Costs, (no damages) and IP cases

The Full Federal Court (Finn, Sundberg and Edmonds JJ) has clarified how FCR O62 r 36A operates in IP infringement cases.

FCR O62 r36A provides that the costs of a successful applicant which obtains an order for damages less than $100,000 will be reduced by one third, unless the Court otherwise orders.

Nokia had sued Liu for trade mark infringement arising from a customs seizure. The proceedings settled by consent, with injunctions and delivery up. Nokia pursued damages, but obtained only nominal damages as it was unable to obtain discovery of importation in significant quantities. The trial judge refused to allow Nokia any costs of the damages inquiry.

The Full Federal Court has allowed an appeal, awarding Nokia its (taxed) costs up to the consent judgment and completion of discovery about damages; thereafter costs were at the reduced rate.

The Full Court considered that costs of the trial up to and including the consent orders should be at the usual taxed rate, without the 1/3 reduction because it was common in IP cases for trials to be split – a trial on liability and (if successful) an injunction and a subsequent trial about damages (or an account) and  applicants were required to particularise only a single instance of infringement. The Full Court considered the remedy of injunction “indispensable”. It was also appropriate for the proceedings to be brought in one of the “prescribed courts”, customarily the Federal Court and it was not apparent that it would have been sensible for the matter to be referred down to the Federal Magistrates Court (unlike in copyright proceedings where the Federal Magistrates Court has direct jurisdiction).

Nokia was also entitled to costs of the damages inquiry at least until completion of discovery as it was legitimate and, until it had discovery, it could not have known of the futility. Once discovery was completed, it knew the risks it was running and, given the amount recovered, it was inappropriate to exercise the discretion not to limit the costs of that part of the proceeding by 1/3.

Nokia Corporation v Liu [2009] FCAFC 138

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