ACP Machinery Australia Pty Ltd v Aerospace Technologies of Australia Ltd (No 3)
[2013] FCA 718
FEDERAL COURT OF AUSTRALIA
ACP Machinery Australia Pty Ltd v Aerospace Technologies of Australia Ltd (No 3) [2013] FCA 718
Citation: ACP Machinery Australia Pty Ltd v Aerospace Technologies of Australia Ltd (No 3) [2013] FCA 718 Parties: ACP MACHINERY AUSTRALIA PTY LTD (ACN 066 485 925) v AEROSPACE TECHNOLOGIES OF AUSTRALIA LTD (ACN 008 622 008) and BOEING AEROSTRUCTURES AUSTRALIA PTY LTD (ACN 103 165 466) File number: VID 765 of 2010 Judge: JESSUP J Date of judgment: 26 July 2013 Catchwords: CONTRACTS – Construction – Where contract resulted from laymen’s amendments to standard form – Whether appropriate to commence with meaning of standard form – Purpose of amendments – Whether provision void for uncertainty – Whether term as to buyer’s use of data provided by seller in conjunction with supply of goods amounted to qualification of copyright or free‑standing prohibition.
INTELLECTUAL PROPERTY – Copyright – Whether annexure to contract containing technical specifications an original literary work – Whether reproduced – Indirect reproduction – Need for unbroken chain of copying.
INTELLECTUAL PROPERTY – Copyright – Presumption that work bearing mark that a person was the owner of copyright at a particular time is owner at that time – Drawing produced by “design team” of a company – Whether established on evidence that members of the team were employees – Statement that copyright would be assigned – Whether gave rise to equitable assignment – Whether later written instrument sufficient to constitute assignment at law.
Legislation: Copyright Act 1968 (Cth) ss 35, 126B, 196 Cases cited: Acorn Computers Ltd v MCS Microcomputer Systems Pty Ltd (1984) 6 FCR 277
Gold Peg International Pty Ltd v Kovan Engineering (Aust) Pty Ltd (2005) 225 ALR 57
Insight SRC IP Holdings Pty Ltd v The Australian Council for Educational Research Limited (2012) 292 ALR 741
Roban Jig & Tool Co Ltd v Taylor [1979] FSR 130Date of hearing: 22-24, 26, 29-30 April, 1 May 2013 Place: Melbourne Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 104 Counsel for the Applicant: Mr A Ryan SC with Mr C Smith Solicitor for the Applicant: Griffith Hack Lawyers Counsel for the Respondents: Mr C Golvan SC with Mr A Nash Solicitor for the Respondents: K & L Gates
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 765 of 2010
BETWEEN: ACP MACHINERY AUSTRALIA PTY LTD (ACN 066 485 925)
ApplicantAND: AEROSPACE TECHNOLOGIES OF AUSTRALIA LTD (ACN 008 622 008)
First RespondentBOEING AEROSTRUCTURES AUSTRALIA PTY LTD (ACN 103 165 466)
Second Respondent
JUDGE:
JESSUP J
DATE OF ORDER:
26 JULY 2013
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1.The applicant’s case in contract be dismissed.
2.The proceeding be listed for mention at 9:30 am on 9 August 2013 in relation to –
(a) the remedy to which the applicant is entitled on its case in copyright; and
(b) costs.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 765 of 2010
BETWEEN: ACP MACHINERY AUSTRALIA PTY LTD (ACN 066 485 925)
ApplicantAND: AEROSPACE TECHNOLOGIES OF AUSTRALIA LTD (ACN 008 622 008)
First RespondentBOEING AEROSTRUCTURES AUSTRALIA PTY LTD (ACN 103 165 466)
Second Respondent
JUDGE:
JESSUP J
DATE:
26 JULY 2013
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
In this proceeding, the applicant, ACP Machinery Australia Pty Ltd (“ACP”), seeks injunctions and damages against the respondents, Aerospace Technologies of Australia Limited (“ASTA”) and Boeing Aerostructures Australia Pty Ltd (“BAA”), for what are alleged to be breaches of contract and infringements of copyright. The contract on which ACP sues was made in 2001, and the works alleged to be protected by copyright were created at about the same time. At the time, the party with whom ACP dealt, and contracted, was ASTA. In October 2003 the business of ASTA was sold to BAA, then named Hawker de Havilland Aerospace Pty Ltd. In the present proceeding, no party suggested that any material difference was made by these reorganisations, the respondents defending ACP’s allegations as though BAA now is the embodiment of, and responsible for the agreements and actions of, ASTA.
THE FACTS
An aspect of the business of ASTA was the manufacture of certain parts for Boeing aircraft. In 2000 or early 2001, it was announced that ASTA would be building empennage panels for the 777 aircraft. These were to be of fibreglass construction, each panel moulded to its own unique curved shape in a bond tool, after which it would be trimmed to the precise size required and drilled with holes for attachment and other purposes. Hitherto, each panel had been held in its own jig while the trim and drill processes were undertaken manually. However, with the 777 empennage panels, the required tolerances were such that the engineering staff at ASTA determined that a “computer numerical control” machine, or a “CNC” machine, ought to be used. Such a machine would carry out the precision trimming and drilling operations according to commands from a computer.
A CNC machine requires a jig or similar device to hold the panel in place while it is being trimmed and drilled. Such a device is called a “holding fixture”. The engineering staff at ASTA decided that a so-called “universal holding fixture”, or “UHF”, should be employed in conjunction with the CNC being proposed for use on the 777 empennage panels. On the project, there was a range of different parts that were to be trimmed and drilled, and an advantage of a UHF was that, being “universal”, it could be used on different parts (rather than, in the case of the conventional jig, each part requiring its own holding apparatus). The UHF which ASTA had in mind would involve a horizontally-oriented array of programmable “actuators”, arranged in a rectangular “bed”, that could be moved to different heights relative to each other in order to conform with the profile of, and thus to hold securely, the particular panel being trimmed and drilled. At the top of each actuator would be a vacuum cup which, when the vacuum was actuated, would apply the secure hold required.
ACP was an Australian distributor for “Breton” CNC machines, of Italy. It quoted for the supply of such a machine to ASTA, the quote was accepted and ACP did supply a Breton machine for the trimming and drilling of the 777 empennage panels. That aspect of the history of the case is uncontroversial. At about the same time, ASTA asked ACP to quote for the supply of a suitable UHF to be used in conjunction with the CNC machine. ACP did supply such a quotation, under which it proposed to manufacture a custom‑built UHF itself. That quotation was accepted by ASTA. On 10 August 2001, ACP and ASTA executed a contract for the sale and purchase of the UHF, and for the provision of ancillary services (installation, commissioning, etc). I shall return to that contract in more detail presently, it here being sufficient to note that it is under this contract, and under one clause in particular, that the first aspect of ACP’s case against the respondents is based. The contract contained a table of specifications, to which I shall also refer below, which, ACP asserts, was a substantial part of a copyright work of which an employee of ACP had been the author.
ACP duly manufactured the UHF required by ASTA, and installed it in conjunction with the Breton CNC machine at ASTA’s factory. The UHF was subsequently used in the 777 empennage project without, it seems, any issues arising at all. Four years later, it was observed by someone then engaged by BAA, in effect, that it was impressive that the UHF had not encountered a single problem over that period.
At the time of the negotiations for the supply to ASTA of a UHF in 2001, the main personnel involved on behalf of ACP were its Managing Director, Alex Ponfoort, and its Sales and Applications Engineer, Mark Wingrove, and those involved on behalf of ASTA were its Operations Manager, Les Rivette, and an engineer in Operations Support, Joe Vrbetic.
It seems that it was in March or April 2001 that Mr Rivette first raised with Mr Ponfoort the prospect of ACP supplying a UHF in conjunction with the supply of the CNC machine. At one of their early meetings, Mr Rivette asked Mr Ponfoort whether ACP could supply a fixture based on a “pogo system”, custom manufactured to meet ASTA’s specific requirements. Mr Rivette said that other pogo systems available on the market were big, bulky, heavy, inflexible and very expensive. At the time, Mr Ponfoort did not know what a pogo system was. He asked Mr Wingrove to undertake some research on the subject. Mr Wingrove’s own experience had not involved any exposure to UHFs or to pogo systems, but he knew from discussions with Mr Vrbetic that the kind of UHF being sought by ASTA was in the form of a rectangular table or “bed” fitted with adjustable rods, or “pogos”, the upper ends of which protruded from the bed and which could be moved vertically to different heights to conform with the contour of the part being trimmed and drilled.
The “pogos” to which Mr Rivette and Mr Vrbetic referred in their conversations with Mr Ponfoort and Mr Wingrove were the “actuators” mentioned earlier in these reasons. Evidently, they would form the central working apparatus of the UHF which ASTA had in mind, and I should say something more about them. Considered as a separate piece of machinery in its own right, an actuator is a mechanism for generating linear movement in a rod or shaft. The rod or shaft, when retracted, lies mostly within the body of the actuator and is generally in alignment with the long axis thereof. Under operation, the actuator will cause the rod or shaft to move linearly and out from the actuator, such that it is extended the desired distance. I understand that a commonplace domestic and commercial application for such devices is for the opening and closing of “automatic” doors, gates and the like. It seems that the body of the actuator may be cylindrical, but, in the facts of the present case, it was generally observed to be of a rectangular parallelepiped shape.
ASTA’s intention was that the UHF would be fitted with numerous (about 500 as it happened) actuators, the bodies of which would lie below the horizontal surface of the table or bed which constituted the upper horizontal surface of the UHF, and the shafts of which emerged vertically, through holes in that surface, in response to the appropriate commands given by the control system which would be part of the apparatus which ASTA intended to install.
In May 2001, Mr Ponfoort spoke with Mr Rivette on a number of occasions on the general subject of the UHF. On 1 May, Mr Ponfoort and Mr Wingrove reported to Mr Rivette on ACP’s progress in developing the UHF. Mr Ponfoort then asked Mr Rivette which company would “own the technology being developed”. Mr Rivette replied, in effect, that the issue of ownership would need to be negotiated as part of the contract between ACP and ASTA. On a number of subsequent occasions in May 2001, Mr Ponfoort again raised the same question and, according to his undisputed evidence in this case, each time Mr Rivette responded in the same way.
On the technical side, these discussions of May 2001 led to Mr Vrbetic sending to ACP, on 24 May 2001, a draft specification for the UHF. It was in very general terms. With respect to “Description and Requirements of Equipment”, it was said that the dimensions of the UHF were to be 8000 mm x 3500 mm x 750 ±100 mm. The stroke length of the actuators was to be approximately 200 mm. The “pitching” (spatial orientation) of the actuators was stated, as was the number of actuators required – 500. The vacuum at each actuator was to be controlled individually. There was to be a “suitable and maintainable filtration system” to prevent carbon dust being evacuated into ASTA’s vacuum pumps. The equipment was to be waterproof and dustproof. Other specifications stated at this time related to the construction and movability of the overall UHF itself, and do not need to be noted further here.
Finding a source of the actuators that could be used in the ASTA UHF was clearly an important early task for Mr Wingrove in the research with Mr Ponfoort had asked him to undertake. In early May 2001, Mr Vrbetic supplied Mr Wingrove with a quotation for an actuator from a company called Linak Australia Pty Ltd, and this contained some general technical details. Mr Wingrove also made a number of inquiries on his own account. In the course of his work, he came across a catalogue, or product brochure, published by a Dutch company which specialised in motion technology engineering, Elmeq Nederland BV (“Elmeq”). The catalogue or brochure had a “tear off” inquiry form for linear actuators. Mr Wingrove filled it in with such understanding as he then had about ASTA’s requirements, and sent it to Elmeq, where it was received on about 7 May 2001.
René Jansen was then a Senior Sales Engineer in the employ of Elmeq. In his evidence in this proceeding, Mr Jansen said that actuators could be driven by electricity, compressed air or pressurised fluid as a power source. At the time, Elmeq’s actuators were generally electrically driven. A controller would receive an electrical signal and relay it to an electric motor attached to the actuator. The rotary motion of the motor would be transformed to linear motion by means of a gear, pulley, cam, screw jack, ball screw or roller screw.
