Apple Inc. & Anor v Samsung Electronics Co. Limited & Anor

[2011] HCATrans 326

[2011] HCATrans 326

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

Summons for expedition and stay

HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 2 DECEMBER 2011, AT 9.30 AM

Copyright in the High Court of Australia

MR S.C.G. BURLEY, SC:   May it please the Court, I appear with my learned friend, MR A.D.B. FOX, for the applicants.  (instructed by Freehills)

MS K.J. HOWARD, SC:   If your Honour pleases, I appear on behalf of the respondents.  (instructed by Blake Dawson Lawyers)

HIS HONOUR:   Mr Burley, I understand what you want and I have read your application for special leave to appeal, your draft notice of appeal, your summary of argument, your summons on the stay application, your submissions on that application, and Ms Howard’s arguments in relation to that, and also I have read Ms Gilchrist’s affidavit.  There is one preliminary matter.  That affidavit makes various applications for confidentiality orders, are they needed?

MR BURLEY:   Your Honour, yes, they maintain a position that was established in the matter before Justice Bennett regarding matters which your Honour was satisfied were confidential.

HIS HONOUR:   Is there a form of order?

MR BURLEY: We do not have one with us, your Honour, but I think we can find one. Orders were made under section 50 of the Federal Court of Australia Act, as I recall.

HIS HONOUR:   Yes.  The orders may not last too long when the eyes of my colleagues fall on them, but if you have a form we might make the orders later on if you want.  Do you oppose those orders, Ms Howard?

MS HOWARD:   No, your Honour.

HIS HONOUR:   The Court is in a position to hear the special leave application next Friday; is that sufficient expedition from point of view?

MR BURLEY:   Yes, your Honour.

HIS HONOUR:   You want the stay until then?

MR BURLEY:   Yes, your Honour.

HIS HONOUR:   What is your attitude to that, Ms Howard?  I see you oppose expedition of the special leave application.

MS HOWARD:   Your Honour, we oppose the grant of the stay.  We oppose all of our friend’s applications today.

HIS HONOUR:   You oppose an expedited hearing of a special leave application in the High Court of Australia?  Is that on instructions?

MS HOWARD:   I am sorry, your Honour, we do not oppose that.  We oppose the grant of the stay.

HIS HONOUR:   Your written submissions I think say you do oppose it.

MS HOWARD:   Yes, your Honour, we oppose it insofar as it is not necessary if the stay is not granted, your Honour.

HIS HONOUR:   Well, if the stay were not granted but the special leave application succeeded on Friday then it would be up to those who granted the special leave application to reconsider a stay application.  Obviously, the argument for a stay would be much greater if two or three justices thought that the matter should be heard by a Full Court.  One only has to look at statistics to see that once special leave has been granted appeals often succeed.

MS HOWARD:   Yes.

HIS HONOUR:   So we would have this rather broken period of injunction up to today, then no injunction for some period of time, and then possibly further injunction.

MS HOWARD:   Well, your Honour would have seen from our written submissions the reasons why we say that there are no prospects of success of the special leave application, and we also say that there are no exceptional circumstances that justify the grant of the stay.  Your Honour, we say one only needs to look at the summary of argument which sets out the special leave questions that our friend is set to agitate before the High Court.

HIS HONOUR:   That is the applicant’s summary of argument which is approximately, as they usually are, 10 pages long?

MS HOWARD:   Yes, your Honour, but I think one only really needs to look at the first paragraph which sets out the actual questions that our friends seek to have determined, and we say that they are not questions that properly arise for consideration by this Court, and if I may, your Honour, just take you through each of those three questions?  Our friends say in the first paragraph that the question they want to have asked is whether or not, notwithstanding the test in O’Neill, a trial judge considering an application for an interlocutory injunction is bound:

to make an assessment of the strength of a prima facie case independent of finding:

(a)that there was a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial; and

(b)that the inconvenience or injury which the appellants would be likely to suffer if an injunction were refused outweighs the injury that the respondents would suffer if an injunction were granted.

Your Honour, we say that when one looks at the judgment of the Full Court it is clear that that question simply does not arise because the Full Court did make an assessment by balancing the strengths and the weaknesses of the positive cases as well as considering the balance of convenience, and if your Honour wishes I can take you to probably the best paragraph that illustrates that in the Full Court judgment.

HIS HONOUR:   Yes, is it best to look at a Freehills document, or a list of accompanying documents to application for special leave to appeal?  Whatever place suits you best.

MS HOWARD:   Yes, well, your Honour, if I give your Honour a paragraph number it should be the same wherever one finds the judgment.  The paragraph, your Honour, that I would ask you to look at is at 196.  The Court basically, as your Honour will have understood the Court, sets out the principles in O’Neill.  The Court acknowledges that her Honour Justice Bennett had also set out the principles in O’Neill.  Our friends had accepted that those were the principles that applied, and the Full Court found that her Honour did not undertake the tasks that were required in the application of those principles, so we say there is no question as to what the principles are.  When one looks at the foot of paragraph 196 in the last two sentences you can see that the Full Court – and it was a unanimous decision – said:

Finally, in the present case, the most compelling features are the assessments of the strengths and weaknesses of the respective cases and the equality of a likely detriment.  Other considerations pale into insignificance beside those matters.

Then at 199 on the same page their Honours said:

We do not consider that these considerations, either singly or together, should have led her Honour to grant interlocutory injunctive relief.

