FEDERAL COURT OF AUSTRALIA

Mylan Health Pty Ltd (formerly BGP Products Pty Ltd) v Sun Pharma ANZ Pty Ltd (formerly Ranbaxy Australia Pty Ltd) (No 2) [2019] FCA 883

ORDERS

THE COURT ORDERS THAT:

1.    The applicants pay 80% of the first respondent’s costs of the proceeding (including the cross-claim) as assessed or agreed.

2.    Order 1 does not displace any costs order previously made in the proceeding.

3.    There be no other order as to costs.

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

REASONS FOR JUDGMENT

NICHOLAS J:

1    In this matter I made orders dismissing the applicants’ application and, on the first respondent’s cross-claim, revoking various claims of three Australian patents: see Mylan Health Pty Ltd (formerly BGP Products Pty Ltd) v Sun Pharma ANZ Pty Ltd (formerly Ranbaxy Australia Pty Ltd) [2019] FCA 28. The parties have filed written submissions in relation to the costs of the proceeding.

2    The applicants submit that, subject to orders already made in respect of costs thrown away as a result of the amendment of pleadings, it is appropriate that the applicants pay 80% of the first respondent’s costs of the proceeding as assessed or agreed. The first respondent submits that it should have all of its costs of the proceeding. When I say all of its costs, there is no suggestion that the costs it seeks are anything other than party/party costs.

3    There is no issue between the parties as to the relevant principles.

4    While the Court’s power to award costs under s 43 of the Federal Court of Australia Act 1976 (Cth) is broad and unfettered, it is to be exercised judicially and in accordance with well-established principles. As stated by French CJ, Hayne, Bell, Gageler and Keane JJ in Gray v Richards (No 2) (2014) 89 ALJR 113 at 113–114 [2]:

The disposition of costs is within the general discretion of the court. Ordinarily, that discretion will be exercised so that costs are awarded to the successful party, but other factors may have a significant claim on the discretion of the court [Stewart v Atco Controls Pty Ltd (In liq) (No 2)(2014) 252 CLR 331 at 334 [4]]. The disposition which is ultimately to be made in any case where there are competing considerations will reflect a broad evaluative judgment of what justice requires.

5    It is well recognised that “[a] successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other parties’ costs of them. In this sense ‘issue’ does not mean a precise issue in the technical pleading sense but any disputed question of fact or law”: Ruddock v Vadarlis (No 2) (2001) 115 FCR 229, 234-235 [11], per Black CJ and French J.

6    The applicants in their submissions provided a detailed analysis of the issues that were contested in relation to the infringement and validity of each of the three patents in suit. The correctness of that analysis was not challenged by the first respondent which instead resisted the applicants’ contention that the first respondent should receive only 80% of its party/party costs on the basis that it was overwhelmingly successful in the litigation and that this was a clear case in which costs should follow the event.

7    The first respondent was in fact wholly successful in the proceeding in that the applicants’ case that the first respondent threatened to infringe was rejected either because each of the claims sued on was invalid or, if not invalid, because it was not likely to be infringed. The result was that the applicants were not entitled to any injunctive or other relief and their application was dismissed on that basis. The first respondent has, commercially speaking, achieved a complete victory. That is certainly a factor in deciding what costs order should be made in this case.

8    But there were a number of issues raised by the first respondent both in relation to infringement and validity upon which it was unsuccessful. Some of these issues took up a not insignificant amount of hearing time and were likely to have taken up a not insignificant amount of the applicants’ legal representatives’ time in preparing for the trial. These issues included:

    711 Patent

- novelty challenge based on Squibb Patent when read with Desk Reference: Reasons [165]-[172];

- novelty challenge based on prior use by Professor Carter and investigation in Eye Study and FIELD Study: Reasons [173]-[183];

- not patentable because not a manner of manufacture: Reasons [251]-[254];

    807 Patent

- proper construction of claims 26, 27, 64 and 65: Reasons [367]-[369];

- determination of particle size: Reasons [373]-[378];

- lack of utility: Reasons [453]-[456].

    964 Patent

- proper construction of claims 12 and 13: Reasons [291]-[299];

In addition, the first respondent abandoned any reliance on various prior art documents either before or during the trial, namely, Munoz, MIMS Annual, 29th edition, International Patent Application WO 2004/052362 A, and International Patent Application WO 2005/074909.

9    The applicants also relied on a quantitative analysis of the content of the written submissions, affidavits, expert reports and cross-examination in support of their costs position. This analysis identified by reference to affidavits, transcript and written submissions, the attention given by witnesses and counsel in evidence and submissions to particular issues upon which the first respondent was unsuccessful. It suggests that a fairly significant amount of time was devoted to issues upon which the first respondent was unsuccessful.

10    There are difficulties with this type of analysis which often does not take adequate account of overlapping issues and evidence and the fact that some evidence which is primarily directed to one issue upon which a party is unsuccessful is also relevant and perhaps of considerable significance to another issue on which the party was successful. At least some of the evidence that the applicants have sought to characterise as relevant to issues on which the first respondent was unsuccessful falls into that category.

11    One matter that added considerably to the length and complexity of this proceeding was that the applicant chose to sue on three patents and a large number of claims. Moreover, a good deal of evidence and submission was directed to resolving construction issues that owed their existence to what seems to me to be poor drafting. Even though some of these issues were ultimately resolved in the applicants’ favour, I think the arguments advanced by the first respondent on these points were perfectly reasonable.

12    It is true that a number of the issues that were contested by the first respondent were quite confined and did not receive much attention in either the evidence or submissions. However, there were other issues contested by the first respondent upon which it was unsuccessful that did occupy a considerable amount of time in evidence and submissions. The most significant of these was the matter of particle size, which was the subject of a considerable amount of expert evidence and written and oral submissions.

13    The applicants submitted that the 20% discount that they seek in respect of the first respondent’s costs of the proceeding reflects the reality that had the various grounds upon which the first respondent was not successful not been raised by it then the proceeding would have been conducted more economically.

14    In my opinion this is a case in which some discount should be imposed to take account of the first respondent’s lack of success on various issues.

15    The first respondent did not submit that some percentage different from that which the applicants argued for should be adopted in the event that it was decided that some apportionment should be made. In the circumstances I propose to make the costs order sought by the applicants.

16    Orders accordingly.

Associate:

Dated:    12 June 2019