On 29 May 2001, Elmeq sent a facsimile message, over the name of Matthijas Kesteloo, a Desk Sales Engineer who reported to Mr Jansen, to Mr Wingrove providing an indicative price for 550 actuators. The actuators on which that price was based, however, were not suitable for Mr Wingrove’s purposes: they were “off the shelf” units which (according to Mr Wingrove’s evidence) “did not have a closed loop positioning system, did not have controllers, and could not be properly mounted into the UHF”. Mr Wingrove’s concerns led to him having some discussions with Mr Jansen and Mr Kesterloo. Then, in a facsimile to Elmeq of 12 June 2001, Mr Wingrove set out his requirements in more detail than had previously been done. They were:
Stroke length 200mm.
Mounting position vertical.
Thrust force 20kgs.
Static load 14kgs.
Stroke speed 50mm sec minimum.
Duty cycle 5%.
External guide No.
Repeatability accuracy 0.2mm.
Positioning accuracy 0.2mm.
Maximum rod side load 12kgs
Drive type inline stepper motor.
Number of stops per cycle 1
Mounting type front flange mount.
Rod end female thread rod end.
Life requirement 100,000 cycles.
Operating temperature 10°C – 40°C.Contamination risk carbon fiber [sic] dust at rod end / very slight water at rod end.
Special considerations inline motor / end of travel switches / rod must not rotate rod position must be held without power / seal at rod end required.
Number of units 500 + spares to be advised
There followed a further telephone conversation between Messrs Wingrove, Jansen and Kesterloo, in which Mr Wingrove outlined the kind of application for which he required the actuators. It was then that he mentioned to the Dutch engineers that he wished to control all 500 actuators simultaneously, or as close to simultaneously as possible, by means of a single computer.
After that conversation, Mr Jansen discussed Mr Wingrove’s requirements with a software engineer employed by Elmeq, René de Nooijer. He had recently completed a thesis on the use of “CANbus” connections with Elmeq’s MDC 2 controller. In his evidence in this case, he described “Bus” or “Field Bus” as –
[A] form of network topology, where the word fieldbus is used when ‘slave’ nodes are connected to a ‘master’ node and the bus being used ‘in the field’ (and not in ‘office IT’). Multiple nodes can be connected between the two endpoints of a bus system and each node can communicate (via electrical signals) directly with all other nodes. Bus topologies require the node (which in this case is an actuator) to be uniquely identified so that the node/actuator only receives and responds to electrical signals intended for it.
Mr de Nooijer described CANbus – “CAN” being an acronym for “Controller Area Network” – as –
[A] particular type of bus system characterised by particular signal levels (voltage, load, termination, slope, etc), speed, arbitration, data size, addressing, etc. CAN is a multi master communication system originally developed in the 1980’s [sic] for communication with and control of systems in motor vehicles. It subsequently spread to the industrial automation field in the 1990s. In the present application, a CANbus system is used to communicate between the central PC (which controls the entire array of actuators) to transmit messages to the controller in each individual actuator which then tells that actuator to move into its specified position.
It should also be noted there that there was a variety of CAN protocols, both proprietary and “open”, the latter having the advantage, according to Mr de Nooijer, of “allow[ing] other parts to communicate with [Elmeq’s] system using the same protocol”.
It was Mr de Nooijer’s background in these areas of technology that led to Mr Jansen bringing him in on the job for ACP. Mr Jansen had not previously had the experience of having to control as many as 500 actuators simultaneously. This line of thinking, and Mr de Nooijer’s involvement, led to Elmeq suggesting to Mr Wingrove that a CANopen protocol, running on a CANbus system, be used to control the actuators on the UHF being built for ASTA. On 15 June 2001, Mr Kesterloo sent a facsimile to Mr Wingrove in which it was proposed that ACP use Elmeq’s CAN-open LC-series of actuators. He asked Mr Wingrove to send him “a drawing of the application”.
On 18 June 2001, Mr Wingrove sent the requested drawing. As Mr Jansen interpreted it, the drawing showed what was called “multiplexing”, that is to say, the control of actuators in groups, in this case rows of 20. However, Mr Wingrove had added in his message: “If your CANopen software and controllers can do this easily please let me know, also the cost involved.” For reasons which do not need to be canvassed here, Mr Jansen and Mr de Nooijer thought that a multiplexing system would be an inferior solution for the project that Mr Wingrove had in mind, and that the CANbus system, using the CANopen protocol, would be a much better one. Elmeq’s facsimile to ACP dated 2 July 2001, incorporating indicative pricing, was based on that technology.
After some further discussions with Mr Wingrove, on 10 July 2001 Elmeq sent ACP a quotation for 500 actuators according to specifications there set out. This led to further conversations between the Elmeq engineers and Mr Wingrove, and to a further quotation from Elmeq on 23 July 2001, stating the following specifications:
Linear actuator, LC serie, CAN bus with CANopen protocol
·Stroke length: 200 mm
·Dynamic Force: 200 N
·Static Force: 2000 N
·Maximum side rod load: 120 N
·Speed: 19 mm/s
·Current at 200 N: 2,0 A
·Duty cycle: 5 %
·Supply voltage: 24 VDC
·Protection Class IP 54
·Ambient T range: 0°C – 45°C
·Material Rod: Stainless Steel
·Screw Type ACME screw/ 16 x 4, self braking
·Material Body: Anodised Aluminium
·Connector: Harting
·Amplifier: Included
·Rod: Anti rotation
·Front mounting flange
·Female thread rod end for vacuum cups attachments
·Bus + system CAN-open: 100 pieces a node. For your application there is 5 CAN-open drives/carts necessary, the final solution is to be discussed.
·The absolute position accuracy after homing is < ± 0,05 mm (see attached sketch).
·The repeatability in one direction load is < 0,1 mm.
·The wear-out of a trapezium spindle can not be calculated. The lifetime expectancy of a spindle is depending on the usage, the environment (humidity, operating temperature), speed etc. Based on our experience we do not expect any problems with the 100,000 cycles. To ensure this, the lifetime of the actuators of at least 100,000 cycles must always be tested.
·Maintenance: Greasing is not required.
·Homing: Based on Mechanical block and current sense.
Extra:
·At a voltage brake down, the position of the rod can be stored.
·Furthermore this LC-Linear Actuator requires only 5 wires to connect the actuator and is very easy to exchange (easy way of connecting).
By then, developments along the ASTA-ACP axis were reaching a point of resolution. On 4 July 2001, ACP provided what was then the latest of a number of quotations for the Breton CNC machine, and on 6 July 2001 ASTA placed a purchase order for that machine (although a further amended quotation was provided on 23 July 2001). In that month, ASTA asked ACP to provide a fixed price for the supply of the UHF. On 25 July 2001, ACP did so. In its quotation of that date addressed to ASTA, ACP described the proposed UHF in the following terms:
Principle of fixture: To hold composite plates for machining by vacuum cups which are individually electronically adjustable for height by means of actuators (pogo or other makes). The individual height to be obtained by an ASCII file from Boeing along with coordinate position of actuator.
Proposal: To produce a fixture manufactured from steel in 5 sections which are bolted together to produce a single table with the dimensions 8,000mm x 3,000mm x 750mm. On the top surface of this fixture there are pockets for the mounting of 500 actuators. In addition, the pitch of the actuators will be positioned 300mm in X-axis direction (8,000mm) and 150mm in the Y-axis direction (3,000mm).
The fixture to be lifted by 4 aero-castors then manually positioned and located on two dowels fixed to the machine bed. The fixture is then manually clamped via four over center toggle clamps.
Control of the actuators is by Ci-tech industrial software to interface between the actuators (via busline) and the data file from Boeing (ASCII file). It is envisaged that the actuators will be driven by a bus system (e.g. CAN-open or profibus protocol) with 24Volt DC stepper motors feedback. The power to each actuator is a maximum of 2.0 amps at full dynamic load. Each, actuator has only 5 wires via one connector for simple maintenance and change over through the bus system.
The Actuator specification should meet the following:
·Positioning accuracy +/- 0.1mm
·Stroke length 200mm
·Dynamic force 200N
·Static force140N 140N
·Maximum side rod load 120N
·Speed 15mm/sec
·Max current draw at load 2.0amps
·Supply voltage 24Volt DC
·Non rotating rod
·Front mounting flange
·Self braking
·Female thread rod end for end effector mounting
·Bus operation protocol
The actuator is attached to the fixture by a front flange mount fixed to a removable plate, which allows independent removal for maintenance through the top surface of the fixture.
The Ci-tech software will have one overview page, 25 row mimic pages and individual actuator control pop-up. Database to store actuator settings for each product.
The vacuum cups to be 50mm diameter, each to have a cone valve to ensure no loss of vacuum when not in use. These give a holding force of 40N at a vacuum of -60kPa at each 50mm diameter cup. The Vacuum pump is protected by a filtration system to stop any ingress of carbon dust along with a manometer to check vacuum. Each actuator is fix plumbed to the vacuum system.
Connection to the control computer is via an industrial flexible conduit which is 15m long to enable movement of the fixture, also through this conduit is the air supply for the air cushions and the main vacuum pipe.
Vacuum pump and 24_Volt DC power supply (300amp) will by [sic] held externally from the fixture.
On the following day, 26 July 2001, ASTA forwarded to ACP its specification (ie no longer a draft) for the UHF. The “[m]inimum actuator specifications” were as follows:
Positioning accuracy: ± 0.1 mm Stroke length: 200 mm Dynamic force max.: 200 N Static force max.: 140 N Maximum side rod load: 120 N Actuator speed: 15 mm/second Max. Current draw at load: 2.0 amps Supply voltage: 24 VDC
Electro/mechanical characteristics: Non rotating rod Front mounting flange Self braking Female thread rod end for end effector mounting Bus operation protocol Encoder feedback on motors for position Stepper or Servo motor drive system Motors are sealed to be resistant to dust & water Actuator position maintained with power off
Mr Vrbetic then requested Mr Ponfoort to meet with Josip Juric, Associate Procurement Manager with ASTA. It was his role to negotiate procurement contracts on behalf of ASTA, and the purpose of him meeting with Mr Ponfoort was to negotiate a contract for the purchase of the UHF from ACP. At their first meeting, held on 26 July 2001, Mr Juric provided Mr Ponfoort with ASTA’s standard form contract in such matters which, he (Juric) said, was “a good place to start”. I shall return to that form of contract below. Mr Ponfoort asked Mr Juric whether he was aware of the discussions which he (Ponfoort) had had with Mr Rivette on the subject of the ownership of the technology (see para 10 above), and Mr Juric replied that he was aware of those discussions, adding that ownership was a matter to be negotiated.
Mr Ponfoort had plans to travel overseas with Mr Wingrove on 28 July 2001 (for purposes which included meeting with prospective suppliers of actuators) and, since his negotiations with Mr Juric had not been brought to a conclusion at their first meeting, he requested that ASTA supply a letter confirming its intention to purchase the UHF from ACP. On 28 July 2001, ASTA wrote to ACP in the following terms (over the hand of Mr Juric):
As per our meeting on Thursday, 26th July, 2001 please be aware that Hawker de Havilland intends to purchase 1 off Universal Holding Fixture (UHF):
As specified in the
Hawker de Havilland Specification No: OS2001-05-24 Revision: 2
Date: 26th July 2001This is subject to Hawker de Havilland and ACP Machinery Pty Ltd successfully negotiating the Terms and Conditions of purchase by 14 August 2001.
I herby [sic] request ACP Machinery Pty Ltd to do all that is necessary to insure [sic] that the Completion date of March 2002 is not jeopardised. In the event that Hawker de Havilland and ACP are not able to reach agreement on the terms by said date then Hawker de Havilland will pay a sum computed and sustained with standard accounting practices for those reasonable costs incurred by ACP in the performance of this task. prior [sic] to the date of written notification that Hawker de Havilland will not finalise the agreement.
