Here’s a brief round up of practical things to remember from recent Australian Federal Court IP decisions. (There’s no real legal analysis here, sorry – this one is for business readers, not lawyers.)
Strategic Litigation Management is Crucial. Companies should develop a clear and well-supported strategy ideally before or at least early in any litigation. Changing the way a case is pursued on appeal, such as seeking a narrower scope of registration in a trade mark dispute or presenting new evidence, can impact costs outcomes and weigh against a favourable costs order, even if ultimately successful. Somers Enterprises Australia Pty Ltd v Basefun Pty Ltd (No 2) [2025] FCA 418. Ensure pleadings adequately describe the basis for claims, as courts will assess this even in default judgment scenarios: EV20 Consulting Group Pty Ltd v Paperless Warehousing Pty Ltd (No 2) [2025] FCA 476.
Understand and Prepare for Costs Assessment. The Federal Court prefers assessing costs on a lump sum basis to avoid lengthy and expensive taxation processes. While a “broader brush” is applied in lump sum assessment, it must still be logical, fair, and reasonable, often starting with actual costs and applying discounts. Companies must provide evidence of costs incurred for assessment. Swancom Pty Ltd v The Jazz Corner Hotel Pty Ltd (No 5) [2025] FCA 505
Litigation Costs Must Be Proportionate. The Court considers whether parties conduct proceedings, including costs assessments, consistently with the overarching purpose of resolving disputes at a cost proportionate to the matters in dispute. Excessive expenditure incurred during a costs assessment itself can be taken into account when awarding costs related to that assessment. This means parties should avoid incurring disproportionate costs disputing quantum. Swancom Pty Ltd v The Jazz Corner Hotel Pty Ltd (No 5) [2025] FCA 505
Impecuniosity is Not an Automatic Shield Against Security for Costs. If a company is impecunious and argues that an order for security for costs would “stultify” (stop) the litigation, the mere existence of that impecuniosity is not sufficient proof. The company bears the burden of proving that the proceedings will not continue and must prove, with cogent evidence, that other potential sources of funding are also unavailable. The Advanced Technology Group Pty Ltd v Foxtel Cable Television Pty Ltd [2025] FCA 408
Funding Sources Beyond the Plaintiff Company Will Be Considered. When assessing stultification, courts will consider the financial position of those who stand behind the company and stand to benefit from the litigation, such as shareholders or beneficiaries. It is the plaintiff’s obligation to show that these parties are also without means. The extent of benefit and influence over the litigation are relevant factors in determining if it is reasonable to expect these parties to provide security. This may include exploring whether financing can be raised against the company’s assets, including intangible ones, or related entities. The Advanced Technology Group Pty Ltd v Foxtel Cable Television Pty Ltd [2025] FCA 408
Trade Mark Use Requires Diligence. Companies should actively use their registered trade marks to avoid non-use removal actions. Be prepared to provide evidence of good faith use. Defending an overly broad registration before a delegate or the Court, and then narrowing it on appeal, can be a factor against recovering costs incurred in defending the broader scope. Maintaining the integrity of the Trade Marks Register is a public interest concern, and removal provisions are designed to ensure it accurately reflects marks in use. Somers Enterprises Australia Pty Ltd v Basefun Pty Ltd (No 2) [2025] FCA 418. and Village Roadshow IP Pty Ltd v VUR Village Trading No 1 Limited [2025] FCA 428
Logical approach to costs reports. Courts expect legal principles, such as the allocation of costs between claims and cross-claims under the Smith v Madden principle, to be correctly applied, even in simplified processes like lump sum assessments. Referee reports on quantum of costs are likely to be adopted if they demonstrate a thorough and logical approach based on applicable principles and evidence. Swancom Pty Ltd v The Jazz Corner Hotel Pty Ltd (No 5) [2025] FCA 505
(The first draft of this post was created with help from NotebookLM.)