FEDERAL COURT OF AUSTRALIA

Voxson Pty Limited v Telstra Corporation Limited (No 3) [2015] FCA 1492

THE COURT ORDERS THAT:

1.    The applicant (Voxson) pay the first respondent’s (Telstra) costs of and incidental to Telstra’s interlocutory application dated 17 October 2014 and costs thrown away by reason of each set of proposed amendments to the Voxson pleading filed on 29 August 2014 and by reason of Voxson’s late service of documents, up to and including 3 September 2015, on the ordinary basis.

2.    Voxson pay the third respondent’s (Optus) costs of and incidental to Optus’ interlocutory application dated 24 October 2014 and costs thrown away by reason of each set of proposed amendments to the Voxson pleading filed on 29 August 2014:

(a)    up to and including 23 March 2015 on an indemnity basis.

(b)    from 23 March 2015 up to and including 3 September 2015 on the ordinary basis.

3.    Voxson pay the fifth respondent’s (Vodafone) costs of and incidental to Vodafone’s interlocutory application dated 20 October 2014 and costs thrown away by reason of each set of proposed amendments to the Voxson pleading filed on 29 August 2014:

(a)    up to 5 February 2015 on the ordinary basis.

(b)    from 5 February 2015 up to and including 23 March 2015 on an indemnity basis.

(c)    from 23 March 2015 up to and including 3 September 2015 on the ordinary basis.

4.    Telstra, Optus and Vodafone pay Voxson’s costs of and incidental to the hearings of 28 and 29 September 2015 insofar as they relate to the respondents’ interlocutory applications and Voxson’s leave to amend its pleading, on the ordinary basis.

5.    Voxson pay Telstra’s, Optus’ and Vodafone’s costs of and incidental to the applications for costs, including such part of the hearings of 28 and 29 September 2015 that related to the applications for costs, on the ordinary basis.

6.    The second and fourth respondents cease to be proper or necessary parties to the proceeding pursuant to r 9.08 of the Federal Court Rules 2011(Cth).

7.    Voxson pay 80% of the costs of the second and fourth respondents on the ordinary basis.

8.    All costs be payable forthwith.

9.    Optus Networks Pty Limited be joined to the proceedings.

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

THE COURT ORDERS THAT:

1.    The applicant (Voxson) pay the first, third and fifth respondents’ costs thrown away by each set of proposed amendments to the amended statement of claim filed on 1 September 2014.

2.    Each party pay its own costs of so much of the hearing on 28 and 29 September 2015 as related to the respondents’ (strike out) interlocutory applications and Voxson’s application to amend the amended statement of claim filed on 1 September 2014.

3.    Voxson pay Telstra’s, Optus’ and Vodafone’s costs of and incidental to the applications for costs, including such part of the hearings of 28 and 29 September 2015 that related to the applications for costs, on the ordinary basis.

4.    The second and fourth respondents cease to be proper or necessary parties pursuant to r 9.08 of the Federal Court Rules 2011 (Cth).

5.    Voxson pay 80% of the costs of the second and fourth respondents on the ordinary basis.

6.    All costs be payable forthwith.

7.    Optus Networks Pty Limited be joined to the proceedings.

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

REASONS FOR JUDGMENT

1    The applicant, Voxson Pty Limited (Voxson), is the patentee of Australia Patent No 676242 (the Vox 1 Patent) and Australia Patent No 686591 (the Vox 2 Patent). The respondents (the first respondent, Telstra Corporation Limited (Telstra), the second to fourth respondents (together the Optus respondents) and the fifth respondent, Vodafone Hutchinson Australia Pty Limited (Vodafone)) each filed applications to strike out the presently filed pleadings in each case (the strike out applications). The third respondent, Optus Mobile Pty Limited, (Optus) also sought to remove the second to fourth respondents. The strike out applications are the subject of Voxson Pty Limited v Telstra Corporation Limited [2015] FCA 1490 (the Vox 1 decision) and Voxson Pty Limited v Telstra Corporation Limited (No 2) [2015] FCA 1491 (the Vox 2 decision). Each respondent seeks the costs of each of its strike out application and of Voxson’s applications for leave to amend each of the filed pleadings (filed on 29 August 2014 in the Vox 1 proceeding and 1 September 2014 in the Vox 2 proceeding).

2    Leave has been given to Voxson to file an amended pleading in each proceeding. It is convenient to deal with the questions of costs in the Vox 1 and Vox 2 proceedings together in these reasons.

3    It is agreed that the second and fourth respondents should no longer be parties in either proceeding. Optus seeks an order for removal pursuant to r 9.08 of the Federal Court Rules 2011 (Cth) (the Rules), such that the second and fourth respondents cease to be proper or necessary parties in the Vox 1 and Vox 2 proceedings. Voxson seeks leave to discontinue. There is no agreement as to the costs of these respondents. It is agreed that Optus Networks Pty Limited be added as a respondent to each proceeding.

4    Annexed to these reasons are the chronologies relevant to the various amendments to the Vox 1 and Vox 2 pleadings (Annexures A and B respectively).

5    Optus’ submissions formed the basis of the respondents’ arguments on costs. Accordingly, these reasons primarily address Optus’ submissions, which were adopted by Telstra and Vodafone.

6    In relation to the Vox 1 proceeding, Optus relevantly submits that:

    if leave is granted to Voxson to re-plead or to file an amended pleading in the Vox 1 proceeding, it should have the costs in relation to the Vox 1 strike out application on an indemnity basis;

    if leave is granted to Voxson to re-plead or to file an amended pleading in the Vox 2 proceeding, it should have costs of the strike out application, including costs thrown away by reason of the series of amendments;

    Voxson should pay the costs of the second and fourth respondents who were, Optus submits, improperly joined, on an indemnity basis; and

    all costs should be payable forthwith.

7    Fundamentally, Optus’ assertion is that Voxson has adopted an approach to this litigation that has caused the waste of significant costs by pleading assertions without a factual basis and with inadequate particulars. This is in circumstances where Optus has, on each occasion, with each proposed amended pleading, written to Voxson and explained what it characterises as a deficiency and suggested that the allegations be withdrawn.

8    Telstra seeks costs of its interlocutory application with regard to the Vox 1 pleading, including costs associated with the late service of documents and the costs thrown away as a result of Voxson serving amended versions of the Vox 1 pleading on 19 January 2015, 9 February 2015, 24 February 2015, 23 March 2015 and 3 September 2015. Telstra seeks the same orders as to costs with respect to the Vox 2 pleading and the amended versions of the Vox 2 pleading on 14 January 2015, 20 February 2015 and 13 March 2015. It seeks orders with respect to both Vox 1 and Vox 2 that the costs be taxed and payable forthwith.

9    Further, Telstra argues that Voxson should pay the costs associated with the late service of documents on 19 January 2015 as Telstra was served with the proposed Vox 1 Second Further Amended Statement of Claim, proposed Vox 1 Amended Originating Application and proposed Vox 1 Amended Statement of the Nature of the Case and this was extremely close to the start of the interlocutory hearing on 4 and 5 February 2015.

