Federal Court of Australia

Rakman International Pty Limited v Boss Fire & Safety Pty Ltd (No 2) [2022] FCA 1113

ORDERS

THE COURT DECLARES THAT:

1.    Claims 1, 2, 3, 4 and 5 of Australian Innovation Patent 2017101778 (the 778 patent) are, and were at all material times, invalid.

2.    Trafalgar Group Pty Ltd (Trafalgar) has, in trade or commerce, engaged in misleading or deceptive conduct in contravention of s 18 of the Australian Consumer Law (Sch 2 to the Competition and Consumer Act 2010 (Cth)) by representing that:

(a)    all uses of the Boss FyreBox Multi Service Cable & Pipe Transit (Boss FyreBox) to construct a fire barrier will infringe the 778 patent;

(b)    supply of the Boss FyreBox infringes Trafalgar’s rights in the 778 patent; and

(c)    the use of the method of construction in the claims of the 778 patent by installation of the Boss FyreBox will infringe Trafalgar’s patent rights.

THE COURT ORDERS THAT:

3.    Claims 1, 2, 3, 4 and 5 of the 778 patent be revoked.

4.    The applicants/cross-respondents pay the respondents’/cross-claimant’s costs of the proceeding (including the cross-claim) to date:

(a)    up to 11.00 am on 30 July 2019 on a party-party basis; and

(b)    from 11.00 am on 30 July 2019 on an indemnity basis.

5.    Order 3 be stayed:

(a)    initially for a period of 28 days from the date of these orders; and

(b)    if an appeal is lodged by the applicants within that period, until the determination of that appeal and any further appeal therefrom.

6.    In the event that no appeal is lodged by the applicants within 28 days of the date of these orders, or upon the determination of any such appeal, the parties are to approach the Associate to Yates J for the purpose of listing the matter for case management in respect of the inquiry as to the quantum of damages arising from Trafalgar’s contravention of s 18 of the Australian Consumer Law.

7.    The originating application be dismissed.

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

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be allowed.

2.    The decision of the Registrar of Trade Marks by her delegate, given on 29 March 2019 in relation to Australian Trade Mark Application 1736748 (748 application), be set aside.

3.    The 748 application be refused.

4.    The respondent pay the appellant’s costs of the opposition proceeding before the Registrar’s Delegate as assessed pursuant to Schedule 8 of the Trade Marks Regulations 1995 (Cth).

5.    The respondent pay the appellant’s costs of this proceeding:

(a)    up to 11.00 am on 30 July 2019 on a party-party basis; and

(b)    from 11.00 am on 30 July 2019 on an indemnity basis.

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

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

2.    The appellant pay the respondent’s costs:

(a)    up to 11.00 am on 24 September 2019 on a party-party basis; and

(b)    from 11.00 am on 24 September 2019 on an indemnity basis.

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

REASONS FOR JUDGMENT

YATES J:

Introduction

1    On 29 April 2022, I published reasons for judgment in relation to three proceedings which I had heard concurrently: Rakman International Pty Limited v Boss Fire & Safety Pty Ltd [2022] FCA 464.

2    In NSD 1589 of 2018 (the patent proceedings), I found that Boss’s cross-claim alleging patent invalidity succeeded and that all the claims of the patent were invalid. It followed that Trafalgar’s claim of infringement against Boss under s 117(1) of the Patents Act 1990 (Cth) (the Patents Act) could not be established. Had the claims of the patent not been invalid, Trafalgar’s case of infringement against Boss (but not against Boss’s director, Mr Prior) would have succeeded. I also found that Boss’s cross-claim alleging that Trafalgar had contravened s 18(1) of the Australian Consumer Law (Sch 2 to the Competition and Consumer Act 2010 (Cth)) succeeded, but not its claim that Trafalgar had made unjustifiable threats within the meaning of s 128(1) of the Patents Act.

3    In NSD 641 of 2019 (the first trade mark appeal), I found that Boss’s appeal succeeded. In NSD 1242 of 2019 (the second trade mark appeal), I found that Trafalgar’s appeal did not succeed.

4    At the time of publishing my reasons, I made orders that the parties bring in agreed or, if agreement could not be reached, competing draft orders giving effect to the reasons.

5    Trafalgar and Boss were unable to agree on the orders that should be made. Their main areas of disagreement were in relation to the costs orders that should be made. They approached the question of costs from fundamentally different positions.

Trafalgar’s positions on costs

6    In the patent proceedings, Trafalgar contends that separate orders should be made in respect of its claim for infringement and in respect of Boss’s cross-claim.

7    Trafalgar proposes that an order should be made that Boss pay 90% of the costs of the infringement claim. Its reasoning is that it succeeded on the question of construction and, subject to the adverse findings on patent validity, substantially on the question of infringement. In its infringement claim, it did not succeed in establishing that Mr Prior authorised Boss’s alleged infringement. In recognition of this fact, it proposes that there be a discount of 10% on the costs which, on its argument, Boss should otherwise be ordered to pay.

8    Trafalgar proposes that an order should be made that it pay 30% of the costs of Boss’s cross-claim. Its reasoning is that Boss’s costs of the cross-claim should be discounted by 70% to reflect Boss’s lack of success on a large number of issues. Trafalgar estimates that “close to 90%” of the written submissions, and a significant proportion of the written and oral evidence, addressed grounds raised by Boss which were either abandoned by Boss or determined in Trafalgar’s favour.

