Apple Inc & Anor v Samsung Electronics Co. Limited & Anor
[2011] HCATrans 341
[2011] HCATrans 341
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Sydney No S392 of 2011
B e t w e e n -
APPLE INC.
First Applicant
APPLE PTY LIMITED (ACN 002 510 054)
Second Applicant
and
SAMSUNG ELECTRONICS CO. LIMITED
First Respondent
SAMSUNG ELECTRONICS AUSTRALIA PTY LIMITED (ACN 002 915 648)
Second Respondent
Application for special leave to appeal
FRENCH CJ
GUMMOW J
BELL J
TRANSCRIPT OF PROCEEDINGS
AT SYDNEY ON FRIDAY, 9 DECEMBER 2011, AT 10.24 AM
Copyright in the High Court of Australia
MR S.C.G. BURLEY, SC: May it please the Court, I appear with my learned friends, MR C.A. MOORE, SC and MR A.D.B. FOX, for the applicants. (instructed by Freehills)
MR N.J. YOUNG, QC: May it please the Court, I appear with my learned friends, MS K.J. HOWARD, SC and MR S.J. FREE, for the respondents. (instructed by Blake Dawson Lawyers)
FRENCH CJ: Yes, Mr Burley.
MR BURLEY: Your Honours, the first error of the Full Court was to place a gloss on the test of Australia Broadcasting Corporation v O’Neill by requiring that an applicant demonstrate a strong prima facie case and that the primary judge make specific findings as to that strength. If your Honours could turn to the Full Court decision, which appears behind tab 4 of volume 1, to paragraph 87 which appears on page 120 your Honours will see that at about – just after halfway down the paragraph their Honours conclude, having reviewed submissions in relation to the effect of the primary judge’s reasons:
But, with great respect to her Honour, neither in those paragraphs nor anywhere else in her reasons is there revealed any assessment or evaluation of Apple’s case of infringement. Her Honour was obliged to make such an assessment for the purpose of deciding whether Apple had made out a prima facie case of sufficient strength –
and then in the final line of that paragraph their Honours conclude –
Apple was required to demonstrate a relatively strong case.
GUMMOW J: You have to read the whole of the sentence.
MR BURLEY: Yes, your Honour, I do not mean to exclude that by any means, having regard to the practical consequences and so on. Revealed from that passage, however, are two propositions: first, the expectation that a primary judge needs not only to assess whether or not there is sufficient strength but also reveal in a verbal formula of some sort as a forecast of the result of the proceedings particular words indicating what that strength is, and also a requirement that an applicant in such circumstances as this case provided – has the onus of demonstrating a strong prima facie case.
GUMMOW J: What was the structure of the primary judge’s reasoning?
MR BURLEY: That commenced in paragraph 21 of her Honour’s reasons with an articulation of the test as to what a prima facie case within the O’Neill Case meant, and a careful evaluation of what that included, including the requirement that there be a sufficiently strong case in the circumstances to warrant the grant of the remedy that was sought.
FRENCH CJ: In the end, though, did she go any further in relation to infringement than saying that there was a prima facie case of infringement subject to the construction question without ‑ ‑ ‑
MR BURLEY: In our submission, her Honour did, and her Honour’s reasons set it out on a number of occasions. For instance, at paragraph 75 of her Honour’s reasons, which appears behind tab 1, her Honour said:
Samsung has established a prima facie case for the want of novelty of claim 6 of the Touch Screen Patent. However, within the analysis referred to at [32]‑[36] above, Samsung’s case on invalidity by reason of the disclosures in the Leeper Article does not alter the conclusion that Apple has a prima facie case for relief for infringement of claim 6 within the test in O’Neill.
FRENCH CJ: But that has to be read in the light of what she said in paragraph 58, does it not?
MR BURLEY: Yes, indeed, your Honour. In fact, paragraph 58 is one aspect of her Honour’s reasoning.
FRENCH CJ: She does exactly the same exercise, I think, in respect of the heuristic ‑ ‑ ‑
MR BURLEY: Indeed, your Honour, and the critical paragraph that requires attention in this regard is the explanation her Honour gives in her reasons at paragraph 21, because her Honour there explains what is meant in the later parts of the judgment by a prima facie in the O’Neill sense, and her Honour says:
It is made clear in O’Neill that a prima facie case is one in which there is a probability that at trial the applicant will be held entitled to relief. The inquiry of whether there exists a “prima facie case” does not require Apple to show that it is more probable than not that it will succeed at trial. In O’Neill, Gummow and Hayne JJ said at [65] that ‘it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial’.
Her Honour goes on to observe:
‘how strong the probability needs to be depends, no doubt, upon the nature of the rights [the plaintiff] asserts and the practical consequences likely to flow from the order he seeks’.