10    Vodafone seeks the same orders as does Optus. That is, Vodafone seeks the following orders:

    Voxson be ordered to pay Vodafone’s costs to date;

    that those costs relating to Vox 1 be paid on an indemnity basis; and

    that all of the costs be taxed and paid immediately.

11    Voxson maintains its position that the extensive costs incurred by the parties in each proceeding, particularly by Optus, have been of their own making, by mounting serial attacks on the statements of claim and presenting serial sets of submissions. Further, it says that Telstra and Vodafone have been represented at all days of hearing but have, in the main, adopted Optus’ submissions and, in particular in the case of Vodafone, Voxson submits that it has ‘made no significant contribution to the arguments advanced’.

12    It should immediately be observed that serial attacks by the respondents followed the serial proposed amendments by Voxson.

13    Further, Voxson submits that the parties raised complaints about the Vox 1 and Vox 2 statements of claim that pressed ‘unnecessary arguments’ which resulted in a protraction of the hearings. While it can be said that the respondents did not succeed in all bases for the strike out applications, it cannot in my view be said that the arguments were unnecessary. At the least, those arguments led to further amended particulars, which provided clarification.

14    Again, with regard to the Vox 1 and Vox 2 proceedings, Voxson accepts that it ought to pay the costs thrown away by reason of its amendment of the Vox 1 and Vox 2 pleadings, other than by reason of Vox 1 amendments consequent on the provision of the “dumb pipes” information on 5 February 2015 as explained below. However, Voxson says that the respondents ought to pay the costs of the interlocutory applications. Voxson’s position on costs of the applications is premised on Voxson being given leave to file the proposed amended statements of claim and on the assertion that the respondents have ‘in effect, abandoned seeking much of what was initially sought in interlocutory applications’.

15    Again, Voxson seems to disregard the history of the proceedings and its serial proposed amended pleadings in each case.

16    The costs of the second and fourth respondents will be considered separately (see [91] – [110] below).

THE VOX 1 APPLICATIONS

The respondents’ position on implementation of the claimed system

17    Voxson insisted that Optus had, itself, implemented assisted GPS (A-GPS). This was maintained through a number of hearing days and four different versions of the statement of claim, until the proposed amended pleading served on 23 March 2015 (the proposed March pleading). Optus submits that this amounted to the making of groundless contentions and allegations and a refusal, by a party holding a patent in the field of telecommunications and therefore with a degree of expertise, to investigate necessary matters of fact upon which the cause of action was said to be founded.

18    Optus says that Voxson failed to investigate matters that could readily have been ascertained (as in Australian Guarantee Corporation Ltd v De Jager [1984] VR 483 where Tadgell J awarded indemnity costs for a “high-handed presumption”) and where the proceedings have been “grossly prolonged”, thereby subjecting Optus to costs ‘far beyond what [it] would really have expected to incur in litigation of the genuine issues’. Optus emphasises that the onus was not on it, as a respondent, to prove to Voxson’s satisfaction that it did not implement the claimed system before Voxson would amend its pleaded causes of action.

19    I have read and taken into account the many letters in evidence that passed between the parties but shall refer only to some of them, as necessary.

20    Optus points to its letter of 22 September 2014 (the September letter), preceding the filing of the strike out application, where it:

    asserted an absence of a factual foundation for the case of infringement;

    stated that Optus has not implemented the infrastructure and protocols to support A-GPS in its network, either on the control plane or the user plane;

    dealt with each step of the claimed allegations and asserted that there was no implementation;

    pointed out that the Vox 1 pleading was premised on the Optus infrastructure implementing the steps, including use of Secure User Plane (SUPL) architecture, and asserted that Optus has not implemented any such system; and

    pointed out that the examples provided in the pleading refer to the SUPL enabled mobile device or terminal’s (SET) use of A-GPS and not to implementation by the Optus network, but rather that the particulars indicated a third party provision of the A-GPS services.

21    Voxson’s response was to say that Optus did not dispute that it sold and authorised ‘activities, services and products’ which had A-GPS capability. Voxson then asked for an explanation of Optus’ denial, without saying what was incomplete in the detailed denial set out in the September letter. Further, while SUPL was included in the case being made by Voxson at that time, its reply made it clear that its allegations, including those as to SUPL, were in the context of services operated by or on behalf of Optus and its related bodies corporate, as set out in amended statement of claim filed on 29 August 2014 (the pleading).

22    In the September letter, Optus not only complained of the lack of particulars in the pleading, it also set out its understanding of the case being made against it, being that it had implemented an A-GPS system. It went further, as it provided a summary of the steps alleged in that statement of claim and asked for confirmation that the summary was accurate or, if not, why not. It pointed out that the steps in the pleading were ‘premised upon the Optus Infrastructure’ receiving requests and responding. It then stated: ‘We are instructed that in fact this does not occur, because Optus has not implemented any such system’.

23    In the September letter Optus referred to the Nokia N95, as particularised in the pleading, and stated:

Particulars (e) and (f) to [146] refer to the iPhone and the Nokia N95 as offering A-GPS features. That does not indicate that Optus infrastructure provides or has implemented such a service. Indeed, the particularised Nokia manual indicates that Nokia provided the A-GPS service in the absence of the configured service. We assume that your client does not assert that these matters suggest that Optus has implemented on A-GPS system.

24    The response from Voxson was a reiteration that the allegations concerned 2G, 3G and 4G location servers and SUPL Location Platforms operated by or on behalf of the Optus respondents.

25    Voxson complains that it did not and does not understand what Optus meant by using the word “implemented”. That complaint must be rejected. Even to the lay reader, let alone to a reader of the relevant sophistication of Voxson as the patentee, the meaning is abundantly clear. In any event, when Voxson responded on 10 October 2014, it did not complain about the use of the word but asked for the basis of the denial and whether the denial extended to a capability of using the claimed system. Voxson maintained that the servers involved in its allegations were those operated by or on behalf of Optus. There was no suggestion by Voxson of a third party server.

26    After the first day of the hearing of the strike out application on 4 February 2015, when Optus’ counsel had made statements to the effect of the contents of the September letter and Voxson had said that it may wish to investigate third party implementation, Optus again wrote to Voxson. It repeated part of the September letter and reiterated that A-GPS had not been implemented in the Optus network, whether by Optus or by a third party on its behalf. It reminded Voxson that it had stated back on 3 May 2012, by letter, that it does not provide an A-GPS service.

27    Voxson said that this assertion conflicted with Dr Harper’s evidence.

28    As at 5 February 2015, Optus’ stated position was that Dr Harper’s evidence did not involve testing what the network does and that the Optus infrastructure (Optus 2G-GERAN and/or external servers operated by or on behalf of Optus) may be used ‘simply as a conduit, as dumb pipes’, as in the transmission of emails. Dr Harper’s evidence was to the effect that the Optus network was ‘in some way’ providing assistance data. On that same hearing day, counsel for Telstra stated that Telstra does not implement A-GPS with respect to the 4G network and added: ‘frankly, we think that those in the industry must know that no telecommunication provider would because with this latest level of technology, your Honour, handset makers are implementing their own A-GPS arrangements’. Vodafone placed itself in the Optus camp, stating that Vodafone does not believe that it implemented A-GPS and adopted ‘the dumb pipes theory’.

