FEDERAL COURT OF AUSTRALIA

Bitech Engineering v Garth Living Pty Ltd (No 2) [2010] FCAFC 93

THE COURT ORDERS THAT:

1.                  The appeal be allowed.

2.                  The cross-appeal be dismissed.

3.                  Order 1 made on 26 November 2009 and Orders 2, 5 and 6 made on 9 December 2009 be set aside.

4.                  The respondents pay the appellant’s costs of the appeal and the proceedings at first instance, such costs to be taxed and payable forthwith.

5.                  The first respondent pay the appellant’s costs of the cross-appeal, such costs to be taxed and payable forthwith.

6.                  The solicitors for the appellant be at liberty to release the funds held pursuant to Order 1 made on 13 November 2006 to the appellant forthwith.

7.                  The matter be listed for directions before the primary Judge on 28 July 2010 or such other date as the primary Judge may determine for directions as to the further conduct of the matter.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

THE COURT ORDERS THAT:

1.                  The appeal be allowed.

2.                  Order 1 made on 26 November 2009 and Orders 2 and 3 made on 9 December 2009 be set aside.

3.                  The respondent pay the appellant’s costs of the appeal and the proceedings at first instance, such costs to be taxed and payable forthwith.

4.                  The solicitors for the appellant be at liberty to release the funds held pursuant to Order 2 made on 11 April 2007 to the appellant forthwith.

5.                  The matter be listed for directions before the primary Judge on 28 July 2010 or such other date as the primary Judge may determine for directions as to the further conduct of the matter.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

THE COURT ORDERS THAT:

1.                  The appeal be allowed.

2.                  Order 1 made on 26 November 2009 be set aside.

3.                  The respondent pay the appellant’s costs of the appeal, such costs to be taxed and payable forthwith.

THE COURT NOTES THAT:

4.                  Pursuant to Order 7 made on 3 February 2010, the question of the appropriate form of orders as to costs of the proceedings at first instance between the appellant and the respondent is reserved to date to be fixed before the primary Judge.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

THE COURT ORDERS THAT:

1.                  The appeal be allowed.

2.                  Order 1 made on 26 November 2009, Order 2 made on 9 December 2009 and Order 1 made on 10 December 2009 be set aside.

3.                  The respondent pay the appellant’s costs of the appeal and the proceedings at first instance, such costs to be taxed and payable forthwith.

4.                  The solicitors for the appellant be at liberty to release the funds held pursuant to Order 2 made on 8 February 2008 to the appellant forthwith.

5.                  The matter be listed for directions before the primary Judge on 28 July 2010 or such other date as the primary Judge may determine for directions as to the further conduct of the matter.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

THE COURT:

Introduction

1                     On 23 June 2010, reasons for judgment of the Full Court were published in which it was decided that four related appeals from a judgment of a single Judge of the Court should be allowed, and that a cross-appeal should be dismissed (Bitech Engineering v Garth Living Pty Ltd [2010] FCAFC 75).  The parties were given 7 days to make submissions on the costs of the appeal, on any variation to the order for the costs before the primary Judge and to propose orders to give effect to the reasons of the Full Court and for the further conduct of each proceeding.

2                     The appellant (Bitech) sued respondents in four separate proceedings for infringement of Australian Patent No 621713 entitled ‘Apparatus for Simulating Flames’ (the patent).  The infringing conduct was said to include, inter alia, the importation and sale of certain electric heaters.  At first instance, the first respondent in NSD 1681 of 2009 (Garth Living) contested infringement and cross-claimed for revocation of the patent on certain grounds of alleged invalidity.  The second respondent in that proceeding (Cohen Nominees) also contested infringement but did not cross-claim for revocation of the patent.  The respondents in NSD 105 of 2007 and NSD 2056 of 2007 (Flameglow and Hotpoint respectively) contested infringement and also cross-claimed for revocation of the patent.  Flameglow also cross-claimed on the additional ground that Bitech had made unjustifiable threats of patent infringement proceedings.  In NSD 43 of 2007 the respondent (Bunnings) contested infringement but did not cross-claim for revocation of the patent. 

