GERMAN POOL GROUP CO LTD AND OTHERS v. DYSON TECHNOLOGY LTD AND ANOTHER

HCIP 53/2019

[2022] HKCFI 3504

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

INTELLECTUAL PROPERTY PROCEEDINGS NO. 53 OF 2019

(Transferred from Consolidated HCA 838/2011 and HCA1233/2017

pursuant to the Order of The Honourable Mr. Justice Lok

dated 6 September 2019)

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DECISION

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1.  This is the paper application of the Defendants in the Consolidated Action (collectively referred to as “Dyson”) for an order to stay the taxation of the Bill of Costs of the Plaintiffs in the Consolidated Action (collectively referred as “German Pool”) filed herein on 18 June 2019 until the conclusion of the Consolidated Action. German Pool’s Bill of Costs relates to the costs of Dyson’s patent infringement claim and German Pool’s counterclaim for patent invalidity and revocation in HCA 838/2011.

Procedural background

2.  The present case is a consolidated action of two actions: HCA 838/2011 and HCA 1233/2017.

3.  In HCA 838/2011, Dyson claimed against German Pool for copyright infringement and infringement of Hong Kong Standard Patent No. HK1143413 (“the Patent”).  German Pool counterclaimed for invalidity and revocation of the Patent.

4.  On 3 June 2011, upon Dyson’s application for interlocutory injunction and other relief on both the copyright and patent infringement claims, German Pool gave certain undertakings in respect of the interlocutory relief sought and the court made orders for further interlocutory injunctive and other relief against German Pool (“the Injunction Order”) upon Dyson’s usual undertaking as to damages.

5.  By a consent order dated 21 November 2012, final relief including permanent injunction and other ancillary relief was granted against German Pool as sought by Dyson in respect of the copyright infringement claim.

6.  On 25 July 2013, Dyson commenced taxation of their costs in respect of the copyright infringement claim.  On 4 October 2013, German Pool issued a summons applying for an order that taxation of Dyson’s costs be stayed until the conclusion of the action under O 62 r 9D of RHC.

7.  On 26 March 2014, Master C Chow granted German Pool’s application to stay the taxation.  The appeal of the order by Dyson was dismissed by To J on 19 September 2014 (“Judge To’s Decision”).[1]  The learned judge held that all costs should be taxed “after the patent infringement claim is concluded”.

8.  Further to the decision of the Opposition Division of the European Patent Office to revoke the related European patent, upon which the grant of the Patent was based, the court discharged the Injunction Order on 12 December 2016.

9.  On 24 May 2017, Dyson applied for leave to withdraw the patent infringement claim against German Pool.  On the same day, German Pool commenced HCA 1233/2017 against Dyson for groundless threats of proceedings for infringement of the Patent.

10.  On 5 June 2017, the court granted leave to Dyson to withdraw the claim for patent infringement.  By another order dated the same day, the court ordered, inter alia, that judgment be entered for German Pool on their counterclaim that the Patent be declared invalid and that the Patent be revoked.

11.  On 14 September 2017, the court entered final judgment and granted permanent injunction and other ancillary relief against Dyson in HCA 1233/2017 for groundless threats of proceedings for infringement of the Patent.  The court further directed German Pool to proceed with an enquiry as to damages.

12.  On 19 January 2018, the court ordered, inter alia, that the costs of Dyson’s patents claim and German Pool’s counterclaim for invalidity of the Patent (including the costs of the other summonses) be to German Pool on party-to-party basis (“the Costs Order”).

13.  By another order made on the same day, the court directed German Pool to proceed with the enquiry as to damages caused by the Injunction Order.

14.  In view of the common and overlapping issues in the enquiries as to damages, the court on 26 April 2019 ordered the said two actions be consolidated with consequential directions for the filing of consolidated pleadings in the consolidated assessment of damages, discovery and witness statements.

15.  On 18 June 2019, German Pool commenced taxation of their costs in HCA 838/2011, to which Dyson now applies for a stay.

Arguments advanced by the parties

16.  O 62 r 9D(1) of the RHC provides that, subject to r 9D(2) and (4) thereof, “the costs of any proceedings shall not be taxed until the conclusion of the action”.  The dispute between the parties lies on the meaning of the phrase “until the conclusion of the action”.

