Charter Pacific Corporation Limited v CSIRO
[2000] VSC 100
•28 March 2000
| SUPREME COURT OF VICTORIA | |
| PRACTICE COURT | Not Restricted |
No. 8051 of 1998
| CHARTER PACIFIC CORPORATION LIMITED | Plaintiff |
| v. | |
| COMMONWEALTH SCIENTIFIC AND INDUSTRIAL RESEARCH ORGANISATION | Defendant |
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JUDGE: | BEACH, J. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 14 MARCH 2000 | |
DATE OF JUDGMENT: | 28 MARCH 2000 | |
CASE MAY BE CITED AS: | CHARTER PACIFIC CORPORATION LTD. v. C.S.I.R.O. | |
MEDIUM NEUTRAL CITATION: | [2000] VSC 100 | |
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CATCHWORDS: Practice and Procedure – Amendment of pleadings – Amendment extending ambit of claim – Prejudice – Compensation by costs.
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APPEARANCES: | Counsel | Solicitors |
For the Plaintiff | Mr. B. O'Donnell Q.C. | Cornwall Stodart |
| For the Defendant | Ms. S. Crennan Q.C. and Mr. K. Lyons | Freehill Hollingdale & Page |
HIS HONOUR:
This is an appeal by the defendant C.S.I.R.O. from the order of the Listing Master made on 1 February 2000 whereby the Master gave leave to the plaintiff Charter Pacific Corporation Ltd. to amend its statement of claim.
The proceeding was originally filed in the Queensland District Registry of the Federal Court of Australia on 1 October 1996.
It was cross-vested to this Court by order of the Federal Court on 28 October 1998.
The defendant is the owner of a number of inventions associated with what are described as Optically Variable Inks and Transfer Media, Diffraction Device and Enhanced Anti-Copying Protection, and Electronically Responsive Security Verification Devices. It has made international patent applications in respect of the inventions.
The inventions relevant for present purposes are known as "Pixelgram", "Exelgram", "POPS" and "Vectorgram". The defendant is the owner of those trademarks.
Between 1991 and 1994 the defendant entered into a number of written agreements with Leon Hard Kurz Gmbh (Kurz) and Markem Systems Limited (Markem) for the commercial exploitation of the technologies.
Kurz is incorporated in the Federal Republic of Germany; Markem is incorporated in the United Kingdom.
The agreements relevant for present purposes are those the defendant entered into with Kurz on 20 December 1991 (the Kurz Pixelgram license) and 1 January 1994 (the Kurz Exelgram license) and those it entered into with Markem on 17 January 1992 (the Markem Pixelgram license) and early 1994 (the Markem Exelgram license).
I was informed by counsel for the parties that the four licenses in question expired in 1999. The relevance of that fact will become apparent in due course.
In 1992 the plaintiff and an associated company called Tambabrook Pty. Ltd. instituted proceedings in the Federal Court against C.S.I.R.O. and the Reserve Bank in relation to agreements entered into between the parties concerning technology C.S.I.R.O. had developed. The defendant filed a cross-claim in the proceeding.
By a deed entered into by those parties on 26 September 1994, the parties compromised their claims.
Pursuant to the deed the plaintiff acquired rights to royalties from the exploitation of the Pixelgram, Exelgram, POPS and Vectorgram technology. In that regard the deed required the defendant to fulfil a number of obligations.
Certain of the obligations which are relevant for present purposes are those specified in clauses 10.2(a) and (d), 10.3, 10.4 and 10.13 of the deed which read:
"10.2 Subject to the facts, matters and things adverted to in the Acknowledgments by CPC and Tambabrook, CSIRO warrants to CPC and Tambabrook that:
(a)it asserts that it is the legal and beneficial owner of and it believes it has good right and title to and authority to use the Technology and Intermediate Technology and that it will do all things reasonably necessary to establish that ownership, right, title and authority; PROVIDED that, subject to clause 6.1 and notwithstanding clause 10.1, CSIRO's obligations hereunder are also subject to the following and should CSIRO and/or any third party act in the manner adverted to in the Acknowledgments by CPC and Tambabrook and/or should the following eventuate or should CSIRO act in the manner contemplated in the following, CSIRO shall not be in breach of its obligations hereunder:
(i)as CSIRO and RBA are both Commonwealth Government instrumentalities or organs (by whatsoever name called) it is impractical for CSIRO to issue proceedings against RBA, and CSIRO's obligation to do all things reasonably necessary to establish ownership, right, title and authority does not and shall not require CSIRO to issue proceedings against RBA; and
(ii)given that the Technology and Intermediate Technology and LGZ's patents relate to optically variable device technology which has not yet been unreservedly accepted in the market place, the issuing of proceedings by CSIRO against LGZ or any defence of proceedings may be detrimental to the acceptance of the Technology, Intermediate Technology and Future Technology in the market place and accordingly it may be unreasonable for CSIRO to issue or defend proceedings or to give notice to threaten or give notice of an intention to issue proceedings against LGZ or its associates either to challenge the validity of LGZ's patents or to establish that Exploitation of the Technology, Intermediate Technology or Future Technology or some of them does not infringe LGZ's patents; and
