Herold v Seally (No 2)

Case [2017] FCA 543

FEDERAL COURT OF AUSTRALIA

Herold v Seally (No 2) [2017] FCA 543

File number: NSD 2139 of 2016
Judge: BROMWICH J
Date of judgment: 19 May 2017
Catchwords:

PRIVATE INTERNATIONAL LAW – anti-suit injunctions – whether proceedings instituted in foreign court vexatious or oppressive according to principles of equity

PRIVATE INTERNATIONAL LAW – stay of proceedings on forum non conveniens grounds – whether local proceedings in a clearly inappropriate forum

Legislation:

Trade Marks Act 1995 (Cth), s 88

Federal Court Rules 2011 (Cth), r 13.01

Cases cited:

Ace Insurance Ltd v Moose Enterprise Pty Ltd [2009] NSWSC 724

British South Africa Company v Companhia de Mocambique [1893] AC 602

Carron Iron Co v Maclaren (1855) 5 HLC 416

CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345

Habib v Commonwealth [2010] FCAFC 12; (2010) 183 FCR 62

Henry v Henry (1996) 185 CLR 571

Joyce v Sunland Waterfront (BVI) Ltd [2011] FCAFC 95; (2011) 195 FCR 213

Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197

Regie Nationale des Usines Renault SA v Zhang [2002] HCA 10; (2002) 210 CLR 491

Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460

Tony Blain Pty Ltd v Jamison (1993) 41 FCR 414

TS Production LLC v Drew Pictures Pty Ltd [2008] FCAFC 194; (2008) 172 FCR 433

Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538

Davies M, Bell A and Brereton P, Nygh’s Conflict of Laws in Australia (9th ed, LexisNexis Butterworths, 2014)

Date of hearing: 26 April 2017
Registry: New South Wales
Division: General Division
National Practice Area: Intellectual Property
Sub-area: Trade Marks
Category: Catchwords
Number of paragraphs: 58
Counsel for the Applicants: Mr M Hall SC
Solicitor for the Applicants: James Beatty & Associates
Counsel for the Respondents: Mr T Di Francesco
Solicitor for the Respondents: Phillips Ormonde Fitzpatrick Lawyers

ORDERS

NSD 2139 of 2016
BETWEEN:

LARS HEROLD

First Applicant

GREEN LIGHT GROUP PTE LTD (SINGAPORE COMPANY REGISTRATION NO 20121505Z)

Second Applicant
AND:

JONATHON SEALLY

First Respondent

PODWAY LTD

Second Respondent

JUDGE:

BROMWICH J

DATE OF ORDER:

19 MAY 2017

THE COURT ORDERS THAT:

1.The outstanding paragraph 1 of the applicants’ amended interlocutory application dated and filed 9 January 2017 be dismissed.

2.The respondents’ interlocutory application dated and filed 30 January 2017 be dismissed.

3.Each party bear their own costs.

4.The parties have liberty to apply within 14 days for a different costs order.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

BROMWICH J:

  1. The parties to these proceedings are involved in a highly polarised dispute as to who should take the dominant credit for the development of a particular concept for driverless vehicles, and thereby be able to develop the concept commercially, principally overseas.  The applicants contend that the litigation to resolve that dispute should be conducted only in this Court and that an anti-suit injunction should be granted to restrain the continuation…

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Details
AGLC
Herold v Seally (No 2) [2017] FCA 543
Case
[2017] FCA 543
Decision Date

CaseChat Overview and Summary

Herold and GLG sought an anti-suit injunction against Podway to prevent it from continuing with litigation against Herold and GLG in the United States, and a stay of the local proceedings on forum non conveniens grounds. Podway opposed the applications and sought to have the interlocutory applications adjourned pending the outcome of the proceedings in California. The dispute arose out of allegations of intellectual property theft and misuse. Herold and GLG argued that the proceedings in the United States were vexatious and oppressive, and that the local proceedings should be stayed on forum non conveniens grounds.

The Court had to decide whether the California proceedings were vexatious or oppressive, and whether the local proceedings should be stayed on forum non conveniens grounds. The Court noted that the burden of proof for establishing that the foreign proceedings were vexatious or oppressive was very high, and that the Court had not been presented with sufficient evidence to make such a finding. The Court also found that the proceedings in the United States were not in a clearly inappropriate forum, and that there were significant advantages to the plaintiffs in pursuing their claims there. The Court concluded that there was no proper basis to grant the anti-suit injunction or to stay the local proceedings.