FRENCH CJ: It is an interaction, is it not, between the assessment of the strength of the case and the strength of the balance of convenience?
MR BURLEY: Yes, and her Honour saw it, in our respectful submission, as a dynamic interaction as to one concerning the strength of the case and the requisite balance of convenience on both sides. Her Honour was not, and expressly was not, making a determination by way of forecast as to what the likely outcome of the proceedings would be.
FRENCH CJ: On one reading of her Honour’s judgment you sort of have your relief, as it were, by the skin of your teeth in the sense that what tips the balance of convenience – and I may be oversimplifying it – seems to be Samsung’s attitude to an early final hearing and the existence of your two registered patents.
MR BURLEY: Not only the existence of the two registered patents, her Honour’s assessment as to there being a sufficiently strong case within O’Neill of infringement for two, not one. Of course, that logically must be so, these are two independent rights.
FRENCH CJ: They are interdependent, are they not?
MR BURLEY: Well, no, your Honour, with respect, each patent being a separate cause of action.
FRENCH CJ: I am sorry, I am talking about the criteria of strength and the balance of convenience.
MR BURLEY: Yes, my apologies, your Honour. Yes, in that sense, they are interdependent. Her Honour’s recognition that they were interdependent is present throughout the judgment also. The error of the Full Court, in our respectful submission, was to assume that her Honour had made no assessment, notwithstanding her Honour’s words, and of course, her Honour was applying, in our respectful submission, the approach mandated by the Court in O’Neill and also the Court in Beecham which O’Neill upheld.
If your Honours were to turn back to the Full Court decision and to paragraph 49 to 51 of the Full Court’s decision, your Honours will see that the starting point that the Full Court appeared to take was one which appeared to view the grant of interlocutory relief against Samsung as one which was tantamount to frustration of the court’s process. Their Honours said in paragraph 49:
In the present case the parties accept that the orders made below are effectively final in that the commercial viability of the Galaxy Tab 10.1 in the Australian market will be lost.
GUMMOW J: That is not disputed, is it?
MR BURLEY: No, but there is one point that their Honours do not observe there. It would be effectively final subject to when the hearing of the matter was to be determined. It would not be effectively ‑ ‑ ‑
GUMMOW J: What?
MR BURLEY: When the matter was determined on its merits finally, because that was, of course ‑ ‑ ‑
GUMMOW J: Given the propensities of these parties it is an incantation to talk about a final hearing, is it not? There would be an appeal and then an attempt to come here from the intermediate appeal. That is the way these parties operate and there is nothing critical about it, but that seems to be the fact.
MR BURLEY: Well, your Honour, the starting point, however, that her Honour was ‑ ‑ ‑
GUMMOW J: Unless the earlier final hearing was given on an undertaking extracted from each side that the unsuccessful party would not appeal the decision on the earlier final hearing, and that undertaking would never be given.
MR BURLEY: Your Honour, what her Honour was grappling with at first instance though was that the question of the likelihood that the life cycle of the products would be superseded by even consideration on a final basis of the matters and that is a matter which was one aspect of their Honours’ consideration, but the other aspect which their Honours go on to say is:
We doubt whether the grant of interlocutory relief in the present case avoids frustration of the Court’s process. When one keeps in mind that the Court must seek to do justice to both parties, such a consequence for Samsung can hardly be described as other than a frustration of the Court’s process.
That represents a view from the Samsung perspective but it does not recognise that the equivalent concern arises in Apple’s case; the weight of that was equally balanced. Their Honours continue in paragraph 50 at about halfway down the paragraph:
The question, then, was whether Samsung’s conduct in refusing an early trial on the conditions offered, together with whatever may be made of the “eyes wide open” factor and the fact that Apple relies on two patents rather than one leads to the conclusion that Samsung should be denied a trial on the merits.
Their Honours were equating interlocutory relief granted in circumstances to maintain the status quo to a denial of trial of the merits or frustration of the court’s process, and it is within that context that the final sentence in paragraph 51 emerges where their Honours say:
Where the merits and the question of convenience are fairly evenly balanced, there will be no injustice in requiring that the party seeking relief demonstrate good prospects of success before imposing almost certain prejudice on the other side.
In our respectful submission, that reflects a predisposition reflected later in paragraph 87 of the Full Court to regard the approach to balance of convenience not as one as a balancing exercise but rather as one where the applicant for relief in an interlocutory injunction starts from the basis that it has to demonstrate good or strong prospects ‑ ‑ ‑
GUMMOW J: Not any interlocutory injunction, Mr Burley.
MR BURLEY: No, an interlocutory injunction where ‑ ‑ ‑
GUMMOW J: That is not what O’Neill was talking about. O’Neill encompassed an infinite variety of circumstances of which this is an extreme example.