17.  Mr Liao, SC, counsel for German Pool, relies heavily on the case of Molnlycke AB v Procter & Gamble Limited (No 6)[2] and argues that, for the purpose of O 62 r 9D, “the action was concluded by the judgment notwithstanding that under that judgment there were certain enquiries which were reserved to future hearings”[3]. As the liability under the patent infringement claim has been resolved, the action in HCA 838/2011 has concluded.

18.  According to Mr Liao, this is in line with the usual practice and procedure of the Chancery Division and the Patents Court in England and Wales concerning patent proceedings which have been broadly followed in Hong Kong in that there would be split trial of liability and damages in patent, trade mark, registered design and copyright actions.^[4] The usual procedure in the Chancery Division in respect of intellectual property (“IP”) cases is for the plaintiff to establish their right and their entitlement to an injunction against the defendant who has infringed that right in the trial of the action, leaving any claim as to damages to be dealt with in an enquiry as to damages (unless the court thinks an enquiry unnecessary as, for instance, where the damages are nominal), the costs of the action being dealt with in the order made upon judgment in the action and the costs of the enquiry being reserved to the enquiry, so that the plaintiff prosecutes the enquiry at their own risk.^[5]

19.  Where an action for patent infringement has been decided and the court has given final judgment, such cause of action which was raised by the writ and pursued to judgment has merged in the judgment.  The liability under the accounts and enquiries and the obligation to pay sums due as found by those accounts and enquires arise under the judgment into which the original cause of action has merged.  It may well be that the reference number relevant to the enquires will be the same as that appears on the writ which states the action.  But the cause or matter, namely the activation of the jurisdiction of the court to establish the patent infringement, is concluded by the judgment notwithstanding that under the judgment there are certain enquires which are reserved to future hearings.  Accordingly, costs can be taxed after the granting of the judgment.[6]

20.  On the other hand, Mr Lok, counsel for Dyson, relies on Big Boss Investment Ltd v So Lai Kei^[7] and Judge To’s Decision and argues that, unless a costs order specifies the time for taxation or states that a party should have their costs “forthwith”, taxation of costs shall not take place until the conclusion of the action, leading to one taxation per party per action.    Further, it was confirmed in Judge To’s Decision that the proper reading of Big Boss is that the rule applies to the costs of non-interlocutory and interlocutory proceedings.  As the present proceedings have not concluded (i.e. there will still be enquires as to the damages caused by the Injunction Order and the damages under the groundless threats claim), German Pool are not entitled to tax their costs under the Costs Order at this stage.  In other words, “until the conclusion of the action” under O 62 r 9D means the conclusion of the entire action.

21.  Mr Lok argues that there is good reason for having one taxation per party per action, as it enables the court and the taxing officer to have before them all the relevant considerations when reaching their decisions. The construction of O 62 r 9D must therefore be based on such identified goal.  It is not dependent on the nature or the subject matter of the proceedings (for example IP proceedings).  It is expressly stated in O 1 r 2 that the provisions of the RHC generally apply to all proceedings in the High Court, and there is no reason why r 9D should be construed differently in the context of say IP cases.  In case that hardship is caused to a particular party by reason of any delay, such hardship is not to be addressed by a strained construction of O 62 r 9D but by asking the court to make a specific order for taxation under r 9D(2).  If it was the legislative intention that the phrase “conclusion of the action” refers to an earlier point in the proceedings, RHC should have expressly stated so as those provisions in O 35 r 10, O 62 r 8A(4) and O 62 r 17A.

Discussion

22.  First, I agree with Mr Lok that the construction of O 62 r 9D is not dependent on the nature or the subject matter of the proceedings.  Unless expressly provided otherwise, RHC are meant to be applied to all the proceedings in the High Court.

23.  Second, though the dicta in Molnlycke have been considered and applied in some local authorities including Judge To’s Decision and Sang Hing Mechanical & Electrical Engineering Ltd v Arnhold & Co Ltd[8], those cases have not addressed the meaning of the phase “until the conclusion of the action” in r 9D.  In fact, To J said the following in §45 of Judge To’s Decision:

“Under section 2 of the High Court Action, ‘action’ means a civil proceeding commenced by writ of summons or in such other manner as may be prescribed by any law; and ‘cause’ means any action or any criminal proceeding. These definitions reinforce the proposition that ‘cause’ in rule 9D(4) meant ‘action’ and ‘conclusion of the action’ in rule 9D(1) means conclusion of all the proceedings commenced by the writ of action and nothing less. ‘Action’ cannot be construed merely to mean an issue, a collection of issues, a set of proceedings, or one or some of the causes of action in a writ of summons. It means conclusion of the entire action, not just some of the causes of action pleaded in the action.”

