Ltd (ACN 098 300 988) v Lynx Engineering Consultants Pty Ltd (ACN 059 949 469) (2008) 78 IPR 586 Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151 Date of hearing: Determined on the papers Date of last submissions: 19 October 2012 Place: Perth Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 16 Counsel for the Applicant/Cross-Respondent: SCG Burley SC with ADB Fox Solicitor for the Applicant/Cross-Respondent: Griffith Hack Lawyers Counsel for the Respondent/Cross-Appellant: JJ Garnsey QC with RJL McCormack Solicitor for the Respondent/Cross-Appellant: Karp Steedman Ross-Adjie Lawyers IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION NSD 439 of 2007 ON APPEAL AND CROSS-APPEAL FROM A DELEGATE OF THE COMMISSIONER OF PATENTS BETWEEN: BRADKEN RESOURCES PTY LIMITED (ACN 098 300 988) Applicant/Cross-Respondent AND: LYNX ENGINEERING CONSULTANTS PTY LIMITED (ACN 059 949 469) Respondent/Cross-Appellant JUDGE: MCKERRACHER J DATE OF ORDER: 21 DECEMBER 2012 WHERE MADE: PERTH THE COURT DECLARES THAT: 1. Australian Patent Application No. 749848 ('the Patent') proceed to sealing with the priority date of its claims being 30 March 1999. 2. The Patent should proceed to sealing and the Commissioner should so direct. THE COURT ORDERS THAT: 3. The appeal in proceedings number WAD 212 of 2009 is dismissed. 4. The Notice of Objection to Competency in proceedings number WAD 212 of 2009 is dismissed. 5. The cross-appeal in proceedings number WAD 212 of 2009 is allowed except as to the priority date of the claims of the Patent which take as their priority date the date of filing of the Complete Specification, namely, 30 March 1999. 6. The appeal in proceedings number NSD 439 of 2007 is dismissed. 7. The cross-appeal in proceedings number NSD 439 of 2007 is dismissed. 8. The applicant/cross-respondent pay 85% of the respondent/cross-appellant's party and party costs incurred in proceedings number WAD 212 of 2009 including in relation to the respondent/cross-appellant's cross-appeal, to be taxed if not agreed. 9. The applicant/cross-respondent pay 85% of the respondent/cross-appellant's party and party costs incurred in proceedings number NSD 439 of 2007 including in relation to the respondent/cross-appellant's cross-appeal, to be taxed if not agreed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 212 of 2009 ON APPEAL AND CROSS-APPEAL FROM A DELEGATE OF THE COMMISSIONER OF PATENTS BETWEEN: BRADKEN RESOURCES PTY LIMITED (ACN 098 300 988) Applicant/Cross-Respondent AND: LYNX ENGINEERING CONSULTANTS PTY LIMITED (ACN 059 949 469) Respondent/Cross-Appellant JUDGE: MCKERRACHER J DATE OF ORDER: 21 DECEMBER 2012 WHERE MADE: PERTH THE COURT DECLARES THAT: 1. Australian Patent Application No. 749848 ('the Patent') proceed to sealing with the priority date of its claims being 30 March 1999. 2. The Patent should proceed to sealing and the Commissioner should so direct. THE COURT ORDERS THAT: 3. The appeal in proceedings number WAD 212 of 2009 is dismissed. 4. The Notice of Objection to Competency in proceedings number WAD 212 of 2009 is dismissed. 5. The cross-appeal in proceedings number WAD 212 of 2009 is allowed except as to the priority date of the claims of the Patent which take as their priority date the date of filing of the Complete Specification, namely, 30 March 1999. 6. The appeal in proceedings number NSD 439 of 2007 is dismissed. 7. The cross-appeal in proceedings number NSD 439 of 2007 is dismissed. 8. The applicant/cross-respondent pay 85% of the respondent/cross-appellant's party and party costs incurred in proceedings number WAD 212 of 2009 including in relation to the respondent/cross-appellant's cross-appeal, to be taxed if not agreed. 9. The applicant/cross-respondent pay 85% of the respondent/cross-appellant's party and party costs incurred in proceedings number NSD 439 of 2007 including in relation to the respondent/cross-appellant's cross-appeal, to be taxed if not agreed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION NSD 439 of 2007 ON APPEAL AND CROSS-APPEAL FROM A DELEGATE OF THE COMMISSIONER OF PATENTS BETWEEN: BRADKEN RESOURCES PTY LIMITED (ACN 098 300 988) Applicant/Cross-Respondent AND: LYNX ENGINEERING CONSULTANTS PTY LIMITED (ACN 059 949 469) Respondent/Cross-Appellant IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 212 of 2009 ON APPEAL AND CROSS-APPEAL FROM A DELEGATE OF THE COMMISSIONER OF PATENTS BETWEEN: BRADKEN RESOURCES PTY LIMITED (ACN 098 300 988) Applicant/Cross-Respondent AND: LYNX ENGINEERING CONSULTANTS PTY LIMITED (ACN 059 949 469) Respondent/Cross-Appellant JUDGE: MCKERRACHER J DATE: 21 DECEMBER 2012 PLACE: PERTH REASONS FOR JUDGMENT introduction 1 In Bradken Resources Pty Ltd v Lynx Engineering Consultants Pty Ltd (2012) 97 IPR 424 (Bradken No 