Federal Court of Australia

UbiPark Pty Ltd v TMA Capital Australia Pty Ltd (No 3) [2023] FCA 1079

ORDERS

THE COURT DECLARES THAT:

1.    Each of the threats of patent infringement proceedings made by the first respondent (TMA Capital) against the applicant (UbiPark), and against customers of UbiPark, in respect of Australian Patent No. 2019213335 (the 335 Patent) (as described in the Court’s reasons for judgment dated 2 August 2023 at [178]-[179]) was unjustifiable.

THE COURT ORDERS THAT:

2.    TMA Capital be permanently restrained from making further threats of patent infringement proceedings in respect of the 335 Patent against UbiPark, or any customer or potential customer of UbiPark, in respect of the use or proposed use of the UbiPark technology which is configured to operate in the manner described at [79]-[101] of the Court’s reasons for judgment dated 2 August 2023.

3.    The cross-claimants’ (the TMA parties’) cross-claim against UbiPark and the second cross-respondent (Mr Howell) be dismissed.

4.    UbiPark’s claim for revocation of the 335 Patent be dismissed.

5.    In relation to costs:

(a)    In relation to UbiPark’s claim for revocation of the 335 Patent: UbiPark pay TMA Capital’s costs.

(b)    In relation to the balance of the proceeding (including all reserved costs): the TMA parties pay UbiPark’s costs and Mr Howell’s costs.

6.    The costs referred to in paragraph 5 be determined on a lump sum basis by a Registrar.

7.    The security paid pursuant to the undertaking given by UbiPark to the Court on 14 February 2022 be paid to UbiPark, together with any accrued interest.

8.    The matter be listed for a case management hearing in relation to the quantum phase of the proceeding, on a date to be fixed.

9.    The parties have leave to appeal, and leave to cross-appeal, from the judgment and these orders.

10.    Paragraph 7 above is stayed for a period of:

(a)    28 days from the date of these orders;

(b)    if the TMA parties (or any of them) file a notice of appeal within 28 days, a further 14 days after the notice of appeal is filed.

THE COURT DIRECTS THAT:

11.    Within 28 days, the parties file any agreed proposed minute of orders fixing a lump sum in relation to the costs referred to in paragraph 5(a) and/or (b) above.

12.    In the absence of any agreement:

(a)    within a further 28 days, each party in favour of whom costs are to be paid pursuant to paragraph 5 above, file and serve an affidavit constituting a Costs Summary in accordance with paragraphs 4.10 to 4.12 of the Court’s Costs Practice Note (GPN COSTS);

(b)    within a further 28 days, the other party file and serve any Costs Response in accordance with paragraphs 4.13 to 4.14 of the Costs Practice Note (GPN COSTS); and

(c)    in the absence of any agreement having been reached within a further 14 days, the matter of an appropriate lump sum figure for the costs referred to in paragraph 5(a) and (b) above, be referred to a Registrar for determination.

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

REASONS FOR JUDGMENT

MOSHINSKY J:

Introduction

1    These reasons deal with issues concerning the form of orders and costs following the delivery of reasons for judgment in this matter on 2 August 2023: UbiPark Pty Ltd v TMA Capital Australia Pty Ltd (No 2) [2023] FCA 885 (the August 2023 Reasons). These reasons should be read together with the August 2023 Reasons. I will adopt the abbreviations used in those reasons.

2    Pursuant to orders made on 2 August 2023, and subsequent orders, the parties have filed submissions in relation to the form of orders and costs. Additionally, Mr Howell has filed an affidavit of Steven Donley, a solicitor at Clyde & Co, the solicitors for Mr Howell, dated 18 August 2023.