The Court dismissed both interlocutory applications and made no order as to costs. The Court noted that the parties could apply for a costs order within 14 days if they wished to do so.

Orders

Orders of the court

1. The outstanding paragraph 1 of the applicants’ amended interlocutory application dated and filed 9 January 2017 be dismissed.

2. The respondents’ interlocutory application dated and filed 30 January 2017 be dismissed.

3. Each party bear their own costs.

4. The parties have liberty to apply within 14 days for a different costs order.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

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Evidence

Evidence Before The Court

It was also advanced on behalf of Seally and Podway that this Court should adjourn the competing interlocutory applications pending the outcome of the applications by Mr Herold and Mr Seeger in the California proceedings. It was submitted that the result of the strike-out applications in those proceedings will be relevant to the anti-suit injunction application in this Court, and that these proceedings may ultimately be rendered otiose if the California Superior Court declines jurisdiction. No prejudice to Herold and GLG in respect of this delay was said to have been demonstrated.The expert evidence for the respondent The respondents relied upon the expert evidence of a US attorney, Howard Holderness, whose report was referred to extensively at the hearing. Some of the key aspects of that evidence, as dealt with in submissions by both parties, were as follows:(1)Mr Holderness indicated that virtually all complaints in complex litigation matters contain “Doe” defendant allegations. Complaints alleging trade secret misappropriation were said to be no different, and that any competently drafted complaint would include “Doe” allegations. Senior counsel for the applicants submitted that this process was largely equivalent to the process of preliminary discovery in this Court, although it was said in answer by counsel for the respondents that the “Doe” procedure offers some advantages considering that there are greater procedural and evidentiary obstacles to obtaining an order for preliminary discovery. (2)In relation to the damages that might be available in the California proceedings, Mr Holderness considered that where neither damages nor unjust enrichment are provable, a reasonable royalty may be imposed for a period of time no longer than the use of the secret could have been prohibited. It was submitted by counsel for Seally and Podway that this “royalty” remedy was significant because it was not available in Australia and might offer a greater potential for benefit to a claimant, avoiding the situation where a plaintiff might win on liability but lose anyway because no loss or unjust enrichment is provable.(3)Mr Holderness also expressed the view that the trade mark application in this Court might be determined in the California proceedings, the correctness of which was doubted by senior counsel for the applicants. At the hearing, counsel for Seally and Podway conceded that there would be significant obstacles to this approach, namely, the rule expressed in British South Africa Company v Companhia de Mocambique [1893] AC 602 (cited in TS Production by Finkelstein J at 438 [14]) to the effect that intellectual property right ownership will normally be determined by a court of the country or the state from which the right was obtained. On the basis of that concession, it was submitted on behalf of Seally and Podway that their strongest case was for this Court to retain the trade marks aspect of Herold’s application, but to stay the balance of these proceedings. Resolution of the disputeWhether these proceedings are in a “clearly inappropriate forum”

Decision

Reasons for decision

Strictly speaking, this question does not arise because of the finding that, on the material before this Court, it has not been demonstrated that the California proceedings meet the still-stringent test of being vexatious or oppressive. However this was an interlocutory proceeding and new matters may emerge and be raised by way of a fresh application. It is therefore of utility to observe that had the vexatious or oppressive test been met, it would have been appropriate in all the circumstances for the applicants first to seek to have the California Superior Court stay or strike out those proceedings. It necessarily follows that such an application should probably first be made, and fail, before any further application for an anti-suit injunction in this Court is contemplated.Conclusion Herold and GLG have a proper case to bring in this Court and Podway appears to have a proper case to bring in California. There is no proper basis upon which to stay these proceedings in whole or in part. Insufficient grounds have been established to injunct Podway from maintaining its case against Herold (and potentially GLG) in California. However that view of the California proceedings is not intended to suggest in any way that the California Superior Court could not or should not take a different view, given its undoubted superior position and capacity to determine that question more thoroughly and control matters wholly within its jurisdiction. It follows that both interlocutory applications must be dismissed.Costs As both applications have been dismissed it is not presently apparent that there is any proper basis for either party to have either the burden or the benefit of a costs order. However the parties will be given an opportunity, if sought, to identify a basis upon which any contrary application should be entertained.

Ratio Decidendi

Legal Principle Established

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