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Practice and procedure – order applicants make election between damages or…

…account of profits applicants sought to reserve making election until after service of respondent’s evidence on damages – whether such election would be unreasonably delayed to prejudice of respondents

In Australian Mud Company Pty Ltd v Globaltech Corporation Pty Ltd (No 3) [2022] FCA 596 (17 May 2022), Besanko J refused an application by the respondents for an order requiring the applicants to make an election between damages or account of profits (at [5]).

The court noted that a plaintiff who has established an infringement of their patent must make an election to claim either damages or an account of profits pursuant to s122 of the Patents Act 1990 (Cth). This section does not stipulate a timeframe by which this choice needs to be made (at [7]).

At the time the respondents made the application, the applicants had filed evidence with respect to damages and the respondents had filed evidence with respect to an account of profits (at [8]). The applicants’ case for damages was for the sum of $21.5 million (including interest) and the respondents’ case for an account of profits was for the sum of $3.3 million (at [10]).

The respondents argued that the applicants should make the election between the two remedies at that point in time (at [9]), and without waiting for the applicants to file evidence with respect to an account of profits or for the respondents to file evidence with respect to damages (at [8]).

The court relied on the principles about the timing of an election in LED Builders Pty Ltd v Eagle Homes Pty Ltd (No 3) [1996] FCA 972; (1996) 70 FCR 436 referring to Island Records Ltd v Tring International Plc [1996] 1 WLR 1256; [1995] 3 All ER 444.

In particular, the court accepted that the applicants should not be required to make their election until they are able to do so in an informed manner, including by reliance on accessible evidence which would ensure the applicants were not speculating about which of damages or an account of profits would exceed the other. The court also accepted that the applicants’ exercise of their election must not be unreasonably delayed to the prejudice of the respondents (at [11]-[12]).

The respondents argued that the parties and their legal representatives were required to avoid unnecessary costs and delay in the conduct of civil litigation. The respondents argued that the respondents would suffer prejudice through costs and lost time and resources if the respondents prepared damages evidence, but the applicants ultimately elected an account of profits (at [16]).

The court rejected these arguments and the court accepted that the applicants were entitled to assess the respondents’ evidence on damages before making their election (at [18]-[19]).

Nadia Stojanova is a barrister at the Victorian Bar, ph 0480 254 662 or email nadia.stojanova@vicbar.com.au. The full version of these judgments can be found at austlii.edu.au. Numbers in square brackets refer to a paragraph number in the judgment.

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