FEDERAL COURT OF AUSTRALIA

MSA 4x4 Accessories Pty Ltd v Clearview Towing Mirrors Pty Ltd (No 2) [2024] FCA 417

ORDERS

THE COURT ORDERS THAT:

1.    The Respondent/Cross-Claimant pay the costs of the Applicants/Cross-Respondents thrown away by reason of Orders 1 to 4 made on 11 May 2023, to be agreed, or failing agreement, to be taxed.

2.    The Applicants/Cross-Respondents pay 60% of the costs of the Respondent/Cross-Claimant of the Amended Originating Application and the Amended Notice of Cross-Claim to be agreed, or failing agreement, to be taxed.

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

REASONS FOR JUDGMENT

DOWNES J:

1    On 24 January 2024, I published my reasons for judgment in this proceeding: MSA 4x4 Accessories Pty Ltd v Clearview Towing Mirrors Pty Ltd [2024] FCA 24 (J).

2    Pursuant to an Order made on 6 February 2024, the parties were given an opportunity to make submissions on costs, and each did so. These reasons deal with the costs issue associated with the liability aspect of the proceeding and should be read together with the reasons for judgment. I adopt the same definitions as in the judgment.

3    As part of the Order made on 6 February 2024:

(1)    MSA and Miles obtained certification pursuant to s 19(1) of the Patents Act 1990 (Cth) that the validity of each of claims 1, 5–12 and 15 of the Patent was unsuccessfully questioned in this proceeding;

(2)    Clearview obtained declaratory and injunctive relief against MSA and Miles in connection with unjustified threats and breaches of the ACL, including in relation to an announcement to customers that the Clearview Easy Slide was copied from one of MSA’s products;

(3)    the Amended Originating Application was dismissed (being the infringement claim);

(4)    the Amended Notice of Cross-Claim was otherwise dismissed (being the invalidity claim).

4    As to costs and by way of overview, the differences between the parties are:

(1)    Clearview seeks a global costs order, while MSA and Miles seek:

(a)    separate costs orders in respect of the infringement claim and the invalidity claim; and

(b)    that the orders relating to the cross-claim be subject to further division, by issue (as set out below);

(2)    the amount of the appropriate discount to be applied if a global order is made, with MSA and Miles proposing 80%, and Clearview 20%; and

(3)    the treatment of the reserved costs order made on 11 May 2023 (order 6) with respect to the evidence of Mr Cruise.

5    The precise order sought by MSA and Miles is as follows:

1.    The Respondent/Cross-Claimant (Clearview) pay the costs of the Applicants/Cross-Respondents (MSA and Miles) thrown away by reason of Orders 1 to 4 made on 11 May 2023, to be agreed, or failing agreement, to be taxed.

2.    MSA and Miles pay Clearview’s costs of the Amended Originating Application (the infringement claim), to be agreed or failing agreement, to be taxed.

3.    Clearview pay MSA’s and Miles’ costs of paragraphs 1 and 2 of the Amended Notice of Cross-Claim (the invalidity claim), to be agreed or failing agreement, to be taxed.

4.    MSA and Miles pay 65% of Clearview’s costs of paragraphs 3 to 5 of the Amended Notice of Cross-Claim (the unjustified threats/ACL claims), to be agreed or failing agreement, to be taxed.

Whether global costs order should be made

6    Claims for patent infringement and invalidity are typically treated as separate events upon which the ordinary rule applies. However, it is common ground that this is not an immutable principle.

7    For example, departure from this position can be justified where there is a common substratum of fact, or the issues are wrapped up with one another or could not be readily disentangled: GlaxoSmithKline Consumer Healthcare Investments (Ireland) (No 2) Limited v Generic Partners Pty Limited (No 2) [2018] FCAFC 100 at [8] (Middleton, Nicholas and Burley JJ).

8    In this case, the following matters indicate that the cross-claim was responsive to the infringement proceeding, and was therefore defensive, and that the claim and cross-claim involved common issues:

(1)    the claims of the Patent which Clearview sought to invalidate were only those relied upon by MSA and Miles for their infringement case: J [5]–[7];

(2)    had the constructions for which MSA and Miles contended been accepted, Clearview’s invalidity claim would have been successful with respect to lack of fair basis: J [4], [292];

(3)    two of the three prior art documents relied upon by Clearview with respect to its novelty case (Dieter and Thomas) were only advanced upon the constructions relied upon by MSA and Miles in prosecuting their infringement claim: J [147] (see also J [185]–[186], [204]–[206], [222]).