29    Despite this appearing on the transcript, Optus again wrote to Voxson on 5 February 2015. It stated that the pleading required:

for all forms of infringement, that the Optus Infrastructure (ie 2G GERAN and any external location servers operated by or on behalf of Optus) must respond to a request from the Location Based Services application by transmitting the pleaded RRLP (or RRC, LPP or UPL) messages, as specified in the Standards, to a mobile device; and that it must also respond to information received back from the mobile device by undertaking the further processing of that information pleaded in relation to each mode. This may be referred to as the implementation of A-GPS in the Optus Network.

(emphasis added)

30    There could not have been any misunderstanding at all of what Optus meant by “implementation”. Optus also explained in the letter the detail of the alternative mechanism which does not involve the implementation of A-GPS in the Optus network, using the Optus network “pipes” as a conduit, an ‘over the top service’, and points out that the statement of claim ‘does not and could not allege that Optus is liable for such scenarios’, pointing out that Voxson’s oral submissions confirmed that the over the top scenario is not what is embraced by “external location servers” of the then current statement of claim, the pleading. It pointed out that Dr Harper’s affidavit did not distinguish between the two possibilities, or distinguish between the implementation of A-GPS in the Optus network and an over the top application.

31    Vodafone also wrote to Voxson on 5 February 2015. In that letter, Vodafone stated that it does not accept the position put forward by Voxson’s senior counsel that Vodafone accepts that it provides A-GPS. Vodafone stated that it ‘made it clear in its letter of 26 September 2014 that it does not implement the system as claimed in the Vox 1 GPS Patent’. In its letter dated 26 September 2014, Vodafone stated the following:

We are instructed that Vodafone does not implement any system as claimed in claims 1-4, 10-15, 22 and 24 of the Vox 1 GPS Patent. In particular, Vodafone does not employ a system in which there is a process of ‘correcting’ existing data as described in paragraphs 72-74 of the FASOC.

32    On 4 February 2015, the solicitor for Vodafone stated that Vodafone ‘didn’t say we didn’t do Assisted GPS, we just said we did not implement the system of claim 1.’ However, on 5 February 2015, the solicitor for Vodafone informed the Court that he was now instructed that ‘Vodafone does not believe that it implemented Assisted [GPS]’ and offered to write formally to Voxson to inform them of that fact, resulting in the letter of 5 February 2015.

33    Voxson’s response to all respondents on 9 February 2015 was to demand ‘an Affidavit supported by documents which demonstrate each of your clients’ respective positions’ and ask a series of specific questions. On 9 February 2015, Optus filed the affidavit of Mr Colgan dealing with the lack of implementation and the function of the network only as a conduit, without knowledge or control of the data. A concurrent affidavit of Mr Hayes reported on experimental use and raised the possibility of receipt of data from an external source, that is, a third party server through the conduit of the Optus mobile data connection. Mr Hayes, in his affidavit dated 23 February 2015, subsequently identified the relevant registrant of the URL, which was not Optus.

34    Dr Harper stated that the Optus Nokia device ‘received A-GPS information by use of a SUPL server and the Optus 3G Network’. On 19 June 2015, Mr Colgan stated in a further affidavit that:

In relation to the function of the Optus network as a conduit for a third party SUPL service, such a service, in order to operate, may utilise a cellular mobile network (such as a 2G, 3G or 4G network) as a conduit, but it does not require the cellular mobile network to have any functionality other than its pre-existing functionality as a 2G/3G/4G network. Optus has not implemented in its mobile telecommunications network (that is, incorporated any functionality other than its pre-existing functionality as a 2G/3G/4G network) any of the OMA Secure User Plane Location standards.

35    Optus’ position was that it did not implement the claimed system and that there is a difference between it providing A-GPS and third party A-GPS which interoperates with the Optus infrastructure. That position was reiterated in writing and orally during the early days of the hearing of the strike-out application. It was made clear, despite Voxson’s assertions that Optus did not clarify whether there was an infringing system being operated on its behalf, that Optus did clarify that as early as 22 September 2014, in the September letter. It was clearly stated that the denial of implementation extended to an ‘external service as operated by or on behalf of Optus’.

36    This, Optus says, represented a clear statement that equated to an explanation that the Optus network functions as the “dumb pipes” for the purposes of transmission of messages. While the expression “dumb pipes” was not used in the correspondence relied on by Optus, it is a reference to a third party service providing the A-GPS data using the Optus network as a conduit. This, Optus emphasises, was precisely what it stated in the September letter, including identifying Nokia as a relevant third party. Even if there was an onus on Optus to inform Voxson of the “dumb pipes” position, which it refutes, it points out that it did so. It did so again in its opening written submissions dated 25 January 2015 and again during the hearing on 5 February 2015.

37    When Voxson, on the second day of the February 2015 hearing, adduced evidence from Dr Harper, for the first time purporting to establish that Optus had implemented A-GPS by a demonstration with a Nokia phone as sold by Optus, Optus immediately pointed out that the evidence only supported the conclusion that a third-party service was providing assistance data, utilising the Optus network as a conduit only. Optus’ explanation about this was detailed. Optus adduced evidence from publicly available sources to support its contentions and the explanation.

38    Voxson’s response was not to amend its pleading but to tell the Court that it was to seek further information from Optus and, on the third hearing day, 10 February 2015, Voxson indicated that it would state its position on the Vox 1 proceedings as quickly as possible. In fact, Voxson did not respond to Optus’ letters dated 10 and 13 February 2015, the latter seeking urgent clarification as to whether Voxson intended to pursue this proceeding against any of the Optus respondents, and set out its position prior to the matter returning to Court for the fourth hearing day. Voxson still maintained that Optus implemented A-GPS, relying on the evidence adduced from Dr Harper.

39    That same evidence from Dr Harper was, by 25 August 2015, relied upon by Voxson to establish that Nokia, a third party, and not Optus, provided the A-GPS service, that is a third party SUPL server. Optus adds this to the matters that had to be clarified by successive hearings as Voxson changed its reliance on Dr Harper’s evidence from supporting implementation by Optus to supporting the identification of the third party server SUPLNokia.com.

40    Voxson did not seek to investigate its contention that the Optus mobile network had implemented A-GPS, notwithstanding Optus’ denial prior to the commencement of proceedings that it had done so. Voxson’s pleadings and correspondence have never, at any subsequent stage, provided any substantiation for that contention, notwithstanding the reiteration of that denial and the requests for information made by Optus in correspondence, in Optus’ interlocutory application and in its submissions in support of that application. Eventually, on the first day of the hearing, after Optus’ senior counsel explained Optus’ position again, Voxson offered to consider its position against Optus. However, having done so it then, on the following day, sought to adduce evidence of an experiment it had just conducted which, it said, indicated that Optus had implemented A-GPS. Optus immediately pointed out, including by reference to Voxson’s own particularised documents, that this experiment indicated that the device was using a third party service, not any service implemented by the Optus mobile network. Voxson provided no substantive response to this.

41    All of the above is relied upon by Optus to support its submission that the pleading was unsupported by material facts and should never have been pleaded and that this was due to Voxson’s failure to investigate available facts, having ignored Optus’ assertions and its own evidence, until it abandoned the original assertions in the proposed March pleading and substituted the pleading based on SUPL, being the third party A-GPS case.