Mr Ponfoort and Mr Wingrove did travel overseas at the end of July 2001 and, on 31 July 2001, visited the Elmeq plant at Schoonhoven. They had discussions with Mr Jansen, in which various matters in relation to the actuators and their control system were refined. No final contract was entered into at that time and, as it happened, there was one other European supplier of actuators which the ACP representatives visited at that time. It was as a result of these two visits that ACP decided to source the actuators for the UHF from Elmeq. That decision was conveyed to Mr Jansen on about 2 August 2001. Accordingly, on 7 August 2001, Elmeq sent ACP its formal offer, which was in the form of that of 23 July 2001, but this time omitting the earlier qualifier “without any commitment”. The technical specifications of 7 August 2001 were as follows:
1. Linear actuator, type no. LC#T420AA6324
Specifications:
·Stroke length 200 mm
·Dynamic Force: 200 N
·Static Force: 400 N
·Maximum side rod load: 120 N
·Speed: 19 mm/s
·Current at 200 N: 2,0 A
·Homing current: ± 1,0 A, based on mechanical block
·Duty cycle: 5%
·Supply voltage: 24 VDC, chassis = - (GND), + 24V = via Connector
·Protection Class: IP 54
·Ambient T range: 0°C – 45°C
·Rod: Anti rotation
·Screw Type ACME screw/ 16 x 4
·With the specified load, the unit is self braking
·Connector: Harting
·Pin-layout/ Wires: CAN requires 3 cables of 0,5 mm2 required, it is advisable to have twisted wires (shielded). Power requires 2 cables of 0,75 mm2 (less than 5 A).
Electronic:
·Bus-system: CAN
·Protocol: CAN-open
·Amplifier: Integrated high dynamic 4-Q amplifier
·Encoder Integrated 2 Channel/ 500 pulse
Material:
·Material Body: Black Anodised Aluminium
·Material Rod: Stainless Steel
Accuracy
·The absolute position accuracy after homing is < ± 0,05 mm.
·The repeatability in one direction load is < 0,1 mm.
Extra Information:
·Female thread rod end, diameter M12 for vacuum cups attachments, material to be specified.
·At a voltage brake down, the position of the rod can be stored.
·Front mounting flange, material to be specified.
·At the bottom end of the actuator, there is a hole to avoid pressure and vacuum inside the unit.
·Maintenance: Greasing is not required.
·Homing: Based on Mechanical block and current sense.
On 8 August 2001, Mr Wingrove addressed (by email) some further technical queries to Mr Kesterloo, and these were answered (by email) on 14 August 2001. In that responding email, Mr Kesterloo noted that Elmeq had not yet received ACP’s final order, and requested it as soon as possible. That order is not in evidence, but it is uncontroversial that Elmeq’s offer was accepted by ACP, and that the Elmeq actuators were used in the UHF being built for ASTA.
On Mr Ponfoort’s return to Australia, he and Mr Juric resumed their contract negotiations. They held two meetings at the Bankstown Hotel in Sydney, the first on 6, or possibly 7, August 2001, and the second which commenced on 8 August 2001 and continued until about 1 am the following morning. At the first meeting, Mr Ponfoort told Mr Juric that ACP had selected Elmeq as the “technical partner” for the UHF project. At both of these meetings, the negotiators had before them ASTA’s standard form contract, which I first mentioned at para 21 above. It is now necessary to refer to some of the terms of that form of contract, and to compare them with the contract actually executed by ACP and ASTA on 10 August 2001.
In fact, what I have described as ASTA’s standard form contract was a set of “terms and conditions” designed to accompany an order for goods, materials, etc. It referred to the supplier as “seller” and to ASTA, its divisions or subsidiaries, as “buyer”. The following general provisions are by way of background to the constructional issues that must be resolved in this case:
3. ACCEPTANCE
Seller’s Acceptance is expressly limited to the written terms of this Order. No additional or different terms shall be binding. Buyer hereby objects to any additional or different terms contained in Seller’s acceptance. Any of the following acts by Seller shall constitute acceptance: signing and returning a copy of this Order; commencement of performance; or informing Buyer of commencement.
4. COMPLETE AGREEMENT
This Order is the complete and exclusive statement of all terms and conditions of agreement.
5. MODIFICATION
No modification of this Order including but not limited to any additional or different terms in Seller’s acceptance, the specification, technical data, schedule or any other part of this Order whether an integral part of the Order, attachment or lower-tier document included by reference shall be binding on Buyer unless agreed to in writing and signed by Buyer’s purchasing representative.
….
13. NON‑CONFORMING GOODS
If the Seller fails to deliver or delivers defective or nonconforming products, Buyer may:
(a) Rescind/cancel this Order;
(b) Accept such products at an equitable price reduction;
(c) Reject such products;
(d) Demand specific performance; or
(e) Replace such products and charge the cost incurred to Seller.
….
15. WARRANTIES
Seller warrants that for a period of twenty four (24) months from the date of Final Acceptance, that all products delivered shall conform to all requirements of this Order, be free from defects in material, workmanship, design and fit for the intended purpose. Buyer’s approval of designs furnished by Seller or any approval of Seller’s “First Article” (if applicable) shall not relieve Seller of any obligations under this Warranty. Seller’s warranties shall be enforceable by Buyer, Buyer’s customers and any subsequent owner, user or operator of the products.
….
20. SELLER’S DATA
Any knowledge, information, drawings, designs, data or computer programs (herein called “Data”) which Seller discloses to Buyer for this order that Seller has not marked with a “proprietary” legend, shall not be considered proprietary to Seller or in any way restrict Buyer’s use of such Data.
21. DISCLOSURE OR DISPOSAL
Seller shall safeguard and keep secure all designs, processes, drawings, specifications, reports, data and other technical or proprietary information and features of all parts, equipment, tools, gauges, patterns and other items furnished or disclosed to Seller by Buyer. Unless otherwise provided herein, or authorized by Buyer in writing, Seller shall use such information and items, and the features thereof only the performance of this Order. Seller shall not sell, or otherwise dispose of as scrap or otherwise, any completed or partially completed or defective Products without defacing or rendering such Products unsuitable for use. Upon completion or termination of this Order, Seller shall, at Sellers [sic] expense, dispose of all information, items and Products as required or directed to [sic] Buyer.
22. BUYER’S PROPERTY
Buyer shall retain title to all property furnished to Seller (i.e., dies, moulds, jigs, tools, materials, etc). Seller shall label, maintain and dispose of Buyer’s property including scrap, according to Buyer’s direction and Seller shall be responsible for all loss or damage.
23. RESPONSIBILITY FOR CLAIMS/INDEMNITY
Seller shall at its own expense defend, indemnify and hold harmless Buyer from any claims, injury or liability arising out of or related to this Order, including attorneys’ fees and costs. In the event that Seller fails to defend, hold harmless, and indemnify Buyer, then Seller shall pay for any damages, attorneys’ fees, and any other fees, costs and expenses that may be incurred by Buyer in the defense of any action related to the Order and/or in the prosecution of any action to enforce the provisions of the clause.
….
32. RIGHTS IN DATA AND COPYRIGHTS
The parties expressly agree that all original works of authorship fixed in any tangible form, including but not limited to technical data, drawings, designs, software, software improvements and/or enhancements, derivative works and mask works, whether specially ordered or commissioned, made by Seller alone or jointly with others in connection with this Order are hereby assigned to Buyer. The author of the works agrees to execute all necessary documents to transfer and assign all right, title and interest in said work to Buyer.
33. PATENT AND COPYRIGHT INDEMNITY
Seller shall defend Buyer, Buyer’s customers, and any subsequent seller or user of the Products against all claims and proceedings alleging infringement of any United States or foreign patent or copyright of any Products delivered under this Order, and Seller shall hold them harmless from any resulting liabilities and losses, provided Seller is reasonably notified of such claims and proceedings. Seller’s obligation shall not apply to Products manufactured pursuant to detailed designs developed and furnished by Buyer nor to any infringement rising from the use or sale of Products in combination with items not delivered by Seller if such infringement would not have occurred from the use or sale of such Products solely for the purpose for which they were designed or sold to Buyer.
….
38. ORDER OF PRECEDENCE
In the event of any inconsistency between any parts of this Order, the inconsistency shall be resolved by giving precedence in the following order:
I. Typed Purchase Order including the Program Schedule
II. Terms and Conditions
III. Technical Specifications/Drawing
IV. Other Referenced Documents
….
40. TAXES and EXPORT DUTIES
Seller’s price(s) include all applicable Federal, State and Local taxes including Export duties and taxes.
It will be apparent from the above that these terms and conditions were substantially intended to protect ASTA. In those and a number of other respects not mentioned above, they were very favourable to ASTA. I would not be at all surprised if a seller in the position of ACP wanted to make changes to them before signing a contract based on them.
After his meetings with Mr Juric at the Bankstown Hotel, on 9 August 2001 Mr Ponfoort prepared an amended version of the terms and conditions which he then sent to Mr Juric. That led to the execution of the contract between ACP (over the hand of Mr Ponfoort) and ASTA (over the hand of Mr Juric) on 10 August 2001.
The contract consisted of the agreement itself, and two attachments. The agreement identified a “firm fixed price” (exclusive of GST) payable to ACP, and the breakdown of that price. The central agreement to supply was expressed as follows:
Seller agrees to provide the Supplies set out above under a Firm Fixed Price Buyer Order in accordance with the terms and conditions set out in Attachment [T]wo hereto, and in accordance with the technical requirements, specifications, and drawings specified in Attachment One hereto.
There was an “entire and final agreement” clause, by which the written agreement “supersede[d] all prior and contemporaneous oral and written agreements and discussions”.
Attachment 1 to the agreement was headed “Technical Requirements” and was prepared, and provided for insertion into the contractual document, by ACP. It included the following:
The Actuator specification should meet the following:
·Positioning accuracy +/- 0.1mm
·Stroke length 200mm
·Dynamic Force 200N
·Static force 140N
·Maximum side rod load while moving 120N
·Maximum side rod load while static with
50mm dia vacuum cup attached 35N
· Speed/no load 15mm/sec
· Max current draw at load 2.0amps
· Supply voltage 24Volt DC
· Lateral deflection accuracy at 200mm stroke @ 40N ≥ 0.75mm
· Lateral deflection accuracy at 150mm stroke @ 40N ≥ 0.40mm
· Lateral deflection accuracy at 100mm stroke @ 40N ≥ 0.20mm
· Lateral deflection accuracy at 50mm stroke @40N ≥0.10mm
· Non rotating rod
· Front mounting flange
· Self‑braking ACME type thread
· Female thread rod end for end effector mounting
· Bus operation protocol (CAN-open)
· Encoder feedback on motors for positioning
· 24Vdc motor
· Harting type electrical connection plug and socket
The actuator is attached to the fixture by a front flange mount fixed into a pocket in the top face of the fixture by 4 socket head cap screws, which allows independent removal for maintenance through the top surface of the fixture. Electronic supply to each actuator is via a quick connector ([H]arting Plug) which has 5 wires, 2 for 24Vdc, 3 for control signal.
The Ci-tech software will have one overview page, 25 row mimic pages and individual actuator control pop‑up. Database to store actuator settings for each product.
The vacuum cups to be 50mm diameter, each to have a cone valve to ensure no loss of vacuum when not in use. These give a holding force of 40N at a vacuum of −60kPa at each 50mm diameter cup. The Vacuum pump is protected by a filtration system to stop any ingress of carbon dust along with a manometer to check vacuum. Each actuator is plumbed to the vacuum system via push on connectors suitable for 4mm tube.
Connection to the control computer is via an industrial flexible conduit which is 15m long to enable movement of the fixture, also through this conduit is the air supply for the air cushions, 24Vdc supply and the main vacuum pipe.
Vacuum pump and 24Volt DC power supply transformer (300amp) will by [sic] held externally from the fixture.
Actuators, Type Elmeq actuator model number LC # T420AA6324
Limitations. The force applied to each individual actuator while cutting shall not exceed the following: −
Vertical force applied not to exceed 60N
Horizontal force applied not to exceed 35N
Nominal extended operational height of each actuator is 50mm any extension beyond this should be viewed as supplementary support only.
