Abbey Laboratories Pty Ltd v Virbac (Australia) Pty Ltd (No 5)

Abbey Laboratories Pty Ltd v Virbac (Australia) Pty Ltd (No 5) [2025] FCA 1427 is a short Federal Court costs judgment delivered after an earlier patent decision. The Court ordered Abbey and the cross-respondents to pay Virbac’s costs of the originating application and the cross-claim. If the parties could not agree the amount within 21 days, the costs were to be determined by a Registrar on a lump sum basis under the Federal Court Costs Practice Note.

The judgment is useful for what it says about costs principles, but it is not a full account of the patent dispute. The reasons do not explain the underlying technology, the commercial conduct in issue, or the broader merits findings in any detail. They focus on three practical questions only: whether Abbey’s limited success on some patent claims justified a discount, whether Abbey should recover proof costs after notices to admit, and whether the costs process should be stayed pending a possible appeal.

The parties were Abbey Laboratories Pty Ltd and Abbey Animal Health Pty Ltd on one side, and Virbac (Australia) Pty Ltd on the other. The Court identified the matter as part of the Intellectual Property National Practice Area and the patents sub-area. However, the reasons in this judgment are confined to costs. They expressly adopt defined terms from the principal judgment, Abbey Laboratories Pty Ltd v Virbac (Australia) Pty Ltd (No 3) [2025] FCA 1179, and do not retell the underlying patent dispute.

That limitation matters. The judgment does not set out the patent technology, the alleged infringing conduct, or the full invalidity and infringement findings. What it does explain is the immediate post-judgment fight about costs. In the principal judgment, Jackman J had already expressed a preliminary view that Virbac was entitled to its costs and invited affidavits and written submissions on that issue. The costs question was then determined on the papers.

Virbac sought an order that Abbey and the cross-respondents pay its costs, with a lump sum assessment if the amount could not be agreed. Abbey tried to reduce or reshape that outcome in three ways. First, it argued for a 17% discount because the Court had found claims 19, 20 and 21 of the patent invalid, and Abbey said those three claims represented three of the seventeen claims asserted by Virbac. Second, Abbey argued that it had incurred considerable costs proving publication and ascertainment of the EE Injection Data Sheet and EE Injection Label after Virbac had not admitted certain facts in response to notices to admit. Third, Abbey asked for a stay of the costs assessment.

The Court rejected all three arguments. It treated Abbey’s success on claims 19 to 21 as too limited to matter to the overall costs result. It also held that Virbac had acted reasonably in not admitting certain facts before seeing Abbey’s evidence, so no special costs order should be made in Abbey’s favour. Finally, it refused to delay the costs process merely because an appeal was in prospect.

The legal issue in this judgment was not whether the patent was valid or infringed. The Court was dealing with the follow-on question of costs after the main case had already been decided. That meant the judge had to exercise the Court’s broad discretion about costs in light of the overall result and the parties’ competing submissions.

There were three concrete questions. First, should Virbac receive its costs of the proceeding without reduction, even though Abbey had succeeded on invalidity in relation to claims 19, 20 and 21? Abbey argued that because it had knocked out three of the seventeen claims asserted by Virbac, the costs order should be discounted by 17%. The Court had to decide whether that arithmetic approach reflected the real significance of Abbey’s success.

Second, should Abbey receive a favourable costs adjustment because Virbac had not admitted certain facts in response to notices to admit, and Abbey later proved those facts? The Court referred to r 22.03 of the Federal Court Rules 2011 (Cth), which relevantly provides that if a party disputes the truth of a fact specified in a notice to admit and that fact is later proved, the disputing party must pay the costs of proving it. But the Court also referred to r 1.35, which allows the Court to make an order inconsistent with the Rules where appropriate.

Third, should the Court stay the assessment of costs while an appeal was contemplated? That required the Court to consider whether there was any practical reason to delay quantification, including whether Virbac would be able to repay costs if the appeal later changed the position.

The Court ordered the applicant and cross-respondents to pay Virbac’s costs of the originating application and the cross-claim. It also ordered that, if the parties did not agree the amount within 21 days, the costs were to be determined by a Registrar on a lump sum basis in accordance with the Federal Court Costs Practice Note. The orders set out a timetable for Virbac to file and serve its material in support of the lump sum claim and for Abbey to file and serve any response.

