12 July 2020

Costs Award Discounted for ‘Over-Egged’ Evidence in Aristocrat Case

Oversized eggIn a postscript to last month’s decision in Aristocrat Technologies Australia Pty Limited v Commissioner of Patents [2020] FCA 778 (see Federal Court Finds Computer-Implemented Gaming Machine Patent-Eligible in Australia), the court has now ruled that the Commissioner of Patents should pay only 50% of Aristocrat’s costs associated with its expert evidence: Aristocrat Technologies Australia Pty Limited v Commissioner of Patents (No 2) [2020] FCA 974.  Under the usual practice in Australia (i.e. the so-called English Rule) a losing party can expect to be ordered to pay the reasonable costs (including attorney’s fees) of the successful party.  In this instance, however, Justice Burley was partially persuaded by the Commissioner’s argument that much of Aristocrat’s evidence ‘was irrelevant or of very limited utility’, and consequently applied a discount in respect of the costs associate with expert evidence (but not the lay evidence that was also adduced by Aristocrat).

As I reported last month, the expert witnesses in the case fell into two categories: four (two on each side) were gaming experts, and two (one on each side) were Human Computer Interaction (HCI) experts.  The six expert witnesses were cross-examined, and also combined to prepare two joint expert reports.  However, in light of the decision of the Full Court in Commissioner of Patents v Rokt Pte Ltd [2020] FCAFC 86 – which was decided after the hearing in Aristocrat, but prior to the judgment being handed down – it is now clear that the role of expert evidence in determining whether or not a claimed invention is for a patent-eligible ‘manner of manufacture’ is limited (see Rokt’s Computerised ‘Marketing Scheme’ Fails Patent-Eligibility Test on Appeal).  Aristocrat’s position was, essentially, that its approach to the expert evidence had been reasonable, in view of the way in which the approach to patent-eligibility seemed to have been developing in Australia prior to Rokt – particularly within the Patent Office, including the decision appealed in this case by Aristocrat.

Perhaps influenced by the Judgment of Solomon, Justice Burley determined that the costs (though fortunately not – unlike the biblical baby – the experts themselves) should be split in two, finding (at [12]):

There is merit in the Commissioner’s submissions, in the sense that the expert evidence adduced by Aristocrat somewhat over-egged the pudding. Even making allowances for the uncertainties arising from the development of the law in relation to the patentability of inventions involving computerisation, there was really no justification for calling three experts in separate fields to attempt to establish that there was a “technical effect” in Aristocrat’s secondary argument. Aristocrat was perhaps entitled to be creative in attempting to justify the patentability of its invention, but that should not be funded by the Commissioner, even on an ordinary basis. I agree that the Commissioner should bear 50% of the costs of Aristocrat’s experts.

Additionally, the judge rejected Aristocrat’s contention that it should also receive its costs associated with the original Patent Office decision made by a delegate of the Commissioner, finding (at [8]) that ‘[t]he delegate acted as a neutral arbiter performing a statutory function’ and that the Commissioner had not ‘engaged in any conduct that would remotely warrant an order of costs against her in relation to the decision from which the appeal was brought.’

The court’s orders also grant the Commissioner a stay of the orders requiring Aristocrat's innovation patents to be certified (but not the costs orders) for a period of 14 days (until 24 July 2020), within which she may apply for leave to appeal to a Full Bench of the Federal Court of Australia.  I anticipate that an application for leave will be filed.

[Correction: An earlier version of this article incorrectly stated that the costs orders had been stayed pending any appeal by the Commissioner.]


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