(iii)if CSIRO does not issue or defend proceedings against either Mikoh or Mr. Hermann; and
(iv)CSIRO has resolved certain outstanding claims by and issues with RBA upon terms, the details of which are contained in a letter dated 14 September 1994 from RBA to CSIRO and have been provided in confidence to CPC; and
(v)clause 10.2(a) shall only require CSIRO to do what, in the bona fide opinion of CSIRO's Responsible Officer (based where appropriate, upon legal advice), is appropriate for promotion of the commercialisation of Technology or Intermediate Technology in the circumstances;
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(d)except for the Technology Agreements, it has not, by itself or to the best of its knowledge by its licensees, entered into any other Scheme in respect of the Technology, Intermediate Technology or the Future Technology other than:
with RBA, details of which have been provided to CPC in the letter referred to in clause 10.2(a)(iv); and
with Astor Universal Limited, being a licence of Exelgram, in terms largely similar to the licence of Exelgram to Leonard Kurz Gmbh and Co, which licence to Astor Universal Limited has not been executed by CSIRO; and
with Leonard Kurz Gmbh and Co relating to POPS, in that Leonard Kurz Gmbh and Co has indicated a willingness to assist CSIRO with funding of research and development of POPS, however, such research and development has not proceeded and details of the assistance are yet to be concluded;
with Leonard Kurz Gmbh and Co and customers or potential customers of Leonard Kurz Gmbh and Co limited details (without identification of such customers or potential customers) of which have been orally disclosed by a solicitor acting for CSIRO to CPC's solicitor and which are confirmed in a letter dated the date of entry into this Deed from DCB to KJD, which is to be released in confidence to CPC within 30 days of entry into this Deed or promptly following receipt of approval by Leonard Kurz Gmbh and Co, whichever is earlier.
10.3Subject to clause 6.1, CSIRO shall take all steps reasonably necessary to abide by the terms and conditions of the Technology Agreements and the Future Technology Agreements which affect Royalty by a Material Amount PROVIDED:
(a)that CSIRO's obligations hereunder shall not fetter or otherwise affect CSIRO's exercise of or ability to exercise its rights, pursuant to a Technology Agreement or Future Technology Agreement, in the manner which, in the bona fide opinion of CSIRO's Responsible Officer, is appropriate for the promotion of the commercialisation of Technology, Intermediate Technology or Future Technology.
(b)that CSIRO need not incur any expenditure which, in the bona fide opinion of CSIRO's Responsible Officer (based where appropriate on legal advice), is inappropriate or unwarranted; or
(c)that CSIRO need not take steps which, in the bona fide opinion of CSIRO's Responsible Officer, are inappropriate for the promotion of the commercialisation of the Technology, Intermediate Technology or the Future Technology.
10.4Subject to clause 6.1, CSIRO shall take all steps reasonably necessary to enforce the terms and conditions of the Technology Agreements and the Future Technology Agreements which affect Royalty by a Material Amount, PROVIDED nothing in this clause 10.4 shall oblige CSIRO to:
(a)incur any expenditure which, in the bona fide opinion of CSIRO's Responsible Officer (based where appropriate on legal advice), is inappropriate or unwarranted; or
(b)take steps which, in the bona fide opinion of CSIRO's Responsible Officer, are inappropriate for the promotion of the commercialisation of the Technology, Intermediate Technology or the Future Technology.
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10.13Subject to clause 10.14, CSIRO shall use its best endeavours to promote the receipt of Royalty until 30 June 2006 PROVIDED that CSIRO may:
(a)allocate its financial resources amongst its Divisions (by whatever name called) in a manner which, in the bona fide (sic) of CSIRO's Responsible Officer, is appropriate having regard to:
(i) the revenue of CSIRO;
(ii)the needs of the Divisions (by whatever name called);
(iii)the need for research and development in other fields; and
(b)choose to undertake or not undertake, as the case may be, such research and/or development as, in the bona fide opinion of CSIRO's Responsible Officer, is appropriate and justified; and
(c)invent or develop Excluded Technology or Exploit Excluded Technology by way of an Exempted Scheme; and
(d)develop Technology or Intermediate Technology which does not incorporate or use Optically Variable Devices or is exploited for a use other than a Specified Nature or Exploit Technology, Intermediate Technology or Future Technology which does not incorporate or use Optically Variable Devices or is not exploited for a Specified Nature."