1) I concluded (at [367]) that the respondent/cross-appellant (Lynx) had succeeded on all issues except for the correct priority date and the applicant/cross-respondent's (Bradken) entitlement to rely on a particular patent (Gilpin) as prior art for novelty purposes, although it had been raised for the first time. 2 I ordered the parties to file submissions on the orders which should follow. Both Bradken and Lynx have filed detailed submissions. FORM OF THE ORDERS GENERALLY 3 Lynx contends the following non-costs orders are appropriate following the outcome of the litigation: (a) DECLARES that each of claims 1 to 28 of Australian Patent Application No 749848 in the name of Lynx found by the Commissioner of Patents to be in order to proceed to sealing in the Commissioner's final determination dated 13 November 2008 (the Patent) take as their priority date the date of filing of the Complete Specification, namely, 30 March 1999. (b) DECLARE that the Patent should proceed to sealing and that the Commissioner should so direct. (c) ORDER that the appeal in proceedings number WAD 212 of 2009 otherwise be dismissed. (d) ORDER that the notice of competency in the appeal in proceedings number WAD 212 of 2009 be dismissed. (e) ORDER that the cross-appeal in proceedings number WAD 212 of 2009 be allowed except as to the priority date of the claims of the Patent which take as their priority date the date of filing of the Complete Specification, namely, 30 March 1999. (f) ORDER that the appeal in proceedings number NSD 439 of 2007 be dismissed. (g) ORDER that the cross-appeal in proceedings number NSD 439 of 2007 be dismissed. 4 Perhaps unsurprisingly, there is less argument in relation to these orders than there is in relation to costs. I will dispose of the issues concerning these orders briefly. Bradken's objection to the form of the non-costs orders advanced by Lynx is very limited. Bradken suggests a modified form of the declaration, noting that its purpose is to address my finding in relation to the priority date. I accept this submission. Bradken's suggested declaration is as follows: 'Australian Patent Application No 749848 proceed to sealing with the priority date of its claims being 30 March 1999'. Bradken contends that the second declaration proposed by Lynx is unnecessary. While it may be that the second declaration is not strictly necessary, it does accord with the outcome of the litigation and, in my view, should be included (at least out of an abundance of caution). COSTS 5 In large scale commercial litigation, having regard to the complexity of issues involved, it is almost inevitable that the successful party may not win every argument. Notwithstanding this, providing those points on which it fails have not been frivolous and providing they have not unduly wasted the time and costs of the Court and the parties, there is no reason that there should not be a full recovery of at least party and party costs. 6 In the parties' submissions concerning costs, there is a very detailed examination of the points on which they succeeded and failed. Having regard to the general proposition just stated, I do not think that descent to such detail can reasonably be expected. These commercial entities committed themselves to large commercial litigation. 7 In my estimation, this is a case for a modest adjustment only of the usual rule that costs follow the event: Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151 (at 152). A modest reduction 8 Those costs which were reserved will follow the event. Where no order was made, costs will be in the cause. Bradken accepts that, given the complexity and number of the various issues raised in the proceedings and the competing positions taken by the parties in relation to them, this is not a case in which it is appropriate to award costs on an 'issue by issue basis'. Nevertheless, it argues that there should be discount of 25% to reflect the areas on which it succeeded and to reflect the conduct of Lynx in the course of the proceedings. 9 In this regard, Bradken succeeded in an early interlocutory application in which para 16 of Lynx's then Defence was struck out. However, this was, with respect, a relatively modest success and I do not think it should have bearing on the costs disposition. 10 In relation to a further interlocutory application, Bradken stresses the point that Lynx had insisted that it was entitled to the grant of two claim sets known at the original claims and the amended claims. Later, at trial, after the parties had prepared and filed extensive evidence in relation to both claim sets, Lynx abandoned its entitlement to the grant of the Patent with the original claims and confined its entitlement to the amended claim set. I accept that this was a reasonably substantial argument. 