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Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225

Updated: Feb 12, 2023

Sheppard J

Costs, indemnity costs, patents

Facts: Colgate-Palmolive Co v Cussons (1993) is ironically not about toothpaste. But it is about removing a legal "stain" between the plaintiff and the defendant. Colgate-Palmolive Co brought proceedings in the Federal Court against Cussons, alleging that they infringed their trademarked laundry detergent.

Cussons called out their audacity and denied the infringement, responding with a cross-claim and to spice up their response, they fought to remove Colgate's patent. Just when you thought there couldn't be any more drama, Cusson's claim was successful. To cover the costs of the proceedings, Cussons insisted on being awarded indemnity costs concerning two key arguments Mae my Colgate-Palmolive.

(i) that the 'flowability' of the detergent should be measured using the 'unvented jar test' compared to any other test.

(ii) that Colgate-Palmolive's patent was inventive (unintended shade, in my opinion)

Law: At [4] In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis, whether here or in England. The tests have been variously put. The Court of Appeal in Andrews v Barnes (supra) at 141 said the Court had a general and discretionary power to award costs as between solicitor and client “as and when the justice of the case might so require”.

At [5]-[6] Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of...discretion.The question must always be whether the particular facts and circumstances of

the case in question warrant the making of an order for payment of costs other than on a party and party basis.

[6] It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge.

Holding: Sheppard J awarded indemnity costs to Cussons, but only concerning the 'flowability' of the detergent argument. However, the Court held that the second argument was not unreasonable in the sense that Colgate-Palmolive could bring an argument based on the "inventiveness" of their product. In this case, his Honour set the guidelines for awarding indemnity costs.

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