9    In the first trade mark appeal, Trafalgar proposes that, save in respect of any costs order previously made in the proceeding, an order should be made that it pay 40% of Boss’s costs. Its reasoning is that, in this appeal, Boss abandoned a number of opposition grounds at the end of the hearing of the appeal (during closing submissions), and that Boss failed with respect to a number of other issues it had raised. Trafalgar estimates that “close to 75%” of the written submissions, and a significant proportion of the written and oral evidence, addressed grounds that were either abandoned by Boss or determined in Trafalgar’s favour.

10    In the second trade mark appeal, Trafalgar also proposes that, save in respect of any costs order previously made in the proceeding, an order should be made that it pay 40% of Boss’s costs. It relies on the same reasoning for the costs order proposed in the first trade mark appeal.

Boss’s position on costs

11    Boss proposes that Trafalgar pay its costs of the patent proceedings, the first trade mark appeal, and the second trade mark appeal on an indemnity basis having regard to a series of offers it (Boss) had made.

12    On 26 July 2019, Boss made an offer of compromise in the patent proceedings. The offer was that the claim and the cross-claim be discontinued and that Trafalgar pay 80% of Boss’s party and party costs up to the date of the offer (Offer 1).

13    Boss contends that Offer 1 was substantially better for Trafalgar than the outcome of a trial because, if accepted:

(a)    the offer would have allowed Trafalgar to keep its patent;

(b)    Trafalgar would have avoided any liability for damages as a result of its contravention of the Australian Consumer Law; and

(c)    Trafalgar’s costs liability to Boss would have been reduced.

14    As to the costs liability, the evidence is that Boss’s total costs incurred in the patent proceedings as at 26 July 2019 were $459,427.33. As at 29 April 2022, Boss’s costs were $2,257,693.37.

15    On 26 July 2019, Boss made an offer of compromise in the first trade mark appeal. The offer was that the appeal be discontinued; that Trafalgar withdraw the 748 application (Trafalgar’s application for registration of FIREBOX); and that Trafalgar pay 80% of Boss’s party and party costs in the first trade mark appeal and 80% of Boss’s scale costs in the opposition (in respect of the 748 application) before the Registrar (Offer 2).

16    Boss contends that Offer 2 was better for Trafalgar than the outcome of the first appeal because, if accepted, Trafalgar’s costs liability to Boss would have been reduced. The evidence is that Boss’s total costs incurred in the first trade mark appeal as at 26 July 2019 were $95,615.35. As at 29 April 2022, Boss’s costs were $450,955.03. Although, in accepting Offer 2, Trafalgar would have been required to withdraw the 748 application, I have held that the 748 application should be refused.

17    On 20 September 2019, Boss made another offer of compromise in the first trade mark appeal (Offer 3). Offer 3 was in the same terms as Offer 2 except that, by 20 September 2019, Boss’s total costs in respect of the first trade mark appeal were $219,545.37.

18    On 20 September 2019, Boss also made an offer of compromise in the second trade mark appeal. The offer was that the appeal be dismissed and that Trafalgar pay 80% of Boss’s party and party costs in the second trade mark appeal and 80% of Boss’s scale costs in the opposition in respect of the 214 application (Trafalgar’s application for registration of the FYREBOX composite mark) before the Registrar (Offer 4).

19    Boss contends that Offer 4 was better for Trafalgar than the outcome of the second trade mark appeal because, if accepted, Trafalgar’s costs liability to Boss would have been reduced. The evidence is that Boss’s total costs incurred in the second trade mark appeal as at 20 September 2019 were $13,511.00. As at 29 April 2022, Boss’s costs were $134,999.65. Although, in accepting Offer 4, the position remained that the 214 application would not proceed to registration, this was, in fact, the outcome of the second trade mark appeal in this Court.

20    Boss contends that, even if the Court is not satisfied that indemnity costs should be granted, the Court should nevertheless order that Trafalgar pay Boss’s costs in each proceeding. Boss contends that there is no warrant for the discounts that Trafalgar proposes because those discounts “reflect a failure to confront the realities of the conduct and outcome of the litigation”. Boss contends that costs should be addressed having regard to “the outcome of the case as a whole”.

Relevant provisions

21    Section 43(1) of the Federal Court of Australia Act 1976 (Cth) (the Act) relevantly provides:

(1)     The Court or a Judge has jurisdiction to award costs in all proceedings before the Court (including proceedings dismissed for want of jurisdiction) other than proceedings in respect of which this or any other Act provides that costs must not be awarded. This is subject to:

(a)     subsection (1A); and

(b)     section 570 of the Fair Work Act 2009; and

(c)     section 18 of the Public Interest Disclosure Act 2013.

22    Sections 43(2) and (3) direct attention to the discretionary nature of an award of costs in the manner in which the power to award costs can be exercised:

(2)     Except as provided by any other Act, the award of costs is in the discretion of the Court or Judge.

(3)     Without limiting the discretion of the Court or a Judge in relation to costs, the Court or Judge may do any of the following:

(a)     make an award of costs at any stage in a proceeding, whether before, during or after any hearing or trial;

(b)     make different awards of costs in relation to different parts of the proceeding;

(c)     order the parties to bear costs in specified proportions;

(d)     award a party costs in a specified sum;

(e)     award costs in favour of or against a party whether or not the party is successful in the proceeding;

(f)     order a party’s lawyer to bear costs personally;

(g)     order that costs awarded against a party are to be assessed on an indemnity basis or otherwise;

(h)     do any of the following in proceedings in relation to discovery:

(i)     order the party requesting discovery to pay in advance for some or all of the estimated costs of discovery;

(ii)     order the party requesting discovery to give security for the payment of the cost of discovery;

(iii)     make an order specifying the maximum cost that may be recovered for giving discovery or taking inspection.