42    The following short chronology of the Vox 1 proceeding, with respect to Optus, is relevant in the context of the above:

    Voxson, in correspondence commencing in 2007, alleged that Optus implemented A-GPS.

    After other correspondence, on 3 May 2012, Optus stated that it did not provide an A-GPS service.

    Voxson commenced proceedings on 29 November 2013 but Optus was not served with this statement of claim.

    Optus was served with an amended statement of claim on 12 June 2014.

    On 19 September 2014, a further amended statement of claim was served (filed on 29 August 2014).

    On 22 September 2014, Optus wrote the September letter.

    On 24 October 2014, Optus filed its interlocutory strike out application.

    The first round of hearing of the interlocutory application commenced on 4 February 2015. Voxson states that it was only during this hearing that Optus raised the “dumb pipes” or third party service theory. Voxson makes no reference to the continued denial by Optus in correspondence of implementation of A-GPS in its network or its repeated references, from the September letter, to the alternative scenario, not pleaded, of a third party service.

    On 10 February 2015, at the resumed strike out hearing, Voxson indicated that it would state its position as quickly as possible.

    Voxson still refused to abandon the pleading that Optus, or someone on its behalf, implemented A-GPS at the resumed hearing on 25 February 2015.

43    Optus did not hide its position – it openly and clearly stated it.

44    In the circumstances set out above, it was unreasonable for Voxson to have commenced and maintained the pleading against Optus and to have subjected Optus to the consequential costs of maintaining its position.

45    Turning to a matter arising from the proposed March pleading, Optus points out that it notified Voxson of a problem it identified in the proposed March pleading as to the signalling layer/traffic channel of the claimed system on 17 April 2015, in a written submission. This asserted problem did not arise until the amendments to the pleading that gave rise to the proposed March pleading, which were the subject of the hearing in August 2015 (being version 2 of the second further amended statement of claim). Optus submits, correctly, that although Voxson subsequently made a further proposed amendment to include both the traffic and control channels as constituting the “special signalling layer”, it was forced to argue the point in August 2015, despite having clearly warned Voxson of the problem it identified.

46    Optus also points out that it has had to deal with ‘a litany of changed positions’. Optus submits that it should never have been obliged to pay the costs of the arguments, in particular where Optus had pointed out in writing the problems with Voxson’s case and where Voxson first refused to change its position and then, when argued by Optus at a hearing, Voxson re-pleaded such that Optus had to look at the next version afresh and, again, point out “flaws” which were then dealt with in the same way. Optus points out that it was not until the proposed March pleading that Voxson abandoned allegations of implementation, without explanation as to why this was not done earlier. Optus relies on the observation by Heerey J in Black & Decker Inc v GMCA Pty Ltd (No 3) [2008] FCA 932 at [35] that while ‘[s]ome latitude needs to be allowed for the changing of a party’s case as investigations reveal possible new arguments… a line has to be drawn somewhere’.

47    Optus’ description is not an unfair description of what has occurred.

48    Reciting the relevant authorities, such as De Jager and Black & Decker, Optus’ case for indemnity costs is to rely on:

    The making of groundless contentions or allegations that the Optus network had implemented A-GPS with no factual foundation.

    The refusal to investigate critical matters of fact upon which the action was said to be founded and yet maintaining the proceedings. Voxson did this despite Optus’ denials prior to the commencement of proceedings and continued denials subsequently. Further, Voxson did this despite the fact that the evidence on which Voxson sought to rely to establish that Optus had implemented the system, that of Dr Harper, was pointed out by Optus to indicate a third party server.

    The unreasonableness of subjecting Optus, as the innocent party, to expenditure of costs.

Voxson’s responsive submissions

49    Voxson seeks to characterise the changes made that have resulted in the now proposed amended pleading served on 3 September 2015 (the proposed amended pleading) as a series of amendments, for example, to change the definition of the location servers and to delete and replace particulars. Voxson points to the fact that overarching claims to direct infringement and authorisation of infringement stand. Voxson maintains that the proposed amended pleading in Vox 1 does not represent a new case. It says that the case that was pleaded as at 29 August 2014 and in the proposed amended pleading is, as against Telstra, direct and secondary infringement in relation to 2G, 3G and SUPL and, as against Optus and Vodafone, secondary infringement allegations in relation to SUPL. Otherwise, says Voxson, there have simply been deletions from the pleading which it characterises as:

    For Telstra, infringement allegations for the 4G network other than secondary infringement relating to SUPL on the 4G network.

    For Optus and Vodafone, infringement allegations for the 2G, 3G and 4G networks and direct infringement allegations for SUPL.

50    However, such a characterisation is totally inappropriate. The nature of the case alleged has changed significantly. To say that Voxson’s proposed amended pleading is to the same overarching claims of infringement and authorisation disregards the fact that the case has changed (see the Vox 1 decision). It is tantamount to saying that one claim for infringement is the same case as any other claim for infringement and disregard the need for a pleading of material facts.

51    Voxson submits that an award for costs that resulted in substantial costs would be ‘most unfair and unjust’ because, inter alia, it would discourage other small or medium businesses from attempting to enforce patent rights in Australia and would also discourage international companies from litigating in Australia. I put this submission to one side. There is no evidence to support it, it does not necessarily follow irrespective of subject matter of the Vox 1 Patent, it has not been shown to be relevant or applicable to the course of conduct or, indeed, to the parties in these proceedings.

52    Voxson submits that, as to Vox 1, it pays the costs thrown away by reason of its amendment of the pleadings, other than costs thrown away by reason of amendments consequent upon the provision of the dumb pipes information, for which each party should bear its own costs, and that the respondents should pay Voxson’s costs of the interlocutory applications. Voxson submits that if it is successful as to amendment by the proposed amended pleading, then it has been successful in the interlocutory applications in surviving a strike out and that costs should follow the event. These submissions are overly simplistic and do not deal with the history of the proceedings at all. Further, Voxson submits that the parties raised complaints about the Vox 1 and Vox 2 statements of claim that pressed ‘unnecessary arguments’ which resulted in a protraction of the hearings. It is the case that I have accepted that the detail of such matters, such as particularisation of the standards, can await evidence but that has not meant that such arguments were unnecessary. Indeed, they elicited further detail from Voxson.

53    Voxson characterises other amendments as “minor”, which seems to be said to apply to the inclusion of allegations under s 117 of the Patents Act 1990 (Cth) (the Act) which, it says, are based on facts already pleaded, and a claim for additional damages. These amendments were not minor. Voxson accepts that the amendments that it has made will save time and expense in the course of the litigation.

54    Voxson submits that certain amendments were made during the course of the hearing ‘at the invitation or direction of the Court’, as part of the iterative process of amendment. To the extent that that is relied upon to avoid an order for costs, it should be rejected. As certain matters were raised by the respondents, the Court indicated that it saw deficiencies in the then proffered statement of claim. It was in that context that it was suggested that Voxson may wish to amend to avoid the consequence, namely a strike out, with respect to that matter. In this way, at a time when the parties indicated that they did not want reasons but rather a decision on each of the many matters raised, the Court was able to deal with a number of matters raised by the respondents that were clarified, for example by amendment or by deletion, rejected, or otherwise made subject to amendments.

