FEDERAL COURT OF AUSTRALIA Beadcrete Pty Ltd v Fei Yu trading as Jewels 4 Pools (No 4) [2013] FCA 475 Citation: Beadcrete Pty Ltd v Fei Yu trading as Jewels 4 Pools (No 4) [2013] FCA 475 Parties: BEADCRETE PTY LTD (ACN 071 743 961), DESIGNER CONCRETE COATINGS PTY LTD (ACN 102 760 234), BUYRITE STEEL SUPPLIES PTY LTD (ACN 053 173 041) and DESIGNERITE PTY LTD (ACN 146 670 706) v FEI YU TRADING AS JEWELS 4 POOLS, JEFFREY STUART MCALISTER, PEBBLE MASTERS PTY LTD (ACN 087 540 734), TWIN COAST POOLS PTY LTD (ACN 104 149 484), MELKEN DEVELOPMENTS PTY LTD TRADING AS BAYSIDE POOLS & PAVING (ACN 052 945 169) and GRIN DISTRIBUTIONS PTY LTD (ACN 133 541 563) File number(s): NSD 111 of 2011 Judge: JAGOT J Date of judgment: 22 May 2013 Catchwords: PATENTS – orders and costs Cases cited: Beadcrete Pty Ltd v Fei Yu trading as Jewels 4 Pools (No 3) [2013] FCA 187 Cantarella Bros Pty Limited v Modena Trading Pty Limited (No 2) (2013) 99 IPR 623; [2013] FCA 130 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 10 Counsel for the Applicants: Mr A J Bannon SC with Ms P Arcus Solicitor for the Applicants: Creagh & Creagh Counsel for the Respondents: Ms S J Goddard SC with Mr H P T Bevan Solicitor for the Respondents: Conditsis Lawyers IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 111 of 2011 BETWEEN: BEADCRETE PTY LTD (ACN 071 743 961) First Applicant DESIGNER CONCRETE COATINGS PTY LTD (ACN 102 760 234) Second Applicant BUYRITE STEEL SUPPLIES PTY LTD (ACN 053 173 041) Third Applicant DESIGNERITE PTY LTD (ACN 146 670 706) Fourth Applicant AND: FEI YU TRADING AS JEWELS 4 POOLS First Respondent /First Cross Claimant JEFFREY STUART MCALISTER Second Respondent/ Second Cross Claimant PEBBLE MASTERS PTY LTD (ACN 087 540 734) Third Respondent TWIN COAST POOLS PTY LTD (ACN 104 149 484) Fourth Respondent MELKEN DEVELOPMENTS PTY LTD TRADING AS BAYSIDE POOLS & PAVING (ACN 052 945 169) Fifth Respondent GRIN DISTRIBUTIONS PTY LTD (ACN 133 541 563) Sixth Respondent JUDGE: JAGOT J DATE OF ORDER: 22 May 2013 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1 The respondents whether by themselves, their directors, servants, agents or otherwise, be restrained from infringing claim 1 of the Patent during the term thereof. 2 The respondents whether by themselves, their directors, servants, agents or otherwise, be restrained during the term of the Patent from, without licence from the applicants: (a) supplying, selling or disposing of, or offering to sell or dispose of, the Jewel4Pools products green and ice blue, for use in isolation or in combination with each other; and/or (b) authorising, procuring or inducing others to supply or sell or to use the Jewels4Pools products green and ice blue in isolation or in combination with each other. 3 An inquiry be held to determine the quantum of pecuniary relief to which the applicants/cross respondents are entitled. 4 The proceeding be stood over for further directions for the conduct of the inquiry until 9.30am on 18 June 2013. 5 The respondents pay 60% of the applicants' costs of the proceeding, including the applicants' costs of the cross-claim, as agreed or taxed. 6 The cross-claim be dismissed. 7 The applicants' provision of security for the respondents' costs of the proceedings in the sum of $75,000 pursuant to Order 1 of the orders of 29 April 2011 be released. 8 The applicants pay the respondents' costs of the motion fixed on 21 March 2011 as agreed or taxed. THE COURT CERTIFIES THAT: 9 For the purposes of section 19 of the Patents Act 1990 (Cth), the validity of the claims 1, 2, 3, 9, 10, 11, 12, 13, 20, 21, 22, 23, 24, 25 and 26 of the Patent was questioned in this proceeding and each claim was found valid. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 111 of 2011 BETWEEN: BEADCRETE PTY LTD (ACN 071 743 961) First Applicant DESIGNER CONCRETE COATINGS PTY LTD (ACN 102 760 234) Second Applicant BUYRITE STEEL SUPPLIES PTY LTD (ACN 053 173 041) Third Applicant DESIGNERITE PTY LTD (ACN 146 670 706) Fourth Applicant AND: FEI YU TRADING AS JEWELS 4 POOLS First Respondent / First Cross Claimant JEFFREY STUART MCALISTER Second Respondent / Second Cross Claimant PEBBLE MASTERS PTY LTD (ACN 087 540 734) Third Respondent TWIN COAST POOLS PTY LTD (ACN 104 149 484) Fourth Respondent MELKEN DEVELOPMENTS PTY LTD TRADING AS BAYSIDE POOLS & PAVING (ACN 052 945 169) Fifth Respondent GRIN DISTRIBUTIONS PTY LTD (ACN 133 541 563) Sixth Respondent JUDGE: JAGOT J DATE: 22 may 2013 PLACE: SYDNEY REASONS FOR JUDGMENT 1 The principal reasons for judgment in this matter were published on 8 March 2013 (Beadcrete Pty Ltd v Fei Yu trading as Jewels 4 Pools (No 2) [2013] FCA 187). The remaining issues are the orders which should be made, including any order for costs. These issues are to be determined on the basis of the written submissions filed by the parties. 2 The applicants seek a declaration of infringement and injunctions restraining any future infringement, as well as orders for an inquiry as to damages and for costs. The declaration and injunctions are limited to the "supply for use of the Jewels4Pools 1-3 mm green and ice blue products if those products are used in isolation (or in combination with each other)" consistent with the principal reasons for judgment (see at [147]). The proposed declaration is unnecessary. It also raises difficult issues, best avoided if possible, about whether the respondents have in fact supplied for use the Jewels4Pools 1-3 mm green and ice blue for use in isolation or in combination with each other or have only threatened to do so by reason of the instructions for use of the Jewels4Pools products. I am not persuaded that any declaration should be made or that the form of declaration proposed by the applicants is appropriate. 