The winner doesn’t always take it all – apportioning costs in patent cases

Everyone is aware of the ordinary rule: costs follow the event.  A successful litigant will recover costs in the absence of special circumstances.  But what constitutes special circumstances in patent cases?  The recent Full Court decision in PAC Mining Pty Ltd v Esco Corporation (No 2) [2009] FCAFC 52 highlights where the Court may depart from the ordinary rule and apportion costs on an issues basis.

We acted for Esco, who succeeded at first instance in their claim for patent infringement against PAC Mining, and in defending a cross-claim by PAC mining that Esco’s patent should be revoked for invalidity.  On appeal, the Full Court upheld the finding that Esco’s patent was valid and should not be revoked, but overturned the finding of infringement.

The Full Court apportioned costs on the basis of the parties’ respective success on the issues in question.  Esco was ordered to pay PAC Mining’s costs regarding the infringement argument, and PAC Mining was ordered to pay Esco’s costs on the cross-claim for revocation.  The Court rejected PAC Mining’s argument that the cross-claim should be considered part of the ‘defence’ to the infringement claim and costs awarded accordingly.  Because this argument was unsuccessful, PAC Mining was also ordered to pay 75% of Esco’s costs of the hearing to determine appropriate costs orders.

While apportionment is not adopted as a matter of course, it is particularly relevant in patent cases, where the Court often has to separately deal with discrete issues.  A review of recent cases in the last five years shows that the Court is likely to apportion costs where each party succeeds on different issues, as was the case here.  Distinct issues may be as disparate as infringement and revocation, or more closely connected such as obviousness and novelty. 

The other scenario in which costs are likely to be apportioned is where there has been some element of misconduct by the successful party, such as unnecessarily prolonging the trial or not making proper discovery.


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