MR BURLEY: It is an example, indeed, your Honour, and one where the weight was not all on one side. Indeed, as the findings were there was a prospect of irredeemable harm on the part of both Apple and Samsung. In our respectful submission ‑ ‑ ‑
GUMMOW J: What would you have this Court do if you got special leave?
MR BURLEY: With special leave?
GUMMOW J: Yes.
MR BURLEY: Your Honour, we would invite the Court to realign the reasons ‑ ‑ ‑
GUMMOW J: No, no, no, in terms of outcome.
MR BURLEY: Outcome? Uphold the injunction, your Honour, and maintain its continuation pending final hearing. Your Honour, the concern as a matter of ‑ ‑ ‑
GUMMOW J: We could not do that without reagitating the matters of substance that the Full Court investigated, could we?
MR BURLEY: Well, with respect, your Honour, we ‑ ‑ ‑
GUMMOW J: Two items of prior art in respect of one of the patents and in respect of infringement of both.
MR BURLEY: Our submission is that your Honours would not need to revisit that because the key that opened the door to revisiting the merits of the prima facie case was a finding, erroneous we say, that her Honour erred as a matter of principle in setting out the test for the prima facie case and then failed to apply it. There was no error in the sense of House v The King that would warrant the Full Court going back into that matter. Her Honour’s assessment at first instance ought to stand and this Court would not need to revisit that on this question. The contention that ‑ ‑ ‑
FRENCH CJ: It comes down to whether the Full Court mischaracterised her Honour’s approach.
MR BURLEY: Yes, indeed, or as we have submitted, having seen her Honour’s approach thought that it was not enough and felt that two factors are also necessary as a component to the consideration of interlocutory relief in this case. First, that there be a strong prima facie case established by the applicant, and secondly, that there be a formula of words that articulates over and above satisfaction that there is sufficient strength to warrant the grant of relief that there also be a component of a reasoned evaluation, as the court put it, in the judgment which effectively amounts to a forecast of the result.
GUMMOW J: What is wrong with the proposition that in these special circumstances it is necessary to examine the case put forward as the prima facie case rather closely to see the strength of it?
MR BURLEY: We do not gainsay that at all, your Honour.
GUMMOW J: Well, the Full Court did.
MR BURLEY: Well, our respectful submission is the way the Full Court approached it was to fail to appreciate that her Honour’s reasons did precisely that. What her Honour did was very carefully set out the arguments on both sides and then formed a view that there was a sufficient strength in the case ‑ ‑ ‑
GUMMOW J: The Full Court having done it, why should we interfere?
MR BURLEY: Well, the Full Court ‑ ‑ ‑
FRENCH CJ: Let us assume they were wrong to enter upon the exercise – that they entered upon the exercise and they have come to an answer adverse to you.
MR BURLEY: Yes. The Full Court’s analysis itself is, in our respectful submission, replete with error. The starting proposition is that the Full Court had one day the benefit to hear the matter, they had the benefit of about 20 minutes submission in relation to each patent from each party, and a limited introduction to the material before it. Her Honour had four days to consider openings on the patent, a proposition that the applicant was not available to have at the Full Court hearing, and far more detailed consideration of the matters. Your Honours, in our respectful submission, an intermediate court replacing its view for the primary judge’s court on a interlocutory matter on the basis, as we would submit, an incorrect matter of principle, would be slow to accept that that replacement represents a better version of the construction than the learned primary judge gave.
In some respects, the conclusions of the Full Court involved assumptions as to a state of – an appropriate approach to the construction of the patents which, in our respectful submission, were not correct. Your Honours would not need to go to that. If the door is not open for the Full Court to revisit those matters then the Court would reinstate her Honour’s conclusions in relation to that.
BELL J: Where do we find in her Honour’s reasons the sort of careful analysis that you acknowledge was necessary having regard to the nature of this interlocutory injunction?
MR BURLEY: Your Honour, that is apparent from three factors, if I can put it this way. The first factor is her Honour’s analysis as to the test of a prima facie case in O’Neill which I have taken your Honours to in paragraph 21, and then going on to the reasons that her Honour gives, starting at paragraph 37 of the judgment her Honour then traverses through the arguments from either side of the parties ‑ ‑ ‑
BELL J: Putting aside a statement from the authority and recitation of the competing submissions on either side, where does one find the analysis that you say her Honour made?
MR BURLEY: Well, paragraphs 58 and 75 are two examples. If I can anticipate your Honour’s question in relation to that?
BELL J: Yes.
MR BURLEY: The question that arises is whether that is sufficient.
GUMMOW J: Well, 58 and 75 are conclusory statements.