3                     The four proceedings were heard together as, although the parties in each proceeding were different, the issues were broadly the same: Bitech Engineering v Garth Living Pty Ltd [2009] FCA 1393 at [2].  The primary Judge found that the respondents’ heaters did not infringe the patent, and made orders dismissing each application.  His Honour also determined that the patent was not invalid, and dismissed the cross-claims.  In substance, his Honour ordered Bitech to pay the respondents’ costs in relation to infringement.  His Honour reserved the question of costs in the proceeding against Flameglow pending the determination of an appeal, as Flameglow had been placed in liquidation, and its cross-claim based on unjustifiable threats remained unresolved: see Bitech Engineering v Garth Living Pty Ltd (No 2) [2009] FCA 1460 at [34]-[62] and the orders made by the primary Judge in NSD 105 of 2007 on 3 February 2010.  His Honour also granted leave to Bitech to prosecute an appeal against Flameglow while the company was in liquidation.

4                     Bitech filed notices of appeal from the primary Judge’s judgment in each proceeding.  Garth Living also filed a notice of cross-appeal from the primary Judge’s dismissal of its cross-claim for revocation.  None of the other respondents cross-appealed.

5                     Garth Living, Cohen Nominees and Bunnings were represented by the same counsel at the hearing of the appeals.  Garth Living filed substantial written submissions relating to the appeal and cross-appeal.  Bunnings and Cohen each filed brief written submissions in which they adopted and joined with the submissions of Garth Living “on the construction of the claims of the Patent and on infringement”.  Both sets of submissions included a statement that the filing party sought “to benefit from any declaration of invalidity of the Patent and consequent effect on liability and quantum at the application of Garth Living” in the relevant proceedings.

6                     No submissions were filed by Hotpoint or Flameglow.  Hotpoint was not represented at the hearing of the appeal.  Counsel for Flameglow made brief oral submissions to the effect that Flameglow had been placed in liquidation around the time of the judgment at first instance and had not played and would not play any active role in the appeal.  Counsel requested that the Court dispose of that appeal in accordance with the findings and reasons given in the contested appeals, and sought to be excused from further participation.

The parties’ submissions

7                     Flameglow and Hotpoint each submit that, as they took no active part in the appeals, there should be no order for costs against them. 

8                     Garth Living, Cohen Nominees and Bunnings have made no submissions on the question of costs or on any other matter arising from the Full Court’s decision in the appeals.

9                     Bitech submits that, in respect of the appeals, costs orders should be made in its favour on a party-party basis against all respondents, and, in respect of the cross-appeal, against Garth Living, Cohen Nominees and Bunnings.

10                  Bitech accepts that only Garth Living took an active role in the appeals but submits that, by filing written submissions, Cohen Nominees and Bunnings were supporting Garth Living’s position and, in seeking to benefit from any outcome in Garth Living’s favour, they should, as unsuccessful parties in the appeals concerning them, be liable for costs.  Bitech submits that Hotpoint and Flameglow should be liable for costs because they did not consent to the appeals concerning them. 

11                  As to the costs of the cross-appeal, Bitech submits that costs should be ordered against Garth Living as the unsuccessful cross-appellant.  It also submits that, because Cohen Nominees and Bunnings sought to benefit from any declaration of invalidity that might ensue as a consequence of Garth Living’s cross-appeal, they too should be liable for costs equally with Garth Living.

12                  Bitech also seeks variations of the costs orders made by the primary Judge.  It seeks cost orders in its favour with respect to the proceedings at first instance against Garth Living, Cohen Nominees, Bunnings and Hotpoint on the basis that, having regard to the Full Court’s reasons, Bitech should have succeeded in each proceeding.  It submits that it should have the benefit of orders that those respondents be liable jointly and severally for those costs, rather than for an identified portion of them.  In support of this outcome Bitech submits that, although it commenced separate proceedings against different respondents, the issues in the proceedings were broadly the same; the conduct of the respondents in those proceedings was broadly the same; the proceedings were heard together, with evidence in each proceeding being evidence in all other proceedings; and the heater designs were all materially identical, the heaters being imported from the same manufacturer.  No respondent has made a submission against the variation that Bitech seeks.

Consideration

13                  In our view it is appropriate that, in the case of each appeal, costs should be ordered against each respondent, for the reasons advanced by Bitech.

