FEDERAL COURT OF AUSTRALIA

Aristocrat Technologies Australia Pty Limited v Commissioner of Patents (No 2) [2020] FCA 974

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be allowed.

2.    The decisions made by the delegate of the Commissioner of Patents on 5 July 2018 (Decisions) to revoke Innovation patents 2016101967, 2017101097, 2017101098 and 2017101629 (Patents) under section 101F(1) of the Patents Act 1990 (Cth) be set aside.

3.    The Commissioner of Patents is directed to issue, publish and register a certificate of examination in respect of each Patent, in accordance with section 101E(2) of the Patents Act.

4.    It is certified, pursuant to section 19(1) of the Patents Act, that the validity of each Patent as claiming an invention that is a manner of manufacture within the meaning of section 18(1A)(a) of the Patents Act was questioned in this proceeding.

5.    The Commissioner of Patents pay the Appellant’s costs of this proceeding on the ordinary basis, as agreed or (failing agreement) as taxed, excluding 50% of Aristocrat’s costs associated with the evidence of Mr David Little, Mr Matthew Dietz and Professor Jeremy Cockburn.

6.    Subject to the Commissioner of Patents undertaking to prosecute any application for leave to appeal, and any subsequent appeal expeditiously, orders 2, 3 and 4 be stayed until the later of:

(a)    14 days from the date of these orders;

(b)    In the event such an application for leave to appeal in respect of those orders is made within 14 days from the date of these orders, 28 days after the determination of that application, and

(c)    In the event that leave to appeal is granted form those orders, 28 days after the determination of that appeal.

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

REASONS FOR JUDGMENT

BURLEY J:

1    In Aristocrat Technologies Australia Pty Limited v Commissioner of Patents [2020] FCA 778 (judgment) I determined that an appeal against a decision of a delegate of the Commissioner of Patents should succeed, and that four innovation patents should proceed to grant. The parties have conferred and provided draft orders giving effect to the judgment together with short submissions going to matters of disagreement between them. Having regard to the submissions, I consider it is appropriate to determine the resolution of those matters on the papers. These reasons assume familiarity with the judgment, and adopt the definitions used in it.

2    The orders that I will make are as follows:

(1)    The appeal be allowed.

(2)    The decisions made by the delegate of the Commissioner of Patents on 5 July 2018 (Decisions) to revoke Innovation patents 2016101967, 2017101097, 2017101098 and 2017101629 (Patents) under section 101F(1) of the Patents Act 1990 (Cth) be set aside.

(3)    The Commissioner of Patents is directed to issue, publish and register a certificate of examination in respect of each Patent, in accordance with section 101E(2) of the Patents Act.

(4)    It is certified, pursuant to section 19(1) of the Patents Act, that the validity of each Patent as claiming an invention that is a manner of manufacture within the meaning of section 18(1A)(a) of the Patents Act was questioned in this proceeding.

(5)    The Commissioner of Patents pay the Appellant’s costs of this proceeding on the ordinary basis, as agreed or (failing agreement) as taxed, excluding 50% of Aristocrat’s costs associated with the evidence of Mr David Little, Mr Matthew Dietz and Professor Jeremy Cockburn.

(6)    Subject to the Commissioner of Patents undertaking to prosecute any application for leave to appeal, and any subsequent appeal expeditiously, orders 2, 3 and 4 be stayed until the later of:

(a)    14 days from the date of these orders;

(b)    In the event such an application for leave to appeal in respect of those orders is made within 14 days from the date of these orders, 28 days after the determination of that application, and

(c)    In the event that leave to appeal is granted form those orders, 28 days after the determination of that appeal.

3    The parties agree to orders 1 to 4 and 6. They disagree on the question of costs.

4    In Idenix Pharmaceuticals LLC v Gilead Sciences Pty Ltd (No 2) [2018] FCAFC 7 the Full Court said at [3]:

The power of the Court in relation to costs is well established. Section 43 of the Federal Court of Australia Act 1976 (Cth) gives the Court a wide discretion in awarding costs. The exercise of the Court's discretion is not without principles or practices; it must be exercised judicially (Les Laboratoires Servier v Apotex Pty Ltd (2016) 247 FCR 61 at [305] per Bennett, Besanko and Beach JJ). The ordinary rule is that costs follow the event, although a successful party may be awarded less than its costs, or costs may be apportioned, based upon success on the issues (Firebird Global Master Fund II Ltd v Republic of Nauru (No 2) (2015) 327 ALR 192; [2015] HCA 53 at [6] per French CJ, Kiefel, Nettle and Gordon JJ; Les Laboratoires Servier at [297] to [298] and [303]).

5    In Davies v Lazer Safe Pty Ltd (No 2) [2019] FCAFC 118 the Full Court said at [6]:

Some general principles as to awarding costs, and as to when the Court may award costs on an issues basis, were set out in Les Laboratoires Servier v Apotex Pty Ltd [2016] FCAFC 27; 247 FCR 61 (Bennett, Besanko and Beach JJ):

[297]    There are two general approaches to the award of costs that have general application and have been the subject of numerous decisions:

(1)    The successful party is generally entitled to its costs. That is, costs usually follow the event.

(2)    It is also the case that a successful party may be awarded less than its costs, or there may be an order apportioning costs, on the basis of success on the issues.