MR BURLEY: They reflect her Honour’s conclusions, but ‑ ‑ ‑
GUMMOW J: You are being asked to try and locate any elaboration of the steps which led to 58.
MR BURLEY: Yes, with respect, I am being asked that, and I am taking your Honours to those conclusions for the reasons of identifying what appears to be the divergence in approach between the Full Court and her Honour the primary judge. Her Honour not making an assessment as to an evaluation as a forecast of the outcome of the proceedings, and expressly not doing so, her Honour has assessed and formed a confusion as to the likely strength of the case based on the matters which her Honour has previously recited. It would be to suggest that her Honour’s recitation of the competing arguments was for no reason at all if it is to be concluded that the statements in paragraphs 58 and 75 were made bereft of any analysis of those competing arguments altogether.
Your Honours, in our outline of submissions we refer to the decision of the Court in the Beecham Case where – and perhaps if I could ask your Honours to turn to tab 10 at page 180 of volume 1 of the application book at paragraph 28? In Beecham the Court observed:
The chief questions to be decided at the trial concern the issue of infringement. We have had in the course of the argument a detailed review by counsel of the respective contentions of the parties under this head, but we think it neither necessary nor desirable to discuss them here. All that can be said without danger of prejudicing the ultimate decision is that upon the material at present before the Court the plaintiff has shown, in our opinion, so substantial a probability of succeeding in the action that it is entitled to have the status quo preserved.
GUMMOW J: Well, that comes back to the point I was making to you. Beecham is a very different circumstance to this case. The product in Beecham was not going to have a short commercial life, was it?
MR BURLEY: No, your Honour, but in our respectful submission, the approach in Beecham and the approach in O’Neill was one which her Honour was endeavouring to follow, and did so correctly. If those approaches are not apposite for a case such as this then, in our respectful submission, if the two questions lingering remain, what formula of words would have been necessary for her Honour to have concluded correctly within that, if her Honour had put before the words “prima facie case” in the sense of O’Neill, “strong prima facie case” or “a better than even prima facie case”? These are considerations which the courts in Beecham and O’Neill suggested were not appropriate to be taken.
Rather, the question is one of consideration and reflection and a conclusion, and the impossible task now underlying for a primary judge who is trying not to form a conclusion contrary to that passage in Beecham and contrary to the other authorities that say one is not trying to predict the outcome of a trial is to move on to the next – is how to thread that needle and, in our respectful submission, that is a matter of interest and one of particular concern here.
The cases which refer to the strength of the case where the outcome of the proceedings is one which would effectively determine the conclusion of rights between parties do not, in our submission, say that it is necessary to go beyond looking at the strengths of the case in a reasoned way or, in our respectful submission, say that there needs to be a strong case in the way the Full Court suggested there did.
For that reason, in our respectful submission, the approach that their Honours took to supplanting their own views on the question of patent construction even on a preliminary basis was incorrect and they lead to the proposition that having in their truncated way arrived at a conclusion as to prima facie case the view of the primary judge ought to be overturned.
Your Honours, in relation to the case management issue, in our respectful submission, the further error of the Full Court that sounds in the third special leave question was that the Full Court accepted the proposition that it was an irrelevant consideration of Samsung’s attitude towards taking an early final hearing. In that regard, one of the aspects of the proposition that the Full Court misinterpreted was that it was Samsung’s own proposal for a preliminary hearing in November after resisting ‑ ‑ ‑
GUMMOW J: Why on earth could we get involved in that squabble?
MR BURLEY: Well, the matter of principle insofar as it arises, your Honour, is not one which requires determination of the particular facts on the case, but rather the question, the bigger question, as to the role the case management principles have and the role that a trial judge would have in seeking to determine these terribly urgent matters by way of exercising powers under section 37M of the Federal Court of Australia Act and the way that the Full Court dispatched that as a matter of technicality.
In our respectful submission, the approach of the Full Court in saying that a level of technicality needs to be applied to the question of any preliminary hearing or early hearing to try and resolve the issues and ameliorate the very final consequences that Samsung said would be visited on them was one which was entirely appropriate in the circumstances of the case and one which ought to have been allowed and upheld.
Their Honours’ conclusion that the question of the appropriate course to preliminary hearing of the matter was one which paled into insignificance next to the merits of the case is one that suggests that a trial judge would have no power or entitlement as a matter of case management to direct the course of the litigation in such a way as to achieve an appropriate and just outcome in the circumstances of the case.
FRENCH CJ: The problem is within the general rubric of O’Neill you are looking at an exercise in the management of risk of harm to both sides, which is often an excruciatingly difficult balancing exercise, and whilst one can have general statements of principle informing the approach to be taken ultimately it becomes very, very circumstantial, if I can say that, or as Justice Gummow said, governed by the infinite variety of circumstances that can arise.