So we say, your Honour, that first question simply does not arise because the Court did do what our friends say the High Court should consider whether one is allowed to do.  So, your Honour, that is the first question.  The second question that our friends seek to have determined by this Court is whether or not, notwithstanding the test in O’Neill, a trial judge considering an application for an interlocutory injunction, is bound to apply a verbal formula as to the strength of the case having already determined that there is a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending trial.

Well, the Court did not say that one must apply a verbal formula.  As I describe, they set out correctly the principles in O’Neill, and then they say – and perhaps if I could take you to the relevant paragraph which is 87 – at 87 the Court noted that in Apple’s submissions before the Full Court:

Apple pointed to her Honour’s exposition of the relevant principles of her reasons and submitted that her Honour applied those principles in the course of her reasons.

So, your Honour, there was no dispute at all as to whether or not the principles in O’Neill were the correct principles, it was simply a question as to whether or not her Honour had applied those correctly.  Then, continuing on through that paragraph because it is an important paragraph:

Apple submitted that her Honour undertook the necessary evaluation of the strength of Apple’s case of infringement and, indeed, Samsung’s case for invalidity, and took the results of her evaluation into account both when determining whether Apple had established a sufficient prima facie case of infringement and in determining where the balance of convenience and justice lay.  Apple pointed to a number of references in her Honour’s reasons to the expression “prima facie case” as indicating that her Honour had conducted the requisite evaluation.

The Court came to the conclusion and says:

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 assessment for the purpose of deciding whether Apple had made out a prima facie case of sufficient strength to justify the grant of an interlocutory injunction to restrain infringement of its patents.

So, your Honour, we say that our friends cannot point to anything in this judgment where the Full Court said that one must apply a verbal formula in the circumstances that they have identified in that second question.  Then moving on perhaps to the most extreme of the three questions that our friends seek to have determined by this Court, and that is in the final paragraph our friends say, the question is whether or not in cases involving fast moving technology where the grant or refusal of an interlocutory injunction may be of particular importance to the parties, a court may give weight to the refusal of a party to accept an early final hearing date as a factor against that party as a discretionary matter.

Your Honour, the first point we would make about that is the law does not distinguish between the types of technology that are being considered by a court.  So, in terms of interlocutory injunctions, the principles apply to patent cases the same way they apply to other cases.  Our friends are seeking to say not only is there a distinction between the application of the principles where there is technology, but the court must determine whether or not it is fast moving technology or some other sort of technology.  So that is the first point we say about that.  Beecham v Bristol made it clear that the principles of interlocutory injunctions apply to patent cases as they do to all other cases.

The second point is this question of whether or not, which became quite a big issue as one sees from the Full Federal Court decision, the question of whether or not the fact that one party for one reason or another does not accept the suggestion by a trial judge to have an early final hearing as opposed to an interlocutory injunction is a factor that can be taken into account in determining the balance of convenience.  So, your Honour, we would say that is simply not an appropriate question for determination by the High Court.  The Full Court considered that question and they came to the conclusion that that is not a factor that is a relevant consideration in terms of the balance of convenience.  So, your Honour, we say that satisfies the first of the tests in Burgundy Royale, that there is no substantial prospect of success of these special leave questions.

So far as the other principles in Burgundy Royale are concerned, we say, your Honour, that there can be no doubt as to the effects of the grant of a stay on Samsung at this point.  As your Honour is aware, as is everybody, Christmas is almost upon us and, your Honour, it was acknowledged by the Full Court and by Justice Bennett that this is a critical period of time.  Even one day can make all the difference.  Your Honour, we have set out in our submissions that Samsung intends to launch the product as soon as the 4 pm time has passed.  Your Honour, plans have been put in place to import the product over the weekend and immediately start promotion and sale.

Your Honour, we have been able to obtain a sworn affidavit from Mr McGee who is the marketing manager for Samsung, if your Honour feels that that would provide any assistance, but his evidence is to that effect, that this is an absolutely critical time and any further extension of the stay in circumstances where we say there is no substantial prospect of our friends obtaining special leave that the stay just simply should not be extended.  Can I just also then perhaps mention a few other matters in relation to the consideration of balance of convenience ‑ ‑ ‑

HIS HONOUR:   Just on the topic of Mr McGee, perhaps I should look at that affidavit if Mr Burley does not object to its reception.  Have you seen it Mr Burley?

MR BURLEY:   No, your Honour.

HIS HONOUR:   We can read it together.

MS HOWARD:   If I could hand the original to be filed in Court and a copy for your Honour?

HIS HONOUR:   I grant leave for the filing in Court of an affidavit of Tyler McGee, affirmed on 2 December.  Yes, I have read that.  Do you object to any of that, Mr Burley?

MR BURLEY:   Not in form, your Honour.  Given the nature of the application, I will not ask for Mr McGee to be cross‑examined but I will make submissions in relation to that.

HIS HONOUR:   Yes, thank you.

MS HOWARD:   So, your Honour, we say that any stay that is granted will prolong the substantial injustice that has already been suffered by Samsung.  Basically, Samsung have been kept out of the market since these proceedings were commenced.  The Full Federal Court has found that the interlocutory injunction was wrongly granted.  We say there are simply no exceptional circumstances that our friends can point to.  The special leave questions that they rely upon, we say, are not appropriate for this Court and there is no prospect of them succeeding in getting special leave on those questions.