9    The preponderance of the expert evidence was given by Dr Field (for MSA and Miles) and Mr Hunter (for Clearview), each of whom dealt with questions that related to both the infringement and invalidity claims, including construction (which was necessarily relevant to both infringement and invalidity). Because of this overlap, I consider that to separate out the costs associated with their affidavit and oral evidence, as well as the JER, by reference to the respective issues on any taxation would lead to disputes and further delay, and thereby add to the parties’ costs. Having been the trial judge, I do not accept that this exercise would be a straightforward one, as MSA and Miles contend. It is not necessary for there to be expert evidence from a costs assessor to form this view. As submitted by Clearview, a global costs order will assist in avoiding, so far as possible, the creation of circumstances in which the quantification of costs will, by itself, become complex, protracted and costly, being something to be avoided: see MMD Design and Consultancy Limited v Camco Engineering Pty Ltd (No 2) [2023] FCA 1416 at [23] (Rofe J). Such a course would not be in the interests of justice and efficiency, or in accordance with the overarching obligations imposed by ss 37M and 37N of the Federal Court of Australia Act 1976 (Cth).

10    The observation of McHugh J in Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [66] is also apposite, being that the outcome of the case is “[by] far the most important factor which courts have viewed as guiding the exercise of the costs discretion”.

11    In this case, the infringement case brought by MSA and Miles failed entirely. While Clearview did not, in the end, succeed in its invalidity claim (which was largely but not entirely defensive in any event), it did succeed in relation to the cross-claim it brought in connection with the unjustified threats and contraventions of the ACL. MSA and Miles seek to whittle down that success by seeking costs orders on an issue by issue basis, but, in the end, Clearview is the only party which had any success in the proceeding. This success cannot be overlooked.

12    Taking into account all of these considerations, I consider that a global costs order is the just and appropriate one.

Discount to be applied to any global costs order

13    Both parties accept that there should be a discount to any global costs order, if made.

14    MSA and Miles submit that any such costs order should be on the basis that they pay 20% of Clearview’s costs, while Clearview submits that they should pay 80%.

15    For the following reasons, the fair result is that there should be a discount of 40% such that MSA and Miles pay 60% of Clearview’s costs:

(1)    I rely upon the matters which are identified in [8] and [11] above;

(2)    it is an overstatement by MSA and Miles to submit that each of the invalidity claims was “bound to fail” irrespective of my findings on construction. See, for example, J [197]–[203] (Thomas) (which identified the evidence of the experts, the difficulties in reconciling it and the paucity of submissions) and J [221] (Dieter) (which expressly referred to construction and the ambiguity in Figure 6 of Dieter);

(3)    the same constructions of the claims were relied upon for both the infringement and validity claims, and I accepted Clearview’s constructions;

(4)    while Clearview was not successful with respect to the third prior art document (Lutkus), I agreed with Clearview with respect to the presence of some disputed integers: J [164], [166]–[167], [169], [184];

(5)    Clearview’s fair basis claim (on MSA’s and Miles’s constructions, which were rejected) was successful: J [292];

(6)    a discount of 40% takes into account that Clearview advanced an obviousness case, which was not tethered to any construction issues, which broadened the scope of the controversy and which failed: J [254];

(7)    Clearview abandoned one of its pleaded prior art documents during its opening.

16    For these reasons, it is appropriate to make an order to the effect that MSA and Miles pay 60% of Clearview’s costs of the proceeding to be agreed, or failing agreement, to be taxed.

Costs thrown away by reason of Orders 1 to 4 made on 11 May 2023

17    MSA and Miles seek an order that Clearview pay their costs thrown away by reason of Orders 1 to 4 made on 11 May 2023, to be agreed, or failing agreement, to be taxed.

18    Although the events which gave rise to these costs were not the fault of any party, I agree with MSA and Miles that it is appropriate that such an order be made.

Associate:

Dated:    26 April 2024

SCHEDULE OF PARTIES