IPC Global Pty Ltd v Pavetest Pty Ltd

Case [2016] FCA 500


FEDERAL COURT OF AUSTRALIA

IPC Global Pty Ltd v Pavetest Pty Ltd [2016] FCA 500

File number: NSD 1203 of 2015
Judge: MOSHINSKY J
Date of judgment: 11 May 2016
Catchwords: PRACTICE AND PROCEDURE – application for leave to amend pleadings – whether leave should be granted to plead copyright infringement in relation to applicant’s firmware
Legislation: Federal Court Rules 2011, rules 8.21(1), 16.53
Cases cited:

Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175

Cement Australia Pty Ltd v Australian Competition and Consumer Commission (2010) 187 FCR 261

Tamaya Resources Limited (in liq) v Deloitte Touche Tohmatsu (A Firm), in the matter of Tamaya Resources Limited (in liq) [2015] FCA 1098

Tamaya Resources Limited (in liq) v Deloitte Touche Tohmatsu (A Firm) [2016] FCAFC 2

Date of hearing: Determined on the papers
Date of last submissions: 4 May 2016
Registry: Victoria
Division: General Division
National Practice Area: Intellectual Property
Sub-area: Copyright and Industrial Designs
Category: Catchwords
Number of paragraphs: 36
Counsel for the Applicant: R Cobden SC with E Bathurst
Solicitor for the Applicant: Bird & Bird
Counsel for the Respondents: CP Thompson
Solicitor for the Respondents: Stephens Lawyers & Consultants

ORDERS

NSD 1203 of 2015
BETWEEN:

IPC GLOBAL PTY LTD (ACN 168 265 156)

Applicant

AND:

PAVETEST PTY LTD (ACN 160 146 083)

First Respondent

CON SINADINOS

Second Respondent

ALAN JOHN FEELEY (and another named in the Schedule)

Third Respondent

JUDGE:

MOSHINSKY J

DATE OF ORDER:

11 MAY 2016

THE COURT ORDERS THAT:

1.Leave be granted to the applicant to file and serve a further amended originating application in the form of Annexure ‘A’ to the short minutes of orders attached to its written submissions dated 22 April 2016.

2.Leave be granted to the applicant to file and serve a further amended statement of claim in the form of Annexure ‘B’ to the short minutes of orders attached to its written submissions dated 22 April 2016.

3.By 4.00 pm on 18 May 2016, the first respondent make discovery of the following documents pursuant to rule 20.14 of the Federal Court Rules 2011:

All historic and current versions of the source code for the software embodied in the firmware of the CDAS (as defined in paragraphs 11 and 12 of the affidavit of Jane Margaret Frances Owen sworn 24 February 2016).

4.Inspection of such documents pursuant to paragraph 3 be subject to the Confidentiality Undertakings comprising Annexure ‘D’ to the orders made on 25 November 2015, and those documents be treated as “Pavetest Source Code” as defined in the Confidentiality Undertakings comprising Annexure ‘D’ to the orders made on 25 November 2015.

5.The applicant pay the respondents’ costs of the applicant’s interlocutory application dated 24 February 2016 (including the amended interlocutory application dated 11 April 2016) and any costs thrown away by reason on the amendments referred to in paragraphs 1 and 2 above.

6.The proceeding be listed for directions on a date to be fixed.

Note:    Entry of orders is dealt with…

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Details
AGLC
IPC Global Pty Ltd v Pavetest Pty Ltd [2016] FCA 500
Case
[2016] FCA 500
Decision Date

CaseChat Overview and Summary

IPC Global Pty Ltd sought leave to amend its pleadings in a proceeding against Pavetest Pty Ltd, which was set down for trial on issues of liability. The central dispute was whether IPC Global should be granted leave to plead copyright infringement in relation to its firmware. IPC Global sought to amend its pleadings to include allegations of copyright infringement by Pavetest in relation to the source code for the software embodied in the firmware of the CDAS. The respondents opposed the application on the grounds that IPC Global’s new case was based substantially on opinion evidence that was, in the circumstances, inherently unreliable, the circumstances leading to that new case had been inadequately explained and remained obscure, and in the course of building its new case, confidential information of the respondents was exposed directly to IPC Global.

The court considered the principles applicable to an application for leave to amend a pleading, including the factors relevant to whether leave should be granted. The court concluded that the proposed amendments were appropriate, and that IPC Global had acted as expeditiously as possible to seek the amendments. The court also found that the respondents had not demonstrated that the proposed amendments would cause them substantial prejudice or that the amendments were an abuse of the court’s process. The court therefore granted leave to the applicant to file and serve a further amended originating application and a further amended statement of claim. The court also ordered Pavetest to make discovery of certain documents and set a date for directions.

