Eastland Technology Australia Pty Ltd v Whisson - [1999] WASC 29

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: EASTLAND TECHNOLOGY AUSTRALIA PTY LTD -v- WHISSON & ANOR [1999] WASC 29

CORAM: McKECHNIE J

HEARD: 8 & 9 APRIL 1999

DELIVERED : 9 APRIL 1999

PUBLISHED : 18 MAY 1999

FILE NO/S: CIV 1333 of 1999

BETWEEN: EASTLAND TECHNOLOGY AUSTRALIA PTY LTD (ACN 059 479 391)
Plaintiff
AND
MAXWELL EDMUND WHISSON
First Defendant
DEAN BRIAN PRESTIDGE
Second Defendant
SILVERFERN NOMINEES PTY LTD AS TRUSTEE FOR THE PRESTIDGE FAMILY TRUST (ACN 070 887 722)
Third Defendant

Catchwords:

Application for interlocutory injunction pending full hearing - Risk to patents - Application refused - Turns on own facts - No new principle

Legislation:

Nil

Result:
Application for interlocutory injunction refused

Representation:

Counsel:

Plaintiff:     Mr R J L McCormack
First Defendant             :     Mr S P Crabb
Second Defendant         :     Mr S P Crabb
Third Defendant           :     Mr S P Crabb

Solicitors:

Plaintiff:     Blake Dawson Waldron
First Defendant             :     Clayton Utz
Second Defendant         :     Clayton Utz
Third Defendant           :     Clayton Utz

Case(s) referred to in judgment(s):

American Cyanamid Co v Ethicon Ltd (1975) AC 396
Cash Converters v Hila Pty Ltd (1993) 9 WAR 481
Castlemaine Tooheys v South Australia (1986) 161 CLR 148

Case(s) also cited:

Ainsworth Nominees Pty Ltd v Andclar Pty Ltd (1988) 12 IPR 551
Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249
Angus & Coote Pty Ltd v Render & Ors (1989) 16 IPR 387
Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd (1967) VR 37
Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618
Blackie & Sons Ltd v The Lothian Book Publishing Co Pty Ltd (1921) 29 CLR 396
Cadbury-Schweppes Pty Ltd v The Pub Squash Co Ltd (1980) 2 NSWLR 865
Cash Converters Pty Ltd v Hila Pty Ltd (1993) 9 WAR 471
Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148
Coco v A N Clark (Engineers) Ltd (1969) RPC 41
Conagra Inc v McCain Foods (Aust) Pty Ltd (1992) 23 IPR 193
Custom Credit Corporation Ltd v Whitehall Holdings Pty Ltd, unreported; Library No 920231; 7 April 1992
HB Homes Pty Ltd v Beer [1986] 2 Qd R 379
LAC Minerals Ltd v International Corona Resources Ltd (1989) 16 IPR 27
Ladbroke (Football) Pty Ltd v William Hill (Football) Pty Ltd (1964) 1 WLR 273
Locabail International Finance Ltd v Agroexport [1986] 1 WLR 657
O Mustad & Son v Dosen & Anor (1963) RPC 41
Parfums Christian Dior (Australia) Pty Ltd v Dimmeys Stores Pty Ltd (1997) 39 IPR 349
Parker v Camden London Borough Council [1986] Ch 162
Ricegrowers' Co-operative Ltd v Howling Success Australia Pty Ltd (1987) ATPR 40-778
Saltman Engineering Co Ltd Ferotec & Monarch Engineering Co v Campbell Engineering Co Ltd (1948) 65 RPC 203
Seager v Copydex Ltd (No 1)(1967) 2 All ER 415
Skybase Nominees Pty Ltd v Fortuity Pty Ltd (1996) 36 IPR 529
State of Queensland v Australian Telecommunications Commission (1985) 59 ALR 243
Terrapin Ltd v Builders Supply Co (Hayes) Ltd (1967) RPC 375
Vieright Pty Ltd v Myer Stores Ltd (1995) 31 IPR 361
Westminster Brymbo Coal & Coke Company v Clayton (1867) 36 LJ Ch 476

McKECHNIE J : This is an application on the part of the plaintiff for an interim injunction pending a full hearing for an interlocutory injunction at a special appointment some weeks from now. I have dealt with this application as a matter of urgency after a hearing which lasted nearly five hours. As I may be the Judge to hear the special appointment in due course, it is important to note that the decision I am about to deliver is not a prejudgment of the issues, some the same and no doubt some different, which will be raised at the special appointment.