Telstra’s additional submissions

55    Telstra relies on the matters raised by Optus, save that Telstra does not seek indemnity costs, for reasons that it gave concerning the different position regarding implementation in its networks and pleadings in that regard. However, Telstra points out that it raised the question about the “special signalling layer” of the Vox 1 Patent at an early stage: questioning what the layer consisted of and what messages were transmitted across it, so that Voxson was on notice in that regard. This affected the proposed March pleading and the proposed amended pleading.

56    Telstra points out that the original pleading relied on by Voxson in the Vox 1 proceeding has been abandoned and that, as a result of the strike out applications by the respondents, the pleading has been substantially amended, including adding substantial particulars, where previously there were no, or insufficient, particulars and new pleadings, such as those regarding s 117 of the Act. Further, as a result of the hearing of the applications, Voxson has clarified a number of matters and notified changes of position, which would not have arisen otherwise.

57    Telstra relies on the chronology of the amended proposed pleadings in the context of its interlocutory application and the fact that when an amended pleading was received, it had already incurred significant costs in bringing the application and then in reviewing amendments and amending its submissions.

58    Telstra relies specifically on:

    the multiple attempts to plead, which have caused significant cost and delay;

    the chronology of correspondence which demonstrates that Telstra sought particulars to clarify the nature of the case being made;

    Voxson maintained the adequacy of its case and of the pleading;

    there will be a lengthy time between the determination of this application and final hearing;

    the amendments made to the pleading have been substantial such that the proposed pleading is, to a large extent, a new pleading. One example is the withdrawal of allegations of direct and indirect infringement by reason of Telstra’s 4G network, except insofar as the allegations relate to SUPL; and

    the necessity of having to deal with each point at a hearing despite having notified its position as to uncertainty regarding the “special signalling layer” in October 2014. An example given by Optus related to the question of traffic/control channels and the signalling layer of the claim progressing to a hearing on 19 August 2015, before Voxson prepared further amendments.

Vodafone’s additional submissions

59    Vodafone generally adopts Optus’ submissions. However, its situation differs slightly from Optus. Despite an incorrect statement on 4 February 2015 that it did implement A-GPS, Vodafone made a clear statement during the hearing on 5 February 2015 that it did not itself implement A-GPS and it supported this statement with a letter the next day. This statement was later supported by affidavit evidence of Mr Walls provided on 19 August 2015 and sworn on 1 September 2015.

60    In oral submissions at the hearing on 29 and 30 September 2015 (September 2015 hearing), Vodafone asserted that it was in the same position as that of Optus prior to 4 February 2015 as it had not ‘implemented the system of claim 1’. Accordingly, Vodafone argued that it was also entitled to indemnity costs, in relation to Vox 1, prior to 4 February 2015 when it made its position clear. Vodafone submits that prior to the 4 and 5 February 2015 hearing dates it had communicated to Voxson that it had made it clear that it had not implemented the system of claim 1 but that contention is not made clear on the available evidence.

61    Vodafone has also pointed to the importance of particularisation in claims for patent infringement as highlighted in r 34.42(3) of the Federal Court Rules 2011 (Cth), as well as r 16.45(1) as to the need for particulars. Vodafone points out that it is, and has been for each version of the statement of claim, entitled to sufficient information in the pleading and in the particulars to enable it to know which of its acts, and which of its products or services, are impugned.

Voxson’s submissions

62    In essence, Voxson says:

    It should be given leave to amend to file the proposed pleadings.

    Accordingly, the respondents will have been unsuccessful in their maintenance of the applications to strike out the statements of claim.

    Voxson succeeded in defending against some of the matters raised, such as the pleading by way of cross-referencing and the further provision of details of the standards and the necessity to plead either a product or a process and Voxson should have those costs.

    As at the conclusion of the hearing, the respondents did not press for the alternative orders sought, that there be further particulars and a statement of the nature of the case (Voxson does not place this into the context of the provision of that material after the applications were filed).

    The fact that there may be limitation issues is a discretionary factor in favour of the leave to amend being given.

    Insofar as the interlocutory applications have been pressed following the Vox 1 proposed amended pleading of 3 September 2015 and the Vox 2 proposed amended pleading of 13 March 2015, if Voxson succeeds in obtaining an order that leave be given to file those amended pleadings, Voxson has been successful and costs should follow that success.

    The proposed amended pleadings have narrowed the issues because Voxson has been willing to accept, in good faith, information provided by the respondents and to address their concerns.

    The respondents have raised matters “piecemeal” and Voxson should not be penalised by the late raising of issues (this submission does not deal with the fact that some matters have only arisen after iterative amendments proposed by Voxson).

    Optus only raised the dumb pipes issue on the second day of the hearing on 5 February 2015. Any reference in earlier documentation was no more than a “footprint” that did not reveal the true issue.

    Vodafone indicated on 4 February 2015 that it was in the same position as Telstra, before adopting the dumb pipes position on 5 February 2015 and providing a letter identifying a third party provider on 23 February 2015 and an unsigned affidavit in August 2015 with the signed affidavit served on 16 September 2015.

    Telstra did not raise the dumb pipes position with respect to its 4G network until 5 February 2015. Although it did not provide an affidavit from an appropriately qualified person, Voxson accepted the position and served the proposed March pleading.

    The respondents’ conduct was unreasonable in light of material forwarded by Voxson, including standards and claim charts, well prior to the commencement of proceedings.

    There is no justification for an order that costs be paid forthwith and the demands of justice do not require departure from the ordinary rule.

    The pleading of infringement issues will be addressed at trial.

    The trial can be ready in 12 – 24 months.

    Voxson’s conduct has at all times been more than reasonable.

    Voxson has provided security for costs.

    As it is an early stage of the proceedings and no respondent has filed a defence or, Voxson says, prepared evidence, there can be no prejudice if Voxson is granted leave to amend the statements of claim in each of Vox 1 and Vox 2.

Consideration

Optus’ costs until service of the proposed amended pleading

63    In its submissions, Voxson appears to suggest that Optus was to blame for Voxson having commenced and maintained proceedings against it, because ‘the dumb pipes theory was first raised by Optus during the second day of the hearing’. This suggestion, however, does not withstand scrutiny. Voxson’s pleadings identified that its case was based on the contention that the Optus mobile network has implemented A-GPS; its own particularised (Nokia) documents made the distinction between this scenario and the scenario in which assistance data are provided by a third party service; and those documents also demonstrated that the settings of a mobile device identify which of those scenarios (if either) applies. Further, Optus put Voxson on notice that it had not implemented A-GPS well prior to the commencement of proceedings (and repeatedly thereafter). It also repeatedly drew attention to the contrasting scenario of a third party service and the relevance of the settings of the mobile device to the question whether it was using a third party service, notwithstanding that there was no onus upon it to do so. Voxson disregarded all of those matters, including when it belatedly conducted an experiment on 4 February 2015. That experiment failed to investigate the source of any assistance data received by the device. As Optus’ response demonstrated, a basic investigation would have revealed that the device was configured to use a third party service. These were the matters pointed out in Optus’ letter of 4 February 2015.