Attachment 1 to the agreement was the first of two copyright works on which the applicant sues. I was asked by counsel for ACP to accept that the attachment had been written by the staff of ACP, the bullet‑pointed specifications having been written by Mr Wingrove. As to the latter aspect, Mr Wingrove gave evidence only that he “prepared” the specifications that were included in the letter from ACP to ASTA on 25 July 2001. He gave no evidence as to the creation of Attachment 1 specifically. Mr Ponfoort wrote the letter of 25 July 2001, but he too gave no evidence as to the writing of Attachment 1. By the same token, none of the respondents’ witnesses made any contribution on that subject either. The version of Attachment 1 placed into evidence was a photocopy of a facsimile sent from ACP on 4 October 2001, a date which otherwise is of no present relevance. If the creation of the attachment was going to be controversial, that was not a very satisfactory way to proceed. On the other hand, in an environment when there had been, over the period leading to 10 August 2001, a busy interchange of technical correspondence, aside from the table of specifications as such, nothing otherwise in the evidence bears any resemblance to the text of Attachment 1. It was clear that ACP’s case was that the attachment had been written by Messrs Ponfoort and Wingrove, and the contrary was not suggested to either of them. In the circumstances, I am prepared to accept that case.
Attachment 2 to the agreement contained the “terms and conditions” to which I have already referred. Of the clauses in the ASTA standard form set out in para 25 above, cll 3, 4, 5, 13, 21, 22 and 33 were unamended. Changes of substance, which do not touch on matters of present concern save in the sense that they demonstrate attention to detail, were made to cll 15, 23 and 40. Sub-clause II of cl 38 was amended by the substitution of “this agreement” for “terms and conditions”. That leaves cll 20 and 32 of the executed version. They were changed into the following terms:
20. Sellers data
Any knowledge, information, drawings, designs, data or computer programs (herein called data) which Seller discloses to Buyer for this order that seller has not marked with a proprietary legend, shall not be considered the [sic] proprietary to Seller or in any way restrict Buyers use of such data.
….32. Rights in data and copyrights.
The parties expressly agree that all original works of authorship fixed in any tangible form, including but not limited to technical data, drawings, designs, software, software improvements and/or enhancements, derivative works and mask works. [sic] Whether specially ordered or commissioned, made by Seller alone or jointly with others in connection with this Order are hereby assigned to the Seller. However, the Seller agrees to make available all technical data, drawings, designs, software, software improvements and/or enhancements, derivative works and mask works to the Buyer for this contract-project. In addition, the Buyer and Seller agree that the Buyer is allowed to use all the technical data, drawings, designs, software, software improvements and/or enhancements, derivative works and mask works on any future project’s [sic] for their own use but not involving any other companies without the specific written approval of the Seller!It will be noted that the change to cl 20 appears only to be one of emphasis. There was no definition of “proprietary legend” in the terms and conditions, and it was not submitted that it was a term of art in the trade. It is the redrafted cl 32 that lies at the centre of ACP’s case in this proceeding (and, speaking of emphasis, I note that the exclamation mark is not a typographical error in these reasons: it was part of the clause as agreed to by Messrs Ponfoort and Juric) .
For the sake of the narrative, I next refer to a series of technical drawings representing the design and spatial characteristics of the UHF being built for ASTA which Mr Wingrove caused to be prepared by a mechanical and engineering design company called Cannon Industrial Design Services Pty Ltd (“Cannon”) in August 2001. In the present proceeding, they were referred to as “CAD drawings”. Mr Wingrove commenced by sending some drawings of his own to Cannon. Those drawings were not dated, but I note that the CAD drawings themselves, as subsequently prepared by Cannon and supplied to ACP, are dated variously 11, 22 and 27 August 2001. Although each drawing had provision for a date upon which it was checked, only one of them was so dated, that date being 12 December 2001. From this, I would infer that the drawings were most probably supplied by Cannon to ACP in the month following August 2001 – the exact date is of no moment – and it is common ground that they were then provided to ASTA under the contract of 10 August 2001.
The UHF was delivered to ASTA on 7 March 2002.
The next relevant series of events occurred in 2005, when BAA was preparing for the production of certain panels to be used in the wings of the new 787 aircraft (then referred to internally as the “7E7”). BAA contracted Marand Precision Engineering Pty Ltd (“Marand”) to undertake what was described as a “trade study” for the production facility for the 787 panels, of which the trim and drill cell was a component. Marand was then contracted (as Peter Steele, an engineer working on the 787 project for Boeing, put it) “as the sole integrator of the manufacturing equipment for the ‘detail’ parts” which BAA was producing for that aircraft. That meant that Marand would (again according to Mr Steele) “design and build entire production systems, source the necessary components and equipment that make up the facility and, where necessary, organise custom made equipment, which [was] either designed in-house or supplied by another contractor”.
At some point inferentially in early 2005, Conrad Sevenster, an engineer/designer then working for Marand who came to be most closely associated with this project for BAA, suggested to the engineering staff at BAA that a UHF might be used to hold the wing panels in place while they were being trimmed and drilled, and (subsequently) while they were being subjected to non-destructive testing. Mr Sevenster was told that, if that were to be the course adopted, BAA would want to use the same actuators as had been used on the UHF installed in March 2002. This was, Mr Sevenster was told, “to ensure that [BAA] used common components across its various manufacturing systems”. Someone from BAA asked Mr Sevenster to obtain a quotation from ACP for the supply of those actuators. Accordingly, Mr Sevenster contacted ACP with that request. The contact appears to have been by telephone, and there is no direct documentary evidence of it. It may be inferred, however, that it was in March or April 2005.
By a letter dated 21 April 2005 over the hand of Mr Wingrove, ACP provided the quotation requested. It included the following technical specifications for the actuators (of which there were to be 50):
·Positioning accuracy of actuator +/-0.05mm @24 deg C
·Repeatability in one direction only under load =/- 0.1mm @24 deg C
·Stroke length 300mm
·Dynamic force 200N
·Static force 400N
·Maximum side rod load while moving 120N
·Speed/no load 15mm/sec
·Max current draw at load 2.0amps
·Supply voltage 24Volt DC
·Lateral deflection accuracy at 100mm stroke @ 50N [0.10mm
·Lateral deflection accuracy at 300mm stroke @ 50N ≤0.75mm
·Optional lateral deflection at 300mm stroke @ 50N ≤0.30mm
·Non rotating rod.
·Front mounting flange.
·Self braking.
·Female thread rod end for end effecter mounting.
·Encoder feedback on motors for positioning.
·24Vdc motor.
Although not the subject of direct evidence, for reasons which will appear, it seems that both BAA and Marand considered that ACP’s quotation was much too expensive. Marand’s attempts to deal with that issue involved, in sequence, contacting Elmeq directly, seeking to persuade ACP to lower its price and obtaining the actuators from another supplier, which was the course ultimately followed.
However, as at 21 April 2005, BAA had not yet decided to use a UHF for holding the wing panels while they were being trimmed and drilled. In the second half of May 2005, other options were still being considered, including having a separate holding jig for every panel being worked on. However, it seems that a decision to use a UHF had been made by 30 May, since, on that day, Mr Sevenster emailed Mr Steele with a request for “the pogo bed drawings”, which, Mr Sevenster accepted under cross-examination, were the drawings for the UHF installed in March 2002. He asked for the drawings “to make sure [they didn’t] repeat any sort of difficulties in the operations persons might have with new equipment”, that is to say, to learn from what had gone before. His request for the drawings was passed by Mr Steele on to Mr Vrbetic, who replied that BAA did have the drawings “in AUTOCAD format”, adding:
However the electronics side of things is owned by ACP Machinery and we do not have drawings for this. This has become redundant now for a new fixture due to design improvements by ACP. The frame is a simple welded construction with nothing spectacular about it.
Mr Steele requested Mr Vrbetic to send the drawings, or a link to them, “anyway”, which Mr Vrbetic immediately did. Those drawings were the CAD drawings which had been prepared for ACP by Cannon in 2001. In a similar vein, on 31 May 2005 Mr Sevenster asked Mr Steele for “the details and suppliers of the vacuum generator and other vacuum technology” being used on the 2001 UHF, and, on 17 June 2005, Mr Steele replied that “the pogo was a turnkey system, the supplier was ACP. To find out who they used we’d probably have to dig around a bit more.”
On 28 June 2005, Mr Sevenster emailed Mr Wingrove with respect to the ACP quotation of 21 April 2005. He said that “we are now into the fine detail arguments with our clients”, and asked for clarification on one aspect of the ACP specification. He followed that with another query on 30 June 2005. Mr Wingrove responded to both by email dated 2 July 2005. Save to note that, at this stage, it would have appeared to ACP that its quotation was under active consideration, nothing further needs to be said about this correspondence.
In evidence is an email sent on 11 July 2005 by someone called Grant Forest, a “Reliability Engineer” at BAA. The email was sent to Elmeq, and stated that BAA had “a system that uses 400+ Elmeq pogo-sticks”. A part number and customer number were given. Mr Forest’s inquiry was whether Elmeq had an Australian agent. By email of 13 July 2005, Mr Kesterloo said that Elmeq’s Australian agent was ACP, and provided contact details, including the telephone numbers of Messrs Wingrove and Ponfoort.
On 3 August 2005, Mr Sevenster sent an email to Mr Steele asking who supplied the vacuum cups used on the actuators installed in March 2002. He received no response to that email, but, in his affidavit evidence, Mr Steele said that “[u]ltimately the original vacuum cup used on the [2002] UHF would not work on the 2005 UHF”, because of the more curved contour of the parts being made for the 787 and the lack of a swivel mechanism on the mountings of the vacuum cups on the original UHF. I gather that what Mr Steele meant by “ultimately” was at least subsequent to the matters next recounted below.
Also on 3 August 2005, Mr Sevenster addressed another email inquiry to Mr Wingrove, saying “we are getting into the very detail [sic] phases now”. He added:
With regards [sic] the vacuum cups on the pogo bed. What info can you give me and perhaps drawings too? We want to use the same technology, and not having to reinvent the wheel there. Can you assist?
Mr Sevenster received no reply to that inquiry. In the result, Marand used vacuum cups for incorporation into the UHF for the 787 panels which were quite different from those used in the UHF built by ACP.
On 12 September 2005, Mr Steele took a number of close-up photographs of an actuator removed from BAA’s existing UHF. In his evidence, Mr Sevenster said that he believed that he requested Mr Steele to take these photographs so that he, Sevenster, could contact the manufacturer of the actuator with an inquiry about a direct purchase. Mr Steele said that, sometimes, an Australian supplier might apply a substantial mark-up on the price of “overseas components”, and that it was sometimes possible to obtain the components directly from the overseas manufacturer at a lower price. Although neither witness gave evidence of a specific communication between them with respect to the purpose of Mr Steele’s photographs, the objective facts are consistent with the evidence of both.
It was submitted on behalf of ACP that I should find, contrary to the evidence referred to in the previous paragraph, that the real purpose of Mr Steel’s photographs was to furnish Mr Sevenster with certain technical specifications for the actuators used on the UHF manufactured by ACP. One of the photographs was of the identification plate on an actuator, which read as follows:
Part: LC#T420AA6324
Serial no.: B010831/B-37463-0151424
Supply: 24 VDC Current: 2A / 200 N Speed: 16 mm/s Load: 200 N Stroke: 200 mm Temp range: 0 …45°C Protection: IP 54 Field Bus: CAN Protocol: CANopen Elmeq Nederland B.V., Broeikweg 25,
2871 RM Schoonhoven, The Netherlands.
It was suggested to Mr Steele that there was no reason why he might not simply have taken a note of the Elmeq part number and given that to Mr Sevenster. He responded that it was “just easier to take a photo”. I have no reason to disbelieve that response. In this respect I found Mr Steele’s evidence to be credible and not contradicted by the objective materials before the court, such as they are. I find that, to the extent that Mr Steele provided the identification plate photograph to Mr Sevenster, he did so for the purpose of putting Mr Sevenster in a position to provide positive identification of the actuator in question in the inquiry which he then understood Mr Sevenster proposed to make of Elmeq directly.
