TCT Group Pty Ltd v Polaris IP Pty Ltd (No 2)

• Jurisdiction: Australia Federal only
• Judgment Date: 03 April 2023
• Neutral Citation: [2023] FCA 284
• Date: 03 April 2023
• Court: Federal Court

Federal Court of Australia

TCT Group Pty Ltd v Polaris IP Pty Ltd (No 2) [2023] FCA 284

File number(s):	NSD 1013 of 2020
Judgment of:	BURLEY J
Date of judgment:	3 April 2023
Catchwords:	COSTS – where respondents refused an offer of compromise – whether judgment is more favourable than the terms of the offer for the purposes of FCR 25.14(3) – whether amount of costs incurred at time of judgment compared to time of offer relevant to evaluation ; COSTS – discretion as to costs – whether costs order in favour of applicants should be discounted – where superfluous grounds of invalidity – where two out of four prior art documents advanced by applicants unnecessary – discount allowed
Legislation:	Federal Court of Australia Act 1976 (Cth) ss 37M, 37N, 43 Federal Court of Australia Rules 2011 (Cth) rr 1.35, 25.14(1), 25.14(2), 25.14(3), 40.30(b) Patents Act 1990 (Cth) s 128
Cases cited:	Aristocrat Technologies Australia Pty Ltd v Konami Australia Pty Ltd (No 4)[2022] FCA 1501 Damorgold Pty Ltd v Blindware Pty Ltd (No 2) [2018] FCA 364 Dometic Australia Pty Ltd v Houghton Leisure Products Pty Ltd (No 2)[2019] FCA 57 EMI Songs Australia Pty Ltd v Larrikin Music Publishing Pty Ltd [2011] FCAFC 92 Henley Arch Pty Ltd v Henley Constructions Pty Ltd (No 2) [2022] FCA 231 Idenix Pharmaceuticals LLC v Gilead Sciences Pty Ltd (No 2) [2018] FCAFC 7 Kismet International Pty Ltd v Guano Fertilizer Sales Pty Ltd (No 2) [2013] FCA 705 LFDB v SM (No 2) [2017] FCAFC 207 Sandoz Pty Ltd v H Lundbeck A/S (No 2) [2021] FCAFC 47 Stead v Fairfax Media Publications Pty Ltd [2021] FCA 65 Sydney Equine Coaches Pty Ltd v Gorst [2017] FCAFC 34 TCT Group Pty Ltd v Polaris IP Pty Ltd [2022] FCA 1493 The State of Victoria v Sportsbet Pty Ltd (No 2) [2012] FCAFC 174
Division:	General Division
Registry:	New South Wales
National Practice Area:	Intellectual Property
Sub-area:	Patents and associated Statutes
Number of paragraphs:	34
Date of hearing:	22 March 2023
Counsel for the Applicants:	Ms S J Goddard SC
Solicitor for the Applicants:	Wrays Lawyers
Counsel for the Respondents:	Mr A Fox SC with Ms A Spies
Solicitor for the Respondents:	Spruson & Ferguson Lawyers

ORDERS

		NSD 1013 of 2020
BETWEEN:	TCT GROUP PTY LTD ACN 139 488 467 First Applicant ; ASTRAL HARDWARE PTY LTD ACN 624 872 322 Second Applicant
AND:	POLARIS IP PTY LTD ACN 625 343 964 First Respondent ; GLASS HARDWARE AUSTRALIA PTY LTD ACN 109 911 677 Second Respondent
AND BETWEEN:	GLASS HARDWARE AUSTRALIA PTY LTD ACN 109 911 677 Cross-Claimant
AND:	TCT GROUP PTY LTD ACN 139 488 467 (and others named in the Schedule) First Cross-Respondent

order made by:	BURLEY J
DATE OF ORDER:	3 APRIL 2023

THE COURT DECLARES THAT:

1. Claims 1, 2, 3, 4 and 5 of Australian Innovation Patent No 2020100485 (the 485 Patent) are, and were at all material times, invalid.

2. Claims 1, 2, 3, 4 and 5 of Australian Innovation Patent No 2020102918 (the 918 Patent) are, and were at all material times, invalid.