We say that there is simply no point of public importance here.  Your Honour will have seen from Ms Gilchrist’s affidavit that there is a reference to public interest.  Well, your Honour, there is a big difference between public interest and the interests of the public.  The fact that the media are interested in this case has nothing to do with whether or not this is a case that is sufficiently important to warrant consideration by the High Court.  The only points of public interest that our friends can point to are that people are interested in this case.  So, your Honour, when one looks at what the Full Court did, its approach was perfectly orthodox, it identified the correct legal principles, and that was not disputed.  The court identified the errors of the primary judge and then the Full Court went on to exercise the discretion as to whether or not to grant interlocutory relief for itself and concluded that there had not been a strong enough case that had been established for the grant of interlocutory relief.

It also considered at length the issues of balance of convenience and concluded in those paragraphs that I took the Court to that the circumstances where there was no prima facie case of infringement by Apple and the equality of the detriment, that there should not have been any grant of the interlocutory injunction.  So what our friends seek to have the High Court do, if one leaves aside the difficulties with the special leave questions, is to have the High Court basically look at afresh the questions of discretion, because our friends do not complain per se that the principle in O’Neill is wrong, they complain about the application of the principle, and the application of the principle includes, or will involve, considerations of evidence and discretion.  As Justice Dawson has told us in the case that we have referred to in our submissions, in the Olex Focas Case, that is not an appropriate task for the High Court.  So while our friends have attempted to dress up ‑ ‑ ‑

HIS HONOUR:   I think that was 1996, this is 2011.

MS HOWARD:   Yes, your Honour.

HIS HONOUR:   I think the fact is simply that the Court does now look – if the Court thinks some injustice has occurred – if the Court thinks, for example, that someone has become a quadriplegic and has not recovered damages because of some egregious mistake by the trial judge the Court will hear the case.  Now, I am simply pointing out that although these questions of discretion and evidence and judgment and so on are good arguments from your point of view, they are not automatically conclusive arguments.

MS HOWARD:   We accept that, your Honour, but we say, in the present case, there are no such circumstances.  This is not a case where there is any matter of public importance at all.  This is a private dispute between two companies as to patents and infringement relating to certain technology.  There is no question of public importance.  There is no relevant subject matter, we say, to preserve, and a lot of the categories where a stay has been granted fall into that category, but this case does not fall into that category at all.

HIS HONOUR:   But it is part of your contention – Mr McGee’s contention in his affidavit was that to be delayed for one week would be very damaging to the interests of the Samsung companies.  For Apple to be exposed for one week to the competition of the Samsung companies must therefore, must it not, be damaging to them?

MS HOWARD:   Your Honour, it is a relevant question in terms of balance of convenience, but when one looks at the balancing here, we have been kept out of the market to date.  We have a Full Court decision that says that the granting of the interlocutory injunction was wrong and our friends cannot get over the first hurdle, we say, of even showing a substantial prospect of success in relation to the special leave application.  Although of course there has to be a balancing exercise in terms of injustice, we say that we are the ones who will suffer more injustice because of the fact that we say they cannot come up with any particular issue of law that is appropriate for this Court to consider.

When one looks at the three questions that they have identified, none of them, we say, is an issue of law.  Indeed, your Honour, they do not query the principles.  They simply say that the principles were applied incorrectly and we say when you look at the judgment they were applied correctly.  Your Honour, of course we say the injustice to both parties has to be taken into account but the other factors here, we say, strongly weigh against the grant of a stay.

As your Honour has pointed out, the various cases where stays have been granted involve, for example – it might involve the liberty of an individual or some overwhelming public interest or some requirement to preserve the subject matter of the litigation.  The subject matter of the litigation here is some patents.  The patents are going to remain on the register, whatever happens.  Our friends can continue to exploit those patents ‑ ‑ ‑

HIS HONOUR:   You abandon your claim that they should be revoked?

MS HOWARD:   No, your Honour, we certainly do not.

HIS HONOUR:   I thought you ran a novelty argument which Justice Bennett thought was prima facie arguable, and the Full Court said it was not.

MS HOWARD:   Yes.

HIS HONOUR:   Are you withdrawing your contention that the patents are bad?

MS HOWARD:   No, your Honour, but it is running the ordinary course.  At the moment, the status quo is that the patents are on the register.  Our friends can continue to exploit them as against other third parties and we can continue to challenge the validity.  This is already in the course of trial proceedings before her Honour Justice Bennett.  We say this is not a case where one has to preserve the subject matter of the litigation because there is simply no question of that.

Really, your Honour, when one looks at the points that our friends have made, certainly in the affidavit of Ms Gilchrist, there is the harm point, but we say the harm to us is greater in these circumstances, and the only public interest point that they can point to is the fact that the public are interested.  Your Honour, we just say that our friends cannot satisfy the requirements of Burgundy Royale.  They cannot establish that there are exceptional circumstances here or questions of law that are appropriate to be considered by the High Court.

There is just one more point, I think, your Honour, that we have made in our submissions, and that is in terms of the balancing of injustice we say that the Full Court has acknowledged and, I think, directed Samsung to keep accounts, and I think there have been express and detailed orders about that.  Your Honour, we say any injustice that Apple suffers will be ‑ ‑ ‑

HIS HONOUR:   Just on that, the position, strictly speaking, that there is an undertaking by your clients to keep accounts, an undertaking to the Court by your clients to keep accounts.

MS HOWARD:   Yes, your Honour, and orders as well, as I understand it, your Honour.

HIS HONOUR:   I am just looking at the order of Justices Dowsett, Foster and Yates of 30 November.  Order 1 grants leave to appeal.

MS HOWARD:   I think it is order 5, your Honour.

HIS HONOUR:   Yes, I see.  The Apple parties continue their undertakings as to damages, and you are ordered to keep accounts.

MS HOWARD:   Yes, your Honour.

HIS HONOUR:   Very well.

