FEDERAL COURT OF AUSTRALIA

Acohs Pty Ltd v Ucorp Pty Ltd (No 6) [2013] FCA 1345

THE COURT ORDERS THAT:

1.    Order 1 made on 2 September 2010 be amended –

(a)    by deleting “Of the respondents’ costs referred to in Order 2 made on 10 June 2010, those that were” and by substituting therefor “The applicant pay the respondents’ costs”; and

(b)    by inserting before the words “be taxed” the words “such costs to”.

2.    The applicant pay the respondents’ costs incurred only in resisting the applicant’s claims that –

(a)    the respondents had engaged in conduct in contravention of ss 52 and 53 of the Trade Practices Act 1974 (Cth);

(b)    the respondents had engaged in passing off;

(c)    the respondents had infringed the applicant’s trade mark;

(d)    the source code for an electronic document in HTML format was an original work in which the applicant owned the copyright, and/or had been reproduced by the respondents;

(e)    the “Blackwoods compilation” was an original work in which the applicant owned the copyright, and/or had been reproduced by the respondents;

(f)    the respondents had infringed the applicant’s copyright by reproducing material safety data sheets at the request of J Blackwood & Son Ltd.

3.    The applicant pay the respondents’ costs thrown away by reason of the application to amend, and the subsequent amendment of, the Sixth Further Amended Statement of Claim, the subject of the leave granted on 18 September 2009.

4.    Subject to costs orders previously made in this proceeding, the respondents pay two-thirds of the applicant’s costs, including reserved costs, remaining after deducting costs incurred –

(a)    in prosecuting either of the claims referred to in Order 1 made on 2 September 2010 as amended this day,

(b)    in prosecuting any of the claims referred to in Order 2 above, and

(c)    in applying for leave to make, and in making, the amendment referred to in Order 3 above.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    The reasons which follow deal with the costs of this proceeding, to the extent not covered by previous orders. Issues of substance were resolved in my judgment of 10 June 2010 (Acohs Pty Ltd v Ucorp Pty Ltd (2010) 86 IPR 492) and in two judgments of the Full Court on appeal (Acohs Pty Ltd v Ucorp Pty Ltd (2012) 201 FCR 173 and Acohs Pty Ltd v Ucorp Pty Ltd (No. 2) [2012] FCAFC 67), and the subject of remedies was dealt with in my judgment of 7 October 2013 (Acohs Pty Ltd v Ucorp Pty Ltd (No 5) [2013] FCA 1006).

2    By way of introduction, I should mention that this proceeding was commenced on 13 July 2004. By the time that the trial commenced on 31 August 2009, there had been 56 separate occasions upon which interlocutory orders had been made. I do not suggest that legitimate justifications for these procedures were lacking, but I do stress the prospect that costs will by now have become a very significant burden for both parties. For that reason, in what follows I have attempted to make discriminations by reference to departments of the case in which one or other of the parties succeeded, perhaps more so than would commonly be the practice in litigation which did not have the features to which I have referred.

3    It should also be noted that, although the result of the case is that the applicant has succeeded in securing permanent injunctions restraining the respondents from reproducing its authored MSDSs (that is, in the absence of a request by a customer for such reproduction) there is, in my view, considerable substance in the respondents’ complaint that, until the amendment which was made on the last day of the trial, the applicant based its copyright case on artefacts which were held not to be literary works capable of sustaining an infringement of copyright claim. I shall say something more about this below. At present, I observe no more than that the case as originally (and until quite late in the piece) formulated necessarily involved a degree of technical and conceptual complexity which, ultimately, made little or no contribution to the applicant’s success but which would inevitably have made participation in the proceeding a more expensive exercise for all concerned.

4    Finally by way of preliminary, I would note that, on many occasions in the interlocutory period, costs were reserved. The respondents ultimately made no submission that I should now revisit each such occasion to determine where, in the light of the final disposition of the proceeding, the merits of the matter lay on the question of costs. Accordingly, the applicant’s costs of those occasions will be included in its costs and, subject to the exclusions and apportionments which I make below, will be paid by the respondents. Likewise, there were a number of such occasions when costs were ordered to be in the cause. The respondents made no submission that “the cause” ought not to be regarded as one in which the applicant prevailed, whatever was the subject matter dealt with on those occasions or any of them.

5    The applicant’s position is that the respondents are entitled to their costs to the extent that they were incurred only in resisting its claims that –

    the respondents had engaged in conduct in contravention of ss 52 and 53 of the Trade Practices Act 1974 (Cth) (“Trade Practices Act”);

    the respondents had engaged in passing off; and

    the respondents had infringed the applicant’s trade mark;

but that, otherwise, and subject to costs orders previously made, the respondents should pay 75% of its costs. That percentage figure was said to be a fair, albeit robust, estimation of the extent to which the costs of the applicant, as the party which achieved headline success in the proceeding, should be discounted to reflect aspects of its copyright case in respect of which it did not succeed.

