Calderbank Consequences – Miele Awarded Indemnity Costs Despite 15% Discount for Unsuccessful Arguments

Highlight

This decision concerns the apportionment of costs arising from the substantive decision in Miele & Cie KG v Bruckbauer [2025] FCA 537 (27 May 2025) (Substantive Decision). Justice Rofe considered the appropriate apportionment of costs where Bruckbauer had rejected a Calderbank offer from Miele but ultimately failed in its infringement case, and where Miele had made certain strategic choices which resulted in higher evidence costs being incurred by both parties but with no effect on the overall result of the case.

Background

In the Substantive Decision in May 2025, Miele succeeded in revoking relevant claims of Bruckbauer’s patent AU2012247900 entitled “Hob with central removal of cooking vapours by suction-extraction in the downward direction” (the Patent), which Bruckbauer claimed were infringed by Miele’s cook-top hobs. The revocation of the relevant claims meant that Miele’s cook-top hobs did not infringe Bruckbauer’s Patent.

In the course of the infringement proceedings, and after the close of evidence, Miele served Bruckbauer with a Notice of Offer to Compromise together with a Calderbank offer. The Notice and Calderbank offer together proposed resolution of the proceedings, including that Bruckbauer would pay Miele’s costs in the sum of AUD $250,000, and that the parties would take all necessary steps to facilitate suitable orders being made by the Court to support the resolution of the matter and the payment of costs to Miele. Bruckbauer rejected the offer but subsequently failed in its infringement case.

Key Issues and Consideration

Since Miele succeeded in the Substantive Decision, Miele was entitled to costs. As a result of the Notice and Calderbank offer, Miele argued that it was entitled to indemnity costs. The parties disagreed on two issues affecting the apportionment of costs, namely whether:

1. Miele’s recoverable costs should be discounted due to Miele’s lack of success in relation to certain issues argued in the case (the Chinese Amendments); and

2. Miele should be awarded a portion of its costs on an indemnity basis due to the rejected Calderbank.

In relation to the first point, Miele had argued in the substantive proceedings that the Chinese Amendments (which were amendments made by Bruckbauer to one of its Chinese patent applications) were publicly available in 2015 and disclosed the invention claimed in the Patent, therefore making the relevant claims of the Patent invalid. This argument was ultimately unsuccessful but resulted in a substantial amount of evidence being dedicated to the Chinese Amendments, including unscheduled evidence from Miele which was served days before the start of the trial. Justice Rofe found that a significant portion of the trial was devoted to the issue of the public availability of the Chinese Amendments and the trial was extended due to issues with interpreter-related delays (i.e. lengthening of cross examination due to translation of questions and answers) and uncooperative conduct from witnesses on both sides. Justice Rofe found that it was appropriate to reduce Miele’s costs by 15%, as Miele had initiated the Chinese Amendments issue and the related line of evidence, which ultimately did not add any value to Miele’s invalidity case against the Patent. Accordingly, her Honour considered that the costs would not have been incurred had the issue of the Chinese Amendments not been raised.

In relation to the second point, Justice Rofe considered whether Miele was entitled to indemnity costs under Rule 25.14(3) of the Federal Court Rules 2011 (Cth), which provides:

(3) If an offer is made by an applicant and not accepted by a respondent, and the applicant obtains a judgment that is more favourable than the terms of the offer, the applicant is entitled to an order that the respondent pay the applicant’s costs:

(a) before 11.00 am on the second business day after the offer was served–on a party and party basis; and

(b) after the time mentioned in paragraph (a)–on an indemnity basis.

Bruckbauer argued that, the Substantive Decision was not more favourable to Miele than what was proposed by Miele under the offer, that the offer was not a genuine compromise and, for those reasons it was reasonable for Bruckbauer to reject the offer. Justice Rofe disagreed, saying that Miele had achieved a more favourable judgment than what was proposed in the offer. Her Honour also considered that no exceptional circumstances existed which would justify an order inconsistent with the Federal Court Rules. Justice Rofe was of the view that the Calderbank offer, which explained why Miele believed it would succeed at trial, constituted a genuine offer of compromise as there was little else that Miele could offer to Bruckbauer by way of compromise and that, by the time Miele extended the offer, Bruckbauer should have been aware that its infringement case was weak. As a result, no exceptional circumstances were established.

Outcome and Implications

Bruckbauer was ordered to pay 85% of Miele’s costs on an indemnity basis from the second business day after the offer was served on Bruckbauer. Miele’s overall costs were discounted by 15% because it had chosen to pursue the Chinese Amendments issue and the associated line of evidence which ultimately had no impact on the outcome of the case.

Justice Rofe’s decision highlights the impact that evidentiary decisions and offers of compromise can have on the extent of the ultimate costs orders. This is of great significance given the high cost of patent litigation in Australia.

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