Castledex Business Systems Pty Ltd v Lamont, Paul
[1997] FCA 1486
•21 FEBRUARY 1997
FEDERAL COURT OF AUSTRALIA
PRACTICE AND PROCEDURE - interlocutory proceeding - application to strike out parts of statement of claim - whether pleading of breach of confidence pursuant to “springboard doctrine” insufficiently precise so as to be embarrassing - pleading of breach of copyright - whether sufficient particulars given under O 58 r 16 - pleading of infringement of registered design - whether sufficient particulars given under O 58 r 21.
Copyright Act 1968 (Cth)
Patents Act 1990 (Cth)
Trade Practices Act 1974 (Cth), s 52, subs 53(eb)
Designs Act 1906 (Cth)
Federal Court Rules, O 11 r 16, O 58 rr 16, 21
Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 74 ALR 428 applied
O’Brien v Komesaroff (1982) 150 CLR 310 applied
Saltman Engineering Co Ltd v Campbell Engineering Co (1948) 65 RPC 203 applied
Carindale Country Club Estate Pty Ltd v Astill (1993) 115 ALR 112 applied
American Cyanamid Co v Alcoa Of Australia Ltd (1993) 27 IPR 16 applied
Faccenda Chicken Ltd v Fowler [1986] 1 All ER 617 applied
ANI Corporation Ltd v Celtite Australia Pty Ltd (1991) 19 IPR 506 applied
Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37 applied
Terrapin Ltd v Builders’ Supply Co (Hayes) Ltd [1967] RPC 375 applied
Seager v Copydex Ltd [1967] 2 All ER 415 applied
Titan Group Pty Ltd v Steriline Manufacturing Pty Ltd (1990) 19 IPR 353 applied
CASTLEDEX BUSINESS SYSTEMS PTY LTD (ACN 009 097 821) v PAUL LAMONT and ORS
WAG 143 of 1994
LEE J
PERTH
21 FEBRUARY 1997
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
WAG 143 of 1994
BETWEEN:
CASTLEDEX BUSINESS SYSTEMS PTY LTD
ACN 009 097 821
ApplicantAND:
PAUL LAMONT
First RespondentCLIFTON PEART
Second RespondentAUSRECORD PTY LTD
ACN 066 822 099
Third RespondentJUDGE:
LEE J
DATE OF ORDER:
21 FEBRUARY 1997
WHERE MADE:
PERTH
THE COURT ORDERS THAT:
There be leave to amend in respect of par 1.
With respect to par 10, the words following “1994” and preceding “for the purpose of” be struck out .
Paragraph 11 be struck out.
With respect to par 15, there be leave to amend item 1 of the particulars.
Paragraph 17 be struck out with leave to replead.
With respect to par 19, item 3 of the particulars be struck out with leave to replead.
With respect to par 21, item 2 of the particulars be struck out with leave to replead.
Paragraph 22 be struck out with leave to replead.
There be leave to make further amendments as perceived necessary.
Costs be in the cause of the respondent.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
WAG 143 of 1994
BETWEEN:
CASTLEDEX BUSINESS SYSTEMS PTY LTD
ACN 009 097 821
ApplicantAND:
PAUL LAMONT
First RespondentCLIFTON PEART
Second RespondentAUSRECORD PTY LTD
ACN 066 822 099
Third Respondent
JUDGE:
LEE J
DATE:
21 FEBRUARY 1997
PLACE:
PERTH
EX TEMPORE REASONS FOR JUDGMENT
The respondents by motion, seek an order under O 11 r 16 of the Federal Court Rules (“the Rules”) that certain paragraphs of the statement of claim filed by the applicant (“Castledex”), be struck out on the grounds that:
(i)they have a tendency to cause prejudice, embarrassment or delay in the proceeding;
(ii)they disclose no reasonable cause of action or other case appropriate to the nature of the pleading.
The statement of claim seeks a number of orders against the respondents. These include, interlocutory and final orders that the respondents be restrained from infringing Castledex’s copyright under the Copyright Act1968 (Cth), and that the respondents be restrained from making use of the Castledex’s confidential information, obtained by the first respondent (“Lamont”) and second respondent (“Peart”) whilst employed by Castledex.