MR BURLEY: Yes, indeed, your Honour, and the concern that arises as a matter of principle on that matter are the statements that I have taken your Honours to in relation to the requirement that there be a strong case, the requirement that there be statements of particular reasons which will be regarded by future courts and primary judges in the same position as imposing much higher obligations, effectively raising the bar for obtaining an interlocutory injunction in a patent infringement case and, in our respectful submission, that raises a matter of principle that could only be determined in a case such as this which is an interlocutory injunction which raises the principles of interlocutory injunctions as relevant considerations.
FRENCH CJ: Thanks, Mr Burley. Yes, Mr Young.
MR YOUNG: If the Court pleases, there was no gloss on O’Neill by the Full Court. May I take the Court to page 110 of the appeal book as a convenient reference to the passages in O’Neill? In O’Neill paragraphs 70 to 72 address the relevant principles. There was no dispute below but that these were the relevant principles, and there was no dispute below but that the primary judge was required to undertake a substantive analysis of the respective strengths of the infringement case. That seems to have been acknowledged this morning by Mr Burley. It is to be found nowhere in the judgment, as the Full Court said.
The primary judge fell into the error identified by the High Court in O’Neill in these paragraphs. At the end of paragraph 70 the Court drew attention to the fact that the strength of the probability required was variable. In paragraph 71 they identified an approach in England under which serious question had become equated with “not frivolous or vexatious”, a kind of minimum threshold standard, that if that could be ticked then one independently considered the balance of convenience. What their Honours said was:
Those statements do not accord with the doctrine in this Court . . . They obscure the governing consideration that the requisite strength of the probability of ultimate success depends upon the nature of the rights asserted and the practical consequences likely to flow from the interlocutory order sought.
The next passage then takes up that point concerning practical consequences, saying in paragraph 72 that it:
is illustrated by the particular considerations which arise where the grant or refusal of an interlocutory injunction in effect would dispose of the action finally –
citing Kolback in the Sofronoff article. Now, Kolback and the cases referred to in Sofronoff illustrate the kind of reasoned examination that is required of the case for the injunction that must be undertaken by a judge in circumstances where the grant of an injunction or the non‑grant is going to operate as final relief.
It is imperative that the strength of the case be properly addressed in a recent fashion and evaluated by the judge and then brought to bear in the calculus that requires this interdependent consideration of the balance of convenience. That is exactly what her Honour did not do. The Full Court was correct in paragraph 59 to identify that as “The critical integer” in a case such as the one before their Honours and that:
The extent of the strength required will vary from case to case.
FRENCH CJ: Were not her Honour’s conclusions about infringement expressly conditioned upon the questions of construction, and I am just wondering how far she could have gone into questions of construction and they were fairly narrow questions in a sense, were they not?
MR YOUNG: They were very narrow, your Honour. She could have addressed them in the same way that the Full Court did, that is to say, give reasoned consideration to those construction arguments and express a view, not a final view but an appropriate interlocutory view, to the effect that the construction arguments if the evidence remained as it was were arguments that were likely to fail.
FRENCH CJ: Well, is she saying anything more than that the construction supporting infringement is open and how much more can she say? I mean, you might disagree with that conclusion but I am just putting it in terms of approach.
MR YOUNG: She is certainly saying the first and no more than the first, your Honour. Indeed, that is explicit in relation to her Honour’s remarks concerning the heuristics patent. If I turn to her Honour’s conclusions, there is nothing more than a conclusion, paragraph 125, page 36 of the application book, last sentence of paragraph 125:
while Samsung’s construction has force and may ultimately be successful, both constructions can be said to be open.
Then her Honour jumps to a conclusion without any reasoned examination in paragraph 127:
Apple has made out a prima facie case for infringement within the meaning in O’Neill.
It is clear her Honour is using the phrase “prima facie case” as a label, a minimum threshold that simply needs to be ticked in the same way that serious question was addressed previously, and that is not to apply O’Neill. The point is made when one goes ‑ ‑ ‑
GUMMOW J: It could be a reversion to the English ‑ ‑ ‑
MR YOUNG: Yes, it seems to be, your Honour.
GUMMOW J: Emphasised in O’Neill.
MR YOUNG: The point is made good by ‑ ‑ ‑
GUMMOW J: It is said to be open in 125, “both constructions can be said to be open”, therefore there is a prima facie case of infringement.
MR YOUNG: Yes, your Honour, and the only way it is qualified is by an apparent slight preference for Samsung’s construction. The conclusion concerning the touch screen patent was similar. It was based upon an assumption that the argument was open; that is paragraph 58, last line.
