Cocoon Data Holdings Pty Ltd v K2M3 LLC

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT

S CI 2010 02645

COCOON HOLDINGS PTY LTD (ACN 127 993 300) and COCOON DATA PTY LTD (ACN 127 993 284)	Plaintiffs
v
K2M3 LLC	Defendant

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JUDGE:	FERGUSON J
WHERE HELD:	Melbourne
DATE OF HEARING:	20 May, 29 July 2011
DATE OF JUDGMENT:	29 July 2011
CASE MAY BE CITED AS:	Cocoon Data Holdings Pty Ltd v K2M3 LLC
MEDIUM NEUTRAL CITATION:	[2011] VSC 355

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PRACTICE AND PROCEDURE – Application to strike out defence and enter judgment for failure to comply with anti-suit injunction – Defendant overseas - Declaratory relief - Application granted.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr P Solomon SC with Mr P Herzfeld	Gadens Lawyers
For the Defendant	No appearance

TABLE OF CONTENTS

Parties and introduction.................................................................................................................... 2

The anti-suit injunctions................................................................................................................... 2

Should the Court exercise its inherent jurisdiction to strike out the defence and enter judgment?     5

Conclusion........................................................................................................................................... 9

HER HONOUR:

Parties and introduction

1. The plaintiffs, which I will refer to as Australian Cocoon, entered into a joint development agreement with the defendant, K2M3 LLC, for the purpose of exploiting, in North America, proprietary software encryption technology beneficially owned by Australian Cocoon.  For this purpose, there was a joint venture vehicle, Military Resources Limited, which is also a party to the joint development agreement.

1. In these proceedings, Australian Cocoon has alleged that K2M3 has breached the agreement and they seek a declaration that the agreement is at an end, damages, interest and costs.  On this application, Australian Cocoon sought orders striking out the defence of K2M3 and entering judgment in its favour.  The basis of the application is that, on more than one occasion, K2M3 has breached the terms of orders for anti-suit injunctions that were previously made in this proceeding.

The anti-suit injunctions

1. On 23 September 2010, K2M3 and another company, Cocoon Data LLC, which I will refer to as US Cocoon, began proceedings against Australian Cocoon in the District Court of Harris County Texas, United States of America.  In that proceeding, K2M3 and US Cocoon alleged that Australian Cocoon had breached the joint development agreement and were attempting to licence the encryption technology directly in North America without going through the joint venture company.  It was alleged that US Cocoon had been substituted for Military Resources as the joint venture vehicle.  K2M3 and US Cocoon sought a “temporary restraining order” and a “temporary injunction” against Australian Cocoon to enjoin them from licensing or attempting to licence the encryption technology to any other North American company until the trial of the proceeding, at which stage they intended to seek a permanent injunction.

1. On 27 September 2010, Australian Cocoon sought urgent relief in this Court by way of an interim anti-suit injunction to restrain K2M3 from continuing with the proceeding in Texas.  The application came before me and I made orders restraining K2M3 until 4pm on 14 October 2010 from seeking a temporary restraining order from the…