MS HOWARD:   Perhaps I could just say, your Honour, that we say even if the High Court were inclined to consider this particular issue, we say that the High Court would not reach a different conclusion and I think this is an important point that we would say that any damage to Apple in terms of the injustice point can be remedied by those damages in the usual way, and our friends are protected by those orders.

HIS HONOUR:   Yes, I understand your argument.

MS HOWARD:   Thank you, your Honour.

HIS HONOUR:   Thank you.  Mr Burley, there is one small matter I should raise with you.  You want a stay of orders 3, 4, 5, 6 and 7.  Justice Foster did not stay order 7.  That was an order as to the costs of the appeal to the Full Federal Court.  Is your application, as it were, for Justice Foster’s stay to continue, or for the slightly wider stay as mentioned in the summons?

MR BURLEY:   Your Honour, our application is that Justice Foster’s stay to continue.

HIS HONOUR:   Yes.  Is there anything you want to say in addition to your written submissions?

MR BURLEY:   Yes, your Honour, if I can make some brief points in response to my learned friend’s submissions.  Firstly, the status quo, as it is now, is as it has been following and before her Honour Justice Bennett’s reasons were delivered, namely, that the allegedly infringing device, the Galaxy Tab 10.1, is not on the market.  My friend’s proposition that the stay be lifted for the short period would tear the fabric of that status quo in a way that her Honour found would be irreparable as far as Apple was concerned.  Her Honour found that even a short period of release of the product would cause irreversible harm to Apple, and that it would be of such a type of harm for which damages could not be an adequate remedy.

At paragraph 207 of the learned primary judge’s reasons, her Honour identified that in the context of considering the harm that would be visited upon Apple in the event that there were no interim regime in place before Samsung’s proposal for a preliminary issue was considered and determined in November.  I draw attention to the last sentence of paragraph 207 in that regard.  Her Honour had previously found in paragraph 205 that:

if the Interlocutory Patents are valid and infringed and subject to a right to unquantifiable damages, this would have the effect of negating [Apple’s] rights –

Her earlier finding at paragraph 189 of the reasons was that it would be just that, namely, harm which would not be adequately compensated by damages for Apple.  A key consideration in that regard, your Honour, was the nature of the products are such that there are different operating systems for each of them.  The Galaxy Tab 10.1 is one which operates on an Android system and the iPad product is one which operates on Apple’s iOS system.  These are part of what have been described in the reasons as an ecosystem of operation.  Each of those feed into a different line of compatible products.  So that, for instance, a buyer of an iPad 2, using that operating system, has compatibility with an iPhone, an Apple computer and also an Apple iPod and it can inter‑use those devices.

A purchaser of a Galaxy Tab 10.1 would be involved in the use of the Android operating system, which is usable across other devices, but not compatible in that way with Apple devices.  So one of the problems is that the purchase, we would say, of the infringing Galaxy Tab 10.1 device directs a consumer into this ecosystem, which brings in a whole host of other potential purchasers for a potentially indefinite period while the Android system is being used, away from Apple and Apple’s products.  One of the problems with the undertaking to keep accounts required by the Full Court in the decision is that that involves keeping accounts of the sales of Galaxy Tab products and promotion and so forth.  I am referring, your Honour, to paragraph 5 of the Full Court’s orders.

HIS HONOUR:   Just one moment.

MR BURLEY:   I am sorry, your Honour, behind tab 1 of the bundle.

HIS HONOUR:   Yes.

MR BURLEY:   Your Honour sees that the keeping of account includes paragraph 5(d):

sales or other supply . . . of associated material called “Apps” that are downloaded –

and Apps refer to particular pieces of software that can be downloaded to devices, including the Galaxy Tab 10.1 tablet and smartphones and other such devices that can be acquired over the internet for reward.  Now, that is one aspect of the indirect damage to which Apple contends for.  There is no keeping of an account, and indeed such an account would be impossible, we would submit – I am sorry, I withdraw that.  There is no requirement to keep accounts in relation to related technology acquired, such as Android phones and the like which fall within the compass of the harm that Apple envisages and that her Honour found is likely to occur.  So, in our respectful submission, the undertaking to keep accounts is not an adequate protection for Apple.

If I could make some submissions in response to my learned friend’s submissions as to the strength of the case for special leave?  It starts with the proposition that our learned friend has completely misunderstood the nature of the complaint made about the Full Court decision.  Special leave question number one raises for consideration by the High Court the question of whether in addition to a finding that there is sufficient likelihood of success to justify in the circumstances of the case a preservation of the status quo, and that the inconvenience or injury which the plaintiff would be likely to suffer were refused, outweighs injury that the defendant would suffer, there are other requirements.

Our submission is that the Full Court imposed other requirements beyond O’Neill as a duty upon the primary judge in an interlocutory application, and those requirements were not only that there be a satisfaction to the requisite standard in (i) and (ii) of the question, but also that there be a finding and a statement, by way of evaluation in the reasons, of the specific strength of the case.  Our submission is that that is directly contrary to the approach taken by this Court in the Beecham Group decision and we identify the way the Beecham Group decision was concluded, in paragraph 28 of our written outline of submissions, and we have emphasised the relevant passage at the end of the quotation set out there.

Our submission is that her Honour satisfied the requirement as to prima facie case, but nevertheless the Full Court insisted that there be further steps taken by way of express evaluation and assessment going directly to a degree of probability of success, which is required to be set out.  In our respectful submission, whether that requirement, we would submit, super added from the requirements in O’Neill, is a part of the requirements for a primary judge on an interlocutory application, is a matter of interest and significance.  The second special leave question is related to the first and is whether or not there is a requirement that a verbal formula as to the strength of the case needed to be articulated.  In our submission, that is a matter of significance also.