64    The above chronology confirms that Voxson’s commencement of and persistence in proceedings as pleaded in the pleading against Optus was, at best, speculative and cavalier. It had been put on notice repeatedly that the Optus mobile network had not implemented A-GPS. In the face of this, it made no attempt to investigate or justify its contention until the experiment conducted on 4 February 2015, which was immediately exposed as inadequate. The inadequacy was readily demonstrable by reference to Voxson’s own particularised documents and other publicly available material. Voxson could not possibly suggest that it was unaware of third party services or that it ought not to have made appropriate investigations of them.

65    This is not a case argued, ultimately, as to whether the pleading should be struck out. By the final hearing date, the focus was on the proposed amended pleading. Voxson has presented the proposed amended pleading and has abandoned the filed pleading and subsequent proposed pleadings. The way the case has proceeded, Voxson chose to serve, but not file, sequential pleadings which were then the subject of correspondence, written submissions and hearings. The serial pleadings have been abandoned only after detailed submissions by the respondents and days of hearing.

66    The respondents have been successful in securing that abandonment, with Optus presenting submissions on which Telstra and Vodafone relied.

67    I have given Voxson leave to amend in the form of the seventh version of its statement of claim in the Vox 1 proceeding, the proposed amended pleading. I note that this does not pre-empt or determine the questions of limitation that may arise from the respondents’ assertion that the proposed amended pleading constitutes a new cause of action, and that this was recognised by the parties.

68    However, this does not mean that costs should be awarded as if Voxson was successful in defeating the strike out applications. In substance, the respondents have been successful in removing the pleading and subsequent iterations until the proposed amended pleading. Voxson is being given leave to amend because it produced the seventh proposed pleading for consideration which, after the preparation of written submissions and days of hearing, has itself been the subject of a hearing.

69    Voxson’s success in avoiding a strike out is due to the fact that the respondents have persisted in the course of notifying Voxson of their concerns as to the various iterations of the pleading, thus providing Voxson with a series of opportunities to propose amendments.

70    Voxson finally proposed amendments and acknowledged Optus’ repeated position as to the implementation of the claimed system with the proposed March pleading. The amendments could not be called “minor”, as submitted by Voxson. Voxson’s prior position was unreasonable, was not based on any factual material and was contrary to its own evidence. Voxson should pay Optus’ costs of the strike out application and of Voxson’s applications to amend on an indemnity basis up to the serving of the proposed March pleading and on the ordinary basis thereafter. Voxson should pay Optus’ costs thrown away by reason of the various amendments, from the date of service of the proposed March pleading up to the service of the proposed amended pleading, on the ordinary basis. Voxson should also pay the costs of the contested applications for the costs of the strike out application and applications to amend.

Telstra and Vodafone’s costs until service of the proposed amended pleading

71    Voxson submits that Telstra and Vodafone should not have costs because they did not make substantial submissions over and above those advanced by Optus. I reject that submission. First, each of Telstra and Vodafone were required to consider each series of proposed amendments for its own technology. Secondly, each provided written submissions. Thirdly, each made oral submissions, taking the course of not repeating those submissions made by Optus which it supported. For that purpose, and appropriately, each was represented at the hearing. Each of Telstra and Vodafone is entitled to costs of its strike out application and costs thrown away by reason of a series of proposed amendments, including, for Telstra, costs associated with late service of documents.

72    Telstra does not seek indemnity costs. Accordingly, Telstra is entitled to its costs of the strike out application and costs thrown away by Voxson’s applications to amend up to the service of the proposed amended pleading on 3 September 2015 and the costs associated with late service of documents on the ordinary basis. Telstra is also entitled to the costs of its application for the costs of its strike out application and of Voxson’s applications for leave to amend.

73    As to Vodafone, it clearly articulated on 5 February 2015 that it did not itself implement A-GPS. Accordingly, Vodafone is entitled to indemnity costs from 5 February 2015 until the service of the proposed March pleading for similar reasons to those advanced by Optus. However, I do not accept that Vodafone is entitled to indemnity costs prior to 5 February 2015. It is difficult to conclude that prior to 5 February 2015 Vodafone made it clear to Voxson that it did not implement A-GPS. While Vodafone’s letter dated 26 September 2014 stated that Vodafone did not implement A-GPS, at the hearing on 4 February 2015, Vodafone’s solicitor stated that ‘[w]e didn’t say we didn’t do Assisted GPS’ and said that Vodafone was in the identical position to Telstra. It is difficult to conclude that Vodafone’s position prior to 5 February 2015 was unequivocally clear. Accordingly, Vodafone has not established a basis for indemnity costs prior to 5 February 2015. It is, however, entitled to costs of the strike out application before 4 February and after service of the proposed March pleading and of the applications for costs, on the ordinary basis. Further, for similar reasons to those for Telstra, Voxson should pay Vodafone’s costs thrown away by reason of the various amendments. Vodafone is also entitled to the costs of its application for the costs of its strike out application and Voxson’s applications for leave to amend.

Costs of hearing dates following service of the proposed amended pleading

74    After service of the proposed amended pleading on 3 September 2015, the hearing dates of 29 and 30 September were, in effect, of Voxson’s application for leave to amend in accordance with the proposed amended pleading and of the contested applications for costs.

75    Voxson has been successful in maintaining that proposed pleading and obtaining leave to amend. Optus, Telstra and Vodafone have been largely successful on the questions of costs Optus, Telstra and Vodafone should pay Voxson’s costs of those hearing dates relating to the amendment by the proposed amended pleading in the Vox 1 proceeding. However, Voxson should pay Optus’, Telstra’s and Vodafone’s costs of the contested costs application in that September hearing. The appropriate division of costs for those hearing days is a matter to be determined by agreement between the parties or by taxation.

Costs payable forthwith?

76    Optus relies on Spotwire Pty Limited v Visa International Service Association (No 2) [2004] FCA 571, as summarised by Besanko J in Rafferty v Time 2000 West Pty Limited (No 3) (2009) 257 ALR 503, where his Honour considered relevant factors for immediate taxation, including the circumstances where a strike out application is successful and the unsuccessful party failed to remedy the defects despite clear notice. It also points to what it characterises as Voxson’s unreasonable conduct and the likely considerable lapse of time before the final determination of the proceedings, being categories relevant to circumstances in which costs may properly be ordered to be taxable forthwith (Fiduciary Ltd v Morning Star Research (2002) 55 NSWLR 1), as well as the multiple attempts to plead a case causing delay in its progress to hearing and final orders (Spotwire at [104]; Orrcon Operations Pty Ltd v Capital Steel & Pipe Pty Ltd (No 2) [2008] FCA 24 at [18]).

77    Optus also relies on the reasons outlined by Yates J in making an order that costs be payable forthwith in Nichia Corporation v Arrow Electronics Australia Pty Ltd (No 2) [2015] FCA 824. His Honour considered it relevant that there was a separately identifiable matter which precluded certain available arguments which had significant consequences for the pleaded case and eliminated what would have been a trial on unnecessary issues, as well as the length of time until hearing. Optus submits that the same reasoning applies with respect to the Vox 1 proceeding.

