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.

In this topic:

Schedule 8

Certain Fees not Claimable

Cost of Attending Hearing

Witness Expenses

Variation of the Scale

Costs are an indemnity to the successful party, and they in general include fees to counsel, to solicitors, fees of court, necessary disbursements, and witness expenses. As a general rule the only limit to their amount is that they must be necessary and reasonable. However costs of proceedings before the Commissioner are normally awarded according to the scale of costs specified in Schedule 8 of the regulations and the Commissioner will not depart from an award of costs on this basis unless the circumstances clearly warrant doing so (Colgate-Palmolive Co and another v Cussons Pty Ltd, 28 IPR 561).

Schedule 8

Schedule 8 of the regulations sets out the scale of costs relevant to proceedings before the Commissioner, as well as (in Part 2) expenses and allowances that may be included in an award of costs. These include a prescribed fee, such as the hearing fee, paid in relation to the proceedings, reasonable travel and accommodation expenses and allowances for witnesses and experts summons to appear before the Commissioner.

Schedule 8 applies to proceedings before the Commissioner and is not limited to Chapter 5 proceedings. However not all items will apply to all proceedings. For example a request under section 32 does not equate to a notice of opposition. However, if evidence is filed in a proceeding and can be categorised as evidence in support, answer or reply, the relevant costs items will apply.

Other considerations relevant to the application of the Schedule include:

The word "or" as it is used in Items 12 and 13 of the Schedule is used in a disjunctive sense, i.e. one thing or the other, but not both. Any award of costs according to the Schedule only entitles the claiming of costs in relation to attendance at a hearing by either a patent attorney or a solicitor, not both (Emory University V Biochem Pharma Inc [2000] APO 53);
Item 14, of Schedule 8 relates exclusively to attendance at a hearing by Counsel in the singular, not plural (Emory University V Biochem Pharma Inc [2000] APO 53) - this reasoning would appear to apply equally to the attendance of patent attorneys or solicitors under items 12 and 13;
The scale of costs contains no items in relation to further evidence and hence no costs are awardable in relation to further evidence unless the scale is varied (Colin Leslie Young v W. Neudorff GmbH KG & Arthur Yates & Co [2002] APO 7). The filing of further evidence may however be relevant to the decision to award costs in the proceedings – see 7.9.5 Exemplary Situations in Awarding Costs;
Preparation of a case for hearing in Item 11 includes cost relating to preparation irrespective of whether the hearing proceeds (Hiltive Pty Ltd v Rudolf Hartmann [2002] APO 46). In some circumstances it may also include preparation of written submissions in lieu of appearing at the hearing (John Edward Vines v John McDonald [2005] APO 25).

Certain Fees not Claimable

A person who pays a fee prescribed in the regulations in respect of a matter relating to proceedings before the Commissioner may be paid the amount of the fee (paragraph 1 of division 1 of part 2 in Schedule 8). But it does not follow that all the fees listed in Schedule 7 are relevant to an award of costs.

A party should be awarded a fee from Schedule 7 as costs if the fee gives the party its right to start the proceedings. However, a party should not be awarded a fee from Schedule 7 as costs if the fee is to request an indulgence from the Commissioner - unless the actions of the other party directly caused it to need the Commissioner's indulgence. Thus fees paid for extending the time for filing evidence in the proceedings will normally not be awarded as costs.

See Prudhoe v ICI Aust 27 IPR 100, (1993) AIPC 90-986

Cost of Attending Hearing

An award of costs includes the cost of attendance for persons attending on behalf of the successful party, provided the attendance of that person was reasonable. Thus, the expenses of the counsel and attorneys that were necessary for the hearing can be claimed. Where a party is represented by more than one counsel and one patent attorney, the expenses of the additional representatives will only be available if there has been a variation of the scale.

Where a witness attends on behalf of the successful party, their expenses can be claimed (provided their attendance was necessary). Where the successful party summonsed a witness (and thus met their reasonable expenses of attending), they can claim the expenses of the witness attending. See Witness Expenses below for more about whether attendance of a witness is necessary.

Witness Expenses

Expenses for witnesses are set out in Schedule 8, Part 2, Division 2.

The fact that a witness was not examined does not disentitle a party to costs attendant on his proof and attendance - Clark, Tait & Co. v. Federal Commissioner of Taxation (1931) 47 CLR 142 at 146 and further on page 147, where it was said that the witness "was essential to the proper and prudent conduct of the case even though he was not called as a witness".

See also Russo v. Russo, [1953] ALR 95 and discussion thereof at 27 ALJ 332.

Note also that the cross-examination of witnesses, in itself, is not a special or unusual situation which would warrant variation of the scale of costs (E.I. Du Pont De Nemours and Company v ICI Chemicals & Polymers Limited [2007] APO 12).

Variation of the Scale

Regulation 22.8(1) provides that the Commissioner must not award costs, other than costs (including expenses and allowances) specified in Schedule 8, unless each party to the proceedings has had the reasonable opportunity to make a submission on the matter of the award of those costs.

Thus, any award of costs for a greater quantum than specified in the schedule, or for a matter not specified in the schedule, cannot be made unless the parties have had a reasonable opportunity to make submissions. Usually this will be at the hearing which determines the proceedings.