To take up your Honour the Chief Justice’s point concerning the structure of the reasons, there is no analysis there of the strength, the respective or requisite strength of the case required to be made out for infringement. Her Honour does have a heading at page 64 of the application book, paragraphs 238 and 239, “Strength of prima facie case,” and one might have anticipated the careful consideration of the strength of the case that one finds in Kolback and the English cases where relief is going to be final, but it is absent entirely.
You have a reference to the fact that there is a prima facie case only in the threshold sense in respect of two patents. Well, if each is no more than an observation that the argument is open, to say that twice is not to discharge the court’s responsibilities in a case like this applying the O’Neill principles. It is apparent her Honour is using prima facie case as a minimum threshold from the conclusion on the next page at application book 66. The label “prima facie” in paragraph 244 is applied to both the case for infringement and the case for invalidity.
FRENCH CJ: What do you say tipped the balance on balance of convenience?
MR YOUNG: It is only the fact, as her Honour refers to in paragraph 241.
FRENCH CJ: Yes.
MR YOUNG: First bullet point:
some weight to Samsung’s unwillingness to accept an early hearing date –
There was, in fact, no unwillingness, the argument was about the fact that Apple was attaching a condition that there be an interim injunction and Samsung was saying there should be no interim injunction. Neither party could agree. Her Honour made no ruling or direction about it. Both parties asked the court to determine by properly applying the O’Neill principles whether there should be an injunction in the interim. Samsung made it very clear that we would have a trial on all liability issues, not inappropriately split issues, in March. So there was not any resistance to an early hearing and we proposed a hearing on limited issues without an injunction, so there is really no case management issue.
The other matter, eyes wide open, her Honour said was of minimal weight. That is not really raised on this application and for the reasons given by the Full Court there was no substance in it. In our respectful submission, the principles have not been properly applied; there was no gloss on it. That is abundantly apparent if one takes up the cases that were cited in the footnote by the High Court, Kolback and the Sofronoff article. Could I turn just very quickly to Kolback? I think the Court has been referred to Kolback (1987) 8 NSWLR, a decision of Justice McLelland.
FRENCH CJ: I think it is in your bundle which we have.
MR YOUNG: Yes, page 536A, a very clear illustration here of how simple it is for the court to apply the correct principles. His Honour says:
although normally the Court “does not undertake a preliminary trial, and give or withhold interlocutory relief upon a forecast as to the ultimate result of the case” . . . there are some kinds of case in which for the purpose of seeing where lies the balance of convenience (or more specifically “the balance of the risk of doing an injustice” . . . it is desirable for the Court to evaluate the strength of the plaintiff’s case for final relief . . . One class of case to which this applies is where the decision to grant or refuse an interlocutory injunction will in a practical sense determine the substance of the matter -
It was common ground that that was this kind of case. In all of those cases cited there was a reasoned examination of the strength of the case for final relief to support an injunction. What Justice McLelland then undertook in this case was a reasoned examination of the strength of the case. That appears across pages 537 and 538, the question about substantial purpose for a share allotment - for instance, 538 opposite C, and then the conclusion is expressed, 539:
although I think that Kolback has shown itself to have an arguable case for final relief, it appears to me that it is more likely than not that the case would ultimately fail -
and so on. In those circumstances, the last few lines –
the potential prejudice to Epoch outweighs that to Kolback –
even though it has an arguable case. That is the exercise following the principles enunciated by the High Court that the Full Court undertook, and when they undertook it they found that there was no sustainable case for patent infringement.
Now, an injunction that operates as final relief ought not as a matter of justice to go in circumstances where there has been no examination of the infringement case and when it is finally examined by three judges of the Federal Court they find that there is no sustainable arguments on the evidence as it then stood for patent infringement. That effectively means, as the English cases say, there is summary judgment without ever a hearing on the merits of the legal right in issue.
Now, for those reasons there is no error of principle relating to the injunction principles in O’Neill. As to early final hearing, there was no early final hearing as that would ordinarily be understood. There was no determination of liability issues fully. The preliminary questions were not discrete. Her Honour acknowledged that there would be a prospect of rolling interlocutory applications by Apple on other patents even if that hearing that they were urging went ahead – that is the primary judge at paragraphs 146 to 147 at appeal book 42. If I turn to that briefly, appeal book 42, the Court can there see the judge’s acknowledgement:
it would provide finality –
that is Samsung’s proposed hearing –
on at least these aspects and enable a better assessment of an entitlement to any further interlocutory relief.
There were no proposals that got beyond an exchange of conditional proposals between the parties. Apple rejected Samsung’s proposal, Samsung rejected Apple’s proposal, which involved both interim and final injunctions. The judge never required full argument about the appropriateness of splitting the matter in that way, never made any case management orders. It was left as two unaccepted proposals.