Declaration

3    It is agreed between the parties that there should be a declaration to the effect that each of the threats of patent infringement proceedings made by TMA Capital against UbiPark and against customers of UbiPark in respect of the 335 Patent was unjustifiable (or unjustified). This reflects the conclusions that I reached in the August 2023 Reasons at [16(c)] and [184(a)]. I note that, at [184(a)], I referred to the threats of patent infringement proceedings against UbiPark, but not to the threats of patent infringement proceedings against UbiPark’s customers. However, the claim as summarised at [179] of those reasons extended to threats against UbiPark’s customers and it follows from my reasons that the declaration should extend to threats against UbiPark’s customers. This is recognised in the agreed form of declaration. As for whether the declaration should refer to “unjustifiable” or “unjustified” threats (a matter raised in UbiPark’s submissions), although the heading to s 128 of the Patents Act uses the word “unjustified”, the text of s 128(1)(a) refers to a declaration that the threats are “unjustifiable”. I therefore consider it appropriate to use the word “unjustifiable”. The parties’ form of declaration refers to threats of “patent infringement” rather than “patent infringement proceedings”. I consider that the declaration should use the latter expression, as s 128 refers to threats of “infringement proceedings”. I also consider it appropriate to refer to the paragraphs of the judgment where the relevant threats are described. Accordingly, I will make a declaration in the following terms:

Each of the threats of patent infringement proceedings made by the first respondent (TMA Capital) against the applicant (UbiPark), and against customers of UbiPark, in respect of Australian Patent No. 2019213335 (the 335 Patent) (as described in the Court’s reasons for judgment dated 2 August 2023 at [178]-[179]) was unjustifiable.

Injunction

4    There is a difference between the parties as to the wording of the injunction. The TMA parties contend that the restraint against TMA Capital making further threats of patent infringement proceedings should be confined to the use or proposed use of the UbiPark technology that is configured to operate in the manner described at [79]-[101] of the August 2023 Reasons. The form of injunction proposed by UbiPark is not confined in that way, and refers to UbiPark’s products and services (reflecting [184] of the August 2023 Reasons). I consider it appropriate to confine the injunction in the way proposed by the TMA parties. It was only technology configured in that way that was the subject of the determination of non-infringement. In these circumstances, it is appropriate that the injunction against making threats of patent infringement proceedings be similarly confined. Accordingly, I will make an order as follows:

TMA Capital be permanently restrained from making further threats of patent infringement proceedings in respect of the 335 Patent against UbiPark, or any customer or potential customer of UbiPark, in respect of the use or proposed use of the UbiPark technology which is configured to operate in the manner described at [79]-[101] of the Court’s reasons for judgment dated 2 August 2023.

Costs

5    The respective positions of the parties can be summarised as follows.

6    UbiPark and Mr Howell contend that there should be orders that:

(a)    the TMA parties pay the costs of Mr Howell; and

(b)    the TMA parties pay 90% of UbiPark’s costs of the claim and cross-claim.

7    In the alternative, UbiPark and Mr Howell contend that the appropriate orders are:

(a)    TMA Capital pay the costs reserved pursuant to paragraphs 4 and 5 of the Court’s orders made on 14 February 2022 (which relate to two applications for interlocutory injunctive relief);

(b)    the TMA parties pay UbiPark’s costs of the cross-claim;

(c)    the TMA parties pay Mr Howell’s costs of the cross-claim; and

(d)    UbiPark pay 50% of TMA Capital’s costs of the revocation claim.

8    The TMA parties contend that there should be orders that:

(a)    UbiPark pay TMA Capital’s costs of the claim for revocation;

(b)    each party pay its own costs of the claim for unjustified threats; and

(c)    the TMA parties pay UbiPark’s costs of the proceeding save as provided in paragraphs (a) and (b).

9    The principles relating to costs are well established. In Sandvik Intellectual Property AB v Quarry Mining & Construction Equipment Pty Ltd (No 2) [2017] FCAFC 158, the Full Court summarised the principles at [9]-[11]. See also GlaxoSmithKline Consumer Healthcare Investments (Ireland) (No 2) Limited v Generic Partners Pty Limited (No 2) [2018] FCAFC 100 (GlaxoSmithKline) at [5]-[8].