…

[301]    On the other hand, Courts have been increasingly concerned, generally, to use all proper means to encourage parties to consider carefully what matters they will put in issue in their litigation. This has led to decisions whereby the successful party does not recover all of its costs where it has been unsuccessful on a discrete issue or in what is decided to be an unmeritorious objection. While it is acknowledged that, ordinarily, costs follow the event, the wide discretion in awarding costs has led to circumstances where a successful party who has failed on certain issues may be ordered to pay the other party’s costs of them (as discussed in Hughes v Western Cricket Association (Inc) [1986] ATPR 40-748 per Toohey J), although warnings have been stated that care should be taken in such a course and consideration be given to whether the issues on which the successful party failed are clearly dominant or separable (Waters v PC Henderson (Australia) Pty Ltd (1994) 254 ALR 328 at 330 to 331 per Mahoney JA) and to whether the issues involved different factual enquiries in the one proceeding or multiple causes of action, even if based on a common substratum of fact.

6    Aristocrat first contends that it should have its costs of the hearing before the delegate. The Commissioner submits that the Court has no power to order that she pay the costs of the hearing before the delegate, and that in any event such an order ought not to be made.

7    The Commissioner’s delegate was not a party to the hearing, but rather was an administrative decision maker performing a statutory task under the Patents Act. The Commissioner has power pursuant to s 210(1)(d) to award costs against a party to proceedings before the Commissioner, but no provision suggests that the Commissioner may order costs against herself. It would be odd if it did so. On appeal, the Court stands in the shoes of the Commissioner. The Commissioner submits that it follows that the Court has no power to, or alternatively ought not to award costs against the Commissioner. She points to s 160(1) of the Patents Act, which provides that on hearing of an appeal from a decision of the Commissioner, the Federal Court may order a party to pay costs to another party.

8    These submissions have some force, although overlaid on the powers under the Patents Act are the powers under section 43 of the Federal Court of Australia Act 1976 (Cth) to which Idenix refers at [3]. In the present case, whilst it is possible that the statutory scheme is such that the Court has no power to award costs against the delegate, I am firmly of the view that in any event in the circumstances of the case no such order should be made. The delegate acted as a neutral arbiter performing a statutory function. She has not, by her delegate, engaged in any conduct that would remotely warrant an order of costs against her in relation to the decision from which the appeal was brought.

9    Aristocrat next submits that it should have its costs of the appeal. The Commissioner does not dispute that she should pay Aristocrat’s costs, but submits that they should be reduced to exclude the payment of:

(a)    Aristocrat’s costs associated with the evidence of Mr Dunn, Mr Mountford and Mr Lee; and

(b)    50% of Aristocrat’s costs associated with the evidence of Mr Little, Mr Dietz and Professor Cockburn.

10    The Commissioner submits that Aristocrat, as the moving party in the appeal, filed evidence from six witnesses, three lay and three expert, much of which was irrelevant to the issue to be determined by the Court. In particular, having regard to the principles applicable, as set out by the Full Court in Rokt at [73], the limited role of expert evidence is apparent. The Commissioner submits that much of the expert evidence led by Aristocrat in support of its construction of the patent did not deal with the common general knowledge at all and was irrelevant or of very limited utility. In this regard, each expert gave extensive evidence as to the “technical aspects of the inventions”. Mr Little and Mr Deitz opined as to the “technical” aspects of the features of the game and the significance of the mathematics underpinning the game structure. Professor Cockburn sought to characterise the “technical improvements” through the prism of human computer interaction. None was central to the Court’s reasoning and characterisation of the patents in issue.

11    Aristocrat submits that the expert evidence formed part of the Court’s reasoning in the judgment and was useful in placing the Court in the position of a skilled person, interpreting the art and explaining technical concepts. Further, it submits that the expert evidence was directly relevant to Aristocrat’s secondary argument as identified in [76] of the judgment, namely, that if the inventions were characterised as schemes, they were nevertheless patentable because of the “technical” considerations in the authorities. Aristocrat submits that the delegate raised this factor in finding at [47] that “[a] game rule is not an artificially created state of affairs in the sense that it does not provide a technical effect”. At the time of trial, expert evidence had been adduced by the Commissioner in previous cases concerning manner of manufacture (citing Rokt and Repipe Pty Ltd v Commissioner of Patents [2019] FCA 1956). Until publication of Rokt, which was delivered after the trial of the present proceedings, the role of expert evidence was not entirely clear, because of the approach by the Commissioner to “relevant prior art” in Myriad at [12] and the consideration of “technical” factors in Research Affiliates and RPL Central. Aristocrat’s approach to the expert evidence cannot, it submits, be said to be unreasonable.

12    There is merit in the Commissioner’s submissions, in the sense that the expert evidence adduced by Aristocrat somewhat over-egged the pudding. Even making allowances for the uncertainties arising from the development of the law in relation to the patentability of inventions involving computerisation, there was really no justification for calling three experts in separate fields to attempt to establish that there was a “technical effect” in Aristocrat’s secondary argument. Aristocrat was perhaps entitled to be creative in attempting to justify the patentability of its invention, but that should not be funded by the Commissioner, even on an ordinary basis. I agree that the Commissioner should bear 50% of the costs of Aristocrat’s experts.

13    The Commissioner raises similar arguments in relation to the lay evidence of Messrs Dunn, Mountfort and Lee. I do not consider that a discount in costs in respect of Aristocrat’s lay witnesses is warranted.

Associate:

Dated:    10 July 2020