Paragraph 10 of the statement of claim pleads a claim of breach of confidence against Lamont and Peart as follows:
“10. In or about September and October 1994:
(a)Lamont, in breach of the terms and each of them as pleaded in paragraphs 5 and 6 above; and
(b)Peart, in breach of the terms and each of them as pleaded in paragraph 7 herein
and without the knowledge or authority of Castledex:
(i)disclosed or allowed Castledex’s Confidential Information to be disclosed to an unauthorised person or persons;
(ii) copied Castledex’s Confidential Information; and/or
(iii)used Castledex’s Confidential Information for the purpose of:
(1) competing; and/or
(2) permitting others to compete
in trade or commerce with Castledex through the manufacture, sale and/or supply of products and services the same or substantially the same as Castledex’s Products and Services.
PARTICULARS
Castledex’s Confidential Information was copied by:
(a) Lamont; and
(b) Peart
and disclosed by each of them to Ausrecord as and from on or about 31 October 1994 and to other persons from and prior to that date, the identity of whom Castledex is unable to supply until after discovery and/or interrogatories, for the purpose of establishing a business for the manufacture, sale and supply of systems for filing documents the same as or substantially identical to Castledex’s products and services.”
Paragraphs 5 and 6 refer to the alleged terms of employment between Castledex and Lamont and par 7 outlines the alleged implied terms of employment between Castledex and Peart. The term “Confidential Information” is defined by pars 9 and 18 as follows :
“9. ...
(a) identity of Castledex’s suppliers and customers;
(b)costing and pricing of Castledex’s products and services; and
(c)details and basis of quotations and tenders which Castledex submitted to its customers for the supply of its products and services;
(d)various additional materials and information referred to in subpars 18(1)(a)-(d) inclusive herein ...”
18.Castledex is and has at all material times since on or about 5 October 1989 to date of commencement of the within proceedings been the owner of copyright subsisting in Australia in certain literary and artistic works comprised in the embodiment in material form of Castledex’s Confidential Information.
PARTICULARS OF CASTLEDEX’S COPYRIGHT WORKS
(1)(a) technical and workshop detailed drawings of and relating to Castledex’s products;
(b)sales and pricing information in written form relating to Castledex’s business, its products and services;
(c)technical information and data in relation to Castledex’s business, its products and services; and
(d)instruction manuals and documentary samples relating to Castledex’s business, its products and services; ...”
It is submitted by the respondents that “Confidential Information” as defined in this manner, encompasses every possible facet of the Castledex’s business and financial affairs and accordingly is insufficiently precise to support a pleading of breach of confidence. On this basis, the respondents submit that par 10 should be struck out as embarrassing.
It is well settled, that in order to make out a case for breach of confidence, the following elements must be pleaded:
(i)there is information sought to be protected which can be identified with specificity and not merely in global terms;
(ii)the information in question has the necessary quality of confidentiality;
(iii)the information in question was received by the defendant in such circumstances as to import an obligation of confidence; and
(iv)there is actual or threatened misuse of that information: Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 74 ALR 428 at 437-438 per Gummow J; O’Brien v Komesaroff (1982) 150 CLR 310 at 326-328 per Mason J; Saltman Engineering Co Ltd v Campbell Engineering Co (1948) 65 RPC 203 at 215.
More specifically, with respect to element (i), the information sought to be protected must be pleaded with sufficient particularity for the information to be identifiable and capable of forming the basis of an injunction: Carindale Country Club Estate Pty Ltd v Astill (1993) 115 ALR 112 at 120-123 per Drummond J; American Cyanamid Co v Alcoa of Australia Ltd (1993) 27 IPR 16 at 20 per Northrop J.
Further, where the claim of breach of confidence relates to the alleged misuse by an ex-employee of confidential information acquired during the course of employment, a global pleading against the use and disclosure of all such information will not be maintainable. Not all confidential information acquired during the course of employment, is subject to protection in equity after the conclusion of the term of employment. The law draws a distinction between confidential information which must be considered to necessarily become part of the personal skill, knowledge and experience gained by the employee from the term of employment, and information, so confidential, that it may be described as “trade secrets”, and although disclosed to the employee during the employment term, remains the property of the employer following termination. Only the latter type of information is protected by equity from use and disclosure at the conclusion of the employment relationship: O’Brien v Komesaroff (1982) 150 CLR 310 at 324-328 per Mason J; Faccenda Chicken Ltd v Fowler [1986] 1 All ER 617 at 626; ANI Corporation Ltd v Celtite Australia Pty Ltd (1991) 19 IPR 506 at 511 per Burchett J; Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37 at 40 per Gowan J. Hence, a pleading of this kind must specify the information sought to be protected with sufficient particularity for a court to determine whether it is of the requisite confidentiality.