The third special leave question concerns a matter which arises, not because it is a patent case and not because of the particular technology being used, but rather in circumstances where there is a material question as to the likelihood that the events of the commercial realities will overtake the events of the litigation.  There was no dispute between the parties that the conclusion of the interlocutory injunction application was likely to be substantially determinative of important rights.  That is identified in our background section at paragraph 12.

In those circumstances, the question is whether, as a matter of the exercise of the discretion weighing the balance of convenience, it was irrelevant for her Honour to consider the prospect that the matter might be determined on a final basis, either by way of the determination of preliminary issues or otherwise.  The Full Court decided that the question of that matter was insignificant next to other considerations, and that is identified in paragraph 196 of the Full Court’s reasons, where the Full Court concluded:

Finally, in the present case, the most compelling features are the assessments of the strengths and weaknesses of the respective cases and the equality of likely detriment.  Other considerations pale into insignificance beside those matters.

In our respectful submission, a finding that matters relevant to the conclusion of the matter finally are insignificant, or of no significance, as appears to be suggested by the court, is a matter of general interest in the consideration of interlocutory applications.  We would submit that each of these matters arises peculiarly because it is an interlocutory application and would not deter the Court from considering special leave because the matter might be determined on a final basis canvassing the same issues.  So, in our respectful submission, our friend’s criticism of the substance of the strength of the special leave application is to be set to one side.

In relation to the application for expedition we would respectfully submit that the reasons of her Honour, the learned primary judge, articulate precisely the reason why the status quo would be maintained, pending determination of the special leave application.  The harm to Apple that her Honour considered and concluded could not be remedied by damages is of the nature relating to the interoperability of the devices and the attraction away from ecosystems that the Galaxy Tab is likely to cause.  There was no dispute between the parties that there would be an immediate effect of the launch of the Galaxy Tab.  At paragraph 130 of her Honour’s reasons the learned primary judge records the factors that were not in dispute in this regard, and they included that:

oat present, Apple has the Australian tablet market “virtually to itself” –

In our submission, the iPad 1 and the iPad 2 are the market leaders.  Second, that:

othe Australian Galaxy Tab 10.1 would be a “formidable player” in the Australian tablet market;

oat least initially, the aim of the launch of the Australian Galaxy Tab 10.1 is to establish a market in the Android platform; and

oat least initially, the growth of the market in the Android platform would largely be at the expense of Apple.

These are all matters which reflect upon the likelihood that there would be immediate and irreversible harm visited upon Apple in the event that the orders are not stayed.  My learned friend referred to the affidavit of Mr McGee.  Evidence was considered by her Honour in relation to an earlier affidavit of Mr McGee at paragraph 165 of her Honour’s reasons.  In an earlier affidavit – if I could hand up a copy of an affidavit of Mr McGee.  In fact, I will not burden your Honour with further papers.  I think the reasons of her Honour sufficiently sets that out.

The upshot of the matters set out in Mr McGee’s affidavit is simply to confirm the likelihood that very substantial harm would be visited upon Apple in the event that there is no stay pending the special leave application.  It is quite plain that there will be a high velocity launch into the Australian market of the Galaxy Tab and that that will take place even in a matter of days.  As a consequence, we would respectfully submit that Mr McGee’s affidavit confirms that there is a reasonable need for a stay pending the determination of the special leave application.

Your Honour, in relation to a matter raised, we have some draft short minutes of order that might serve as a useful template, if your Honour were inclined to accede to Apple’s application.  The draft short minutes of order include a reference to the confidential exhibits.  They have some handwriting just before paragraph 7.

HIS HONOUR:   Paragraph 7 would need to have added to it, presumably, unless you have some opposition to it, something to do with Mr McGee’s concerns about the confidentiality.

MR BURLEY:   In his further affidavit?

HIS HONOUR:   Yes, he says ‑ ‑ ‑

MR BURLEY:   I am told paragraphs 20 and 23 might be what your Honour has in mind.

HIS HONOUR:   In paragraph 4 he says:

I request the Court to make an order confining access to the confidential natures and exhibits and the information they contain to those who have executed the confidentiality undertaking.

I suppose I should ask Ms Howard.  Is this paragraph 7 of these draft short minutes of order adequate to deal with Mr McGee’s concern in paragraph 4 if we inserted the relevant exhibit numbers and so forth?

MS HOWARD:   I am instructed, yes, your Honour.

HIS HONOUR:   So in that draft order 7 after “Sue Maree Gilchrist 2 December 2011” if we added “and confidential exhibits TM1and TM2 to the affidavit of Tyler McGee dated 2 December 2011” seems to work all right?

MS HOWARD:   Yes, your Honour.

HIS HONOUR:   Have you finished, Mr Burley?

MR BURLEY:   Almost, your Honour.  I alerted to the fact that our submissions in support of the application for special leave contain a confidential schedule which refers to confidential figures.  I wonder if we might have your Honour’s leave to add that to the regime by adding words to the effect of ‑ ‑ ‑

HIS HONOUR:   Which document should I look at?  Is it the applicant’s summary of argument?

MR BURLEY:   Yes, your Honour.

HIS HONOUR:   Which bit of it?

MR BURLEY:   The very last page, your Honour.

HIS HONOUR:   I have an applicant’s summary of argument.  The last page is page 10.

MR BURLEY:   I am sorry, it may be that some ‑ ‑ ‑

HIS HONOUR:   In your other submission, your stay submission?