Note:     For further provision about the award of costs, see subsections 37N(4) and (5) and paragraphs 37P(6)(d) and (e).

23    The discretion conferred by s 43(2) is unfettered except by the principle that it be exercised judicially. However, as the Full Court observed in Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International N.V. (No 2) [2007] FCAFC 121 at [6], in the absence of circumstances justifying some other order, costs ordinarily follow the event and a successful litigant is entitled to an order for its costs.

24    Rule 40.01 of the Federal Court Rules 2011 (Cth) (the Rules) provides:

If an order is made that a party or person pay costs or be paid costs, without any further description of the costs, the costs are to be costs as between party and party.

Note:    Costs as between party and party is defined in the Dictionary.

25    Part 25 of the Rules concerns offers to settle. Rule 25.01 provides for offers of compromise:

(1)     A party (the offeror) may make an offer to compromise by serving a notice, in accordance with Form 45, on another party (the offeree).

(2)     The notice must not be filed in the Court.

26    Rules 25.02 to 25.05 provide for the form, timing, and content of such offers.

27    Rule 25.14 provides for the consequences of not accepting an offer of compromise:

(1)     If an offer is made by a respondent and not accepted by an applicant, and the applicant obtains a judgment that is less favourable than the terms of the offer:

(a)     the applicant is not entitled to any costs after 11.00 am on the second business day after the offer was served; and

(b)     the respondent is entitled to an order that the applicant pay the respondent’s costs after that time on an indemnity basis.

(2)     If an offer is made by a respondent and an applicant unreasonably fails to accept the offer and the applicant’s proceeding is dismissed, the respondent is entitled to an order that the applicant pay the respondent’s costs:

(a)     before 11.00 am on the second business day after the offer was served—on a party and party basis; and

(b)     after the time mentioned in paragraph (a)—on an indemnity basis.

(3)     If an offer is made by an applicant and not accepted by a respondent, and the applicant obtains a judgment that is more favourable than the terms of the offer, the applicant is entitled to an order that the respondent pay the applicant’s costs:

(a)     before 11.00 am on the second business day after the offer was served—on a party and party basis; and

(b)      after the time mentioned in paragraph (a)—on an indemnity basis.

Note 1: Costs on an indemnity basis is defined in the Dictionary.

Note 2:    The Court may make an order inconsistent with these rules—see rule 1.35.

28    Rule 1.35 provides:

The Court may make an order that is inconsistent with these Rules and in that event the order will prevail.

29    In Sydney Equine Coaches Pty Ltd v Gorst [2017] FCAFC 34, the Full Court (at [14] – [24]) discussed the implications of r 1.35 in respect of the application of r 25.14:

14     The power conferred by r 1.35 is discretionary and is expressed in general terms. It is, however, subject to the overarching purpose of the civil practice and procedure provisions of the Rules and any legislation with respect to the Court’s practice and procedure, including under Pt VB of the Federal Court of Australia Act 1976 (Cth) (the “Federal Court Act”). That overarching purpose is to facilitate the just resolution of disputes according to law, as quickly, inexpensively and efficiently as possible: s 37M(1). The civil practice and procedure provisions (including all of the Rules) must be interpreted and applied, and any power that they confer must be exercised, in the way that best promotes the overarching purpose: s 37M(3). Moreover, s 37N(1) of the Act imposes a duty on the parties to a civil proceeding in this Court to conduct proceedings, “including negotiations for settlement of the dispute to which the proceeding relates”, in a way that is consistent with the overarching purpose.

15     In The Queen v Australian Broadcasting Tribunal; Ex parte 2HD Pty Ltd (1979) 144 CLR 45 at 50, Stephen, Mason, Murphy, Aickin and Wilson JJ said of a provision expressed similarly to r 1.35 is:

The general rule is that a discretion expressed without any qualification is unconfined except in so far as it is affected by limitations to be derived from the context and scope and purpose of the statute.

16     Here, the context, scope and purpose of the discretion conferred by r 1.35 to make an order inconsistent with the Rules includes not only r 25.14 itself but also the overarching purpose of the civil practice and procedure provisions prescribed in Pt VB of the Federal Court Act.

17     Rule 1.35, moreover, is a discretionary power conferred on this Court and any exercise of that discretion must be consistent with the principle identified in cases such as FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268 at 283-284 per Wilson J (with whom Brennan, Deane and Dawson JJ agreed), 291 per Gaudron J and Owners of the Ship “Shin Kobe Maru” v Empire Shipping Co Inc (1994) 181 CLR 404 at 421, where Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ said:

It is quite inappropriate to read provisions conferring jurisdiction or granting powers to a court by making implications or imposing limitations which are not found in the express words.

18     Nonetheless, such broadly construed powers conferred on a court must be exercised judicially (i.e. not arbitrarily or capriciously), as Gaudron J explained in Knight v FP Special Assets Ltd (1992) 174 CLR 178 at 205 in a passage approved by Gleeson CJ, Gummow, Kirby, Hayne and Crennan JJ in Mansfield v Director of Public Prosecutions (WA) (2006) 226 CLR 486 at 492 [10] and 496 [25].