14                  However, in respect of the cross-appeal, costs should be ordered against Garth Living alone as the only party which filed a notice of cross-appeal and actively prosecuted that appeal.  Although Cohen Nominees and Bunnings expressed a desire to benefit from any success that Garth Living might have had, neither sought to make any submission in support of the cross-appeal, whether by adoption of Garth Living’s submissions or otherwise.  Any benefit that Cohen Nominees and Bunnings could derive from a successful cross-appeal by Garth Living, in circumstances where neither sought to contest the validity of the patent at first instance, would be simply adventitious.

15                  As to the variation of the costs orders made by the primary Judge, we accept Bitech’s submissions, and orders to that effect should be made.  We have noted that, in relation to the proceeding in which Flameglow is respondent, costs have been reserved by the primary Judge to be determined at a date after these appeals. 

16                  Two further matters remain for consideration.  First, Bitech submits that orders should be made that the costs of the appeal and cross-appeal, and, where relevant, of the proceedings below, be taxed and payable forthwith.  In our view such orders would be appropriate in the circumstances of this matter.  We note that no respondent has made any submission to the contrary. 

17                  Secondly, orders have been made that provided for the deposit by Bitech of certain sums in its solicitors’ trust account as security for the costs of each of the respondents.  Bitech seeks orders for the release of the funds that have been held as security for the costs of Garth Living, Cohen Nominees, Bunnings and Hotpoint.  In light of the orders that will be made in relation to the costs at first instance of the proceedings involving those respondents, it is appropriate that orders providing for the release of those funds to Bitech be made.  Once again, we note that no respondent has made any submission to the contrary.

18                  Finally, each proceeding should be listed before the primary Judge for the purpose of directions being made for the further conduct of that proceeding.

Disposition

19                  The following orders should be made.

Proceeding NSD 1434 of 2009

1.                  The appeal be allowed.

2.                  The cross-appeal be dismissed.

3.                  Order 1 made on 26 November 2009 and Orders 2, 5 and 6 made on 9 December 2009 be set aside.

4.                  The respondents pay the appellant’s costs of the appeal and the proceedings at first instance, such costs to be taxed and payable forthwith.

5.                  The first respondent pay the appellant’s costs of the cross-appeal, such costs to be taxed and payable forthwith.

6.                  The solicitors for the appellant be at liberty to release the funds held pursuant to Order 1 made on 13 November 2006 to the appellant forthwith.

7.                  The matter be listed for directions before the primary Judge on 28 July 2010 or such other date as the primary Judge may determine for directions as to the further conduct of the matter.

Proceeding NSD 1435 of 2009

1.                  The appeal be allowed.

2.                  Order 1 made on 26 November 2009 and Orders 2 and 3 made on 9 December 2009 be set aside.

3.                  The respondent pay the appellant’s costs of the appeal and the proceedings at first instance, such costs to be taxed and payable forthwith.

4.                  The solicitors for the appellant be at liberty to release the funds held pursuant to Order 2 made on 11 April 2007 to the appellant forthwith.

5.                  The matter be listed for directions before the primary Judge on 28 July 2010 or such other date as the primary Judge may determine for directions as to the further conduct of the matter.

Proceeding NSD 1433 of 2009

1.                  The appeal be allowed.

2.                  Order 1 made on 26 November 2009, Order 2 made on 9 December 2009 and Order 1 made on 10 December 2009 be set aside.

3.                  The respondent pay the appellant’s costs of the appeal and the proceedings at first instance, such costs to be taxed and payable forthwith.

4.                  The solicitors for the appellant be at liberty to release the funds held pursuant to Order 2 made on 8 February 2008 to the appellant forthwith.

5.                  The matter be listed for directions before the primary Judge on 28 July 2010 or such other date as the primary Judge may determine for directions as to the further conduct of the matter.

Proceeding NSD 103 of 2010

1.                  The appeal be allowed.

2.                  Order 1 made on 26 November 2009 be set aside.

3.                  The respondent pay the appellant’s costs of the appeal, such costs to be taxed and payable forthwith.

4.                  The Court notes that pursuant to Order 7 made on 3 February 2010, the question of the appropriate form of orders as to costs of the proceedings at first instance between the appellant and the respondent is reserved to date to be fixed before the primary Judge.

Associate:

Dated:         23 July 2010