On 12 September 2005 Mr Sevenster sent an email to Elmeq referring to the 500 actuators which it had supplied for the UHF installed in March 2002. After stating that the earlier supplier was ACP, Mr Sevenster’s email continued:
Can you help us with the following:
1. I would like to have a price from you (CIF Port Melbourne in Australia)
2. for 110 of the same units
3. plus the CAN control system (as before)
4.the entire system must be delivered fully operational and programmed, which I can interface to my PLC
5.the data format will be similar to the previous system you supplied, which I believe was in a table format, in a txt file, from my PLC to your controller(?)
6.the price to include electrical drawings, and operation manual for the actuator and the controller, plus how the [sic] to operate the control program, and maintenance requirements
7.the stroke of these units are 200 mm, please quote for 300 mm too
8.please provide a data sheet on these units (asap)
For the purpose of identification, attached to the email were the photographs taken that day by Mr Steele. Mr Kesterloo replied on 15 September 2005, stating that the actuators made in 2001 were “specially designed for our agent ACP Machinery”, and requested Mr Sevenster to contact Mr Wingrove about the matter.
That response from Elmeq was not encouraging for Marand or for BAA. On 15 September 2005, Rohan Stocker, the general manager of Marand, sent an email in the following terms to Michael Loh, the Production System Integration Lead for the 787 project, to Mr Steele, and to Rex Ellingham, who did not give evidence but who was described by Mr Loh (in the course of cross-examination) as “the manager responsible for buying the equipment”:
Conrad again spoke to … Elmeq last night in the Netherlands. They said they would send an email with info / price this morning. This morning we received an email from Elmeq stating that we must deal through ACP only. ACP are a one man show and he is on site at the moment and cannot meet with us until next Tuesday. I will be calling them to bring this meeting forward. Do we have HdH’s permission to discuss the original supplier order pricing with ACP and Elmeq. I want to review in detail the reason for the cost increases.
On the same day, Mr Loh emailed Mr Ellingham as follows:
If there is a problem from the proprietary information perspective, we can step in to facilitate that meeting. What do you think?
The meeting which Mr Stocker wanted to bring forward, and which Mr Loh thought he could step in to facilitate, was in fact held on 20 September 2005. I shall return to it in its proper sequence below.
Mr Steele’s next step was to send an email to Mr Vrbetic, as follows:
We have got some really high prices from ACP for the pogos ($5k). Marand have tried to go straight to the supplier but have had no luck (see below). Marand are looking into it but are also looking at using another supplier. Can they borrow that pogo which is off the table and sitting on the bench to look at?
Mr Vrbetic responded that the actuator in question was being sent away for repair, and needed to stay with “maintenance”. He added:
Also the price you are quoting appears to be the correct price for a low volume order so I do not know why Marand are complaining. If you want to know more about rom pricing you should tell me more about what you are doing so that I can help. As currently I know nothing of what you are trying to quote on.
Also it would not be ethical to send the actuator to another supplier to try and build a copy.
It seems that nothing further came of Mr Stocker’s idea of using one of the ACP actuators as a basis for obtaining quotations from other suppliers.
Something did, however, come of Mr Stocker’s request that Mr Sevenster look for alternative suppliers of actuators. Between 3:14 pm and 5:32 pm on 15 September 2005, Mr Sevenster sent email correspondence to 12 potential suppliers. These emails were not all in the same terms (being, it seems, modified to suit the circumstances of the particular addressee), but all included the following passage:
The supply from you must provide a means to drive all the actuators, not necessarily simultaneously. The current solution in operation does not have servos, but steppers, each with an inbuilt drive card. This works well. All the actuators are “daisy chained”, meaning the control cable loops from the one to the next. This way we did not need an individual control cable per actuator.
We are pressed for a solution. We are in final discussion with our client to receive the order. So, could you please bear with us and give this request a good hard look and to supply us with a price by close of business Friday the 16th Sep? That will be very much appreciated.
Can you help us with the following:
1. I would like to have a price from you (CIF Port Melbourne in Australia)
2. for 110 of the same units
3. plus the control system
4.the entire system must be delivered fully operational and programmed, which I can interface to my PLC
5.the data format will be similar to an existing system which is the address of each actuator, and each actuator’s extended position. This data will be supplied to you in a table format, in a txt file, from my PLC to your controller.
6.the price to include electrical drawings, and operation manual for the actuator and the controller, plus how the [sic] to operate the control program, and maintenance requirements
7.the stroke of these units are 200 mm, please quote for 300 mm too
8.please provide a data sheet on these units (asap)
In two of the emails, at the end of item 5 in the numbered list the following was incorporated: “… (the existing system uses CANOPEN control software)”. In his affidavit, Mr Sevenster said that the specifications which he included in the emails “were taken directly from the quote I received from ACP on 21 April 2005”. However, as appears from the extract above, nothing in the emails was remotely similar in point of form (as distinct, to an extent at least, from the content of some technical data) to the table set out in that quotation (see para 35 above).
Under cross-examination, Mr Sevenster accepted that the first paragraph in the extract above was referring to a field bus system of control. How he came by that information was not something to which he was prepared to swear. He accepted that there were various ways of delivering the necessary commands to the actuators in a system such as he was then contemplating, including multiplexing, “RS485”, “RS232” and, of course, field bus. It was put to him that he was able to make the statement in the paragraph above because he had seen the words “Field bus” on the identification plate of the actuator shown in the photograph taken by Mr Steele only three days before. I consider that to be a reasonable inference to draw, and Mr Sevenster’s treatment of the subject in cross-examination was unconvincing. I had the impression that he had no actual recollection of how he came to be able to make the “daisy chain” statement in the email, and that he was attempting to give the court the benefit of what he would have known at the time, and therefore of what he would have been able to say. I find that Mr Sevenster made that statement because of his knowledge then very recently acquired as a result of viewing Mr Steele’s photograph.
I find likewise with respect to the “CANopen” statement in two of Mr Sevenster’s emails sent on the afternoon of 15 September 2005. That too was stated on the identification plate of the actuator which Mr Steele had photographed. Under cross‑examination, Mr Sevenster frankly stated that the purpose of this additional information was “to reduce the number of permutations that the suppliers would answer us in”; that is to say, to bring the suppliers, from whom quotations were being sought in competition with that already received from ACP, directly to the kind of technology that BAA knew, from its previous experience with the ACP system, would work well.
That brings me to 20 September 2005, when the meeting foreshadowed in the Stocker/Loh/Ellingham email exchange of 15 September 2005 took place. It will be recalled that Mr Stocker noted that the “one man” at ACP was on site and would not be available to “meet with us” until the following Tuesday. That Tuesday was 20 September. The meeting was held at Marand’s office at 3.30 pm. Present were at least Messrs Loh and Steele from BAA and Mr Sevenster from Marand. I say “at least” for two reasons: first, Mr Loh said (in his oral evidence) that Mr Stocker was also at the meeting, and secondly, it is controversial whether Mr Wingrove was physically present or participated by telephone. In his affidavit affirmed on 1 September 2011, Mr Wingrove said that the purpose of the meeting was “to follow up on ACP’s quotation for [sic] supply of 50 actuators”. That seems to be uncontroversial, since there was an undated electronic notification of the meeting, over Mr Sevenster’s name, which stated that the purpose of the meeting was “to discuss the pricing of the pogos with ACP’s Mr Mark Wingrove”. Mr Wingrove himself also had an electronic diary entry for the meeting, the “where” part of the entry noting: “Marand Precision”.
It is also controversial what was said at the meeting. In his affidavit affirmed on 1 September 2011, Mr Wingrove said that he recalled saying to Mr Loh (who was sitting opposite him) words to the effect that ACP had a contract with Boeing that meant that the technology used in the UHF could not be used for subsequent projects without ACP’s authorisation. He said that neither Mr Loh nor Mr Steele responded to this, but that Mr Loh “just smiled”. Under cross-examination, Mr Wingrove adhered to this evidence without equivocation.
In his affidavit affirmed on 22 March 2012, Mr Loh denied (in those terms, ie he said “I deny …”) that Mr Wingrove told him that the technology used to build the 2001 UHF could not be used on subsequent BAA projects without ACP’s authorisation. He denied also that Mr Wingrove attended the meeting in person, that he (Loh) had knowledge of the contract between ASTA and ACP prior to the meeting, and that Mr Wingrove said to him that there was an existing contract between ASTA and ACP.
In his affidavit sworn on 22 March 2012, Mr Steele recalled that the purpose of the “conference” (as he called it) was to discuss the supply of actuators. He remembered “talking to ACP on the phone in the same room as Mr Sevenster of Marand”. Mr Wingrove was on the “other end of the call”. Mr Wingrove was not “physically at the … meeting”. Mr Steele denied (again, saying “I deny …”) that Mr Wingrove told him that the technology used to build the ACP machine could not be used on subsequent projects without ACP’s authorisation.
In his affidavit in reply affirmed on 6 July 2012, Mr Wingrove said that Mr Loh was “incorrect” to say that the meeting of 20 September 2005 was by way of teleconference. He said that that was the only occasion upon which he had ever met Mr Loh in person. He produced the original business card which Mr Loh gave him that day. Under cross-examination, Mr Loh maintained that he had never met Mr Wingrove, and could not explain how Mr Wingrove came to have possession of his business card.
In his affidavit affirmed on 28 March 2012, Mr Sevenster said that he had “no memory of the detail of the meeting”. It became clear when Mr Sevenster was cross-examined, however, that the truth of the matter would have been better rendered by a statement that he had no recollection whatsoever of the meeting or what was said at it.
I accept Mr Wingrove’s evidence about the circumstances of the meeting of 20 September 2005, and about what was said at it, in preference to the evidence of Messrs Loh and Steele. I do so for the following reasons. First, it is clear from Mr Stocker’s email of 15 September 2005 that the presence of Mr Wingrove at the meeting was important – sufficiently so for the timing of the meeting to be fixed so as to meet his convenience. That is unsurprising, as the whole point of the meeting was to discuss ACP’s quotation. Secondly, in the light of the fact that Mr Wingrove had in his possession Mr Loh’s business card, and of Mr Loh’s inability to put forward any other explanation for how he came by it, Mr Loh’s denial of ever having met Mr Wingrove cannot be accepted. There was no suggestion that there might have been some other occasion upon which, contrary to Mr Loh’s own evidence, he met Mr Wingrove. Thirdly, the clarity of Mr Wingrove’s recollection, as recounted under cross-examination, with respect to this meeting was manifestly superior to that of Messrs Loh and Steele. In relevant respects, Mr Loh’s evidence was forthright when it came to denials, but vague and, I would have to say, unsatisfactory when it came to recollections of what actually happened. As to Mr Steele, he struck me as making an exaggerated effort not to give evidence of something as to which he was not “absolutely positive”. He said that he was “fairly sure” that the meeting was by telephone. When asked whether he recalled Mr Wingrove making the statement to Mr Loh about the contract between ACP and ASTA, Mr Steele said:
[W]hen you’re trying to remember something that happened a long time ago, it’s – you know, it’s – if someone asked me about the weather eight years ago, and then asked me later on whether I remembered it, I probably wouldn’t, but something like that sounds quite memorable, so I would have remembered something like that, I believe, and I don’t remember something like that.
I am bound to say that Mr Steele seemed to be over-analysing his own thinking about what he recalled, rather than giving the court the benefit of what he actually did recall, or, alternatively, could not recall. Fourthly, and finally, I do not regard it as at all improbable that Mr Loh would simply have smiled, as Mr Wingrove said he did, in reaction to the latter’s comment about ACP’s contractual rights: although he (Loh) had no knowledge of the terms of the contract to which Mr Wingrove referred, he was aware that the use of actuator systems based on those installed in 2002 may have involved “a problem from the proprietary information perspective”.