19     The provisions of r 1.35 are remedial in character. They, like r 1.34, enable the Court to make an order that is inconsistent with the Rules. The purpose of the broad power in a provision such as r 1.35 is to relieve against injustice: FAI 165 CLR at 283. Parties can expect that r 25.14(1) provides for the costs consequences that in the ordinary course of litigation will flow from the non-acceptance of an offer of compromise made under Pt 25 of the Rules where the offeree obtains a less favourable result than the one made in the offer. Nonetheless, the purpose of r 1.35 is to allow the Court to make an order that is inconsistent with what r 25.14 prescribes would otherwise occur, so as both to meet the justice of the case or to prevent injustice and to give effect to the Court’s broad discretion to make orders for costs conferred in s 43(2) of the Federal Court Act.

20     Justice Hely said in Port Kembla Coal Terminal Ltd v Braverus Maritime Inc (No 2) [2004] FCA 1437 at [17], (2004) 212 ALR 281 at 284 that:

Once an offer is made, and a judgment no less favourable obtained, a rebuttable presumption in favour of indemnity costs is created. It then becomes incumbent on the defendant to show reason why the presumption should not crystallise. … the prima facie position should only be departed from for proper reasons which, in general, only arise in an exceptional case.

21     In Lodestar Anstalt v Campari America LLC (No 2) [2016] FCAFC 118 at [27] Allsop CJ, Greenwood, Besanko, Nicholas and Katzmann JJ said:

… the power to make an order inconsistent with the Rules should be exercised for proper reasons which will generally only arise in exceptional circumstances.

22     It follows that there is power to make an order inconsistent with r 25.14 where there is reason to do so, including in those cases where the application of r 25.14 would lead to or cause injustice or not meet the justice of the case. Such an order inconsistent with r 25.14 would, in such circumstances, be an “exception” to the prima facie presumption. Care must nevertheless be exercised to ensure that the use of such phrases as “proper reasons” or “exceptional circumstances” do not operate as a gloss to constrain the otherwise broad discretionary power conferred by r 1.35: Shin Kobe Maru 181 CLR at 421. Rather, expressions such as “exceptional” or “show reason why” that Hely J and other judges have used in explaining occasions on which it is open to a Court to make orders inconsistent (under r 1.35) or relieving compliance (under r 1.34) with the provisions of the Rules, should be understood as simply conveying the notion that a reason or reasons must be shown for departing from the prima facie position set forth in r 25.14. That is because, unless there is a feature of the occasion that calls for an exception to be made, the prima facie position prescribed by r 25.14 will apply.

23     As Rares, Jagot and Bromberg JJ said in Visscher v Teekay Shipping (Australia) Pty Ltd (No 2) [2014] FCAFC 19 at [7], “r 25.14 operates on an offer of compromise at all stages of the proceedings, whatever the state of the evidence when it is served”. But, that does not entail that a material change in the litigation that occurs after an offer under Pt 25 is made, including change caused by evidence that later comes to light, is incapable of enlivening the power under r 1.35 to make an order for costs inconsistent with the operation of r 25.14.

24     Rule 25.14 largely reflects the principles which had been developed under the former O 23 r 11(5) of the now-repealed Federal Court Rules 1979 (Cth): cf. Elecspess Pty Ltd v LED Technologies Pty Ltd [2013] FCAFC 116, (2013) 215 FCR 95 at 105 [22]-[24] per Besanko and Jessup JJ. The purpose of the rule is to promote the settlement of proceedings by the making of offers of settlement involving genuine compromise. If an offer does not involve any genuine compromise, the rule will not be enlivened: Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (No 4) [2016] FCA 218 at [11] per Perram J.

30    In relation to each proceeding, I will approach the question of costs by considering, firstly, whether, and to what extent, r 25.14 applies and then, subject to that determination, what costs should be awarded.

Consideration

The patent proceedings

31    Boss contends that, in respect of Offer 1, r 25.14(3) is engaged on the basis that it should be treated as an “applicant” in respect of the cross-claim. To support its contention, Boss refers to r 15.10:

(1)     To the extent practicable and not inconsistent with this Part:

(a)     the parties must conduct a cross‑claim in the same way as the principal proceeding; and

(b)     these Rules apply to the cross‑claim in the same way as they apply to the principal proceeding; and

(c)     the trial or a hearing, or any other step, in relation to the cross‑claim is to be carried out at the same time as the trial or hearing, or any other step, in relation to the originating application.

(2)     For the purpose of giving effect to this rule:

(a)     a cross‑claimant is to be treated as an applicant; and

(b)     a cross‑respondent is to be treated as a respondent.

32    I do not accept that r 25.14(3) is engaged. First, r 15.10 is of no assistance to Boss. Rule 15.10(2) makes clear that a cross-claimant is to be treated as an “applicant” solely for the purpose of giving effect to that particular rule. It says nothing about the meaning of “applicant” in r 25.14. Secondly, and more importantly, the definition of “applicant” in the Dictionary to the Rules makes clear that an “applicant” is a party claiming relief other than a cross-claimant.

33    Therefore, the relevant rule, here, is r 25.14(2). Subject to the operation of r 1.35, the effect of r 25.14(2) is that Boss is entitled to its costs on a party and party basis up to 11.00 am on 30 July 2019 and, after that time, on an indemnity basis.

