FEDERAL COURT OF AUSTRALIA

Ronneby Road Pty Ltd v ESCO Corporation (No 2) [2016] FCA 711

ORDERS

THE COURT ORDERS THAT:

1.    The decision of the delegate of the Commissioner of Patents given on 5 February 2015 be set aside to the extent that:

(a)    it found that each of claims 1, 6, 7, 9 to 15 and 18 to 23 of the Australian Patent Application 2011201135 (“the Patent Application”) was for a novel invention;

(b)    it found that each of the claims of the Patent Application was for a useful invention;

(c)    it required that the Applicant pay the Respondent's costs according to Schedule 8 of the Patent Regulations 1991 (Cth).

2.    The Respondent pay the Applicant's costs of the appeal, including the costs of this day, and the proceedings before the Commissioner of Patents.

3.    The security paid by the Applicant into Court on 31 August 2015 in the amount of AU$80,000 and on 18 February 2016 in the amount of AU$105,000 be released to the Applicant.

4.    The Respondent be given 60 days to file and serve any interlocutory application to amend the Patent Application for the purposes of removing any ground of opposition, in default of which the Commissioner of Patents be directed to refuse the grant of a patent on the Patent Application.

5.    Orders 1 and 2 be stayed and Order 4 be suspended:-

(a)    for 15 days;

(b)    if any application for leave to appeal from this judgment is filed by then, until that application is dismissed, or, if allowed, then until further order of the Court; or

(c)    if any interlocutory application is filed pursuant to order 5 above, until that application is dismissed, or, if allowed, then until further order of the Court.

6.    The Respondent serve a sealed copy of these orders upon the Commissioner of Patents within seven days.

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

REASONS FOR JUDGMENT

JESSUP J:

1    Of the three matters which have been debated before the court this morning, the first is the procedural question whether the orders now made should reflect an assumption that any issue of amendment of the patent application will be dealt with in the court rather than sent back to the Commissioner. Although I entertain some reservations about the appropriateness of using the court as an ongoing vehicle for processing the administrative application for the grant of a patent, nonetheless I am persuaded by the common cause which the parties have made on this point, and by the provisions of the legislation to which I have been referred (Patents Act 1990 (Cth), s 160), that that is the appropriate course to adopt in the circumstances. Because there is a consensus as between the parties on this issue, I need say nothing further about it.

2    The second question is whether the order which the parties have agreed I should make entitling the applicant to its costs of this proceeding, and of the proceeding before the Commissioner, should be stayed for a period which would permit the respondent to make application for leave to appeal from the orders I am about to make and, if successful in that endeavour, to prosecute the appeal and secure an outcome. This is not a question which relates specifically to the patents jurisdiction, but might arise in any case. I am disposed to think that, in the absence of any particular circumstances of injustice or prejudice, what might turn out to be an unnecessary taxation, with its inevitable costs, should be avoided by staying the operation of the costs order pending the hearing and determination of any application for leave to appeal and, if leave be granted, of any appeal which follows from that application.

3    The third matter concerns the security which the applicant paid into court on two occasions, 31 August 2015 and 18 February 2016, in a total amount of $185,000. I am told that, on each occasion, the provision of this security was a matter of consensus as between the parties, and that the court was never required to rule upon the respondent’s entitlement to it. The court does not therefore know whether grounds for the provision of security were made out.

4    It is put on behalf of the respondent today that the case falls within the ambit of the judgment of Young CJ in Challenger Group Holdings Ltd v Concept Equity Pty Ltd (No 2) [2008] NSWSC 1002 in which his Honour followed an earlier decision by McColl JA in Penrith Whitewater Stadium Ltd v Lesvos Pty Ltd [2007] NSWSC 103. In the Penrith case, the party ordered to provide security appeared to be insolvent, and it was in the light of that circumstance that her Honour concluded, at para 31 of her reasons, that the claimants were at risk if the judgment sum was paid over, and the risk identified by Bell J in granting security originally appeared to her Honour to remain a live concern as to the first instance costs. Dealing with this matter in Challenger, Young CJ adverted to a submission made to him that the case was distinguishable from Penrith because there was no finding of insolvency or impecuniosity on behalf of the defendant/cross-claimant. His Honour continued:

However, it seems to me that prima facie the fact that the parties agreed that there should be security for costs indicates that the facts of this case are not sufficiently far removed from those in the Penrith Whitewater Stadium case for me to distinguish it.

To this point, counsel for the respondent in the present case submitted that it was on all fours with Challenger in that the parties had agreed on the provision for security. Young CJ went on, however, to say:

Of course, each case is separate and in each case the judge must exercise his or her judgment on the facts of the particular case.

In the present case, counsel for the applicant has submitted that there is no evidence as to the financial or other circumstances of their client, and that the court has no proper basis upon which to make an order that the return of the money held as security should be stayed.

5    This is not an easy dispute to resolve. I can see the sense in the positions adopted by both parties, but I am disposed to think that the applicant has the better of the argument. The release of the security would be the conventional and normal course at the end of a trial in which the applicant has been substantially successful and would no longer be exposed to the prospect of an order requiring it to pay the respondent’s costs. If this situation were to be departed from in some way, then it was for the respondent, in my view, to advance a proper evidentiary case making out its claim for security in circumstances where the court had not previously adjudicated on the question.

6    In relation to security, I will make the order on which the parties are agreed, but I will not be imposing any stay upon the operation of that order.

Associate: 

Dated:    24 June 2016