At the meeting on 20 September 2005, there was no resolution of the question whether ACP would reduce its quoted price for the actuators for the 787 UHF, but it did offer a reduction in the days that followed. In an email sent to Mr Sevenster on the morning of 23 September, Mr Wingrove said that, for 100 units with a 300 mm stroke length, there would be a reduction of $590 per unit. He did not, at that stage, offer a new price for units with a 200 mm stroke length. According to the evidence of Mr Sevenster, the reduced price for the 300 mm stroke length actuators was still too expensive.
Also on 23 September 2005, Mr Sevenster requested that he and Andrew Taber, an electrical engineer subcontracted to Marand, be permitted to have “a session with the pogo bed technician”, to have access to the pogo bed itself, to disconnect a pogo, and to see “electrical drawings, or user manual for the software, etc”. In reply to those requests, Mr Loh suggested that there be a discussion on the following Tuesday, when Mr Vrbetic could be present. According to Mr Loh, the discussion took place on 28 September 2005, but he was unable to recall anything about it (or even whether he participated). Mr Sevenster said that he and Mr Taber did visit the site of the UHF installed in 2002, but nothing was disconnected or disassembled because BAA could not afford to jeopardise its production schedule.
From Mr Sevenster’s interest in the actuators in the existing UHF it may be inferred that, at this stage, Marand was intending to use equivalent units in the UHF which BAA had asked it to construct for the 787 project. That inference derives confirmation from an email exchange between Mr Steele and Mr Sevenster on 3/4 October 2005. Mr Steele asked whether there were “any updates on [his] search for a cheaper pogo?”, to which Mr Sevenster responded that there were not, but that there seemed to be “no need”, since BAA was going to “supply the pogos from the [Breton] bed”. In his affidavit, Mr Steele paraphrased this as: “… the current plan was for BAA to take 100 actuators out of the 2001 UHF and use them for the new machine.”
It seems that the correspondence which Mr Sevenster sent to potential suppliers on 15 September 2005 was not productive of the results which he was seeking, since, at some point thereafter, he made telephone contact with John Cunningham of Motion Technologies Pty Ltd (“Motion Technologies”). Motion Technologies had not been a recipient of the 15 September correspondence. There is no direct evidence as to the content of the conversation between Mr Sevenster and Mr Cunningham, but it may be inferred that the former asked the latter to submit a quotation for the supply of actuators.
On 19 October 2005, Mr Cunningham sent Mr Sevenster a “dxf” file for an actuator model which he (Cunningham) described as “the best on hand at the moment”. Before he had opened that file, Mr Sevenster responded to Mr Cunningham by forwarding to him a copy of one of the emails which he had sent to the other potential suppliers on 15 September, describing it as the preliminary specification for the type of actuators required. The forwarded email contained the passage set out at para 46 above. When Mr Cunningham received the email, and presumably had it printed, he made a number of handwritten notations on it, including specification details that remained unclear, and which he needed to know. They were force, speed and mass, and whether the control loop would be open or closed. The “daisy chain” aspect of Mr Sevenster’s email was interpreted by Mr Cunningham as indicating that the actuators would be controlled in a field bus arrangement.
On 20 October 2005, Mr Cunningham sent Mr Sevenster the “3D file” for the actuator which formed the basis of his correspondence of 19 October 2005. At the same time, he clarified a minor, and presently irrelevant, point of confusion on the type of mounting flange used in that actuator. Then, on 25 October 2005, Mr Cunningham sent Mr Sevenster a selection of extracts from the catalogues of suppliers of actuators and associated components – servo motors, stepper motors, miniature motors, and screws. There must have been at least one subsequent telephone conversation between Mr Cunningham, or someone on behalf of Motion Technologies, and Mr Sevenster, or someone on behalf of Marand, since Motion Technologies’ quotation, forwarded on 3 November 2005, was clearly the result of the making of choices and discriminations which were not the subject of any written communication as between those parties. That quotation was for 110 actuators, together with associated components and some services. The actuators themselves, and the stepper motors, were identified parts from third-party suppliers.
Also on 3 November 2005, Mr Sevenster thanked Mr Cunningham for his hard work, and said that he would require “a final 3D model, inclusive of all the systems, showing front mount option”. He also requested “a more detailed schematic of how the control would work … also showing what requirements your system would place on our system”. In reply the following day, Mr Cunningham said that he had commenced a 3D model of the “complete actuator”, and asked for “an example of the table format and the txt file that you wish the controller to interpret”. In compliance with that request, on 8 November 2005 Mr Sevenster sent Mr Cunningham examples of the files that were used to control the operation of the actuators on the existing UHF at BAA, together with two “screen captures” from the control program. In his evidence, Mr Cunningham said that he looked at these things, but made no use of them. He denied that the information assisted him, adding, “[i]t just gave us a picture of what was acceptable”. He accepted cross-examining counsel’s proposition that he “took [the information] on board and put [it] into [his] accumulated store of knowledge for the task that [he] had to do”.
A meeting between Marand and Motion Technologies was arranged for 10 November 2005. It seems that Mr Cunningham had other commitments on that day, but would be able to meet by teleconference. However, he told Mr Sevenster that, if Motion Technologies were “in a favourable position with respect to order placement, then I will cancel out of my prior commitment ….” In an email of 8 November 2005, Mr Sevenster’s response to that comment was:
I will be straight, you are not the front runner, as another company has already provided such a system to HdH about four year[s] ago. That system was imported from the Netherlands. It has had no failure in four years. That isn’t bad! However, they are expensive, but perhaps for a good reason! For you to stay in the race you would have to prove beyond a shadow of doubt your technical ability and competence, as well as the product’s mechanical specification capability. Also what support services you will render toward your product.
The “other company” was, of course, ACP.
In his email of 8 November 2005, Mr Sevenster also set out the detailed specifications required by BAA (where “**” indicated BAA’s “minimum performance requirements”) as follows:
Positioning accuracy of actuator ±0.05mm @ 24 deg C**
Repeatability in one direction only under load ±0.1mm @ 24 deg C**
Stroke length 300 mm**
Dynamic force min 200 N**
Static force min 400 N**
[Max] side rod load while moving 120 N
Speed / no load min 15mm/sec**
[Max] current draw at load 2.0 amps
Supply voltage 24 VDC**
Lateral deflection accuracy at 100mm stroke @ 50 N max 0.1 mm**
Lateral deflection accuracy at 300mm stroke @ 50 N max 0.75 mm**
Non rotating rod**
Front mounting flange**
Self braking**
Female threaded rod-end for end‑effector mounting Encoder feedback on motors for positioning Power source is 24Vdc motor.On 9 November 2005, Mr Cunningham sent Mr Sevenster a table which indicated whether the Motion Technologies quotation complied with these specifications: in each case, his notation was either “comply” or “likely to comply”.
At the meeting of 10 November 2005 referred to above, the most significant development was a major change in the scope of the project for which Motion Technologies was being asked to quote. Whereas originally the quotation was for the supply of the actuators and some components, Marand now asked Motion Technologies to quote on a turnkey solution which included wiring, installation, testing and commissioning. Marand itself would build, or arrange for the building of, the UHF bed as a structure, but Motion Technologies would, if its quotation were accepted, be responsible for the actuators and their operation as an installed system. On 22 November 2005, Motion Technologies submitted its quotation for such a turnkey solution. That incorporated some minor changes to the specifications of the actuators themselves (over what had been submitted on 3 November), but they are of no present concern. The quotation was the subject of further communications between Marand and Motion Technologies, and was formally clarified, and in some respects amended, by correspondence from Motion Technologies sent on 1 December 2005.
Ultimately, Motion Technologies was selected by Marand to supply the turnkey solution referred to. There is no evidence of when, or how, that decision was made or communicated to Motion Technologies. There are minutes of a meeting between representatives of these two companies on 8 December 2005, and they appear to be consistent with a situation in which Marand is then still requiring Motion Technologies to commit to particular requirements, or to supply further information. On 15 December 2005, however, there was an email from Mr Steele to Mr Sevenster, and from Mr Sevenster to Mr Cunningham, attaching the software which controlled the existing UHF (described by Mr Sevenster as “the ACP Pogo bed Citect software”). Mr Steele’s comment, which was passed on to Mr Cunningham, was that the programmers were happy with “the current system”, their main priority being that “each pogo can be programmed independently and … calibrated independently”. The provision of this level of detail to Mr Cunningham is probably consistent with Mr Cunningham by then having been awarded the contract. Nothing, however, turns on the timing of this otherwise important event.
As mentioned earlier in these reasons, the production of the wing parts for the 787 involved not only the trim and drill process but, after that, non-destructive testing (or “NDT”, as it was described). In the affidavit of David Samwell, an engineer in the employ of BAA who supervised its tooling and tool design group, the NDT process was explained as being like ultrasound, whereby engineering staff at BAA could “look inside the material of a part to ensure that it [had] not been damaged during the manufacturing process”. This process required that the part being tested be held in place, and a UHF was to be acquired for the purpose. On this occasion, because of the mode of operation of the NDT equipment itself, the UHF would hold the part in a vertical, rather than in a horizontal, orientation. Otherwise, as I understand it, the principle by which the UHF would operate would be similar to that under which the UHFs of 2001 and 2005 operated, namely, the ability to hold the relevant part securely by means of actuators fitted with vacuum cups of some kind.
Mr Samwell was responsible for the production of a Statement of Work (or “SOW”, as it was described) for the NDT UHF, in which the relevant technical specifications and other requirements would be set out for the information of potential suppliers who would be asked to quote for the supply of this piece of equipment. In his evidence, Mr Samwell said that he intended that the actuators to be used in the NDT UHF should be the same as those that had been used in the UHF built by Marand. For the purpose of preparing a SOW, on 19 January 2006 he addressed the following request to Mr Sevenster:
I have been talking to Peter Steel [sic] for the requirements of the pogo’s [sic] you are using for the trim bed. Just to keep things equal the NDT fixture will require the same system, can you send me the details of the pogo’s [sic] you are going to use and the name and details of the operating system that is going to drive the pogo’s [sic], and how does this software integrate with the NC program for the trimming of parts.
Is it PC based software?
What requirements does it need?
I would appreciate it if you can get back to me before Tuesday next week, I would like to get the SOW out next week for the NDT fixture.
On the same day, Mr Sevenster sent the requested information to Mr Samwell, which included a representation, showing features in three-dimensional form with precise dimensions, of the actuator that had been used in 2005. The information also included the following specifications for the 2005 actuators:
POGO BED ACTUATOR SPEC
Description HdH requirement Positioning accuracy of actuator ±0.05mm @ 24 deg C Repeatability in one direction only under load ±0.1mm @ 24 deg C Stroke length 300 mm Dynamic force min 200 N Static force min 400 N Max side rod load while moving 120 N Speed / no load min 15mm/sec Max current draw at load 2.0 amps Supply voltage 24 VDC Lateral deflection accuracy at 100mm stroke @ 50 N max 0.1 mm Lateral deflection accuracy at 300mm stroke @ 50 N max 0.75 mm Non rotating rod** Front mounting flange** Self braking** Female threaded rod-end for end-effector mounting Encoder feedback on motors for positioning (as required to meet performance spec above) Power source is 24Vdc motor.
On 1 February 2006, BAA raised the SOW for the NDT UHF for the 787 project. Mr Samwell was the principal author of, and had overall responsibility for, that statement. The tool was described as “holding fixture … for use with AUSS scanner”. It was required to have 27 “programmable vacuum pogos”. The actuator specifications were the very ones that had been sent by Mr Sevenster on 19 January 2006, as set out in the previous paragraph. They were accompanied by the same representation as had been sent by Mr Sevenster. Where the list of specifications in Mr Sevenster’s email had been headed “POGO BED ACTUATOR SPEC” (as shown above), the corresponding list in the SOW was headed “Motion Tech. Pogo Actuator Specification”. This made Mr Samwell’s intention clear that the actuators to be used in quotations for the NDT UHF should be the same ones that had been used the previous year by Marand.
In the weeks following, a contract was let for the manufacture of the UHF for the NDT equipment. The actuators used were the same as those that had been used in the 2005 UHF, and were supplied by Motion Technologies.