The practice of a hearing officer in conducting a hearing should be to ensure that parties are provided an opportunity to make detailed submissions going to the question of costs. If necessary, the hearing officer may provide a short period after the hearing for the parties to make submissions on costs, or, where the circumstances warrant, defer detailed submissions on costs until after the issuance of their decision. The hearing officer can then consider the award of costs after the substantive outcome is determined. Parties who believe that an award of costs should be made that departs from the usual award according to Schedule 8 should bring that to the attention of the hearing officer before any award of costs is made.

While the Commissioner will not normally award costs other than on the basis of Schedule 8, such an award will be appropriate "when the justice of the case so requires or where there may be some special or unusual feature in the case" (Re Wilcox; Ex parte Venture Industries Pty Ltd and Others, 141 ALR 727). This could include circumstances where, because of the complexity or importance of the case, the Schedule provides inadequate recompense, or where the conduct of one or other of the parties indicates that variation of the scale is appropriate (see GS Technology Pty Ltd v Davies Shephard Pty Ltd [2000] APO 49). The basic question to consider is “whether the justice of the case requires variation of the schedule” (E.I. Du Pont De Nemours and Company v ICI Chemicals & Polymers Limited [2007] APO 12), and principles relevant to the variation of the scale have been discussed in a number of Office decisions including, for example, Sterling Drug Inc v Boots Company PLC, 35 IPR 630, E.I. Du Pont De Nemours and Company v ICI Chemicals & Polymers Limited [2007] APO 12 and Viskase Corporation v W.R. Grace & Co.-Conn [1998] APO 47.Situations where an award of this nature has been considered appropriate include:

The opposed application was withdrawn after a divisional application was filed (Super Internet Site System Pty Ltd v Sensis Pty Ltd [2006] APO 27).
The opposed application was withdrawn after filing of evidence in support, despite an intention to withdraw apparently being formed much earlier in the opposition process, resulting in the opponent incurring substantial unnecessary costs in preparing for a hearing (Amgen, Inc. v Genentech, Inc. [2016] APO 15). A party used senior and junior counsel and it was considered that the case required this level of representation for its proper conduct (HPM v. Sturdee (1967) 37 AOJP 2077) See also Kroehn v. Kroehn (1912) 15 CLR 137 and Peile v. Nobel (Australasia) (1966) VR 433.

Conduct that the Courts have found to warrant the award of costs on an indemnity basis includes misconduct that causes loss of time to the Court and to other parties; making allegations which ought never to have been made, or unduly prolonging a case by groundless contentions; commencing or continuing an action for some ulterior motive, or with wilful disregard of the known facts or the clear law in circumstances where the applicant, properly advised, should have known there was no chance of success; and abusing the process of the Court, in the sense that the Court’s time, and the litigants’ money, has been wasted on totally frivolous and thoroughly unjustified proceedings (Rouse v Shepherd (No 2) (1994) 35 NSWLR 277 at 279-280). See also Colgate-Palmolive Co and another v Cussons Pty Ltd, 28 IPR 561.

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).

Costs awarded in relation to proceedings on the basis of a variation of the scale may include items included in the Schedule on full or partial indemnity basis, or additional items that may otherwise be relevant to the proceedings. In this regard the Federal Court Scale of Costs may be a useful guide.

Costs are generally awarded on the basis of which party won the case overall, rather which party prevailed on particular points of the case. On the other hand, an apportionment of costs can be made if a particular issue is a separate and distinct from the main issue being considered: see Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602 at [54] where Goldberg J said:

“A court should not be too ready to disallow costs simply because a party has failed upon an issue, unless it is quite a separate and distinct issue from the issues in respect of which it succeeded or unless there be some element of unreasonableness or inappropriate conduct in relation to that issue.”

That is, in circumstances where it is fair to do so, an “issues” approach to awarding costs may be adopted, such that the costs awarded against an unsuccessful party may be reduced to reflect the degree of success on the issues in the opposition. In considering the variation to the costs, in this approach there should not be a mathematical analysis of the degree of success and failure in the opposition, but a “rough and ready” determination of what is a “fair estimate” in the circumstances (H Lundbeck A/S v Alphapharm Pty Ltd (No 2) [2009] FCAFC 118, 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, Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107).

Relevant factors to consider when adopting this approach include the “relative failures and successes of the parties, the time spent on particular issues, the interrelationship between different issues, and the level of involvement of the various parties in leading evidence and making submissions at the hearing” (H Lundbeck A/S v Alphapharm Pty Ltd (No 2) [2009] FCAFC 118 at [15]), as well as the conduct of the parties (SNF (Australia) Pty Ltd v Ciba Specialty Chemical Water Treatments Limited [2016] APO 22).

Situations where this approach has been adopted include:

Costs awarded against the applicant were reduced to reflect that, although the opposition succeeded to a significant extent there was a lack of success on several substantial grounds (CSR Building Products Limited v United States Gypsum Company [2016] APO 7).
Costs awarded against the applicant were reduced in light of the opponent’s pursuit of grounds previously argued unsuccessfully in the Federal Court without significant new evidence, which constituted conduct contributing substantially to the cost and complexity of the opposition (SNF (Australia) Pty Ltd v Ciba Specialty Chemical Water Treatments Limited [2016] APO 22).

Amended Reasons

Amended Reason	Date Amended
Page updated to include information relating to the changes in the scale of costs awardable under Schedule 8 in effect from 1 October 2024.	20 Sep 2024
	18 Oct 2023