3 The applicants seek an order that the respondents pay their costs of the proceedings. The respondents seek an order that the applicants pay 90% of their costs of the proceeding. 4 The applicants' position is that they succeeded and the respondents failed and thus the usual order as to costs should be made. In the alternative, the applicants contend that any reduction of their costs as a result of the limited finding as to infringement by supply should amount to no more than 10% of their costs. The applicants referred to Cantarella Bros Pty Limited v Modena Trading Pty Limited (No 2) (2013) 99 IPR 623; [2013] FCA 130 (Cantarella Bros) in support on the basis that Emmett J reduced an applicant's costs in that matter by 10% when the applicant succeeded on a trade mark case but failed on its misleading and deceptive conduct and passing off cases. As the applicants put it they were successful in this proceeding on more of their claims than the applicant in Cantarella Bros. 5 The respondents' position is that the findings of infringement were limited to infringement by supply of one claim by two colours of products only if used in limited circumstances when there were hundreds of colours and combinations available. Further, the construction of the patent which supported validity and infringement was advanced by the applicants on the first day of the hearing and not before. Finally, the bulk of the hearing concerned infringement not invalidity. 6 The basic facts are that the applicants established infringement of the Patent based on the supply of the Jewels4Pools products but on a far more limited basis than their case of infringement and the respondents failed on their case that the patent was invalid. These facts suggest that the respondents' position that the applicants should pay any part of the respondents' costs is untenable. When questions of costs arise where parties have had mixed results questions of fact, degree and impression inevitably arise. The claims of invalidity, on which the respondents failed in their entirety, involved a significant portion of the hearing, even if it is true that the bulk of the hearing concerned questions of infringement. Moreover, the applicants did succeed in proving infringement of the patent by the respondents. The fact that this proof relied on s 117 of the Patents Act 1990 (Cth), involving infringement by supply, is immaterial. Section 117 is part of the statute just as much as any other provision. Proof of infringement by supply is not some lesser order proof or lesser order infringement. Issues of construction are always a matter for the court and the applicants informed the respondents before the hearing that this was so. That said, the applicants' evidence did not disclose any proper basis for infringement until the construction identified during the hearing became apparent. Having proved infringement, however, I am unable to see any legitimate argument that the appropriate exercise of the discretion in respect of costs is for the applicants to pay any part of the respondents' costs. The fact that the respondents failed on their claims of invalidity confirms this to be so. Accordingly, the real question is whether the applicants' costs should be reduced to reflect the applicants' limited degree of success. 7 As the respondents said, the applicants sued on 18 claims of the patent and, until final address, maintained those allegations of infringement. As noted, I found that two colours of the relevant product, but only if used in isolation or in combination with each other, infringed claim 1 of the Patent. It follows that the basis upon which the applicants proved infringement can fairly be described as extremely confined although the allegations of infringement were broad ranging. As a result, and having regard to the evolution of the applicants' case throughout the hearing, I am persuaded that it is reasonable that the applicants be deprived of part of the costs of the proceeding but, as I have said, I cannot see any basis by which it might be reasonable to make the applicants bear any part of the respondents' costs. Even taking into account the respondents' failure and the applicants' success on the question of the validity of the Patent, I do not accept that the applicants' proposed reduction of 10% reasonably reflects the outcomes of this case. Nor do I accept that the results in other cases can provide meaningful comparisons because the issue depends upon questions of fact, degree and impression which will be unique to each particular case. In my view an order that the respondents pay 60% of the applicants' costs of the proceeding would fairly and reasonably reflect the mixed success which the applicants enjoyed. 8 As to the issue of security for costs, the fact is the security related to this proceeding only and not any appeal. I do not accept the respondents' submission that the security should not immediately be released and I also do not accept that the prospect of any appeal is relevant to this issue. 9 To the extent that there is any issue between the parties in respect of the costs of the respondents' motion filed on 21 May 2011, I accept the respondents' argument that it should be awarded its costs of that motion given that an order for security was made. 10 I make orders in accordance with these reasons. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot. Associate: Dated: 22 May 2013