ACP’S CASE IN CONTRACT
ACP’s case in contract involves two allegations of breach. Each is based upon cl 32 of the contract signed on 10 August 2001. The first allegation relates to the photograph of the identification plate on the actuator which Mr Steele sent to Mr Sevenster in September 2005. The second allegation relates to the inclusion of the actuator specifications in the SOW for the UHF to be used on the NDT equipment in 2006 (see para 70 above). Each was said to be an instance of the use by BAA of data which was prohibited by the terms of cl 32 of the contract. It is necessary to commence with the parties’ submissions with respect to the construction, and enforceability, of cl 32 itself.
For ACP, it was submitted that the information on the identification plate was “technical data” within the meaning of cl 32, that the final sentence in the clause, although expressed permissively, implied a prohibition upon use otherwise than in accordance with the terms of the permission, and that BAA “used” the data in question when Mr Steele sent his photograph to Mr Sevenster (notwithstanding that, ultimately, the actuators on the UHF constructed by Marand were not sourced from Elmeq), and when Mr Samwell incorporated the specification in the SOW. For the respondents, it was submitted that cl 32 was void for uncertainty, or, if the clause were valid, that the information on the identification plate was not “technical data” within the meaning of the clause, that BAA did not “use” that data merely by reason of Mr Steele having sent his photograph to Mr Sevenster, and that there was relevant connection between the table of specifications on which ACP sued and the specifications set out in the SOW. It is convenient to commence with the construction of cl 32, and with the respondents’ argument that it is void on account of uncertainty.
As noted above, the genesis of cl 32 was a provision in what appears to have been a standard form contract used by ASTA when obtaining goods or equipment from a supplier. Regrettably, the attention to which the clause was subject at the hands of Messrs Ponfoort and Juric left the parties with a provision which is problematic in a number of respects. I shall turn to those matters presently, but I propose first to consider the meaning, and reach, of the standard form provision. Where it is known that the relevant clause in the contract actually executed was a modification of the standard form provision, an understanding of the latter should provide a firm base line, as it were, against which to examine the terms to which the parties agreed.
Despite the reference in the title to the standard form of cl 32 to data and copyright, it is clear that the only subject of the provision was copyright. The dominant terms of the first sentence dealt with “original works of authorship”. The long list of subjects which were to be taken as included in such works – “technical data … mask works” – was concerned with the content by which the works referred to might be constituted. A document setting out technical data, for instance, may, depending on authorship, originality and other relevant matters, be a work protected by copyright laws. The second sentence was self-evidently apt to describe a required dealing in copyright. Generally, the clause consistently used terms derived from the copyright lexicon: works, original, author and authorship, tangible form, derivative works and mask works: see, in the case of the two last-mentioned terms, Title 17, s 103 and Ch 9 respectively, of the United States Code (in which respect I consider it to be presently irrelevant whether the protection thereby given to masks works is to be regarded, strictly, as copyright protection as such). Against these strong indications, the reference to “rights in data” in the heading to the clause is insufficient, in my view, to justify a construction of the standard form cl 32 which would have given rise to an assignment of, or to an agreement to assign, rights or interests other than copyright as such (particularly since, as I would infer, the drafting of the clause was the work of ASTA or a member of the Boeing group which had every opportunity to make any intention to effect a wider assignment explicit, but apparently chose not to do so).
It should be noted that the effect of the standard form cl 32 as so construed went further than to permit the buyer to reproduce the works referred to without fear of copyright infringement proceedings. It effected an assignment of the works as such, and involved an agreement to assign all right, title and interest in the works – thereby assigning that right, title and interest in equity – with the result that the buyer would thereafter be, or be entitled to become, the relevant copyright owner. The works in question were, of course, limited to those which had been “made … in connection with this order”. The assignment did not extend to works made otherwise which had been used by the seller in connection with the order. Objectively, I do not see anything improbable in the buyer of industrial equipment laying down a requirement that copyright in works made in connection with its order, the cost of which it would have assumed was factored into the price it was paying, be assigned to itself.
Clause 20 of the standard form terms and conditions had a different purpose. It did not purport to effect any assignment. Indeed, it was not in terms concerned with property such as might have been assigned. It proceeded from the assumption that, in relations such as would arise from the execution of a contract of this nature, the communication by the seller to the buyer of information and knowledge of the kind referred to might well give rise to obligations of confidence on the part of the buyer. To the buyer, and specifically to its engineers and technicians concerned with the performance of such a contract, it might not always be obvious whether particular pieces of information or intelligence had that character. Clause 20 was, in such a setting, a practical way of protecting both parties: the onus was on the seller to mark with a proprietary legend the information etc which it desired to protect and, where it did so, the onus was on the buyer to keep a lookout for any such legends and then to respect the restrictions on use which they implied.
It is now necessary to turn to the actual terms and conditions to which the parties in the present case agreed on 10 August 2001. There is a minor grammatical maladroitness in what, on a first reading, appears to have been the bifurcation of the first sentence as drawn from the standard form. It was submitted on behalf of ACP that the full stop after “mask works” should be a comma, and the respondents did not seriously resist that submission. I accept the submission, and consider that the clause should be read as commencing with the statement that “the parties expressly agree that … [various things] … are hereby assigned to the seller”.
Turning to the changes of substance which were made to the standard form, they were threefold: first, the word “Buyer” at the end of the first sentence was replaced by the words “the Seller”; secondly, the second sentence in the standard form clause was omitted altogether, such that there was in the amended clause no agreement to assign; and thirdly, two new sentences were introduced – those commencing “However” (to which I shall refer as the middle sentence) and “In addition” (to which I shall refer as the final sentence).
I think it is clear at least that the parties intended to remove from cl 32 any suggestion that works, or rights in works, were, or were to be, assigned by ACP to ASTA. The omission of the agreement on the part of the seller to execute all necessary documents to effect assignments is a strong indication of that. The retention of the formula “are hereby assigned to …” in the opening sentence of the amended clause, if that formulation is to be read literally, does convey the meaning that something was to be assigned, but, as the respondents themselves pointed out, such a reading would make no grammatical sense and would seem to be commercially pointless. Indeed, it was submitted on behalf of the respondents that the replacement of “Buyer” with “the Seller” at the end of the sentence made the provision nonsensical. Why would – for that matter, how could – the seller assign rights to itself? However, the variation was the result of the labours of laymen. I should, to the extent reasonably available, strive to give a meaning to the words they adopted which accords with their apparent purpose. That purpose was, I infer, to provide for the rights to which cl 32 referred to be retained by the seller, ACP. Had they been professionally advised, Messrs Ponfoort and Juric would, I infer, have made a slightly more expansive substitution than they did, such that the words “assigned to Buyer” would have been replaced with the words “retained by Seller”. I find that that is what they intended and, although there was a degree of grammatical clumsiness in what they did, I would construe cl 32 accordingly.
As so construed, the (reconstructed) opening sentence of cl 32 would have left ACP with the copyright referred to in the clause. ASTA would thus have been exposed to the risk of infringement proceedings if it reproduced any of the works referred to, even in the course of installing, testing, commissioning, repairing or modifying the UHF for which it paid ACP good money. This is where the middle sentence of the clause came into play. Although ACP would retain the copyright, it would make available the data etc contained in the works “for this contract-project”. The final sentence was an extension of the middle sentence. By its terms, ASTA was “allowed to use” the data etc on any future project. Why did not the parties simply add this to the end of the middle sentence, such that it concluded “for this contract-project or any future project”, or simply “for any project”? The reason is clear: they wanted to make a different provision with respect to future projects. Specifically, they wanted to supply a qualification to the permission to use which went beyond anything intended with respect to the UHF project with which they were then dealing. That qualification was to limit future use to situations in which ASTA itself was the user and no other companies were involved without the specific written approval of ACP.
Grammatically, I do not see anything unclear or ambiguous about the middle and final sentences as so understood. At the level of commerce rather than of grammar, when it is understood that the clause as a whole is concerned with rights which ACP presumptively had from the outset (ie standing outside any such entitlements and prohibitions as were expressed in the clause itself), the prohibitory consequences of the expressly permissive words of the final sentence is intelligible and clear: having such rights in any event, ACP permitted ASTA to engage in a limited range of conduct, but drew the line at a project which would involve other companies where its own specific written approval had not been obtained.
In the submission of the respondents, part of the factual matrix in the context of which the final sentence in cl 32 was to be construed was the circumstance that ASTA was a builder of aircraft components, not of machine tools and associated equipment. When the sentence permitted ASTA to use the data etc on any future project, the contemplation must have been that it would employ contractors for the purpose, as it had always done in the past. The expression “any other companies” could not have been intended to include such contractors. If this submission were accepted in its absolute form, however, it would rob the final sentence of any work to do. In a practical setting, the point at which the engagement of a contractor on a future project otherwise the concern of ASTA itself would involve a contravention of cl 32 (or, more accurately, an infringement of the copyright which cl 32 assumed to exist) might indeed have been problematic, but the present case does not present challenges of that kind. On any view, the permission granted to ASTA in the final sentence was intended to stop short of the kind of turnkey project for which ACP’s own tender had been accepted in 2001, such as the projects let out to Marand in 2005 and to the supplier of the UHF for the NDT machine in 2006.
I would construe cl 32 accordingly. I reject the respondents’ submission that the clause is void for uncertainty.
The respondents also submitted that there was a tension between cll 20 and 32 of the terms and conditions to which the parties agreed on 10 August 2001 which should be resolved in favour of the former because of its clear and categorical wording. That is to say, they submitted that ASTA was entitled to the unrestricted use of any knowledge, information, drawings, designs, data and computer programs which ACP had not marked with a proprietary legend. I do not accept that submission. In the way I have construed cl 32, there was no tension with cl 20. The amendments made to what had been the standard form of cl 32 were merely to adjust the copyright entitlements of ACP in situations in which copyright would otherwise exist. Clause 20 remained relevant to situations of the kind to which I referred in para 77 above.
Although I have rejected the respondents’ uncertainty argument, I have done so by construing cl 32, the result of which is that ACP’s case in contract cannot succeed. That case did not depend upon the technical data which, ACP alleged, was subsequently used by BAA being protected by copyright. Rather, it was said that the final sentence in cl 32 of the terms and conditions contained a free-standing prohibition with contractual force in its own right. For reasons which I have attempted to explain above, that case must be rejected.
ACP’S COPYRIGHT CASE
The first of two works upon which ACP sues in copyright is Att 1 to the contract executed on 10 August 2001 (see para 28 above). The alleged act of infringement is the reproduction of the table of technical data set out in that attachment for the purposes of the SOW raised on 1 February 2006 (see paras 69-70 above). For that purpose, ACP contends that the table in the SOW reproduced a substantial part of Attachment 1 to the August 2001 contract.
Attachment 1 is on any view an original literary work. It is a self‑contained document (albeit that it was intended to be, and was, attached to a contract) consisting of text and data which convey meaning. The extract which I have set out at para 28 above contains about one half of the whole attachment. For reasons given in para 29 above, it must be held that the authors of the attachment were employees of ACP at the time. The respondents’ resistance to my acceptance of the subsistence of copyright in Attachment 1 was misplaced. Perhaps unsurprisingly in the light of the weighting of ACP’s submissions, they focussed upon the extent of Mr Wingrove’s contribution to the lines of data that appeared in the table of specifications, and upon the intellectual effort which he brought to that task. But that table, though important on the subject of infringement, was only an element of what was claimed to be an original work. Even if the table had been lifted directly from a non‑ACP source, the attachment as a whole would not thereby have been rendered non‑original. I do, therefore, uphold ACP’s subsistence case in relation to Attachment 1.
I turn then to ACP’s infringement case, to the extent that it relates to Attachment 1 to the contract. As mentioned earlier in these reasons, the actuator specifications in the 2006 SOW were a direct copy of the specifications sent to Mr Samwell by Mr Sevenster on 19 January 2006. ACP’s case is that ASTA or BAA had previously sent Mr Sevenster the specifications from Attachment 1 to the contract of 10 August 2001. No such sending was, however, directly established on the evidence. Mr Steele’s photographs of 12 September 2005 are, of course, unhelpful to ACP on its copyright case, since they were neither a direct nor an indirect copy of Attachment 1.