10    In the present case, if the claims are analysed separately, the outcomes were as follows (following the order in which they were dealt with in the August 2023 Reasons):

(a)    In relation to the Infringement Claim, UbiPark and Mr Howell were successful: see [16(a)], [173].

(b)    In relation to the Australian Consumer Law Claim, UbiPark and Mr Howell were successful: see [16(b)], [175].

(c)    In relation to the Unjustified Threats Claim, UbiPark was successful against TMA Capital but not against TMA Technology and Zipby: see [16(c)], [183]-[184], [194].

(d)    In relation to the Invalidity Claim, TMA Capital was successful: see [16(d)], [239].

11    I note the following additional facts and matters that are relevant to the question of costs:

(a)    In relation to UbiPark’s application for an interlocutory injunction (the costs of which were reserved by paragraph 4 of the orders made on 14 February 2022), UbiPark’s position that the threats of infringement proceedings were unjustifiable has been vindicated.

(b)    The TMA parties did not press their application for an interlocutory injunction. The costs of that application were reserved by paragraph 5 of the orders made on 14 February 2022. In circumstances where the TMA parties did not press their application, and in light of the outcome of the Infringement Claim, it is appropriate for the TMA parties to bear these costs.

(c)    TMA Capital sued for infringement on 11 claims, and filed an infringement position statement on 6 June 2022 addressing those allegations. UbiPark’s evidence-in-chief on invalidity addressed those 11 claims (Mr Elliott’s affidavit of 30 June 2022). When Mr Sizer’s 21 July 2022 affidavit and report were served, they only addressed claims 1, 4, 11 and 16. Accordingly, UbiPark then confined its invalidity case to those asserted claims.

(d)    The Invalidity Claim was made in response to the Infringement Claim. Had the Infringement Claim not been made, the Invalidity Claim would not have been brought.

(e)    The TMA parties cross-claimed against Mr Howell in addition to UbiPark. It was appropriate in these circumstances for Mr Howell to take steps to protect his personal interests, including by obtaining indemnity under a directors and officers liability insurance policy. Mr Howell and the insurer instructed Clyde & Co to represent Mr Howell to protect their combined interests that were separate to those of UbiPark. The TMA parties opened their case against Mr Howell, but did not address that case in any detail in closing submissions.

12    In my opinion, in the circumstances of this case, it is not appropriate to make a percentage-based order in relation to the costs of the proceedings as a whole, because I do not have sufficient information to make an assessment of the appropriate percentage. I note also that in GlaxoSmithKline, the Full Court stated at [8] that a claim for patent infringement and a cross-claim for patent invalidity are typically treated as separate events upon which the ordinary rule applies as to costs.

13    In the circumstances, I consider it appropriate to make orders that:

(a)    In relation to UbiPark’s claim for revocation of the 335 Patent: UbiPark pay TMA Capital’s costs.

(b)    In relation to the balance of the proceeding (including all reserved costs): the TMA parties pay UbiPark’s costs and Mr Howell’s costs.

14    Broadly, and subject to the comments that follow, these costs orders reflect the outcome of the various claims; in other words, they reflect the usual rule that “costs follow the event”.

15    Insofar as the two interlocutory applications are concerned, for the reasons indicated above, it is appropriate for the TMA parties to pay UbiPark’s and Mr Howell’s costs of those applications. This is reflected in paragraph (b) of the costs orders that I propose, as set out above.

16    There were a significant number of case management hearings in the proceeding at which costs were reserved. These case management hearings involved both the claim and the cross-claim. In circumstances where, overall, UbiPark and Mr Howell have been successful in the proceeding, and for the sake of simplicity, I consider it appropriate that the TMA parties pay such costs (rather than them being apportioned as between the claim for revocation and the other claims). This is reflected in paragraph (b) of the costs orders I propose, as set out above.