In the present case the statement of claim is not an inadequate pleading. There is no global claim that the respondents have generally misused accumulated knowledge, comprised of confidential information, acquired by virtue of their previous positions as Castledex’s employees. The particulars of par 10 limit the alleged misuse of information to the actual copying and disclosure of specific items of Confidential Information.
Although the list of items alleged to have been copied and disclosed is comprehensive, and relate to many aspects of Castledex’s business, the items are described with sufficient particularity in the further particulars to par 9 of the statement of claim to support a pleading of breach of confidence. With regard to the statement in the particulars provided in par 10 that the information was disclosed “to other persons”, in the context of the statement of claim as a whole the statement appears to be irrelevant to the nature of the breaches alleged in par 10 against Lamont and Peart, and it will be ordered that the words “and to other persons from and prior to that date, the identity of whom Castledex is unable to supply until after discovery and interrogatories”, be struck out of that paragraph.
Paragraph 11 alleges a breach of patent against the third respondent (“Ausrecord”) by either manufacturing or causing to be manufactured products which are the same as, or substantially identical to, Castledex’s product. The pleading adds nothing to par 21 of the statement of claim and should be struck out.
It is conceded that in par 14, the reference to “information” should be amended to read “Confidential Information”.
Paragraph 15 reads as follows:
“15.In the premises, at all material times from or about 31 October 1994 Ausrecord:
(a)was under a duty of confidence to Castledex in respect of all the Confidential Information of Castledex supplied by Lamont and/or Peart to it (Ausrecord) but has acted in breach of such duty; and
(b)was not, and is not, entitled to use or disclose such information or any paragraph thereof but has done so.
PARTICULARS
(1)The Applicant refers to and relies upon the fact of Ausrecord being able to offer for sale, and supply sell (sic) the said file folders and provide services in relation to such products virtually immediately upon it commencing trading and had the services of Lamont and/or Peart available to it (Ausrecord) when Castledex’s experience is that such conduct in trade or commerce is not possible without having the benefit of a “springboard” such as access to and use of Castledex’s Confidential Information.
(2)Castledex refers to and relies upon the matters referred to in paragraphs 11, 17, 19, 21, 22, 26, 27, and 28 herein.
(3)Castledex is unable to provide further particulars until after discovery and interrogatories herein.”
It was submitted that the use of the term “file folders” in this and other paragraphs, refers to the folders as defined by subpars 1(d) and 1(e) of the statement of claim. Subparagraph 1(d) refers to file folders subject to Australian Standard Patent No 644378, and subpar 1(e) refers to file folders, the design of which, is subject to Australian Registered Design No 108031. An amendment should be made to par 1 of the statement of claim to specify that any reference to “file folders” in the pleadings is a reference to the file folders defined by subpars 1(d) and 1(e).
In addition, item 1 of the particulars to par 15 should be amended to clarify that Castledex’s complaint against Ausrecord’s production and sale of file folders is not limited to a claim of infringement of Castledex’s patent and registered design. The paragraph is intended to make out a claim of breach of confidence pursuant to the “springboard” doctrine. The doctrine prevents the recipient of confidential information from using that information as a “springboard” in the conduct of activities detrimental to the information’s original owner, where to do so would give the recipient the advantage of a “head start” as against the rest of the world: Terrapin Ltd v Builders’ Supply Co (Hayes) Ltd [1967] RPC 375 at 391 per Roxburgh J; Seager v Copydex Ltd [1967] 2 All ER 415 at 417 per Lord Denning MR; Titan Group Pty Ltd v Steriline Manufacturing Pty Ltd (1990) 19 IPR 353 at 376 per O’Loughlin J.
The real complaint sought to be put forward by the Castledex, is that it is only by using Castledex’s confidential information, that Ausrecord was able to commence the business of offering for sale and supplying and selling the relevant file folders as promptly as it is alleged to have done. Leave is granted for item 1 of par 15 to be amended in order that this contention be more accurately stated.
Paragraph 17 of the statement of claim reads as follows:
“17. In or about October 1994:
(a) (i) Lamont; and/or
(ii) Peart
each acting for and on behalf of Ausrecord, requested Westcare; and
(b) Westcare agreed
to produce for Ausrecord, file folders identical or substantially identical to the file folders Westcare produced for Castledex and, in so doing, disclosed to Westcare such of Castledex’s Confidential Information as was necessary to enable Westcare to produce the said file folders.