MR BURLEY:   No, it seems to be the same one.  There is a page 11 which is headed “Confidential Schedule to the Applicant’s Summary of Argument”.

HIS HONOUR:   Yes.  We should add “and confidential schedule to applicant’s summary of argument”.  Do you oppose that, Ms Howard?

MS HOWARD:   No, your Honour.

HIS HONOUR:   Very well.  Is there anything else?

MR BURLEY:   No, your Honour.

HIS HONOUR:   Yes, Ms Howard.

MS HOWARD:   Your Honour, I would just like to make a few points.  On the prospect of success we note that our friends have not directed the Court to any particular parts in the Full Court decision which support any of those special leave questions.  In relation to the question of status quo we say that the protestations of harm are overstated and do not reflect either the primary judge’s decision or the Full Court’s decision.  If I could please take you first to the primary judge’s decision at paragraphs 241 to 248.

HIS HONOUR:   There is no 248.

MS HOWARD:   No, your Honour.  I am sorry, 214 to 218.  I am very sorry.  Your Honour, you will see there that her Honour posed the question:

Is there a status quo in the Australian tablet market that requires preservation?

At 215 she noted that:

Samsung submits, and I accept, that Apple has misconceived the nature of the status quo in the Australian tablet market.

Then over the page at 216 her Honour said:

As Samsung has already entered the Australian tablet market based on the Android platform and has, to a small degree, captured market share in doing so, it cannot be said that Australian Galaxy Tab 10.1 represents a “new trade in Australia”.

So her Honour recognised that Samsung is already in the market.  In 217 in the fourth last line her Honour said:

I do not attribute any weight to the preservation of the Tablet Market Status Quo as a separate factor, as the effects of a failure to preserve the Tablet Market Status Quo are subsumed within my earlier consideration of whether the Apple Harm involves significant detriment to Apple.

Then if I could take your Honour back to 241 to 242 and there you will see in 241 in the first dot point her Honour said in the second line:

I give some weight to Samsung’s unwillingness to accept an early hearing date, which would have produced this effect.

In the second dot point her Honour said that she gives:

some weight, albeit minimal, to my conclusion that from 15 April 2011 Samsung proceeded with preparations to launch  . . . with its “eyes wide open” –

and the Full Court held that that was incorrect.  The Full Court also held that each of those points was incorrect.  Then if I could ask your Honour to go to the Full Court decision again, and if I could ask you first to look at paragraph 121 which was the passage I meant to take your Honour to before.  The end of 121, that was where the Court said in the last sentence:

If Apple has established a prima facie case at all (which we doubt), it is founded upon a construction argument which, if the evidence remains as it is, is unlikely to succeed at trial.

So, their Honours considered the question of prima facie case, of course, in accordance with O’Neill  before moving on to balance of convenience.  Then, again, in paragraph 160 the Full Court expressed the view that:

On the present state of the evidence we are unable to see that Apple has established a prima facie case of infringement of either claim 1 or claim 55 of the Heuristics Patent.

So, in fairly strong terms their Honours found that there was no prima facie case, or that the prima facie case was very weak, so it was a perfectly orthodox application of O’Neill.  Then, coming back to paragraph 196, which is the passage I took your Honour to before, after considering all these various aspects of balance of convenience, in the last two sentences that is where the Court concluded that:

the most compelling features are the assessments of the strengths and weaknesses of the respective cases –

and your Honour has seen that they came to the view that there was pretty much no prima facie case on infringement.  Then, importantly:

the equality of likely detriment.

So her Honour did not pay much weight to the question of status quo and the Full Court also determined that there was equality of likely detriment.  In those circumstances, we say the Full Court was correct to overturn the interlocutory injunction and our friends cannot establish the important question that they need to in order to succeed in their application, and therefore the application for the stay ought to be refused.

Then picking up on one other point; my friend said something about the ecosystem.  The point is, your Honour, these proceedings are governed by pleadings, the product which I understand my friend to have been mentioning are not products at issue in these proceedings so that is an irrelevant consideration.  Our friend also referred to what was said by Mr McGee which was noted by her Honour some time ago but we have given your Honour an updated affidavit which shows the state of play as it is.  For those reasons, your Honour, we say that the stay ought not to be granted.  If your Honour pleases.

HIS HONOUR:   Thank you, Ms Howard.  I think (a) the hearing should be expedited and (b) that a stay should be granted until that expedited hearing takes place next Friday.  Do you want me to deliver detailed reasons for those conclusions, Ms Howard?

MS HOWARD:   Yes, please, your Honour.

HIS HONOUR:   Do you want to appeal against them, do you?

MS HOWARD:   It is not for me to decide at the moment, your Honour.

HIS HONOUR:   It is a serious matter.

MS HOWARD:   I would have to get instructions, your Honour.

HIS HONOUR:   Very well.

MS HOWARD:   My instructions are at the moment that we would like reasons delivered because the client would like to – Samsung would like to understand the reasons why the stay is being granted.

HIS HONOUR:   On 28 July 2011, two companies known as Apple Inc and Apple Pty Limited, which will hereafter be referred to as Apple, instituted proceedings in the Federal Court of Australia for, among other remedies, an injunction against patent infringement.  After a four‑day interlocutory hearing Justice Bennett granted interlocutory relief.  On 30 November, that is two days ago, after a one‑day hearing, the Full Federal Court allowed an appeal.  Justice Foster, who was a member of that court, stayed the orders of the Full Federal Court until 4.00 pm today.

