Cost awards for IPAustralia trade mark hearings increase – substantially

By David Stewart Ebony Sweetnam

13 September 2024

1. Costs follow the event

The basic rule in Australian trade mark opposition proceedings is that, like litigation, “costs follow the event”: the unsuccessful party must pay for a percentage of the legal costs of the successful party. (It is a curiosity that this is framed as an “award”: the Registrar does not have the power pursuant to section 221(1) of the Trade Marks Act 1995 to make an “order”.) The quantum of this award is assessed through a process called a “taxation of costs”.

2. The gap between fees incurred and costs to be taxed

The disparity however over the years between the fees actually incurred by parties in opposition proceedings, and the costs likely to be awarded by a delegate of the Registrar by way of the taxation of costs, has been stark.

This is because costs awards for inter partes hearings in Australia before both the Trade Mark Registrar, the Designs Registrar, and the Patent Commissioner have remained dormant for decades. The limitations on the quantum of taxed costs for trade mark opposition proceedings and non-use removal applications is set out in Schedule 8 of the Trade Marks Regulations 1995. As of 1 October 2024, however, for the first time since the Regulations were introduced almost 30 years ago, the scale for cost awards will increase.

3. Before and after: a comparison of the increase

IPAustralia, which houses the Australian Trade Mark Registry, has published a useful table setting out the increases:

The most obvious increase is in respect of the cost award for the provision of evidence, which across the board has more than tripled. This should be welcomed. The aggregation and filing of evidence in trade mark opposition proceedings is time-consuming and expensive, and often parties rely upon multiple declarations with voluminous annexures. A maximum award of $700 for the provision of evidence in support of an opposition, as an example, rarely came close to the actual fees incurred in the task.

The changes to the scale of costs in Schedule 8 are not retrospective, and only apply to proceedings commenced after 1 October 2024.

4. Consequences

We predict:

a. a spike in security for costs applications against foreign opponents. Section 222 of the Trade Marks Act 1995 can require an opponent or non-use removal applicant to give security for costs if that person neither resides nor carries on business in Australia. If security is not given within the prescribed time – usually two months – the Registrar may dismiss the proceedings. The sum required as security is at the discretion of the Registrar but is usually for the likely full amount of costs to be taxed according to Schedule 8 of the Trade Mark Regulations 1995. Within the current parameters, this is usually an irritation. Within the new costs regime, the quantum of security is substantive. Before dismissing the proceedings, the Registrar will, in the interests of procedural fairness, give the relevant party an opportunity to be heard on issues such as, for example, evidence of the opponent’s assets in Australia which could be used as security or to rebut the application for the need for security for costs altogether (Guess Europe SAGL v Nick Zisimopoulis and Mary Tucceri-Cimini [2010] ATMO 24.); and

b. a possible slowdown in the number of trade mark oppositions, especially for SMEs, as the stakes are raised in the event of failure.

Disclaimer: The information published in this article is of a general nature and should not be construed as legal advice. Whilst we aim to provide timely, relevant and accurate information, the law may change and circumstances may differ. You should not therefore act in reliance on it without first obtaining specific legal advice.