6    The respondents’ position is that 60% of their costs remaining after giving separate treatment to the costs referred to in Order 1 made on 2 September 2010 (to which I shall return in due course below) be paid by the applicant, and that 10% of the applicant’s costs be paid by the respondents. Those percentage figures were also said to be fair, albeit robust, estimations of the extent to which the parties succeeded on their respective cases.

7    A difference between the applicant’s and the respondents’ respective approaches is that the former makes special provision for the causes of action on which the applicant failed, while the latter incorporates consideration of such aspects into the respondents’ two percentage figures. As mentioned above, it is implicit in the applicant’s approach that it should have its costs in copyright, subject only to a 25% discount for elements of that case which did not succeed. The respondents’ approach also gives a deal of weight to the timing of the introduction of the specific copyright allegations upon which the applicant ultimately succeeded. It is convenient to commence, therefore, with the architecture of those allegations, both at trial and at various times previously.

8    I gave some attention to that subject at paras 32-44 of my reasons of 10 June 2010. The result of the amendment to which I referred in para 32 of those reasons was that so much of the applicant’s case as had alleged that “the layout, presentation and appearance of each Infosafe MSDS rendered by the Infosafe System” was a literary work in its own right was then abandoned. On the present occasion, counsel for the applicant accepted that, normally, the respondents would be entitled to their costs thrown away by reason of the amendment, that is to say, the costs of the amendment as such and costs previously incurred to the extent that they related only to the abandoned part of the applicant’s case. No reason was advanced as to why such an order should not now be made, and I can see none.

9    More difficult is the question of the applicant’s own costs incurred only in advancing its case as originally formulated. To the extent that there were any such costs – ie separate from those that related to the amended case – it would be unjust to require the respondents to pay them. The task of separation would, however, be problematic, especially given that the “layout, presentation and appearance” of each copyright MSDS was, on any view, an aspect of the relevant work itself. Neither party suggested that I should make a costs order which would require the taxing officer to make discriminations at this level of detail. But the respondents submitted, and I accept, that some allowance should be made for this factor.

10    The respondents also drew attention to the circumstance that they had, from very early in the piece, made it clear in their Defence that it was accepted that each relevant MSDS was, as such, a literary work capable of being the subject of copyright. This was said to be in contrast to their position with respect to source code and the layout, presentation and appearance of an MSDS. However, they resisted the applicant’s case that the MSDSs on which it sued were original works of which its staff had been the authors. As counsel for the applicant pointed out, it remained for the applicant to prove originality and authorship. I accept that this required the leading of evidence about the means by which each MSDS was brought into existence, and the content and quality of the contribution of the relevant author. I would not, however, hold that the content and quality of the contributions of those who wrote the software by reference to which the applicant’s database operated were a necessary part of that part of the case upon which the applicant succeeded. There was a great deal of affidavit evidence on that subject, and upon the associated issue of how the database caused the relevant source code to be generated. It would not be just to require the respondents to pay for the applicant’s costs of leading evidence of this nature.

11    In addition to the matter referred to in the next paragraph below, the applicant alleged that the HTML source code for its MSDSs, and the “Blackwoods compilation”, were original copyright works. Those allegations were not made good. I can think of no good reason why the applicant should have the costs incurred in running these aspects of its case. Further, in relation to the applicant’s Blackwoods allegations generally, its infringement case failed even in relation to MSDSs which were literary works in which it held copyright.

12    It was accepted by the applicant that Order 1 made on 2 September 2010 should not be disturbed. Because the order by reference to which Order 1 operated was set aside by the Full Court, it will be necessary to amend it in minor respects.

13    In summary, then, the position is as follows. The applicant should pay the respondents’ costs incurred only in resisting the claims arising under the Trade Practices Act; the claims in passing off, and the trade mark claims. Clearly the applicant should not have its own costs of advancing those claims. I also consider that costs that related only to the applicant’s allegations (1) that HTML source code was a work in which it owned copyright, (2) that the Blackwoods compilation was a work in which it owned copyright, and (3) that the reproductions which the respondents did pursuant to the request by Blackwoods were infringements of the applicant’s copyright in MSDSs should be to the applicant’s, rather than to the respondents’, account.

14    After having taken account of the matters specifically mentioned above, I still consider that for the respondents to be required to pay the whole of the applicant’s remaining costs would not represent a just outcome. In part that conclusion reflects the matters to which I referred in paras 9 and 10 above. In part it also reflects the fact that the applicant succeeded only in relation to MSDSs which had been wholly authored in-house: that is to say, excluding those which had been transcribed and those which had been the result of the so-called joint authorship with the applicant’s customers. For these reasons, I propose to reduce by one-third the costs to which the applicant would otherwise be entitled.

Associate:

Dated:    17 December 2013