Court orders appeal costs but leaves parties to bear their own costs of amendment proceedings
The Federal Court has held that a “watered-down” version of the indulgence principle applies to unsuccessful oppositions to applications to amend patent applications under s. 105(1A) of the Patents Act 1990 (Cth), as it resolved outstanding costs issues arising from a successful patent amendment appeal.
The court ordered Cytec Industries Inc to pay Nalco Company’s costs of the appeal concerning the amendment decision. Still, it ruled that each party should bear its own costs of the amendment proceedings at first instance.
The costs ruling followed the court’s May decision on two appeals involving Australian patent application no. 2012220990, titled “Reducing aluminosilicate scale in the Bayer process”.
In that decision, the court dismissed Nalco’s appeal from an earlier decision concerning a claim construction issue. Still, it allowed its appeal from a 2024 decision concerning its application to amend the patent application. The court ordered that the patent application proceed to grant in the form annexed to Nalco’s amendment application.
The May orders left unresolved the costs of the second appeal and the first-instance amendment proceedings.
Nalco argued that Cytec should pay its costs of both proceedings, submitting that costs of the second appeal should follow the event. Cytec contended that Nalco should bear costs, relying in part on the principle that allowing a patent amendment constitutes an indulgence to the applicant.
The court did not accept either position in full. The court distinguished applications to amend patent applications under s. 105(1A) from amendments to granted patents under s. 105(1), where the indulgence principle applies with greater force.
It noted that a patent application confers no monopoly. Therefore, the rationale concerning potential abuse of a patent monopoly does not apply in the same way. However, the court found that allowing an amendment to a patent application still gives an indulgence to the applicant, although a lesser one than allowing an amendment to a granted patent.
The court concluded that a “watered-down version of the indulgence principle” applies to unsuccessful oppositions to s. 105(1A) applications.
On appeal, the court found Nalco had achieved complete success concerning the amendment decision. Although Cytec’s arguments on construction, allowability and discretionary grounds were not unmeritorious or unreasonable, costs should follow the event.
The position at first instance was different. The court found Cytec was entitled to challenge the amendment application and its opposition was neither unmeritorious nor unreasonable. Nalco’s successful amendment also involved a form of indulgence.
The court therefore ordered each party to bear its own first-instance costs without disturbing existing costs orders. Cytec must pay Nalco’s costs of the amendment appeal on a party-party basis, to be determined as a lump sum by a registrar.