The respondents in the Federal Court proceedings are Samsung Electronics Co Limited and Samsung Electronics Australia Pty Limited, which will together be hereafter referred to as Samsung.  Samsung has made it plain that from 4.01 pm today it will import and offer for sale and seek to sell items which are said to infringe Apple’s patents.  Apple has filed the documents necessary to proceed with an application for special leave to appeal against the Full Court’s orders and it has also filed a summons seeking an expedited hearing of the special leave application and a stay of the Full Federal Court’s orders until its determination.  In particular, though its summons is more extensive than this, it was made plain by Mr Burley SC, who appeared on Apple’s behalf, that what was sought was an extension of Justice Foster’s stay.

Two panels of the Court will be sitting next Friday to determine special leave applications.  Most of those applications have been listed for months and the panels are full but the Chief Justice has made arrangements for this matter to be heard by the Sydney panel, subject to my own decision on the matter.  In my opinion, the hearing should be expedited to next Friday.  I say that, although in the respondent’s summary of argument the following passage appears:

there is no substantial prospect that the High Court would grant special leave to appeal [sic] the judgment of the Full Court and on the basis that the stay is not granted there is, therefore, no need for the application for special leave to appeal to be expedited.

Any opposition to the expedition of any relief in this Court normally attracts considerable sympathy for the party seeking expedition.

A stay for one week will cost Samsung, in effect, one week’s trade.  Mr Tyler McGee, a very experienced executive within Samsung, has provided an affidavit in which he details the damage which he apprehends if Justice Foster’s stay is extended beyond 4 o’clock this afternoon.  His essential point is that the Christmas trade is an extremely important time for the selling of the products in which Samsung and, for that matter, Apple are interested.  The weekend beginning tomorrow is the third‑last weekend before Christmas since Christmas this year falls on a Sunday and he has provided evidence indicating that there is a tendency for, speaking perhaps colloquially, sales to cascade in this period, that is to say, what might be sold in November will tend to increase from week to week as one approaches Christmas.

Ms Howard SC, who appeared for Samsung, contended that a stay even for so short a period as a week would prolong the substantial injustice that has already been suffered by Samsung.  She attacked the three points on which Apple wishes to seek to have the orders overturned.  She contended that the errors which were alleged against the Full Federal Court were, in fact, errors which it had not committed.  She submitted that there was no public interest in the litigation:  I would agree with that submission so far as she contended that the mere fact that media interest is great does not demonstrate public interest in the relevant sense. 

Despite Samsung’s concerns about the substantial injustice which it claims has been done to it, the fact is that a stay for one week will merely extend the status quo for a short time.  To extend the status quo for a short time, it may be accepted, is injurious to Samsung, but not to extend the status quo for a short time is likely to be injurious for similar reasons to Apple.  Justice Bennett made findings which, although they might not be quite so powerful as Apple would have it, were not disturbed in the Full Federal Court.  She did say that damages would be an inadequate remedy for the harm which Apple would suffer if no injunction were granted, and particular reference can be made to paragraphs 130, 165, 194 and 207 of her reasons for judgment.

The parties organised their arguments to some extent by reference to what Justice Brennan said in Jennings Construction Limited vRoyale Investments Pty Ltd (1986) 161 CLR 681 at 683 and 685. Factors (a) and (c) of the factors listed by his Honour, as developed by the applicants, related to “the prospects of success” in the special leave application and the extent of those prospects of success. I will return to that case below. Factor (b) was “whether a stay is necessary to preserve the subject‑matter of the appeal”. In my opinion, it is necessary to preserve the subject matter of the special leave application. Factor (d) was “whether the applicant has failed to take whatever steps are necessary to seek a stay from the court in which the matter is pending”. The applicant did seek a longer stay from Justice Foster than the stay he actually ordered but it did not fail to take the necessary steps and Justice Foster made it plain that any further stay application should ideally be directed to this Court. Factor (e) was whether the grant of the stay would cause loss to the respondent. I think on Mr McGee’s evidence it is clear that it will, but equally to refuse a stay will cause loss to Apple. Factor (f) was where the balance of convenience lies.

It is a case where the status quo is one in which Apple is protected from Samsung’s competition except to the extent that Samsung’s existing competition does not involve exploitation of the patents involved.  Apple’s position requires an extension of the status quo but only for a short time.  As the judges in the Federal Court have pointed out, there is, in a sense, a collision between the parties.  Anything that redounds to one side’s advantage will have, if not an equal, at least an opposite strong impact on the other side’s position. 

One factor relevant to the balance of convenience is this:  that if Apple succeeded in getting special leave next Friday but there were no stay, it would be in a stronger position to seek a stay from the Full Court which granted special leave because that Full Court would have indicated at least some prospects of success in the appeal itself.  A state of affairs which enables Samsung to embark on what Mr Burley called a high velocity launch but which then suddenly generates an order to stop that launch does not seem to assist the convenience of either party.

Ms Howard, validly enough, made the point that the appeal, if special leave were granted, would turn on significant questions of discretion, judgment and evidence.  Perhaps more controversially, she said there were no great issues of law underlying it.  That really goes to the question of what the prospects of success of the application for special leave to appeal are.  In view of the very short nature of the stay, I do not wish to say very much about that subject and I do not wish to make any specific assessment of the prospects of success.  That type of analysis, it seems to me, is more appropriate where a long stay is involved as distinct from a seven‑day stay as here.  I think, though, two things can be said.  The decisions in the courts below appear to reveal a difference of opinion between two experienced patent judges.  The fact that Justice Bennett was reversed is in itself an indication that the special leave application is not without some prospects of success.  Secondly, to my mind at least, it is deeply troubling that there was no expedited final hearing in this case.  Precisely why there was not, on my perhaps limited acquaintance with the materials, is a somewhat murky question.  But why it is that no expedited final hearing took place and how the courts below dealt with the fact that no expedited final hearing took place is a matter of some public interest in the sense in which Ms Howard was using that expression and is a matter which may be thought worthy of close investigation on the special leave hearing.  That particular subject was the subject of ground 1, subparagraph (c) of the applicant’s summary of argument.  For those reasons, the hearing will be expedited and a stay will be ordered.