The decision I have reached is aimed at best preserving the competing rights of the parties before they have the benefit of putting full argument on the points in issue, and, in the case of the defendants, before having the opportunity of filing affidavits in response to those filed by the plaintiffs.
By writ of summons dated 31 March 1999 the plaintiff, in the endorsement of claim, asserts that the defendants have lodged a series of patent applications which are developments or variations of the plaintiff's patent and patent applications in respect of a number of medical devices.
The endorsement claims declarations and permanent injunctions. The application for an interlocutory injunction was originally to be made ex parte. However, the defendants have been served and seek a special appointment and certain programming orders.
This has caused the plaintiff to recast somewhat its proposed order from that originally sought in the Chamber summons. The plaintiff in summary now seeks an injunction restraining the defendants from disclosing or dealing with the patent applications, and an order requiring delivery into Court of all material documentation.
The plaintiff then proposes that the plaintiff's patent attorney and legal advisers inspect the documentation in conditions of confidence, with a right to apply to the Court thereafter. This right to apply is to allow the plaintiff to take steps to protect the patents, to prevent their loss and, as the plaintiff puts it, irreparable harm.
Some argument was directed to the effect of the plaintiff's proposed orders, on the basis that they constituted an application for a mandatory injunction. I do not accept this to be so. The order that the plaintiff seeks is relevantly to bring documents into Court for inspection, and is in the nature of an order for preservation of property. Indeed the plaintiff has expressly put the matter on that basis.
Accordingly, I do not accept that it is necessary for the plaintiff to overcome a further hurdle if in fact there is such a hurdle in law. Probably the better view is that the fact of the mandatory injunction is a factor more to be weighed more in the balance of convenience. I make reference to Cash Converters v Hila Pty Ltd (1993) 9 WAR 481 at 483.
Accordingly I approach this application in accordance with the ordinary principles set out in such cases as Castlemaine Tooheys v South Australia (1986) 161 CLR 148 and American Cyanamid Co v Ethicon Ltd (1975) AC 396. However, I do so with the following qualifications:
(1)There is yet to be a full hearing of the application for an interlocutory injunction.
(2)This application for an injunction is to last only until the special appointment, hopefully later this month.
(3)The defendants have not had sufficient opportunity to properly consider the plaintiff's affidavit and claim, notwithstanding service of a detailed notice of demand 5 weeks ago.
(4)Granting of the application at this stage may render the later application of the special appointment otiose.
The first question is whether there is a serious question to be tried. At this early stage in the proceedings I am prepared to accept that the plaintiff has established a serious question to be tried. Without canvassing all the claims against the defendants, there is a claim for breach of fiduciary duty against the first defendant, who is chairman of directors of the plaintiff, and the second defendant, which includes reference to the third defendant, who is the holder, for reward, of confidential information the property of the plaintiff.
In my opinion, this claim does raise a serious question for trial sufficient to justify consideration of an injunction.
The second issue is balance of convenience. The first application in the proposed order is an injunction restraining the defendants from dealing with the patent applications in the terms set out in the proposed order. In the course of argument I pointed out to counsel for the defendants that there was at this stage, undenied, an assertion on oath that the first defendant had indicated an intention to destroy the documentation relating to the applications if proceedings such as these were instituted. In response the defendants have filed an undertaking not to deal with the documents. The terms of that undertaking do not extend as far as the plaintiff seeks by the minute of proposed order.
In my view, the balance of convenience requires some protection for the plaintiff against destruction of the documentation. However, the balance of convenience does not at this stage require an injunction in terms sought by the plaintiff. It is clear that the situation with respect to the patent applications and the plaintiff's patents is fluid. Negotiations are presently under way with a US party, and there have been negotiations with other parties.
The plaintiff has established an arguable case, but at this stage I am not persuaded that the case is of such strength as to warrant the making of an order beyond that of the defendants' undertaking.
Pending the special appointment in a few weeks, I do not consider that the defendant should be restrained from taking part in negotiations in respect to the patents applications presently lodged in their names and apparently their property.
The second issue is the order for delivery into Court and inspection by the plaintiff's patent attorney and legal advisers. Mr McCormack, who appears for the plaintiff, strongly urged me to make this order, pointing to the lack of prejudice to the defendants. He also points out that the material will be discoverable in any event and that no harm will come if the orders are made with limited disclosure and confidential obligations upon those inspecting the documents.
He submits that irreparable damage may occur if the patent applications are lost. The arguments he mounts may well in due course persuade me, or the Judge who hears the special appointment, to make an order in terms sought. However, I am not presently persuaded that such an order is necessary. The applications still have time to run within the 12 month period. At least one application appears to have been lodged by a patent attorney. Although the others have been lodged by the defendants, they are not entirely lay persons in this respect. The first defendant obviously has some familiarity with patents in respect of medical devices.
The burden is on the plaintiff to establish a convincing case for the order. I take note of Mr Harwood's concerns. However, having regard to the comparatively short time to the hearing of the special appointment, I am not persuaded that irreparable harm is likely if I decline to make the order at this stage.
It is obvious that the resolution of this matter is urgent because all parties will have limited ability to negotiate with others concerning developing patents and these patent applications until this action is settled. It appears from the licence agreement that in January this year the parties had reached some accommodation with each other although they are now at odds.
I cannot order mediation to occur and in any event would not do so without the parties' desire for it. However, I strongly encourage the parties to seek to mediate this dispute, as this is likely to be the quickest, most acceptable commercial outcome.