11 Bradken argues that it had prepared extensive evidence which became redundant by reason of Lynx's late abandonment of its entitlement to the original claims. This evidence constituted approximately 48%, it says, of Bradken's expert affidavit evidence. Bradken argues that this is a striking statistic in support of its submission for a percentage reduction in the overall award of costs in favour of Lynx. On the other hand, I note that Bradken also abandoned a substantial amount of prior art reliance at trial. 12 Another matter on which Bradken had devoted endeavours which were ultimately unnecessary was in relation to the Notice of Objection to Competency filed on 23 December 2009 by Lynx in which it put in issue complex legal arguments relating to the Court's jurisdiction, all of which required significant analysis and consideration by Bradken in its preparation for trial. Those issues were also before the Court in the second interlocutory application. They were not confined to determination or consideration at the trial. Bradken submits that the ventilation of those issues in the second interlocutory application put it to considerable expense. Bradken makes the point that the late abandonment of the Notice of Objection to Competency at trial in its entirety, and the costs thrown away by reason thereof (including Bradken's costs referable to those issues in the second interlocutory application), are matters which supports its contention that there should be a percentage reduction in costs award in favour of Lynx. 13 In addition, Bradken points to the fact that in the cross-appeals advanced by Lynx, a number of significant findings in the Delegate's decisions under appeal were put in issue. They included a challenge to the Delegate's finding in relation to deferral of the priority date of the Lynx Patent application. Lynx did not succeed at trial on that issue. I also accept that this was a reasonably substantial argument. 14 Bradken's costs incurred in relation to those dismissed cross-appeals are further matters which should be taken into account in the award of costs and provide further support for Bradken's contention that there should be a percentage reduction in Lynx's costs award. 15 Lynx, on the other hand, advances an application for indemnity costs in relation to costs thrown away by reason of Bradken's eleventh hour abandonment of certain prior art in its amended pleadings. It notes that 18 items of prior art relied on were reduced to four, with only Gilpin going to novelty. I found the remaining three, along with Gilpin, not to be proven to be part of common general knowledge. However, I do not consider indemnity costs are appropriate. In my view, the abandonment of these items was ultimately a responsible position to take in order to minimise the time and costs to be occasioned by the Court and parties at trial, although it occurred late in the day. CONCLUSION 16 I am satisfied that there should be some reduction in relation to the costs award in favour of Lynx by reason of most of the matters for which Bradken argue. I do not accept that there should be a 25% reduction in the costs award but I consider that, in exercising my discretion conferred by s 43(2) of the Federal Court of Australia Act 1976 (Cth), a reduction of 15% would be appropriate. The following declarations and orders will be made: THE COURT DECLARES THAT: 1. Australian Patent Application No. 749848 ('the Patent') proceed to sealing with the priority date of its claims being 30 March 1999. 2. The Patent should proceed to sealing and the Commissioner should so direct. THE COURT ORDERS THAT: 3. The appeal in proceedings number WAD 212 of 2009 is dismissed. 4. The Notice of Objection to Competency in proceedings number WAD 212 of 2009 is dismissed. 5. The cross-appeal in proceedings number WAD 212 of 2009 is allowed except as to the priority date of the claims of the Patent which take as their priority date the date of filing of the Complete Specification, namely, 30 March 1999. 6. The appeal in proceedings number NSD 439 of 2007 is dismissed. 7. The cross-appeal in proceedings number NSD 439 of 2007 is dismissed. 8. The applicant/cross-respondent pay 85% of the respondent/cross-appellant's party and party costs incurred in proceedings number WAD 212 of 2009 including in relation to the respondent/cross-appellant's cross-appeal, to be taxed if not agreed. 9. The applicant/cross-respondent pay 85% of the respondent/cross-appellant's party and party costs incurred in proceedings number NSD 439 of 2007 including in relation to the respondent/cross-appellant's cross-appeal, to be taxed if not agreed. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. Associate: Dated: 21 December 2012