24.  According to Morritt J in Molnlycke, the liability under the accounts and enquiries and the obligation to pay sums due as found by those accounts and enquires arise under the judgment into which the original cause of action has merged.  However, such reasoning does not address the meaning of the phase “until the conclusion of the action” in r 9D which is the key question in the present case.

25.  In my judgment, an action cannot be regarded as concluded if there is still outstanding assessment or enquiry as to damages.  Assuming that the court, against the contentions of some parties, finds that the parties involved in the case operated a partnership in respect of their business and orders an account to be taken in respect of the partnership account, can it be said that the action has concluded before the taking of the account?  The answer must be in the negative.

26.  The same can be said about personal injuries proceedings.  In case that the plaintiff obtains default judgment against the defendant for damages to be assessed, can it be said that the action has concluded once such judgment has been obtained?  Obviously, there may be merit for the plaintiffs to tax their bills earlier, but they have to obtain a specific order from the court.

27.  The rationale underlying r 9D is that there should be one taxation per party per action.  It would enable the court and the taxing master to have before them all the relevant considerations in assessing the costs.  It would also avoid multiplicity of bills and taxations.[9]

28.  I agree with Mr Lok that any construction of r 9D must be based on the identified goal of having one taxation per party per action.  It is not dependent on the nature of the proceedings in which the question arises or the general practice which prevails in any given area of practice.  As mentioned above, O 1 r 2 specifies that the provisions of RHC apply to all proceedings in the High Court.

29.  There may also be an additional consideration requiring a plaintiff to obtain a specific order for taxation if they seek to tax their bills before the assessment or enquiry as to damages.  It would enable the court to look at the then circumstances of the case to decide whether the bill should be taxed earlier. If the plaintiff is entitled to immediate taxation once the judgment is obtained, they can just simply sit on the case without deciding whether to proceed with the assessment or enquiry.  The need to obtain specific order would require the plaintiff to plan ahead and to make the necessary decisions regarding the second stage of the proceedings.

30.  I can understand why most of the litigants in IP proceedings would regard the action as concluded after obtaining judgment on liability against the defendant.  Experience tells us that most of the claimants would not pursue assessment or enquiry as to damages against the defendants.  However, as mentioned above, the same observation may not be applicable for other proceedings such as partnership or personal injuries proceedings.  As RHC are meant to apply to all proceedings in the High Court, there should not be different rules (unless expressly provided) for different proceedings.

31.  For these reasons, I find that, unless there is any express order to the contrary by the court, German Pool are not entitled to taxation until the enquiry as to the damages in respect of the claim in HCA 838/2011 has concluded.  I therefore allow Dyson’s stay application.

32.  Despite such ruling, I give liberty to the parties to apply for an order for taxation under r 9D(2).  For IP proceedings, there may be special considerations to allow for immediate taxation even before the conclusion of the action, in particular when there are spilt trials on liability and quantum in most of the cases.  I leave room to the parties to argue in the future as to whether this is a case appropriate for immediate taxation now.  There may also be argument as to whether this court has the power to make such order for immediate taxation when the parties agreed for a consent judgment on liability without such specific costs provision.  My preliminary view is that the court has such power.  Whether German Pool are entitled to immediate taxation is a procedural matter which does not affect the substantive rights of the parties.  As the court is the master of its own procedures, the court should have the ultimate power to decide on the time for taxation, especially when the parties are not ad idem about the actual meaning of r 9D in view of some conflicting authorities.

33.  If necessary, the court can also consider the time for the taxation of Dyson’s cost in respect of the copyright infringement claim in the intended application.

Costs

34.  Both parties have submitted their respective Statements of Costs in respect of the stay application for the purpose of summary assessment.

35.  Costs follow the event and so Dyson would get their costs for this stay application.

36.  According to the Statement of Costs dated 23 March 2020 and Supplemental Statement of Costs dated 22 April 2020, Dyson claim a total of about $245,000 for the costs of the stay application.  This sum is less than the amount claimed by German Pool (i.e. $445,350) who are represented by 2 counsel including senior counsel.  Despite that, taking into the nature of this paper application which only concerns a stay application for taxation, I summarily assess Dyson’s costs in the sum of $200,000.