FEDERAL COURT OF AUSTRALIA

Black & Decker Inc v Sunaone Pty Ltd [2008] FCA 1827

COSTS ­– patent and design infringement claim – cross-claim for revocation – gross sum assessment – deduction where expert witness fees in excess of scale rate – whether court should otherwise order under Federal Court Rules O 62 r 36A given judgment less than $100,000

Federal Court Rules O 62 rr 4(2), 36A

Patents Act 1990 (Cth) ss 120(1), 138(1), Sch 1

AR Jamieson Investments Pty Ltd v Robak Engineering & Construction Pty Ltd [1998] VSC 69 cited

Australasian Performing Right Association Ltd v Metro on George Pty Ltd (2004) 64 IPR 57 cited

Axe Australasia v Australume [2006] FCA 844 cited

Black & Decker Inc v GMCA Pty Ltd (No 2) (2008) 76 IPR 99 cited

Black & Decker Inc v GMCA Pty Ltd (No 4) [2008] FCA 1737 cited

Black & Decker Inc v GMCA Pty Ltd (No 5) [2008] FCA 1738 cited

LED Builders Pty Ltd v Hope (1994) 53 FCR 10 cited

Seven Network News Limited v News Limited [2007] FCA 2059 followed

Sony Entertainment (Australia) Ltd v Smith (2005) 215 ALR 788 cited

Tu v Pakway Australia Pty Ltd (2006) 227 ALR 287 cited

Bucknell D, Beattie K, Goatcher A, Rofe H, Australian Patent Law (LexisNexis Butterworths, 2004).

BLACK & DECKER INC and BLACK & DECKER (AUSTRALIA) PTY LTD v SUNAONE PTY LTD

VID 1262 of 2005

HEEREY J

28 NOVEMBER 2008

MELBOURNE

THE COURT ORDERS THAT:

1.                  The costs ordered by the Court on 19 June 2008 to be paid by the Respondent to the Applicants are specified in a gross sum of $825,000.00, pursuant to Order 62 Rules 4(2)(c) and (d) of the Federal Court Rules.

2.                  Such sum shall be paid forthwith by the Respondent to the Applicants.

3.                  Such sum shall not be reduced pursuant to Order 62 Rule 36A of the Federal Court Rules.

4.                  The Respondent shall pay the Applicants’ costs of or incidental to the Applicants’ Notice of Motion filed 31 October 2008, including any reserved costs.

5.                  These orders shall be signed by a Judge and authenticated forthwith by the Registrar.

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 eSearch on the Court’s website.

REASONS FOR JUDGMENT

1                     The respondent has recently changed its name to Sunaone Pty Ltd.  Under its former name GMCA Pty Ltd it was found to have infringed Black & Decker’s standard and innovation patents: Black & Decker Inc v GMCA Pty Ltd (No 2) (2008) 76 IPR 99.  I subsequently ordered that Black & Decker’s costs be the subject of a gross sum order under O 62 r 4(2)(c) and (d) of the Federal Court Rules: Black & Decker Inc v GMCA Pty Ltd (No 4) [2008] FCA 1737.

2                     For this exercise the Court appointed Ms Margaret Gourlay of the Law Institute of Victoria’s Costing Service as a court expert under O 34.  In a very limited time Ms Gourlay provided a comprehensive and detailed report for which the Court is grateful.

3                     The respondent retained Mr Allan McGregor, a solicitor, who provided a report commenting on Ms Gourlay’s report.  Both gave evidence.  As is often the practice in such matters, Deputy District Registrar Tim Luxton sat with me to provide the benefit of his practical experience in taxation of costs.

4                     The relevant principles and details of previous cases where O 62 r 4(2)(c) gross sum assessments have been made are summarised by Sackville J in Seven Network News Limited v News Limited [2007] FCA 2059 at [25]-[34].  I incorporate that passage in these reasons.

5                     Mr McGregor identified 10 items where he disagreed with Ms Gourlay’s assessment.  With one exception, it seemed to me that Ms Gourlay had taken quite a conservative approach and that her opinion should be accepted.  The one exception was in relation to expert witness fees where the fees paid were very much in excess of the scale rate.  I thought the sum suggested by Ms Gourlay should be reduced by $33,000.

6                     The net result is that I assess the gross sum at $825,000.  By way of a check, this sum is roughly half of the amount actually paid by Black & Decker, so that gives additional comfort that the gross sum assessed is not excessive.

7                     Black & Decker elected to take an account of profits, which were duly assessed at $77,275.10:  Black & Decker Inc v GMCA Pty Ltd (No 5) [2008] FCA 1738.  Under O 62 r 36A where a party is awarded judgment for less than $100,000 for a money sum or damages any costs ordered to be paid will be “reduced by one-third of the amount otherwise allowable under this Order unless the Court or a Judge otherwise orders”.  A gross sum would be an amount “allowable” under O 62.

8                     I am satisfied the Court should otherwise order.  The case was a substantial one concerning patent and design infringement and validity.  The trial ran for seven days.  There was substantial expert evidence and no less than 45 pieces of prior art advanced at various times by the respondent.

9                     Practically speaking, Black & Decker had no alternative to commencing this proceeding in the Federal Court or some other “prescribed court” – i.e. the Supreme Court of a State or Territory; see Patents Act 1990 (Cth) s 120(1) and the definition of “prescribed court” in Sch 1.  Such a proceeding could have been brought in “another court having jurisdiction to hear and determine the matter”.  However the Federal Magistrates Court is not such a court, nor is the County Court of Victoria, although it may have jurisdiction to determine patent infringement issues in the course of other proceedings: AR Jamieson Investments Pty Ltd v Robak Engineering & Construction Pty Ltd [1998] VSC 69; Bucknell D, Beattie K, Goatcher A, Rofe H, Australian Patent Law (LexisNexis Butterworths, 2004) at 186.

10                  The respondent, which vigorously prosecuted a cross-claim for revocation of Black & Decker’s patents and design, can hardly complain that the present proceeding was commenced in a “prescribed court”, being the only court in which a revocation proceeding could be brought: Patents Act s 138; see LED Builders Pty Ltd v Hope (1994) 53 FCR 10 at [17]; Australasian Performing Right Association Ltd v Metro on George Pty Ltd (2004) 64 IPR 57 at [8]-[9]; Sony Entertainment (Australia) Ltd v Smith (2005) 215 ALR 788 at [203]; Axe Australasia Pty Ltd v Australume Pty Ltd (No 2) [2006] FCA 844 at [6]; Tu v Pakway Australia Pty Ltd (2006) 227 ALR 287 at [32].

11                  The injunctive and non-monetary relief (declaratory, validity certificates and delivery up) granted in addition to the account of profits was significant.

Associate:

Dated:         2 December 2008