34    Offer 1 was served on Trafalgar approximately 11 weeks after Boss filed its evidence in support of its case that all the claims of the patent were invalid for lack of novelty based on the disclosures at the Seltor meeting in Norway in September 2015. This evidence comprised Mr Ramunddal’s affidavit of 2 May 2019 and Mr Prior’s affidavit of 10 May 2019. Boss’s particulars, filed in respect of its cross-claim, are dated 29 October 2018. They particularise the demonstration of the Pass-It Version 2 at the Seltor meeting as a novelty-destroying disclosure. Trafalgar was, therefore, on notice, some seven months prior to the service of the affidavits, that this particular challenge to validity was being made. Boss’s case on lack of innovative step was also based on the disclosures that supported its case on lack of novelty including, importantly, the disclosures at the Seltor meeting.

35    I do not know what, if any, investigations Trafalgar carried out in respect of the (then) alleged disclosures at the Seltor meeting before service of Mr Ramunddal’s and Mr Prior’s affidavits, but certainly, upon service of those affidavits, Trafalgar had Boss’s evidence of those disclosures, which included, through Mr Ramunddal’s affidavit, digital images of the samples that were demonstrated at the meeting and the Firestopit PDS. Mr Ramunddal’s affidavit also exhibited the actual samples of the Pass-It Version 2 that were demonstrated at the meeting and the Firestopit PDS that Mr Ramunddal was given at that time. I was informed (and there does not seem to be any dispute) that the physical exhibits were inspected by Trafalgar’s solicitors on 29 May 2019.

36    Regardless of any views that Trafalgar might have formed about the strength of Boss’s other grounds of challenge to the validity of the patent, Trafalgar must have realised—or, at least, ought to have realised—that if the Court accepted Mr Ramunddal’s evidence and Mr Prior’s evidence of the Seltor meeting, as given through those affidavits, then claims 1 to 4 of the patent were anticipated by the disclosures at that meeting and were not valid.

37    Similarly, Trafalgar must have realised—or, at least, ought to have realised—that the validity of claim 5 of the patent was then vulnerable on the ground that the invention, as claimed in that claim, lacked an innovative step given that the only feature added by claim 5 to the method of the invention was the step of marking a centre line on an external object to depict the proposed centre line of the barrier. I note that Trafalgar treated this aspect of the case on lack of innovative step as a matter of onus only (namely, whether Boss had discharged its onus of establishing that the invention claimed in claim 5 lacked an innovative step): T1004, lines 7 – 19. Trafalgar did not, itself, call evidence to suggest that marking a centre line made a substantial contribution to the working of the claimed invention. I concluded that marking a centre line was a trivial addition.

38    At the hearing, Mr Ramunddal’s and Mr Prior’s affidavits, in respect of this meeting, were read without objection. Trafalgar’s challenge to this aspect of Boss’s case was to attempt to impugn Mr Ramunddal’s credit and Mr Prior’s credit, and to contend that various items of evidence were fabricated. As to this challenge, I held:

217    Trafalgar’s challenge to the veracity of the evidence given by Mr Prior and Mr Ramunddal in relation to the Seltor meeting really amounts to an allegation of fabrication that involves both Mr Prior and Mr Ramunddal. Trafalgar’s submissions were laced with the suggestion that, because of their relationship, Mr Ramunddal was a witness who would be prepared to conspire with Mr Prior to give false evidence at Mr Prior’s behest. I reject that suggestion. I have no reason not to accept Mr Ramunddal as an honest witness.

218    To summarise, according to Trafalgar the Firestopit PDS shown in the digital image is not a genuine document and, as at September 2015, the products shown in the image did not exist. Further, Trafalgar contended that the image was staged and that some unknown person purposely altered the date setting on the camera to record an event that did not take place.

219    On the evidence before me, this scenario is fantastical. It is based on theories which are not established by the evidence and which, taken as a whole, lack coherence. It also seems to envelope Mr Atkinson’s evidence concerning the creation of the Firestopit PDS and the date when the Pass-It Version 2 was first manufactured by FSi. However, I also accept Mr Atkinson as an honest witness. As explained in the next section of the reasons, I accept that the Pass-It Version 1 and the Pass-It Version 2 commenced to be manufactured by FSi in the period late 2014 to early 2015. I do not accept the likelihood that Mr Atkinson was mistaken about that matter. And, as I have said, I am not persuaded that the Firestopit PDS is not a genuine document. Indeed, it was not even put to Mr Ramunddal that he was not given a copy of the Firestopit PDS at the Seltor meeting.

39    In failing to accept Offer 1, Trafalgar obviously elected to go to trial on whether the relevant disclosures were made at the Seltor meeting, hoping to persuade the Court that it could not be satisfied, on the balance of probabilities, that the disclosures had been made. There was, however, nothing on the face of Mr Ramunddal’s affidavit, or on Mr Prior’s affidavit, that would suggest that the meeting did not take place, or that the disclosures were not made as Mr Ramunddal and Mr Prior had deposed. Having elected to put Boss to proof, and to chance its arm in persuading the Court not to accept Mr Ramunddal’s and Mr Prior’s evidence, Trafalgar must assume the costs consequences of its own forensic decision.

40    Trafalgar resists the outcome provided by r 25.14(2) on the basis that Boss advanced an “expansive case” in respect of its cross-claim, where most of the costs of the patent proceedings resulted. Trafalgar contends that Boss achieved success only because of the findings made in respect of the Seltor meeting, which was but one issue amongst “the sea of issues” raised by Boss. Other issues raised in the cross-claim were either abandoned at trial or did not succeed.