The expression "Technology Agreements" is dealt with in clause 1 of the deed. The following is the meaning given to the expression:
"Technology Agreements means the following agreements entered into between CSIRO and:
(a)Leonard Kurz Gmbh and Co, being a Licence Agreement dated 20 December 1991, Supplemental Agreement dated 19 June 1992 and Supplemental Agreement dated 4 January 1993 relating to Pixelgram and Licence Agreement of 1 January 1994 relating to Exelgram;
(b)Astor Universal Limited, being Licence Agreement dated 17 January 1992 and Supplemental Agreement undated but believed to be of 1992 relating to Pixelgram; and
(c)the Scheme involving RBA referred to in clause 10.2."
(By the date of the deed Markem had changed its name to Astor Universal Limited).
What the plaintiff complains about in the present proceeding is what it contends has been the failure of the defendant to perform the obligations imposed upon it by various clauses of the deed, in particular the clauses to which I have made specific reference.
The plaintiff's complaints in that regard are lengthy. No useful purpose will be served by setting them out in my reasons for judgment.
A suitable example appears in paragraph 20 of the plaintiff's first amended statement of claim which reads:
"20.The Defendant failed to take all steps reasonably necessary to enforce the terms and conditions of the Markem Technology Agreements (as defined in the Settlement Deed) by:
(a)permitting Markem to breach the implied term of the Markem Pixelgram License and the Markem Exelgram License referred to in paragraph 10 hereof;
(b)permitting Markem to breach clause 13 of the Markem Pixelgram License and the Markem Exelgram License by not using its best endeavours to manufacture, promote and sell products of the Pixelgram or Exelgram technology
Particulars
Particulars of Markem's failure to use best endeavours are contained in Schedule 4.
Particulars of permission
Permission is to be inferred from the fact that the Defendant took no steps to require Markem to do any of the matters alleged not to have been done by it;
Particulars of steps necessary to enforce the
Markem technology agreementsParticulars of the steps necessary to enforce the Markem technology agreements are contained in Schedule 5."
The case for the plaintiff as pleaded in its first amended statement of claim is that the breaches of the deed committed by the defendant continued to the date at which it filed its proceeding in the Court namely 1 October 1996.
By its further proposed amendments the plaintiff seeks to achieve the following:
1.To extend its claims in relation to the breaches of clauses 10.3 and 10.4 of the deed to the expiration of the Markem Pixelgram and Exelgram licenses and the expiration of the Kurz Pixelgram and Exelgram licenses. Having regard to the fact that the licenses expired in 1999 that would extend the ambit of those claims by a period of some three years.
2.To extend certain of its claims in relation to breaches of clause 10.13 to the expiration of the licenses and to extend the balance of its claims relating to that clause, and I quote "to the present time".
3.To include a new allegation that from about June 1993 to the time of the settlement deed the defendant entered into a scheme either unilaterally or with Kurz whereby it would cease to effectively promote the Pixelgram technology as and from June 1993.
4.To include a new allegation that from the time of the deed the defendant did not promote the Pixelgram technology.
The plaintiff's application for leave to further amend its statement of claim was debated at some length before the Listing Master.
In due course the Master delivered written reasons for her decision. In those reasons the Master considered the issues debated before her and the principles applicable to the application. In the final analysis she concluded that the plaintiff's application should be granted.
In my opinion the Master made no error in the matter.
Whilst it is true that to grant the plaintiff's application will have the effect of widening the scope of the proceeding in that it will be necessary to examine the behaviour of the defendant and its officers over a longer period of time, the claims the plaintiff ultimately makes against the defendant will be dealt with once and for all.
If the plaintiff's application is refused that will leave the plaintiff no option but to institute a second proceeding against the defendant basically relating to what the plaintiff contends are similar breaches of the deed which have continued since it first instituted the proceeding.
If that is the situation, as I believe it would be, a deal of evidence called by the plaintiff at the trial of this proceeding would need to be recalled by it at the trial of the second proceeding.
Further it is highly unlikely that the Judge who heard and determined the first proceeding would hear and determine the second proceeding. There would be a risk therefore of inconsistent verdicts – a most unsatisfactory situation to say the least of it.
Criticism was made by counsel for the defendant of the second further amended statement of claim which has now been delivered to it pursuant to the Listing Master's order.
The substance of the complaint was that many of the new allegations have not been particularised. Whilst I agree that that is the case, I do not consider that the circumstances of this case are such as to justify a refusal of the plaintiff's application on that ground.
The defendant has already delivered to the plaintiff a request for further and better particulars of the second further amended statement of claim. The request runs to some 17 typed pages. In complying with that request as it is required to, the plaintiff should be able to rectify any deficiencies in the statement of claim. If it does not, the defendant will have an appropriate remedy available to it.
In all the circumstances I consider it is appropriate to exercise my discretion in favour of the plaintiff and grant it the appropriate leave to deliver its second further amended statement of claim. In my view no prejudice will be caused to the defendant by granting the application which cannot be compensated for by the order for costs made by the Master and pronounced on 1 February 2000.
The appeal will be dismissed with costs to be taxed, including any reserved costs, and paid by the defendant.
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