78    In my view, the costs of the Vox 1 strike out applications prior to the serving of the proposed March pleading, payable on an indemnity basis to Optus and Vodafone, and on the ordinary basis to Telstra and Vodafone, should be paid forthwith. In effect the strike out of the prior pleadings was successful, in that Voxson abandoned them. The costs were incurred because Voxson continued to press for matters such as implementation by the respondents of A-GPS despite clear statements that such a pleading was not maintainable. That conduct was unreasonable. As much of the case as pleaded prior to the proposed March pleading has been abandoned or changed, those matters have been finally resolved. The respondents should not have to wait for the costs of multiple attempts to plead Voxson’s case and for dealing with aspects of Voxson’s case that are no longer pressed. Had the respondents not brought their strike out applications, these issues would have had to be resolved at trial, incurring even greater costs and delay.

79    Voxson did not apply to have its costs paid forthwith. However, consistently, Optus, Telstra and Vodafone should pay Voxson’s costs, forthwith.

Orders

80    The following orders are to be made with respect to the Vox 1 applications:

(1)    Voxson pay Telstra’s costs of and incidental to Telstra’s interlocutory application dated 17 October 2014 and costs thrown away by reason of each set of proposed amendments to the pleading and by reason of Voxson’s late service of documents, up to and including 3 September 2015, on the ordinary basis.

(2)    Voxson pay Optus’ costs of and incidental to Optus’ interlocutory application dated 24 October 2014 and costs thrown away by reason of each set of proposed amendments to the pleading:

(a)    up to and including 23 March 2015 on an indemnity basis.

(b)    from 23 March 2015 up to and including 3 September 2015 on the ordinary basis.

(3)    Voxson pay Vodafone’s costs of and incidental to Vodafone’s interlocutory application dated 20 October 2014 and costs thrown away by reason of each set of proposed amendments to the pleading:

(a)    up to 5 February 2015 on the ordinary basis.

(b)    from 5 February 2015 up to and including 23 March 2015 on an indemnity basis.

(c)    from 23 March 2015 up to and including 3 September 2015 on the ordinary basis.

(4)    Telstra, Optus and Vodafone pay Voxson’s costs of and incidental to the September 2015 hearing insofar as they relate to the strike out applications and Voxson’s leave to amend the pleading, on the ordinary basis.

(5)    Voxson pay Telstra’s, Optus’ and Vodafone’s costs of and incidental to the applications for costs, including such part of the September 2015 hearing that related to the applications for costs, on the ordinary basis.

(6)    All costs are payable forthwith.

The Vox 2 applications

81    There is no dispute that Voxson must pay Optus’, Telstra’s and Vodafone’s costs thrown away by reason of the various proposed amendments to the pleading, up to the serving of the Vox 2 proposed amended pleading on 13 March 2015. By the September 2015 hearing, the respondents no longer pressed for a strike out of the Vox 2 proposed amended pleading with no leave to replead. However, it was only during the hearing on 29 September 2015 that Voxson clarified what was meant by “capability” and ‘inter alia’ in the Vox 2 proposed amended pleading, which were matters of ambiguity and scope of the allegations, which were embarrassing. Those explanations were proffered readily upon further identification of the issue by the respondents. Otherwise, Voxson was successful in maintaining the Vox 2 proposed amended pleading, with those clarifications.

82    As to whether Voxson should pay costs forthwith, it is the case that not all of the amendments to the Vox 2 pleading are of a nature that finally disposes of issues in the case. However:

    The need for a series of hearing dates, with written submissions and preparation, arose because of the state of the Vox 2 pleading filed on 1 September 2014 and the iterative nature of proposed amendments and provision of particulars.

    The hearings of the strike out applications for Vox 1 and Vox 2 pleadings were concurrent.

    Voxson is to pay the costs of the Vox 1 strike out applications forthwith and the work to separate the costs to allow for later payment with regard to the Vox 2 applications would outweigh the benefit of such separation.

83    Accordingly, in the circumstances, it is appropriate that Voxson pay the respondents’ costs of the Vox 2 strike out applications and the costs thrown away by Voxson’s served proposed amendments up to the date of service of the proposed amended pleading. Those costs should be payable forthwith. The parties should pay their own costs of so much of the September 2015 hearing that related to the strike out applications and applications to amend the Vox 2 pleading.

Orders

84    The following orders are to be made with respect to the Vox 2 applications:

(1)    Voxson pay Telstra’s, Optus’ and Vodafone’s costs thrown away by each set of proposed amendments to the amended statement of claim filed on 1 September 2014.

(2)    Each party pay its own costs of so much of the hearing on 28 and 29 September 2015 as related to the strike out applications and Voxson’s application to amend the amended statement of claim filed on 1 September 2014.

(3)    Voxson pay Telstra’s, Optus’ and Vodafone’s costs of and incidental to the applications for costs, including such part of the September 2015 hearing that related to the applications for costs, on the ordinary basis.

(4)    All costs are payable forthwith.

Costs thrown away

85    This consideration applies with respect to both the Vox 1 and Vox 2 proceedings.

86    Optus submits, and I accept, that generally, and in particular in this case, it will be very difficult to ascertain costs thrown away by reason of amendment. However, that alone is not a reason for including costs. Voxson says that all such matters can be worked out in taxation.

87    The costs thrown away should include the intervening forms of the pleadings, which included the iterative substantive changes, such as deletion of causes of action, including by amendment of definitions, that culminated in the proposed amended pleading in each of Vox 1 and Vox 2.

88    This will be a matter for taxation, unless the parties can reach agreement.

THE COSTS OF THE SECOND AND FOURTH RESPONDENTS WITH RESPECT TO VOX 1 AND VOX 2

89    Three Optus companies have been joined to the Vox 1 and Vox 2 proceedings. SingTel Optus Pty Limited as second respondent, Optus as third respondent and Singapore Telecommunications Limited as fourth respondent. Optus is the entity which operates the Optus mobile network in Australia and supplies mobile devices and SIM cards and the operation and sale of hardware and software products. Optus says that the other two respondents do not undertake any relevant activities in Australia. For the purposes of the present application to remove those respondents, that is not in dispute. Optus says that the filed amended statements of claim in Vox 1 and Vox 2 did not raise any specific allegations against either of the second and fourth respondents and that Voxson has failed, despite repeated requests, to provide material justifying their joinder. In the Vox 2 further amended statement of claim served on the respondents on 14 January 2015, the second and fourth respondents were removed.

90    As to the publicly available documents relied on by Voxson as the basis for joinder, Optus says that the material did not state that the fourth respondent supplied any relevant goods or services in Australia. Optus also says that Ms Forsyth’s affidavit filed 12 December 2014 states a contrary position.

91    Voxson joined the second and fourth respondents and then, in effect, required them to show why they should not be joined. Voxson did not, for example, seek preliminary discovery.

92    Optus points out that Voxson has sought to reverse the onus of proof, which ignores the obligation to make proper inquiries before commencing proceedings against a party. Rather, Voxson simply defined “Optus” as the three respondents, individually or collectively.