41    It is undoubtedly true that, ultimately, a number of the issues pleaded in the cross-claim, insofar as they were directed to claim validity, were abandoned by Boss or failed. In the normal course of events, this circumstance might justify a discount being applied to the costs to which Boss is entitled. But it is equally true that Trafalgar raised a great many factual issues that were directed to establishing that Boss’s evidence had been fabricated. The alleged fabrications found a particular focus in the evidence of the Seltor meeting: whether the Pass-It Version 2 was in existence at the time of the Seltor meeting; whether the Firestopit PDS was a genuine document; whether the photographic images of the samples and the Firestopit PDS that were displayed at the Seltor meeting had been falsified. These challenges raised myriad sub-issues. Trafalgar even went so far as to challenge whether the Seltor meeting had taken place.

42    All of these challenges by Trafalgar were fruitless. All added significantly to the complexity of the case—complexity that was not otherwise present in this part of the cross-claim. All added considerably to the volume of evidence that Trafalgar called at the hearing. And all added to the intricate web of factual issues that, ultimately, fell for determination. Had these unsuccessful challenges not been made, much of the factual complexity attending the question of claim validity would have been avoided, and the hearing of the cross-claim considerably shortened.

43    Boss’s success on the cross-claim, insofar as it was directed to claim validity, inevitably meant that Trafalgar’s case on infringement could not succeed. Trafalgar places reliance on the fact that it would have succeeded in its infringement case against Boss (the corporate entity) if the claims were, in fact, valid. That is so, but the infringement case was a very small part of the overall patent proceedings and turned on limited questions of claim construction. Moreover, Trafalgar’s case against Mr Prior personally (based on authorisation and joint tortfeasance), which was a significant part of its factual case on infringement, would have failed regardless of the outcome of the cross-claim.

44    It is also to be remembered that Boss succeeded in the cross-claim insofar as it was directed to Trafalgar’s misleading and deceptive conduct in sending the letters to participants in the building industry in September 2018. It is true that Boss failed in establishing that these letters amounted to unjustifiable threats within the meaning of s 128 of the Patents Act. However, importantly, the claim for contravention of s 18(1) of the Australian Consumer Law and the claim of unjustifiable threats under s 128 of the Patents Act were based on common facts and concerned different legal characterisations of the same conduct.

45    Trafalgar also resists the outcome provided by r 25.14(2) on the basis that Offer 1 was not “a real offer” because Boss was seeking Trafalgar’s “capitulation”. Trafalgar also submits that discontinuance of the patent proceedings would not have brought about a final resolution of the dispute.

46    I am satisfied that Offer 1 raised a genuine compromise. By that offer, Boss signified its preparedness to give up its claim for damages arising out of Trafalgar’s wrongful conduct in sending the letters in September 2018 (a claim which it will now pursue), and a not insignificant proportion of its costs, assessed on a party and party basis. It also signified its preparedness to give up its claim to revoke the patent. Had it accepted Offer 1, Trafalgar would have insulated itself from Boss’s claim for damages; its costs burden would have been reduced; and it would have kept its patent. My conclusion that Offer 1 raised a genuine compromise is not gainsaid by the fact that the offer involved discontinuance of the claim and cross-claim.

47    Trafalgar further resists the outcome provided by r 25.14(2) on that basis that its failure to accept Offer 1 was not unreasonable. Here, Trafalgar points to the fact that, even though Boss’s evidence in support of the cross-claim had been served a considerable period of time before Offer 1 was made, Boss was granted leave on 3 June 2019 to file amended particulars of invalidity and was ordered to give discovery, by 3 July 2019, of certain documents including documents that recorded the presentation made by Mr Prior at the Seltor meeting. Trafalgar also relies on the fact that, on 1 July 2019, it was granted leave to issue a subpoena to FSi.

48    I am satisfied that Trafalgar’s failure to accept Offer 1 was unreasonable. None of the matters referred to by Trafalgar persuades me to a different view.

49    First, the leave granted to Boss to file amended particulars of invalidity simply resulted in Boss bringing its particulars into line with the affidavit evidence it had already filed and served. The fact that the amended particulars raised a number of issues concerning the validity of the claims did not rob the disclosures at the Seltor meeting of their obviously decisive significance seen in the light of Mr Ramunddal’s and Mr Prior’s affidavits.

50    Secondly, Trafalgar’s wish to take steps, such as by discovery and requesting the issue of subpoenas, to gather evidence to challenge Mr Ramunddal’s and Mr Prior’s account of the Seltor meeting, does not signify that Trafalgar was not acting unreasonably in failing to accept Offer 1. On the contrary, it signifies that Trafalgar had already made, and wished to persevere with, the forensic decision to contest whether the Seltor meeting had taken place as Mr Ramunddal and Mr Prior had deposed. This was so in circumstances where, as I have said, there was nothing on the face of Mr Ramunddal’s affidavit, or on Mr Prior’s affidavit, to suggest that the Seltor meeting did not take place, or that the disclosures, to which Mr Ramunddal and Mr Prior had deposed, were not made. In any event, the discovery that Trafalgar sought in relation to the Seltor meeting produced no documents. Similarly, the subpoena that was issued at its request did not result in the production of what Trafalgar calls the “original” version of the Firestopit PDS. These facts were known by Trafalgar before Offer 1 was made.