What is clear is that the table of specifications sent by Mr Sevenster on 19 January 2006 was almost identical to the like table which he sent to Mr Cunningham on 8 November 2005 (see para 64 above). The table of 19 January 2006 was, I infer, copied from the table of 8 November 2005. Under cross‑examination, Mr Sevenster said that the latter was derived from the ACP quotation of 21 April 2005. Although that evidence was challenged by ACP, it is consistent with the objective indications, and I accept it. The only respect in which the table of 8 November 2005 departed from the quotation was the omission of the item “Optional lateral deflection at 300mm stroke @ 50N ≤0.30mm”which was, I infer, an option offered by ACP which was not considered necessary when the specifications were sent to Mr Cunningham. By contrast, there are several differences of substance between the table in Attachment 1 to the 2001 contract and the table sent to Mr Cunningham on 8 November 2005. They include the addition of the item “Repeatability in one direction only under load”, the omission of the items “Maximum side rod load while static with 50mm dia vacuum cup attached”, “Bus operation protocol (CAN-open)” and “Harting type electrical connection plug and socket” and the different values for a number of the specifications, including particularly in relation to lateral deflection accuracy values. There is also one minor terminological idiosyncrasy in the table of 8 November 2005 which traces its origin to the quotation of 21 April 2005 rather than to the attachment of 10 August 2001. The first entry in Attachment 1 is “positioning accuracy”. In both the quotation and the communication of 8 November 2005 the words “of actuator” are added. Had Mr Sevenster been copying, and modifying, the attachment rather than the quotation, this would have amounted to a remarkable coincidence.
Counsel for ACP argued that the differences between Attachment 1 and the 2006 SOW may have been technically significant, but they were immaterial in a copyright context because they did not detract from the proposition that what was taken represented a substantial part of the copyright work. That might have been a submission of some force had it been established that Mr Sevenster did have reference to the work, and selected a substantial part of it, when he sent the table to Mr Samwell on 19 January 2006 (or when he sent the specifications to Mr Cunningham on 8 November 2005). But that has not been established. In the previous paragraph, I was not concerned to resolve whether a substantial part of the work had been taken, but, rather, whether any part of the work had been reproduced at all. This is important because, while indirect copying would get ACP home on infringement, there must have been an unbroken chain of reproduction between the copyright work and the allegedly infringing work. ACP has not made good its factual case at this level.
For the above reasons, I find that the table of specifications sent to Mr Samwell by Mr Sevenster on 19 January 2006, and thereafter reproduced by BAA for the 2006 SOW, was not an indirect reproduction of the table of specifications in Attachment 1 to the contract of 10 August 2001. This aspect of ACP’s copyright case must be rejected.
The second work upon which ACP sues in copyright is constituted by the CAD drawings. It is common ground that they are an original copyright work, that they were supplied by ACP to ASTA and that they were reproduced by BAA when it supplied them to Marand at the end of May 2005. That reproduction was, therefore, an infringement of copyright. The question at issue is whether ACP was and is the owner of the copyright and entitled to sue on it. That question arises because the CAD drawings were not the work of ACP – they were the work of Cannon. The respondents make two submissions on the question of ownership: (1) that it has not been proved that the authors of the CAD drawings were employees of Cannon; and (2) that a purported assignment of copyright as between Cannon and ACP was ineffective.
ACP’s first response to these ownership points raised by the respondents is to rely on s 126B(2) of the Copyright Act 1968 (Cth) (“Copyright Act”), which provides:
If a copy of the work or other subject matter, or the packaging or container in which the copy is packaged or contained, bears a label or mark stating that a person was the owner of copyright in the work or other subject matter at a particular time, then the person is presumed to have been the owner of the copyright at the time, unless the contrary is established.
It is admitted on the pleadings that the CAD drawings bore “a copyright notice which made a claim that ACP was the owner of the copyright in the CAD drawings”. But the “particular time” to which the notice related was neither alleged in the Second Further Amended Statement of Claim nor admitted in the Further Amended Defence. The CAD drawings do bear a notice of the kind referred to in s 126B(2), but the date is stated to be “1999”. That is well before the creation of the drawings themselves. On the evidence in this case, it has been established that ACP was not the owner of the relevant copyright in 1999. The presumption in s 126B(2) can, therefore, be of no assistance to ACP.
Turning to the respondents’ points as such, the first is important because, for Cannon to have been the owner of the copyright in the CAD drawings at the point of their making, it was necessary for the author or authors to have been in its employ: Copyright Act, s 35(6). Frederick Wasmer, the director of Cannon (and accepted by the respondents as having been, at the relevant time, an employee of Cannon) gave evidence that he instructed his “design team at Cannon” to prepare the drawings. He was not cross-examined. His affidavit, in which that evidence was contained, was filed on 1 September 2011, some 19 months before the start of the trial. On 15 April 2013, a week before the start of the trial, the respondents filed their outline of submissions, and it contained no suggestion that it would be contended that Mr Wasmer’s evidence that the CAD drawings were prepared by the “design team at Cannon” would be insufficient to prove that the work had been done by employees of Cannon. On the first day of the trial, 22 April 2013, counsel for the respondents gave me the benefit of a short opening, before ACP’s first witness was called. Again, there was no suggestion that such a contention would be made. Had it been made, either in the outline or in the opening, counsel for ACP would, of course, have been able to deal with the matter by evidence. Given this forensic background, I regard the submission ultimately made by the respondents on the point as quite unmeritorious.
I would hold that, in its most natural sense, the expression “design team at Cannon” is to be understood as referring to the design staff employed by Cannon. It is quite possible that the designers concerned were contractors, or in some other relationship with Cannon, but that would have been a matter to be tested with Mr Wasmer under cross-examination. The respondents chose not to follow that course, and cannot now be heard to submit that the most natural sense of the expression should not be accepted. I would find that the author or authors of the CAD drawings was or were employees of Cannon, and that Cannon was thereupon the owner of the relevant copyright.
The second point concerns the means by which, as alleged by ACP, the copyright in the CAD drawings came to be assigned to itself. At the time when the drawings were delivered to ACP by Cannon, there was no written assignment, but Mr Wasmer’s evidence was that it was Cannon’s practice to allow its clients exclusive ownership of all rights, including copyright, in works produced by Cannon on behalf of those clients, and he confirmed to Mr Wingrove that that “would be the case” for the CAD drawings. As particularised in its Third Further Amended Statement of Claim, the agreement between Messrs Wasmer and Wingrove was made “in about August 2001”. Likewise, in a recital to a deed executed in 2011 to which I refer below, the agreement was said to have been made “in about August 2011”. There was, however, no evidence on the subject other than that of Mr Wasmer to which I have referred. I could not find any suggestion of Cannon making good on his confirmation that the copyright would be assigned to ACP, even orally. On the other hand, despite the oddity of the 1999 date, the CAD drawings as produced by Cannon did contain a copyright notice in the name of ACP. It was not suggested that, as between Cannon and ACP, the equitable copyright in the CAD drawings had not vested in the latter by reason of these events, and I consider that to be the appropriate conclusion to be drawn from them. In those circumstances, it was open to the parties later to perfect the equitable title by a legal assignment: see Roban Jig & Tool Co Ltd v Taylor [1979] FSR 130, 142; Acorn Computers Ltd v MCS Microcomputer Systems Pty Ltd (1984) 6 FCR 277, 282; Gold Peg International Pty Ltd v Kovan Engineering (Aust) Pty Ltd (2005) 225 ALR 57, 78-79 [81]-[82] and 92 [135].
That is what Cannon and ACP attempted to do in the present case. In about July 2011 (I say “about” because the document to which I proceed to refer was undated, the execution of the document at about that time is common ground and the actual date on which it was done is of no moment) Cannon and ACP executed a “Confirmatory Deed of Assignment”. It commenced with the following recitals:
A.In August 2001 Cannon was retained by ACP to make the Works, and all Works were created by Cannon’s employees during the course of their employment in collaboration with Mark Wingrove of ACP.
B.Pursuant to an oral agreement made in about August 2001 between Fred Wasmer, for and on behalf of Cannon, and Mark Wingrove, for and on behalf of ACP, Cannon assigned all Copyright subsisting in the Works to ACP.
C.ACP and Cannon have agreed to execute this deed to confirm that ACP:
(i)is; and
(ii)on and since the Effective Date for each Work, has at all times been,
the exclusive legal and beneficial owner of all Copyright subsisting in the Works, and to otherwise assign such Copyright from Cannon to ACP to the extent that such assignment has not already occurred.
The operative provision of the deed, headed “Confirmation of ownership of Copyright in the Works and Assignment”, was as follows:
Cannon:
(a)confirms that, with effect on and from the Effective Date for each of the Works, Cannon assigned to ACP; and
(b)to the extent that such assignment has not already occurred, Cannon hereby assigns to ACP, with effect on and from the Effective Date for each of the Works:
(i)all rights, title and interest in the Copyright subsisting in the Works;
(ii)any and all rights and remedies in relation to the Works;
(iii)without limiting (ii) above, all accrued causes of action, including the right to take action, as the owner of Copyright subsisting in the Work, against any third party for Copyright infringement; and
(iv)without limiting (ii) or (iii) above, the right to sue for past infringement of Copyright and the right to enjoy the reward of such action, including any damages or account of profits or other relief available at law (including at common law and pursuant to statute).
Under the deed, “the Works” were the CAD drawings, and “Effective Date” was the date on which they were made.
It was submitted on behalf of the respondents that subcl (a) of the operative provision of the deed was not in terms an assignment of copyright, but rather was an attempt to confirm what had been done, ineffectively, some years before. They submitted that what had not been effectively done in conformity with s 196(3) could not be the subject of a later “confirmation”, relying in this regard upon Insight SRC IP Holdings Pty Ltd v The Australian Council for Educational Research Limited (2012) 292 ALR 741, 762 [111]. It was further submitted that subcl (b) of the operative provision of the deed did not operate as an assignment because of the problematic nature of the words “hereby assigns … with effect on and from” a date about 10 years previous.
As I have said, what passed in 2001 was sufficient, as between Cannon and ACP, to constitute an assignment in equity of copyright in the CAD drawings. In July 2011, they put that in writing, and they did so by confirming the earlier unwritten assignment, and by making it clear that their writing operated as at the earlier date. What they did amounted to an effectuation, for the purposes of s 196(3), of the earlier assignment. With respect to the respondents’ argument based upon subcl (a) of the operative provision of the deed, I do not accept that the subsection cannot be invoked in circumstances where an unwritten assignment, because of the very terms of the subsection itself, did not have effect. That would deprive the provision of much of its utility. Rather, I consider that s 196(3) contemplates that there may have been events which would amount to an assignment imperfect at law, and permits the parties to perfect the situation – to give “effect” to the assignment – by the execution of written words.
I also accept that subcl (b) of the operative provision of the deed effected (to the extent that subcl (a) had not already done so) a legal assignment of the copyright in the CAD drawings. It was a matter for the parties to give that assignment a date of operation. It is to be noted that s 196(3) states a condition, not a temporal limitation. That is to say, the assignment does not have effect “unless” it is in writing. It is not provided that the assignment does not have effect “until” it is in writing. Once an assignment is put in writing, it is, in my view, entirely for the parties to give it an operative date, whether immediate, retrospective or prospective.
For the above reasons, I reject the respondents’ attack on the efficacy of the assignment of copyright in the CAD drawings from Cannon to ACP.
The respondents did have an estoppel argument, but it did not relate to ACP’s copyright infringement case with respect to the CAD drawings.
It follows that, to the extent that it relates to the CAD drawings, ACP’s copyright infringement case must be upheld. I shall hear from the parties on the subject of remedies.
I certify that the preceding one hundred and four (104) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jessup. Associate:
Dated: 26 July 2013
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