PARTICULARS
(1)The Applicant refers to and relies upon the fact of Ausrecord being able to offer for sale, and supply sell [sic] the said file folders and provide services in relation to such products virtually immediately upon it commencing trading and had the services of Lamont and/or Peart available to it (Ausrecord) when Castledex’s experience is that such conduct in trade or commerce is not possible without having the benefit of a “springboard” such as access to and use of Castledex’s Confidential Information.
(2)Castledex is unable to provide particulars of Castledex’s Confidential Information as provided to Westcare until after discovery and interrogatories herein.”
The pleading is a claim of breach of confidence against Ausrecord for the alleged disclosure of the applicant’s confidential information to Westcare, for the purpose of enabling Westcare to produce file folders for Ausrecord. To the extent that the pleading acknowledges that Westcare already produced identical, or substantially identical file folders for Castledex, in the absence of further particulars, it does not seem that the pleading is capable of supporting a claim that Ausrecord communicated to Westcare any confidential information. As it stands the pleading suggests a breach by Westcare of its obligation to Castledex not to use Castledex’s confidential information for a purpose other than the purpose for which it was provided.
The paragraph should be struck out and repleaded to set out particulars of the confidential information which the applicant alleges was provided to Westcare by Ausrecord, to allow Westcare to produce the relevant file folders in the manner in which it is alleged to have produced them.
Paragraph 19 of the statement of claim is a pleading of breach of copyright against the respondents under the Copyright Act, by the acts of reproducing, publishing or selling Castledex’s copyright works. Order 58 r 16 of the Rules, requires that in proceedings for infringement of copyright, particulars of infringement must specify the manner in which the copyright is alleged to be infringed and must give at least one instance of each type of infringement. Subparagraph 19(3) purports to supply particulars of the alleged acts of infringement by reference to pars 10, 12, 13, 15 and 21 of the statement of claim. However, the contents of these paragraphs do not give sufficient particulars relevant to a claim of infringement of copyright by the “selling” of Castledex’s copyright works. The subparagraph should be amended so as to comply with the requirements of O 58 r 16.
Paragraph 21 sufficiently pleads the exploitation of Castledex’s patent under the Patents Act1990 (Cth) and pars 23 to 26 outline adequately claims of passing off and contravention of s 52 of the Trade Practices Act1974 (Cth). No amendment to these paragraphs is required.
Paragraph 22 pleads an infringement of a registered design under the Designs Act1906 (Cth) against Ausrecord. Order 58 r 21 of the Rules states that such a pleading must provide particulars specifying the manner in which the design is alleged to have been infringed and must give at least one instance of each type of infringement alleged. Paragraph 22 of the statement of claim should be struck out with leave to replead in order to comply with the requirement of O 58 r 21.
Subparagraph 27 (c) of the statement of claim pleads a contravention of s 53 (eb) of the Trade Practices Act against Ausrecord and reads as follows:
“27. ...
(c)Ausrecord has falsely represented that the range of filing system products and/or services provided in relation thereto by it (Ausrecord) are derived from an origin, namely Castledex when they are not so derived and thereby has contravened s 53 (eb) of the TPA;”
Section 53 (eb) of the Trade Practices Act reads as follows:
“53.A corporation shall not, in trade or commerce, in connexion with the supply or possible supply of goods or services or in connexion with the promotion by any means of the supply or use of goods or services:
...
(eb)make a false or misleading representation concerning the place of origin of goods;”
It is submitted for the respondents that sub-par 27 (c) of the statement of claim should be struck out as disclosing no cause of action in that s 53 (eb) concerns the “place of origin” and not the “company of origin” of the relevant goods or services. Counsel for Castledex submitted that the meaning of the phrase “place of origin”, as used in s 53 (eb), is equivocal, and that there is authority to support the meaning set out in the pleading. In my opinion, Castledex should not be precluded from putting forth such as argument on the law. The subparagraph should not be struck out.
Orders will be made accordingly.
I certify that this and the preceding nine (9) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Lee
Associate:
Dated: 21 February 1997
Counsel for the Applicant: R J McCormack Solicitor for the Applicant: Blake Dawson Waldron Counsel for the Respondent: R Griffiths Solicitor for the Respondent: Griffiths & Godecke Date of Hearing: 21 February 1997 Date of Judgment: 21 February 1997
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