51    Trafalgar also seems to suggest that its failure to accept Offer 1 can be excused on the basis that the time had not passed for it to file its evidence in answer, including its expert evidence in answer. However, Mr Ramunddal’s affidavit, and Mr Prior’s affidavit, were perfectly clear on what was disclosed at the Seltor meeting. This was the reality that Trafalgar had to face. Trafalgar did not need the opinions of experts (of the kind called as experts in this case) to inform it of the significance of the disclosures at the Seltor meeting. It is tolerably clear that Trafalgar chose to meet Boss “head on” in relation to that meeting. As I have said, it must bear the costs consequences of its own forensic decision in that regard.

52    Further, any decision to accept or reject Offer 1 did not need to await the time when Trafalgar was directed to file and serve its evidence in answer to the cross-claim. Had, in fact, Trafalgar needed more time to consider and respond to Offer 1, it could have raised that prospect with Boss. It did not. It simply chose not to respond to the offer.

53    In oral submissions, Trafalgar also raised an argument that it was not unreasonable for it to fail to accept Offer 1 because Offer 1 merely offered discontinuance. I do not find this argument persuasive. It is based on the proposition that, having extricated itself from legal proceedings because of Trafalgar’s acceptance of Offer 1, Boss would then turn around and commence proceedings against Trafalgar afresh, raising the same claims. I can think of no rational basis for Boss doing so as the party that was originally sued. The argument seems more theoretical than real. What is more, Trafalgar has not adduced any evidence to support the proposition that its failure to respond to Offer 1 was because Boss was only offering discontinuance.

54    I am satisfied that, in all the circumstances, the costs of the patent proceedings should fall as provided by r 25.14(2). The prima facie position under r 25.14(2) should not be displaced under r 1.35.

55    It is not necessary for me to address in any detail Trafalgar’s contentions that, absent the application of r 25.14(2), it should be awarded 90% of its costs of the infringement claim and that Boss should only be awarded 30% of its costs of the cross-claim. I will simply note that, had I been persuaded that r 25.14(2) should be displaced in respect of the patent proceedings, I would not have awarded costs on this basis. In particular, I would not have been persuaded that Trafalgar should necessarily have an order for costs in its favour in respect of the infringement claim and I would not have been persuaded that Boss’s costs of the cross-claim should be subject to the very deep discount that Trafalgar seeks.

The first trade mark appeal

56    The first trade mark appeal concerns Boss’s unsuccessful opposition to the 748 application. In the Trade Marks Office, Boss relied on the grounds provided by ss 41, 42(b), 58, 59, 60, 62, and 62A of the Trade Marks Act 1995 (Cth) (Trade Marks Act). The delegate noted, however, that while maintaining all its grounds of opposition, Boss relied, primarily, on the grounds provided by ss 58, 62A, and 42(b).

57    This aspect of the costs argument concerns Offer 2 and Offer 3.

58    As the first trade mark appeal was brought by Boss (as an applicant), it raises the application of r 25.14(3)—an offer made by an applicant that is not accepted by a respondent. It is not in dispute that Boss has obtained a judgment that is more favourable than these offers. Prima facie, Boss is entitled to costs in accordance with this rule, regardless of the reasonableness or otherwise of Trafalgar’s failure to accept the offers.

59    Offer 2 was made on 26 July 2019. It was made at a time when Boss had not filed any affidavit evidence in support of its own appeal. Given Trafalgar’s success in the Trade Marks Office in defeating Boss’s opposition to the 748 application, and given that the first trade mark appeal was a hearing de novo in which Boss had the onus of establishing its grounds of opposition to that application, I am persuaded that the operation of r 25.14(3) should be displaced in respect of that offer of compromise.

60    Offer 3 was made on 20 September 2019. It was in the same terms as Offer 2. It was, however, made in different circumstances.

61    At the time that Offer 3 was made, Boss had filed and served its affidavit evidence in support of its appeal. Trafalgar had filed and served its evidence in answer by mid-September 2019.

62    Boss’s affidavit evidence included an affidavit made by Mr Prior on 30 August 2019. In this affidavit, Mr Prior relied on four declarations that had been made for the purposes of the opposition proceeding in the Trade Marks Office. In his affidavit, Mr Prior sought to elaborate upon and clarify the matters addressed in each of the four declarations.

63    One of the matters previously addressed was Mr Prior’s interactions with Mr Falkiner of Wormald and the production of the Wormald data sheet. Mr Prior elaborated on those matters in his affidavit. However, importantly, his evidence was supported by an affidavit made by Mr Falkiner on 26 August 2019. Amongst other things, Mr Falkiner provided independent corroboration of the production and use of the Wormald data sheet which, I found, was an example of the use by Boss of the words FYRE-BOX and FYRE BOX before the priority date of the mark the subject of the 748 application. Mr Falkiner’s evidence was not before the delegate.

64    As I noted in the principal reasons, Trafalgar did not dispute that the words FYRE-BOX and FYRE BOX were used in the Wormald data sheet as a trade mark in respect of relevant goods. Nor did Trafalgar contend that FYRE-BOX and FYRE BOX were not substantially identical to FYREBOX or FIREBOX. Its contention was that Boss had not established that the Wormald data sheet was created before the priority date of the 748 application. Mr Prior’s affidavit evidence and Mr Falkiner’s affidavit evidence was to the contrary. The trade mark use to which they deposed—if accepted—was enough to defeat Trafalgar’s claim to proprietorship of the FIREBOX mark in respect of the relevant goods although, in the end, I was satisfied that Boss had established other prior uses as well. There was nothing on the face of Mr Prior’s affidavit, or Mr Falkiner’s affidavit, that suggested the Wormald data sheet had not been created or used as they had deposed.