17    As already indicated, Clyde & Co was retained to represent the interests of Mr Howell. I consider that it was appropriate for him (and his insurers) to retain separate lawyers. (At the trial, the same barrister represented both UbiPark and Mr Howell, but they had separate instructing solicitors.) Accordingly, it is intended that the costs payable by the TMA parties under paragraph (b) of the costs orders outlined above include the separate costs incurred by or on behalf of Mr Howell.

18    While it is true that TMA Capital initially alleged infringement in relation to 11 claims and that, as a result, UbiPark alleged invalidity in relation to 11 claims and prepared expert evidence on this basis, I do not consider it necessary to reduce the costs payable to TMA Capital in respect of the claim for revocation on this basis. Having reviewed Mr Elliott’s affidavit of 30 June 2022, I am not persuaded that the wasted costs were of such significance as to justify a reduction in the costs otherwise payable to TMA Capital. Also, the narrowing of issues in dispute is to be encouraged as this reduces the overall costs of the proceeding as well as the burden on the Court’s resources.

19    In relation to the Unjustified Threats Claim, while it is true that UbiPark did not succeed against TMA Technology and Zipby, in my opinion it is fair to say that UbiPark was largely successful in this claim, in that it succeeded against TMA Capital. The aspect of this claim that involved TMA Technology and Zipby was (in my view) subsidiary, and added little in terms of time and expense to the claim. I therefore consider it appropriate that UbiPark have its costs of this claim. This is reflected in the proposed costs orders set out above.

20    For these reasons, I will make costs orders as set out in [13] above.

21    UbiPark has requested that the costs be determined on a lump sum basis. This is not opposed in the TMA parties’ responding submissions. I will therefore include an order that the costs be determined on a lump sum basis by a Registrar. I will also make directions to facilitate that occurring.

Other issues

22    Subject to the issue discussed below regarding a stay, it is common ground that there should be orders to the effect that:

(a)    The security paid pursuant to the undertaking given by UbiPark to the Court on 14 February 2022 be paid to UbiPark, together with any accrued interest.

(b)    The matter be listed for a case management hearing in relation to the quantum phase of the proceeding, on a date to be fixed.

23    I consider it appropriate to make orders to this effect.

24    In their initial outline of submissions on orders and costs, the TMA parties sought an order that the above two orders be stayed:

(a)    if no application for leave to appeal is filed within 21 days, for a period of 21 days; or alternatively,

(b)    if an application for leave to appeal is filed within 21 days, until the final determination of that appeal (including any appeal therefrom).

25    Following receipt of these submissions, my chambers wrote to the parties to see whether the TMA parties sought an order granting leave to appeal and, if so, whether the other parties consented to such an order. The TMA parties indicated that they sought such an order if it was not opposed. UbiPark submitted that it would be appropriate for the Court to grant the TMA parties leave to appeal and UbiPark leave to file any cross-appeal. Mr Howell indicated that he did not oppose an order granting leave to appeal. I will therefore make an order that the parties have leave to appeal, and leave to cross-appeal, from the judgment and the orders.

26    Insofar as the TMA parties seek a stay of the orders referred to in [22] above, I consider it appropriate to grant a stay of the order in [22(a)] above for a period of 28 days (being the time in which an appeal can be commenced) and, if the TMA parties commence an appeal within 28 days, for a further 14 days. I consider it appropriate that another judge determine whether or not there should be any further stay of the order referred to in [22(a)]. The period of 14 days should provide sufficient time for any application for a stay to be heard and determined by a duty judge, assuming that the application is filed promptly after the filing of any notice of appeal.

27    I do not consider it necessary to stay the order referred to in [22(b)] above. In the event that an appeal is commenced, the case management hearing can be deferred until after the hearing and determination of the appeal.

Associate:

Dated:    12 September 2023

SCHEDULE OF PARTIES