Biosimilars Deals 2021

Highlight

The Full Federal Court has refused leave to appeal from costs orders made following the successful appeal in the long-running dispute between Vehicle Monitoring Systems (VMS), and SARB Management Group (SARB) and the City of Melbourne (CoM), over parking sensor technology.  The decision provides important guidance on costs appeals, particularly regarding the broad discretion that trial judges have on the issue of costs.

Background

As previously reported, in 2024, the Full Federal Court overturned aspects of the primary judge’s decision regarding construction and infringement of VMS’ patents for parking overstay detection systems.  This led the Full Court to overturn the primary judge’s infringement finding with respect to PinForce version 3.   

Following that decision, the question of whether the original costs orders should be varied was remitted to the primary judge.  The primary judge subsequently vacated the original costs orders, and ordered that VMS was liable: 

• on a party/party basis for SARB’s and CoM’s costs on the infringement claim before their respective Calderbank offers (made in March 2021); and 
• on an indemnity basis for SARB’s and CoM’s costs on the infringement claim and invalidity cross-claim thereafter.   

The primary judge also ordered SARB to pay VMS’ costs on a party/party basis on the invalidity cross-claim before March 2021.   

VMS subsequently sought leave to appeal these varied costs orders to the Full Court. 

Consideration

Costs pre-Calderbank offers 

VMS had sought a percentage-based costs order reflecting its partial success on infringement (it succeed on infringement with respect to Pinforce versions 1 and 2 but not 3).  However, the Full Court agreed with the primary judge’s approach which focused on the “dominant feature of the application”, being the failed infringement claim with respect to PinForce version 3.  The Full Court noted that the primary judge was best placed to characterise the ‘dominant feature’ of the liability trial, and his Honour’s approach of awarding the infringement claim costs to SARB and invalidity cross-claim costs to VMS “reflected that neither party had enjoyed general success in relation to its claim against the other”.   

The Full Court emphasised that judges: 

• have absolute discretion in costs matters (though the discretion must be exercised judicially);  

• are not required to alert the parties to their intended costs orders or seek further submissions about the proposed form of order;  

• are not bound to adopt one or other of a party’s contentions; and 

• may arrive at their own view by making adjustments, even where there is commonality between the costs orders sought by the parties to the dispute.   

The Full Court also dismissed VMS’ submissions that the primary judge had failed to give sufficient weight or consideration to various matters, including VMS’ partial success (which was in fact explicitly addressed in the judgment) and certain aspects of the CoM’s conduct in the proceedings.  In any case, the Full Court noted that silence on particular submissions in a judgment does not necessarily indicate that they were not considered and given appropriate weight.  

Costs post-Calderbank offers 

The Full Court noted that VMS repeated many of its submissions to the primary judge regarding the Calderbank offers in its application for leave to appeal, including that: 

(i) the CoM’s Calderbank offer was not capable of being accepted if SARB’s Calderbank offer was rejected.  In those circumstances, the two offers must be considered together; 

(ii) VMS achieved a better result than the offers because it succeeded on additional damages against SARB for Pinforce versions 1 and 2; 

(iii) VMS was not able to commercially assess the significance of abandoning its claim in relation to PinForce version 3 due to its officers being refused access to information on the volumes and dates of supply of PinForce versions 1, 2 and 3; and 

(iv) SARB’s offer did not explicitly provide for the dismissal of the invalidity cross-claim. 

The Full Court rejected VMS’ arguments, deferring to the primary judge’s reasoning on these submissions.  The Full Court noted that the primary judge did in fact consider the interplay between the two offers and so took into account the contingent nature of the offer by the CoM.  The Full Court also relied upon the primary judge’s finding that VMS’ claim for additional damages was unlikely to exceed SARB’s offer as to costs and that VMS’ rejection was unreasonable, noting that the primary judge was best placed to make such an evaluative judgment.   

Regarding VMS’ ability to commercially assess the significance of abandoning its PinForce version 3 claim, the Full Court noted that VMS’ lawyers had access to the relevant confidential information, making it unnecessary for VMS’ officers to have direct access for this purpose.  The Full Court also found that VMS’ submission that SARB’s offer did not explicitly provide for dismissal of the invalidity cross-claim ignored the clear meaning of the sentence in the offer, being “for the purposes of settling these proceedings, our client accepts the validity of the two patents in suit”. 

Outcome and Implications

The Full Court refused to grant leave to appeal the costs orders, finding no sufficient doubt in the primary judge’s reasons to warrant reconsideration.  The Full Court went further, noting that even if VMS had successfully demonstrated error in the primary judge’s reasoning, the Full Court would still have arrived at the same costs orders. 

The Full Court’s decision confirms the broad discretion trial judges have in making costs orders which leads to costs orders seldomly being overturned on appeal.

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