65    Trafalgar contends that the evidence that Boss served in support of the first trade mark appeal did not vary significantly from the evidence that was led before the delegate in the Trade Marks Office. I disagree. This contention sidelines the important corroborating evidence given by Mr Falkiner with respect to the creation and use of the Wormald data sheet. It also sidelines the importance of other evidence that was not before the Trade Marks Office, namely Mr Prior’s discussions, in the course of trade, with Mr Halliday from Airport Consultancy Group Pty Ltd in respect of which I found that Boss, through Mr Prior, had also used FIREBOX as a trade mark before the priority date of the 748 application. This use was corroborated by Mr Halliday in an affidavit made on 27 August 2019, which had also been served on Trafalgar before Offer 3 was made.

66    As to the Wormald data sheet, Trafalgar contends that there were real questions about the provenance of the document to which Mr Prior and Mr Falkiner referred. Trafalgar contends that it was justified in testing that matter by seeking discovery and then subjecting the discovered documents to forensic examination.

67    I do not accept that, on the face of Mr Prior’s and Mr Falkiner’s affidavit, there were real questions about the provenance of the Wormald data sheet. The only questions raised in that regard were the questions that Trafalgar chose to raise and wished to agitate in an attempt to persuade the Court not to accept Mr Prior’s and Mr Falkiner’s evidence. Its challenge was unsuccessful. Once again, Trafalgar must assume the costs consequences of its own forensic decision to contest this issue.

68    In considering the application of r 25.14(3) to Offer 3, I have reflected on the fact that, as in the Patents Office, Boss also sought to raise a number of grounds of opposition, specifically those under ss 41, 42(b), 58, 59, 60, 62, and 62A of the Trade Marks Act. Although Boss opened on all grounds, by the time of closing submissions, it confined its case to a contest as to who, between itself and Trafalgar, was the owner of FIREBOX as a trade mark in respect of the relevant goods.

69    I do not think that Boss’s decision, in final submissions, to confine the first trade mark appeal to the issue of proprietorship, which was the issue of greatest relevance, stands as a sound reason to displace the application of r 25.14(3) to Offer 3. This is because Mr Prior’s affidavit of 30 August 2019 was directed to Boss’s use of FIREBOX and FYREBOX as trade marks, which was directly relevant to the question of proprietorship. While Mr Prior’s affidavit was available to be used in relation to the other grounds of opposition that Boss had pleaded, the main thrust of the affidavit was that Boss had first used FIREBOX and FYREBOX as trade marks in respect of the relevant goods, not Trafalgar, and that Boss had made commercial use of those marks over time.

70    The effect of the application of r 25.14(3) to Offer 3 is that, in the first trade mark appeal, Boss is entitled to its costs on a party and party basis up to 11.00 am on 24 September 2019 and, after that time, on an indemnity basis.

The second trade mark appeal

71    The second trade mark appeal concerns Boss’s successful opposition to the 214 application. In the Trade Marks Office, Boss relied on the grounds provided by ss 42, 44, 58, 59, 60, 62, and 62A of the Trade Marks Act. However, the opposition was decided on the basis of s 44(1), given the blocking effect of the 702 application which had been made by Boss.

72    This aspect of the costs argument concerns Offer 4.

73    As the second trade mark appeal was brought by Trafalgar (as an applicant), it raises the application of r 25.14(2)—an offer made by a respondent in circumstances where the applicant’s proceeding is dismissed and the applicant unreasonably fails to accept the offer.

74    Offer 4 was made on 20 September 2019, at the same time as Offer 3 was made. By that time, the Court had made orders that evidence in the first trade mark appeal would be evidence in the second trade mark appeal. However, pleadings in the second trade mark appeal had not closed.

75    Notwithstanding the fact that pleadings in the second trade mark appeal had not closed, the fate of the second trade mark appeal rested on the fate of the first trade mark appeal in that if, in the first trade mark appeal, Boss established that Trafalgar was not the owner of the FIREBOX trade mark—but that Boss was—then the second trade mark appeal could never succeed given Boss’s reliance on s 58 as a ground of opposition in that appeal. In short, Trafalgar could not claim to be the owner of FYREBOX as a trade mark for the purposes of the Trade Marks Act. The reality of that position was properly accepted by Trafalgar in closing submissions: [685] of the principal reasons.

76    Given the affidavit evidence that Boss had filed and served in the first trade mark appeal, I am satisfied that Trafalgar acted unreasonably in failing to accept Offer 4 made in the second trade mark appeal.

77    The effect of the application of r 25.14(2) to Offer 4 is that, in the second trade mark appeal, Boss is entitled to its costs on a party and party basis up to 11.00 am on 24 September 2019 and, after that time, on an indemnity basis.

Other matters

78    The only remaining matter of substance that is in dispute is whether, having regard to Boss’s success in the patent proceedings in establishing that Trafalgar contravened s 18(1) of the Australian Consumer Law, an injunction should be granted against Trafalgar restraining it from making the representations which were found to constitute misleading or deceptive conduct on its part.

79    I am not satisfied that an injunction should be granted. The conduct occurred some time ago and has not been repeated. I am not satisfied that it is likely that Trafalgar will make those representations in light of my finding that claims 1 to 5 of the patent are invalid.

Associate:

Dated:    20 September 2022

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