3. The threats made by the First and Second Respondents of infringement of the 485 Patent in correspondence from Spruson & Ferguson Lawyers to each of:

   1. the First Applicant dated 1 July 2020;

   2. the Second Applicant dated 1 July 2020; and

   3. Glass Pro Australia Pty Ltd dated 1 July 2020,

were unjustifiable within the meaning of s 128 of the Patents Act 1990 (Cth).

THE COURT ORDERS THAT:

4. Claims 1, 2, 3, 4 and 5 of the 485 Patent be revoked.

5. Claims 1, 2, 3, 4 and 5 of the 918 Patent be revoked.

6. The Amended Notice of Cross-Claim filed 25 February 2021 be dismissed.

7. The Amended Originating Application filed 6 April 2021 be otherwise dismissed.

8. The Respondents/Cross-Claimant are to pay 90% of the Applicants’ and First to Fourth Cross-Respondents’ costs of the proceeding (including the cross-claim):

   1. on a party and party basis up to 11 am on 22 July 2021; and

   2. thereafter on an indemnity basis.

9. If the parties are unable to agree to the quantum of costs in Order 8, those costs be assessed on a lump sum basis in an amount to be determined by a Registrar of the Court.

10. The Registrar be directed pursuant to r 1.37 of the Federal Court Rules 2011 (Cth) (FCR) to determine the quantum of the lump sum for costs payable in such manner as he or she deems fit including, if thought appropriate, on the papers.

11. The Registrar be directed pursuant to FCR 1.37, at the conclusion of the quantification process, to order that the Appellants/Cross-Respondents are to pay whatever sum has been quantified pursuant to Order 9 above within 28 days from the date of the Registrar’s order.

12. Upon the undertakings referred to in paragraph 13 below, Orders 4 and 5 be stayed:

    1. initially for a period of 28 days from the date of these orders; and

    2. if an appeal is lodged by the Respondents/Cross-Claimant within that period, until the determination of that appeal and any further appeal therefrom.

13. The Respondents/Cross-Claimant undertake to the Court during the period of the stay referred to in Order 12:

    1. to prosecute any appeal expeditiously;

    2. not to threaten any person with proceedings, or bring proceedings against any person, for infringement of:

       1. the 485 Patent; or

       2. the 918 Patent;

    3. not to seek to amend any claims of the 485 Patent or the 918 Patent otherwise than in the course of, or in connection with, these proceedings.

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

REASONS FOR JUDGMENT

1BACKGROUND	[1]
2RELEVANT LAW	[8]
3SUBMISSIONS	[13]
4CONSIDERATION	[20]
5DISPOSITION	[33]

BURLEY J:

1. BACKGROUND

1. On 14 December 2022, I directed that the parties confer and supply to my chambers draft short minutes of order giving effect to my reasons in TCT Group Pty Ltd v Polaris IP Pty Ltd [2022] FCA 1493 (decision). The parties have agreed that the consequence of the decision is that the two innovation patents the subject of the infringement claim advanced by the respondents (Polaris) must be revoked and declarations must be made to the effect that Polaris made unjustifiable threats of infringement of the claims of the patents in breach of s 128 Patents Act 1990 (Cth). With these reasons, I make orders to that effect. However, the parties have been unable to reach agreement on the question of costs, which I address below. These reasons adopt the definitions set out in the decision and assume a broad familiarity with it.

2. The applicants (TCT) contend that they should have their costs on a party and party basis until 22 July 2021 and thereafter on an indemnity basis on the basis of the application of FCR 25.14(3) and s 43 of the Federal Court of Australia Act 1976 (Cth) (the Act). Polaris contends that costs should be awarded on a party and party basis only. Both parties contend that some discounts should be applied, having regard to the result.

3. TCT relies on an affidavit affirmed by its solicitor, Timothy Francis, in support of their contentions. It annexes a Notice of Offer of Compromise dated 20 July 2021 in which TCT proposed that:

1. Polaris pay TCT the sum of $200,000 (excluding GST) within 28 days;

2. Polaris provide undertakings to the Court that they would not make any representation that the Orion Hinges fall within the scope of the claims of the patents or that the exploitation of those hinges infringes or is likely to infringe the patents;

3. ...