7.9.5 Exemplary Situations in Awarding Costs

Date Published

Key Legislation:

Patents Act:

  • s40 Specifications

Patents Regulations:

  • reg 5.20 Hearing and decision--other circumstances
  • Schedule 8 Costs, expenses and allowances

Note: On 1 October 2024, the scale of costs awardable under Schedule 8 of the Patents Regulations was increased.  The new amounts identified in the regulations apply to awards of costs made for inter-parties matters that commenced on, or after 1 October 2024.  For inter-parties matters commencing before 1 October 2024, the previous scale applies.  Interlocutory matters that commence on or after 1 October 2024 will be subject to the increased scale of costs as these are distinct proceedings attracting their own awards of costs.  

Opposition/Application Withdrawn or Lapsed; Opposition Dismissed

Where proceedings are discontinued through the withdrawal of the opposition or patent application, it will often be appropriate for the Commissioner to conclude that the party withdrawing has “effectively surrendered” to the other and an award of costs can be made, save any consideration related to the conduct of the parties.

However, while withdrawal from proceedings may suggest prima facie that one party has succeeded over the other, an award of costs in that situation is not automatic and reference must be made to the particular circumstances of each case.

See Super Internet Site System Pty Ltd v Sensis Pty Ltd [2006] APO 27.

Accordingly the practice of the Commissioner is not to automatically award cost in these circumstances.  However, if a request for an award of costs is filed, the opposition officer will write to the parties indicating that the Commissioner intends to award costs and that comments or objections can be filed within 21 days.  The Commissioner will then, as appropriate, make the award of costs, seek further submissions or set the matter for hearing.

Similar considerations apply when an opposition is dismissed either because it is unsupported or for other reasons.

Special considerations may apply where:

In circumstances where an opposed application lapses it may also be appropriate for the Commissioner to act on the assumption that proceedings have been discontinued and that applicant has “effectively surrendered” to the opponent.  Generally this will be where the applicant is aware of the application lapsing and has made no attempt to seek restoration of that application within a reasonable period.  In such cases the Commissioner will proceed on the same basis as if the application has been withdrawn.

In William King and v KMJ Corporation Pty Ltd [2005] APO 37 however the delegate decided to issue a decision in the matter and awarded costs on the basis that the applicant had demonstrated continuing interest in the application.

 

Opponent Fails to Establish any Grounds of Opposition

The general rule is that costs are awarded against the opponent where they fail to establish any grounds of opposition.  However if the hearing officer finds major defects not raised by the opponents they may decide not to make an award of costs.

In Proline Industries v Ford (1976) 46 AOJP 2887 the opponent failed on all grounds. However the specification was held not to comply with s40, for reasons not raised by the opponent.

Opponent Succeeds in Some, but not all, Grounds of Opposition

In general, when an opposition succeeds on a substantial ground, costs will be awarded against the applicant:

See Inco Europe v. Yazaki Sogyo K.K. [1985] APOR 1, Midrex Technologies Inc. v Voest-Alpine Industrieanlagenbau Gmbh [2002] APO 33, Virbac S.A. v American Home Products Corporation and Merial Australia Pty Limited [2003] APO 6.

However if the successful ground of objection is not substantial, costs may be awarded totally or partially against the opponent or not at all.

See:

  • Rose Holdings v Carlton Shuttlecocks (1958) 28 AOJP 133
  • IBM v Columbia Ribbon (1970) 40 AOJP 1056
  • PPG Industries Inc. v Stauffer Chemical Co. 5 IPR 496.

In some cases, despite there being success on a substantial ground of opposition, the fairness of the case may support an “issues” approach to the award of costs, whereby costs awarded are modified to reflect the degree of success in the opposition (H Lundbeck A/S v Alphapharm Pty Ltd (No 2) [2009] FCAFC 118, Ruddock v Vadarlis  [2001] FCA 1865; 188 ALR 143, SNF (Australia) Pty Ltd v Ciba Specialty Chemical Water Treatments Limited [2016] APO 22, CSR Building Products Limited v United States Gypsum Company [2016] APO 7).  For factors that may be considered in determining costs based on an issues approach, see 7.9.2 Scale of Costs, Variation of the Scale.

More Than One Opponent

Where there are several opponents, and there is one hearing in respect of all oppositions, the general rule is that costs are awarded between the applicant and each opponent according to the success or failure of each opposition where it is clear that the evidence (even though similar) has been independently adduced.  That is, it is possible to apportion costs, see Rayson Industries, Smiths Industries and Westaflex v Vulcan (1976) 46 AOJP 1899. In that case, two of the three opponents established their respective grounds of opposition, whilst the third did not.  The applicant had to pay the costs of the successful opponents whilst the unsuccessful opponent had to pay the costs of the applicant.

See also Malleys Ltd. v Whirlpool Australia and Others 2 IPR 441;

Hitachi Limited v Hoover (Australia) Pty. Ltd. and Another 5 IPR 569.

However where one opponent lodges evidence which is, in total, a mere photocopy of another opponent's evidence it might not be appropriate to award costs to that one opponent, who, in effect, has not mounted a case.  Nothing, of course, prevents the two opponents concerned from sharing costs in such circumstances.