HIS HONOUR:   Apart from the gaps in orders 3 and 4, Ms Howard, do you have any problem with these short minutes of order that Mr Burley handed up?  I think one thing we shall have to do is take out “and 7” from line 2 of order 2 because Mr Burley said he wanted Justice Foster’s stay not.....in the summons but – why do we not concentrate on the gaps.  When can you file a notice of appearance?  By today?

MS HOWARD:   Today, your Honour.

HIS HONOUR:   And summary of argument?

MS HOWARD:   Wednesday, your Honour. 

HIS HONOUR:   Yes.  Just looking at it, of course, in the abstract, that is a perfectly reasonable proposition.  The practice of the Court though is that the panels meet on Wednesday mornings, having examined the papers, to work out the preliminary position on special leave.  It would assist the Judges, I think, if your submissions could be in by 4 o’clock on Monday and Mr Burley’s in reply by noon the following day, or yours in by 10.00 on Tuesday morning and Mr Burley’s in by 2.00.

MS HOWARD:   That sounds a little bit more attractive, your Honour.

HIS HONOUR:   That one, Mr Burley?

MR BURLEY:   10.00 am for our friend’s submissions and 2.00 pm for our reply.  It is likely that our friends will raise matters that require more than a couple of hours of thinking.

HIS HONOUR:   Were you at the hearing in front of Justice Bennett?

MR BURLEY:   I was, your Honour.

HIS HONOUR:   And you were in the Full Court?

MR BURLEY:   Yes, indeed.

HIS HONOUR:   You heard Ms Howard this morning?

MR BURLEY:   I have indeed, your Honour.  Part of the difficulty is I will have to get out of another case in order to be able to attend these matters which I am not yet sure I can, but if we could ask your Honour maybe until the close – perhaps 9.00 and 3.00, something of that nature.

HIS HONOUR:   All right.  Let us say, order 3 by 2 December.  There is 4, the respondents file and serve a summary of argument by 10.00 am on 6 December and 4(a) will be the applicant’s file and serve a summary of argument in reply.  What precise time did you ‑ ‑ ‑

MR BURLEY:   I was proposing later in the day, your Honour. 

HIS HONOUR:   4.00 pm?

MR BURLEY:   4.00 pm, yes.

HIS HONOUR:   I am just looking at number 5.  I am inclined to leave that out and just leave it to the parties to liaise with the Registry on what documents should be provided in what form.  It may be that there should not be a typical formal application book but everything should be assembled in a loose leaf folder, but I think it is best if those instructing Ms Howard and Mr Burley deal with the Registry on that.  I have put in the date in 6 and then we have got the additional material in 7 on the confidential exhibits.  Apart from that, is there any change you want, Ms Howard?

MS HOWARD:   No, your Honour. 

HIS HONOUR:   Thank you.  I make the following orders:

1.Upon the applicant’s undertaking to prosecute its application for special leave and any appeal with all reasonable expedition, the applicant’s application for special leave to appeal be heard on an expedited basis.

2.Upon the applicant’s undertaking as to damages –

Let me just interrupt myself.  That undertaking as to damages was an undertaking given to the Full Federal Court.

MR BURLEY:   Yes, your Honour, in the usual form.

HIS HONOUR:   Would it be satisfactory if we said here “upon the applicant’s undertaking as to damages given by its counsel to this Court”?

MR BURLEY:   Yes.

HIS HONOUR:   Is that enough for you, Ms Howard?  Very important things – very well.

MS HOWARD:   Yes, your Honour.

HIS HONOUR:   Very well.  I withdraw what I said about order 2.  Order 2 will be upon the applicant’s undertaking as to damages given by its counsel to this Court, orders 3, 4, 5 and 6 made by the Full Court of the Federal Court of Australia on 30 November 2011 be stayed pending determination of the applicant’s application for special leave to appeal or further order of the High Court varying this order.

3.The respondents file and serve a notice of appearance by 2 December 2011.

4.The respondents file and serve a summary of argument by 10.00 am on 6 December 2011.

5.The applicants file and serve a summary of argument in reply by 4.00 pm on 6 December 2011.

I will just change the wording of 6:

6.The applicant’s application for special leave to appeal be fixed for hearing on 9 December 2011.

7.Pending further order of the Court, access to confidential exhibits SMG‑2, SMG‑3 and SMG‑12 to the affidavit of Sue Maree Gilchrist dated 2 December 2011, confidential exhibits TM‑1 and TM‑2 to the affidavit of Tyler McGee dated 2 December 2011 and confidential schedule to applicant’s summary of argument be restricted to the external solicitors and counsel on the record for the parties in this proceeding and those individuals who otherwise fall within the confidentiality regime that has been agreed between the parties.

Is there anything else?

MR BURLEY:   No, your Honour.  Thank you.

MS HOWARD:   No, your Honour.

HIS HONOUR:   Thank you very much.  The Court will now adjourn.

AT 10.49 AM THE MATTER WAS ADJOURNED