In those circumstances, Samsung’s attitude was identical to Apple’s, it was an irrelevant consideration and a proper application of O’Neill, and it was immaterial to the result, as the Full Court said at paragraph 196, because once you assessed the O’Neill principles, looked at the strength of the case, there was no reason why an injunction – no basis for granting an injunction whatever view you took about the exchanges of proposals concerning some kind of split hearing.
So there is no appropriate issue for the Court and we embrace what Justice Gummow observed, that this is hardly a suitable vehicle. In terms of what Mr Burley would ask this Court to do, what he omitted was the proposition that his next step would be to ask for a stay, a continuation of the stay on the injunction and thereby he would achieve de facto final relief whatever decision was ultimately made by this Court about the injunction.
That would perpetuate a situation where effectively a restraint continues in circumstances where the only judges who have properly considered the issue, the three Full Court judges, found there was no basis for it. For those reasons, if the Court pleases, the application for special leave should be dismissed with costs.
FRENCH CJ: Yes, Mr Burley. Thank you, Mr Young.
MR BURLEY: In relation to the Kolback and Sofronoff decision, his Honour Justice McLelland’s reasons indicate an examination of the strength of the cases to be determined, but there is no requirement in a particular circumstance, indeed in that circumstance, that there be demonstrated a strong case, and that is a step further beyond the authorities that the Full Court required in the present case.
In our submission, what is required in each case is a different calculus where the matters arising in this case are evenly balanced. That calculus includes a consideration of the strength of the case but without a predetermined requirement that it be of a particular strength, let alone the conclusion of the trial judge articulate the particular strength.
In our respectful submission, the learned judge’s – primary judge’s conclusion at paragraph 127 was antithetical to the proposition that it was simply a minimum threshold test, as our learned friend submits. To reach that conclusion one would have to, as the Full Court appeared to do, completely ignore her Honour’s reference to a prima facie case in the O’Neill sense.
BELL J: But go back to 125, is she not in essence there, as Justice Gummow suggested, applying the English approach?
MR BURLEY: Your Honour, 125 and 127 read together indicate that her Honour is not doing that, with respect. What her Honour is doing is saying, “Yes, I can see there are open constructions”, but manifestly preferring the Apple construction by reaching the conclusion set out in paragraph 127. Otherwise, the words:
Apple has made out a prima facie case for infringement within the meaning in O’Neill –
were words simply just said for no purpose. That is our submission. The Full Court did not engage on that point at all in its consideration of her Honour’s reasons, but rather simply concluded that the references were as my learned friend has submitted it, but that is to read down her Honour’s judgment delivered speedily and in relation to a complex matter in a way which does not do, in our respectful submission, justice to the process of rationale, otherwise, that prefatory material set out at paragraphs 21 to 36 of the reasons was a waste of time.
In our respectful submission, the proposition that her Honour equated the reference to open to a prima facie case is one which does not give that credit, to which we respectfully submit her Honour is entitled in considering her Honour’s reasons. In relation to determination of the matter on its merits, her Honour’s relevant finding was at paragraph 212 of the reasons and her Honour’s conclusion was, having referred akin to determining the matter on a final basis:
The above analysis is predicated on the assumption that there is a later final hearing date. An assessment of this element of the balance of convenience also involves consideration of Samsung’s unwillingness to accept an early final hearing. It is this unwillingness that affects whether injunctive relief concerning the Australian Galaxy Tab 10.1 may, in practical terms, amount to final relief against Samsung. I attribute some weight to this. Samsung could have alleviated this factor by adapting its approach to this litigation and moving on the basis of an early final hearing on the separate questions set out in the Samsung Proposal.
Samsung itself had made a proposal that this would be determined in November, that it would be on the basis of the narrow questions that were up for interlocutory considerations, the two patents, infringement of two and validity on one. Her Honour was considering the narrow question without the requirement that there be a supervening application for preliminary determination of the question, the question whether Samsung’s approach in pulling the pin on the interim restraint for the weeks between the time consideration of the interlocutory injunction and the determination of the matter finally would be appropriate.
In our respectful submission, her Honour was entitled to take that as a consideration into the calculus that Samsung, having asserted the negative effects of a decision in the interim, was not prepared to move itself quickly enough unless it got what it wanted, which was to visit harm on Apple by way of, in the interim, launching a product and going into the marketplace.
In our respectful submission, that was a consideration that her Honour was entitled to take into account without the supervening requirements of notices of motion as to preliminary determination and so forth, which would be manifestly impractical at an urgent interlocutory matter. That is really the question that arises in relation to early determination, the question whether a primary judge is entitled to take those
matters into account without undue formality, which the Full Court seemed to think was necessary in the matter. May it please the Court.
FRENCH CJ: Thank you, Mr Burley. The Court will adjourn briefly to consider what course it should take.