On Abbey’s proposed 17% discount, the Court was clear that there was no warrant for any discount at all, let alone one calculated by simply comparing the number of invalid claims with the number of asserted claims. The judge referred back to the principal judgment and said Abbey’s success on claims 19 to 21 was a pyrrhic victory. Those findings had no effect on the overall result in the proceeding. The issues arising specifically on those claims were also not readily separable or significant in the context of the case as a whole, and only a negligible amount of time and effort appeared to have been devoted to them. For those reasons, the circumstances did not justify any apportionment of costs.

On the notices to admit issue, the Court acknowledged the general rule in r 22.03. But it decided to make an order inconsistent with that rule under r 1.35. The Court considered Virbac’s position to have been reasonable. The facts Abbey wanted admitted were not matters within Virbac’s knowledge. Abbey’s own submissions referred to enquiries by its solicitors with a third party, Merial, which manufactured the relevant product, and with the Internet Archive. The Court said the need for those enquiries itself indicated the reasonableness of Virbac’s stance. The facts also concerned matters such as the ingredients of certain Merial products or involved matters of New Zealand law.

The Court also noted that when Virbac served its notice to dispute on 4 July 2024, it sent a letter explaining the basis of its non-admission. One issue identified in that letter was that the EE Injection Data Sheet, as defined in the notice to admit, referred to a different product on pages 2 to 6 than on page 1. After receiving Abbey’s evidence in chief, Virbac decided not to contest the relevant facts. The judge described that as a justifiable and proper approach. Although the Court accepted that Abbey had incurred considerable costs proving the relevant facts, it did not regard it as appropriate either to make special provision for those costs in Abbey’s favour or to apply the general rule in r 22.03.

On the stay application, the Court refused to pause the costs assessment. There was no suggestion that Virbac would not readily be able to repay any costs agreed or quantified. The judge also said that if Abbey’s appeal succeeded and the costs orders were later set aside or varied, it would be open to the Court to make a costs order in Abbey’s favour to compensate it for any costs thrown away by the relatively quick process of quantifying the lump sum costs order.

For businesses, the most important point is that costs usually follow the overall result, not isolated points won along the way. Abbey appears to have succeeded on invalidity in relation to three claims, but that did not help because the Court considered the success to be limited, not practically important, and not readily separable from the rest of the case. If you are running a patent case, that means you should be careful about assuming that a technical or partial win will materially reduce your costs exposure.

The judgment also shows the danger of relying on simple percentages. Abbey argued for a 17% discount because three out of seventeen asserted claims were invalid. The Court rejected that arithmetic approach. In real litigation, the significance of an issue depends on whether it changed the outcome, whether it was substantial in the context of the case, and how much time and effort it actually consumed. Businesses should therefore assess costs risk by reference to the commercial and forensic importance of issues, not just by counting claims or points.

The notices to admit aspect is also commercially useful. Businesses often hope that if the other side refuses to admit facts and those facts are later proved, the court will shift the proof costs. This case shows that the position is more nuanced. If the facts are outside the other side’s knowledge, depend on third-party information, involve archived material, or raise foreign law issues, the court may regard non-admission as reasonable. That means businesses should budget for the possibility that they will still bear the cost of proving those matters even if they ultimately succeed in proving them.

Finally, the decision is a reminder that a contemplated appeal does not automatically stop the costs machinery from moving. The Court was willing to let quantification proceed because there was no evidence that repayment would be a problem if the appeal later changed the result. Businesses considering an appeal should therefore plan for the possibility that they may need to engage with a lump sum costs process promptly after judgment.

The judgment was delivered by Jackman J on 18 November 2025 in the Federal Court of Australia, New South Wales Registry, General Division. It was determined on the papers. The catchwords identify the subject matter as costs, including a claimed discount for limited success at trial, a claim under r 22.03 of the Federal Court Rules 2011 (Cth), and a request for a stay of costs assessment.

The orders required the parties to try to agree the quantum of costs within 21 days. If they could not, Virbac was to file and serve its material in support of a lump sum costs claim within 40 days of the orders, and Abbey was to file and serve any costs response within 21 days after service of Virbac’s costs summary. The Registrar was directed to determine the lump sum in such manner as he or she considered fit, including on the papers if appropriate.

This page should be read as a case note about post-judgment costs principles. It is not a complete account of the underlying patent dispute because this judgment itself does not provide that detail.