Where opponents have used identical evidence, costs against the applicant have been split accordingly between the opponents.

See, e.g. Snappy Panties & Another v Alleyne & Ombo. (1975) 45 AOJP 1000.

Similarly costs of joint counsel have been apportioned:

See Rayson Industries, Smiths Industries and Westaflex v Vulcan (1976) 46 AOJP 1899.

Specification Amended

As a general rule, where there is no action of substance following amendment of the specification, including when the opposition is withdrawn (whether or not a hearing has been held), and the amendment can reasonably be seen to have been made as a result of the opposition “without the close examination of a case” (We Two Pty Ltd v Shorrock [2002] FCA 875) then costs are generally awarded against the applicant.  See e.g. Faulding v Bickford (1952) 22 AOJP 2045

However where an opposition is withdrawn and it is not clear that the amendment was the result of matters raised in the opposition and would, in effect, require a determination of the merits of the case it will generally be appropriate to make no award of costs.  Super Internet Site System Pty Ltd v Sensis Pty Ltd [2006] APO 27.

If after the amendment of the specification there is further substantive action (i.e. the matter proceeds to a main hearing, or a further or "final" hearing), the Commissioner's general practice has been that costs are awarded against the applicant up to, and including, the date of advertisement of allowance of the amendment (which amendment has the effect of removing the ground of objection) and costs are awarded against the opponent thereafter. However, variations to the transition date have occurred.

Conduct by a Party

In exercising his discretion as to costs, a judge may have regard to the conduct of any party which is calculated to occasion unnecessary expense.  Such conduct need not be misconduct, but only such as can be seen by a judge to have brought about or substantially contributed to the costs which he is considering.

See Keddie v Foxall (1955) ALR 835, the note in 30 ALJ 27;

Weir Pumps v CML Pumps 2 IPR 129 at page 154 re discussion on Ungar v Sugg (1891) 8 RPC 113.

The Commissioner has exercised similar discretion, and as a tribunal and not a court, may act on the basis of natural justice, not being restricted by rules of court or rules of evidence.

Conduct both in and leading up to proceedings may be taken into account when considering an award of costs (Evans and Another v Maclean Shire Council and Another [2004] NSWLEC 89, Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at 97-98).

For conduct that may be taken to justify award above the Schedule of costs see 3.9.2 Scale of Costs, Variation of the Scale.

Note also that in making an award of costs, regulation 5.20(6) provides that the Commissioner may consider a failure by a party to file a summary of submissions as required by regulation 5.20(4).

Costs in Respect of Evidence not filed in Support, Answer or Reply

The award of costs in respect of evidence filed out of time is in general based upon the merits of each case, that is, the costs will normally follow the event.  However a factor that may vary the general rule is when the additional evidence was filed.  Thus, in Mayfield v Radcliff (1993) AIPC 90-962 additional evidence was served on the day before the hearing; although the opposition succeeded on the basis of that evidence, no costs were awarded. See also Inexa, Industria Extractora C.A. v OmniActive Health Technologies Limited[2013] APO 32, GS Technology Pty Ltd v Davies Shephard Pty Ltd [2000] APO 49.

Awarding Costs Where a Litigant is Self-Represented

The Commissioner has the power to order costs, but neither the Act nor the Regulations sets out principles on the awarding of costs to self-represented parties. Helpfully, the principles regarding costs and self-represented litigants in matters before the Registrar of Trade Marks were discussed in Beling v Sixty International S.A. [2015] FCA 250. Although made in the context of a trade marks matter, the consideration given at [64] to [67] of Beling discusses the powers of the Registrar to award costs. It indicates that the legislative scheme for determination of opposition proceedings before the Registrar is similar to that of Court proceedings and notes that the presence of a scale of costs indicates that the Registrar should award costs using similar discretionary principles to that employed by the Federal Court of Australia.

As to those principles, it is a well-established principle of law that self-represented litigants are not entitled to costs of legal representation in matters before the Courts; see for example Cachia v Hanes and Another (1994) 179 CLR 403. Recently the High Court removed the previous exemption to this principle for lawyers who represent themselves; see Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29. That is, the principles regarding costs and self-represented litigants can now be simply stated as that any self-represented litigant is not entitled to costs.

The legislative scheme and powers of the Commissioner of Patents are directly analogous to those of the Registrar of Trade Marks and, therefore, the consideration in Beling is equally applicable to an award of costs in matters before the Commissioner. Hence a self-represented litigant would not be entitled to any of the items at Part 1 of Schedule 8 of the Regulations, as these are costs associated with legal representation. Notwithstanding that tenet, the principles regarding self-represented litigants and costs would not seem to exclude an award of an Allowance or Expense as per Part 2 of Schedule 8 – the wording of these items does not appear to relate to costs of legal representation, but, instead, relate to expenses of a person in terms of prescribed fees, in attending proceedings and for allowances for those summoned to attend proceedings before the Commissioner. Consequently, self-represented litigants would be entitled to expenses and allowances as per Part 2 of Schedule 8.​​​​​​​