AT 11.09 AM SHORT ADJOURNMENT
UPON RESUMING AT 11.17 AM:
FRENCH CJ: On 13 November 2011, the Full Court of the Federal Court (Dowsett, Foster and Yates JJ) ordered the discharge of interlocutory injunctions granted the applicants by the primary judge (Bennett J) on 30 October 2011. The Full Court did so on terms requiring the respondents to keep accounts with respect to the tablet computer known as the “Galaxy Tab 10.1”.
On 2 December a Justice of this Court stayed the orders of the Full Court pending the disposition of this expedited special leave application.
The respondents wish to launch in Australia the Galaxy Tab 10.1 in competition with an established Apple tablet computer product. A primary judge recorded the agreement of the parties that the Galaxy Tab 10.1 would have a short life cycle and that even if Apple were to prevail at a final hearing it was likely by then to have been superseded by the Samsung products.
The primary judge based the interlocutory injunctive relief upon the infringement of claim 6 in Australian Standard Patent No 2005246219 as amended on 30 January 2009 (“the touch screen patent”) and in claims 1 and 55 of Australian Standard Patent No 20072886532 (“the heuristics patent”). Her Honour recorded that her proposal to decide on a final basis the alleged infringement of the heuristics patent had been rejected by the parties. At paragraph 244 of the reasons the primary judge concluded:
Apple has established a prima facie case for an entitlement to relief on the Heuristics Patent. Even though Samsung has established a prima facie case for the invalidity of the Touch Screen Patent, Apple has also established a prima facie case for an entitlement to relief on the Touch Screen Patent. The balance of convenience tilts in Apple’s favour. I am satisfied, within the test in –
and she referred to Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 –
that it is appropriate to restrain the launch of the Australian Galaxy Tab 10.1.
At paragraphs 140, 149 and 150 of its reasons, the Full Court concluded that no prima facie case had been established by Samsung of anticipation at claim 6 of the touch screen patent. The Full Court also concluded at paragraph 121:
that, on the present state of the evidence, there is a real and substantial prospect that the importation into and supply in Australia of the Galaxy Tab 10.1 will not infringe [the amended] claim 6 -
Their Honours added that even if Apple had established any prima facie case of infringement, this was founded upon a construction of the claim which, if the evidence remains as it is, is unlikely to succeed at trial.
Finally, the Full Court concluded at paragraph 160 that Apple had not established a prima facie case of infringement of either claim 1 or claim 55 of the Heuristics Patent.
The organising principles upon which applications for interlocutory injunctions are determined are set out in O’Neill and, as is emphasised in those passages, the governing consideration is that the requisite strength of the probability of ultimate success depends upon the nature of the rights asserted by the plaintiff and the practical consequences likely to flow from the grant of interlocutory relief, the reference to “practical consequences” including the considerations which are present where the grant or refusal of an interlocutory injunction, in effect, disposes of the action in favour of the successful party on that application.
This appears to have been a case where the decision on the interlocutory application effectively would determine the outcome of the dispute, hence, as the Full Court emphasised, the requirement for a reasoned examination of the strength of Apple’s case.
These considerations make it difficult for Apple to demonstrate the presence of a serious question of error in principle by the Full Court sufficient to warrant a grant of special leave. This is particularly so where detailed reasons were given by the Full Court upon the issues of construction of claim 6 of the touch screen patent and claims 1 and 55 of the heuristic patent, matters upon which an interlocutory appeal to this Court ultimately may turn.
The Full Court approached the interlocutory appeal before it on the footing indicated in paragraph 97 of their reasons as follows:
The primary judge’s conclusions as to the existence of a prima facie case of infringement were the subject of considerable contest on the hearing of the appeal. Given the contention that her Honour proceeded in error in finding that a prima facie case of infringement had been established in respect of both the Touch Screen Patent and the Heuristics Patent, it is necessary for us to examine the competing contentions of the parties. It is also necessary for us to express our view as to the likelihood that injunctive relief for patent infringement would be granted at a final hearing, on the assumption that, at that hearing, the evidence remains as it was before the primary judge at the interlocutory hearing.
We see insufficient prospects of success on the part of Apple in demonstrating, on an appeal to this Court, error by the Full Court. Even if the applicant is correct in saying that the Full Court was wrong to enter upon the view of the applicant’s prima facie case, which it did, the fact of its detailed consideration of the strength of the applicant’s case also weighs against the grant of special leave.
Special leave will be refused with costs, including the costs of the application for a stay and for expedition. The result is that the orders of the Full Court discharging the injunctive relief granted by the primary judge are now fully effective.
The Court will now adjourn briefly to reconstitute for the next matter.
AT 11.23 AM THE MATTER WAS CONCLUDED
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