ASSA ABLOY NZ LTD v ALLEGION (NZ) LIMITED [2014] NZHC 2227

ASSA ABLOY NZ LTD v ALLEGION (NZ) LIMITED [2014] NZHC 2227 [12 September 2014]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2013-404-004178[2014] NZHC 2227UNDER the Patents Act 1953IN THE MATTER of New Zealand Patent No. 526262BETWEEN ASSA ABLOY NEW ZEALANDLIMITEDFirst PlaintiffASSA ABLOY IP ABSecond PlaintiffAND ALLEGION (NEW ZEALAND)LIMITEDDefendantHearing: 11 September 2014Appearances: C Elliott QC for the PlaintiffsM Sumpter for the DefendantJudgment: 12 September 2014JUDGMENT OF VENNING JThis judgment was delivered by me on 12 September 2014 at 5.00 pm, pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDateSolicitors: Terry IP, WellingtonChapman Tripp, AucklandCopy to: C Elliott QC, AucklandIntroduction[1] The plaintiffs apply to amend New Zealand Letters of Patent No. 526262. The defendant filed an opposition to the application. The opposition was primarily directed at seeking compensation by way of costs for its wasted time and expense resulting from the amendment but otherwise confirmed it did not, in substance, object to the amendment.[2] The parties have been unable to resolve the issue of costs. That remains the only outstanding issue.[3] The defendant seeks costs on a 2C basis totalling, on counsel's calculation,$20,806. Mr Sumpter submits the defendant stands in the position of a successful strike-out applicant. The plaintiff has sought to amend its patent in response to thedefendant's case the patent is invalid because, inter alia, it describes an invention anticipation by at least two earlier United States patents and was claiming a monopoly over an unjustifiably wide area.[4] In response the plaintiff says it believes the prior art referred to is not particularly relevant. The amendment is sought as a precaution and to put validity beyond doubt. The plaintiffs submit that the hearing was avoidable and the plaintiffs should be awarded their costs on a 2C basis for the hearing at least.General observations re cost categorisation[5] As a preliminary matter I note that counsel referred to the proceeding being categorised as category 2C for cost purposes. That follows from a minute of Brown J of 6 December 2013. However the reference to 2C incorporates two concepts, first the categorisation of the proceedings (as category 2) and a time band (time band C). Proceedings are categorised as category 1 (if of a straightforward nature); category 2 (if of average complexity); or category 3 (if they require counsel to have special skill and experience). The categorisation of the proceedings is related to the nature of the proceedings themselves. It says nothing about the time that may be required or allowed in relation to the individual steps taken during the course of the proceeding. For example, it may well be that in a particularly complexcase properly classified as category 3, time band A might apply to the time required for the preparation of a straightforward memorandum in those proceedings, whereas time band C might appropriately be applied to the discovery exercise in the same proceeding. The short point is that the costs category applies to the proceedings overall whereas the time band allowed for the various steps in the proceedings may vary within the same proceeding.[6] Rule 14.3(2) provides the Court may determine proceedings for costs categorisation which will apply to all subsequent determination of costs unless there is special reasons to the contrary. I consider in light of the above there are special reasons to the contrary in the present case and confirm the categorisation of the proceedings as category 2 for cost purposes.Decision[7] That however does not address the particular issue of the costs sought in the present case. In relation to that I accept there is force in Mr Elliott's submission that the defendant's position has changed in relation to the basis upon which it seeks costs. In the initial opposition the defendant cited as a ground in support of its opposition that that it had:(c) spent substantial time and money searching out, assessing and pleading the prior art, all of which could have been avoided if the patent had been drafted with claims of the scope now sought by the plaintiffs.And:(d) Allegion should be compensated in costs for wasted time andexpense resulting from the amendment. [8] Even with the amendment the plaintiffs' claims for infringement remain as does the defendant's counterclaim seeking declarations of invalidity and revocation.The prior art referred to, namely the two US patents, are, and will be, directly relevant to those issues. The costs and expense in relation to those are, to that extent, costs which will properly be considered in the course of the substantive proceedings.[9] Nor do I accept that the defendant is in the position of a successful applicant for strike out. Where there is an amendment to pleadings r 7.77(8) provides for all costs incurred in relation to the prior pleading to be borne by the party filing the amended pleading. Further, if a strike out application is successful and a party is directed to replead then there has been a determination on the merits of the actual strike out application.[10] In the present case that is not the position. Sections 39 and 40(1) of the Patents Act 1953 and rr 22.9 to 22.16 contemplate an application for amendment to a patent to be made. The only direct evidence before the Court relating to the matter isthe evidence of Mr Oliver that the application is "precautionary in nature". Whetherultimately that is correct or not will be determined in the substantive application. I consider the position to be quite different and distinct to that of a strike out application. It follows that I do not accept the basis for the costs sought by the defendant in relation to the application.[11] However, against that, the plaintiff has effectively obtained an indulgence by the Court making an order for amendment in the course of these proceedings. In my assessment the overall justice of the matter can be reflected in this case by directing costs are to lie where they fall on the application and hearing.Result/orders[12] (a) The New Zealand Letters Patent No. 526262 is amended in accordance with the proposed amendment set out attachment "A" to the interlocutory application of the plaintiffs dated 9 April 2014.(b) Costs on the application are to lie where they fall.__________________________ Venning J