93    Optus says that these respondents have been joined in each of the Vox 1 and Vox 2 proceeding without any factual basis for doing so. At no time, Optus says, did Voxson plead or particularise any specific acts undertaken by either of these parties other than by including them, by definition, as “Optus”.

94    Optus’ submission is relatively straightforward: Voxson has not pleaded, or provided information, that either of these respondents has sold mobile telephones, sold SIM cards, or operated a mobile communication network in Australia. Optus informed Voxson of that fact. Optus provided an affidavit to that effect on 24 October 2014, yet Voxson continued to resist removal of those parties, insisting that Optus prove non-involvement.

95    Optus points to the protracted correspondence between the parties and evidence in which Optus maintained the lack of a relevant role of these respondents, apart from mere membership of a corporate group, which Optus states is an inadequate basis for an allegation of infringement (Apotex Pty Ltd v Les Laboratoires Servier [2012] FCA 359 at [25]). Optus also points to the lack of a factual basis for the original and maintained joinder. It submits that reliance on Optus to prove the absence of relevant activities in Australia inappropriately reverses the onus and that it was unreasonable for Voxson to have subjected these respondents to the costs of the Vox 1 and Vox 2 proceedings.

96    Voxson is now content to remove the second and fourth respondents as parties but on condition that there be no order as to costs. Voxson opposes the making of an order under r 9.08 of the Rules for removal of the second and fourth respondents. It seeks leave to discontinue against them with each party bearing its own costs and to join Optus Networks Pty Ltd, which joinder is not opposed.

97    As to the discontinuance against the second and fourth respondents, Voxson says, in summary:

    Where both parties have acted reasonably, as Voxson has here, there should be no order as to costs (Lai Qin (1997) 186 CLR 622) or an order that each party bears its own costs.

    The parties have been in correspondence since April 2007 and the second respondent did not advise that it was not selling handsets or enabling the use of the Optus network.

    Voxson relied on publicly available information such as webpages and media releases and documents suggesting a degree of integration between the Optus respondents.

    It explained this position to the respondents and asked for a detailed explanation to which the response was the filing of the interlocutory application seeking removal of the second and fourth respondents.

    Optus filed the affidavit of Mr O’Brien on 24 October 2014 concerning the second and fourth respondents but it contained ‘a number of ambiguities’.

    Voxson indicated its preparedness to discontinue ‘at the earliest reasonable opportunity’.

    Optus filed Mr O’Brien’s second affidavit on 19 December 2014 which also identified Optus Networks Pty Ltd as the relevant supplier of SIM cards. On the same date, Optus indicated that it would consent to the removal of the second and fourth respondents and the joinder of Optus Networks Pty Limited.

    On 22 December 2014, Voxson indicated to Optus its willingness to accept that proposal subject to the question of costs.

    Voxson applied to discontinue, with no order as to costs, against the second and fourth respondents on 4 February 2015.

98    Optus submits that misconceived joinder, followed by an adherence to a continuation of the joinder should be met by a costs order that compensates the second and fourth respondents for their actual costs, that is, on an indemnity basis. Optus accepts that Voxson offered to discontinue against these parties on 22 December 2014 but notes that that was subject to the condition that costs be reserved which, Optus says, was inappropriate. No application was filed by Voxson and Optus submits that it should face the costs consequences.

99    Voxson does not say that the pleading as filed made out a tenable case against the second and fourth respondents. It relies on correspondence, where it stated that it would amend to allege authorisation. Voxson submits that it has acted reasonably at all times and in seeking leave to discontinue, so there should be no consequential costs order.

100    Voxson originally alleged direct infringement of the Vox 2 Patent and authorisation by the infringement of both the Vox 1 Patent and the Vox 2 Patent by the second to fourth respondents, which were referred to collectively defined as “Optus”. It says that it was a reasonable assumption that the second respondent sold handsets, sold SIM cards, supplied SIM cards and operated a network or authorised others to do so. There was sufficient information available, Voxson says, for the pleading. The second respondent stated in correspondence that it did not provide an A-GPS service. However, Voxson points to various matters, including the corporate structure and relationship between the Optus respondents to maintain that the pleading was and is reasonable and that it was merely being practical in seeking to discontinue.

101    The pleading asserted authorisation by the fourth respondent, of which the second respondent is a wholly owned subsidiary. Voxson’s case was that authorisation of the sale of devices that have A-GPS functionality is an authorisation of infringement and that, additionally, the fourth respondent authorised the network operated by the Optus companies in Australia. The claim of authorisation was based on the general control of the parent company over the subsidiary. There is no particular factual matter relied upon.

102    Voxson submits that the only question is whether it acted reasonably in commencing proceedings against the second and fourth respondents and then offering to discontinue without paying costs. It submits that it certainly should not be liable for indemnity costs, as sought by Optus.

103    On 22 December 2014, Voxson offered to discontinue as against these respondents costs reserved. At the least, Voxson says, it would have been unreasonable for those respondents to incur any further costs after that date. Voxson then sought leave on 4 February 2015 to discontinue on that basis. Optus opposed the order for discontinuance being made on that date with the question of costs deferred. The hearing of the application to discontinue was deferred without the order being made.

Consideration

104    In my view, the second and fourth respondents should be removed from both proceedings pursuant to r 9.08 of the Rules and Voxson should pay their costs up to 4 February 2015, being the date it sought to have the application to discontinue dealt with. It is not appropriate, in the circumstances, for Voxson to pay indemnity costs. It was not unreasonable for Voxson to join those parties to the proceedings having regard to the relationship between the second, third and fourth respondents and the nature of the businesses concerned, and the allegations of authorisation. The circumstances of the maintenance of joinder are not similar to those that pertain to the serial amendments of the pleadings in the light of the detailed statements made by Optus as to the use of its network. Indemnity costs do not flow simply because Voxson decided to discontinue against two of the respondents. Each of those respondents is part of a corporate structure including Optus and it is now apparent that another entity within that structure, Optus Networks Pty Limited, is, on the basis of information supplied by Optus, to be joined.

105    The second and fourth respondents explained to Voxson why they should not have been joined. Voxson chose not to accept that position until 22 December 2014. However, Voxson continued to refuse to pay costs or to discontinue without paying costs, which led to a hearing on 4 February 2015 where, at Optus’ request, it was deferred. On the other hand, Optus pressed for indemnity costs but has not made out a basis for such an order. Optus is successful in obtaining an order as to costs. The second and fourth respondents are entitled to costs, but not on an indemnity basis.

Orders

106    Orders will be made that the second and fourth respondents cease to be proper or necessary parties in the Vox 1 and Vox 2 proceedings.

107    Voxson should pay 80% of the costs of the second and fourth respondents on the ordinary basis. This reflects the success of the second and fourth respondents in both the Vox 1 and Vox 2 proceedings in obtaining costs over Voxson’s refusal to pay any costs, while at the same time reflecting the fact that, the respondents did not succeed in obtaining indemnity costs. As those parties are to be removed from the proceedings, those costs should be paid forthwith.

108    Optus Networks Pty Limited should be joined to the proceedings.

Associate:

Dated:    23 December 2015

Annexure A

Vox 1 Chronology

Annexure B

Vox 2 Chronology