Orders

Orders of the court

1. Leave be granted to the applicant to file and serve a further amended originating application in the form of Annexure ‘A’ to the short minutes of orders attached to its written submissions dated 22 April 2016.

2. Leave be granted to the applicant to file and serve a further amended statement of claim in the form of Annexure ‘B’ to the short minutes of orders attached to its written submissions dated 22 April 2016.

3. By 4.00 pm on 18 May 2016, the first respondent make discovery of the following documents pursuant to rule 20.14 of the Federal Court Rules 2011:

All historic and current versions of the source code for the software embodied in the firmware of the CDAS (as defined in paragraphs 11 and 12 of the affidavit of Jane Margaret Frances Owen sworn 24 February 2016).

4. Inspection of such documents pursuant to paragraph 3 be subject to the Confidentiality Undertakings comprising Annexure ‘D’ to the orders made on 25 November 2015, and those documents be treated as “Pavetest Source Code” as defined in the Confidentiality Undertakings comprising Annexure ‘D’ to the orders made on 25 November 2015.

5. The applicant pay the respondents’ costs of the applicant’s interlocutory application dated 24 February 2016 (including the amended interlocutory application dated 11 April 2016) and any costs thrown away by reason on the amendments referred to in paragraphs 1 and 2 above.

6. The proceeding be listed for directions on a date to be fixed.

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

Background

Background to the litigation

The matter is currently set down for trial on issues of liability on 11 July 2016, on an estimate of 5-7 days.Background to this application On 24 February 2016, IPC Global filed an interlocutory application seeking non-standard discovery pursuant to rule 20.15 of the Federal Court Rules 2011, of documents falling in three categories. The application came on for hearing on 8 March 2016. The first category of discovery was not opposed (and an order for discovery of this category was made), but the second and third categories were opposed. As formulated in the interlocutory application, categories 2 and 3 were as follows:2.All historic and current versions of the source code for the software embodied in the firmware of the CDAS (as defined in paragraphs 11 and 12 of the affidavit of Jane Margaret Frances Owen sworn 24 February 2016).3.The software tools necessary to compile the source code discovered pursuant to paragraph 2. The application for discovery of documents in these categories is to be understood in the context of matters deposed to by Ms Owen in her affidavit of 24 February 2016. Paragraphs 9-12 of the affidavit read as follows:Discovery sought of TestLab firmware9.I refer to the affidavit of Mr Bhathiya Fernando, Research and Development Manager of the Applicant, affirmed 7 October 2015, in which Mr Fernando explains the operation and components of a materials testing product and in particular the fact that the Applicant’s UTS materials testing product comprises both the software that is installed on the user’s computer, and a controller (in the Applicant’s case called the IMACS) which communicates with the software via the firmware resident [on] the controller.10.In paragraphs 14-16 of that affidavit, Mr Fernando states as follows:14.IPC Global’s products operate using a combination of firmware and software. The firmware resides on the IMACS, and the software resides on a personal computer (PC).Firmware15.The firmware is computer code that is programmed into the read-only memory of the IMACS (the other equipment supplied by IPC Global, such as the UTM-30 depicted above, does not contain firmware).16.The user does not interact directly with the firmware. The firmware drives the electronics of the IMACS to provide loading control and sensor data acquisition.Software17.IPC Global’s software is known as "UTS", which is an acronym for "Universal Testing Software" (UTS).18.The UTS typically communicates with an IMACS by way of USB or ethernet.11.In respect of the First Respondent’s materials testing products, I note that Annexure KTM-6 to the affidavit of Kieran McGrane affirmed 7 October 2015 and filed in these proceedings is the Pavetest Brochure – 2014. This brochure describes the First Respondent’s dynamic testing systems. At page 67 of the brochure appears a description of the CDAS – Control and Data Acquisition System (CDAS), and the 16 channel version of the CDAS is depicted at the right hand side of the page. Annexed to this affidavit and marked JMFO 1 is a further copy of page 67 of that brochure.12.I am informed by Mr Fernando and I believed (sic) that the CDAS is the equivalent apparatus to the IMACS. This is apparent from the base of the page 67 of the annexure JMFO 1, where it is stated:TestLab software is included with CDAS – Control and Data Acquisition System. It is supplied on CD that also includes the relevant Method files (based on the configurations supplied) and calibration files for all transducers supplied.

Evidence

Evidence Before The Court

The principles applicable to an application for leave to amend a pleading are well established: see Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at [5], [25]-[30] per French CJ, at [71]-[83], [89]-[103], [111]-[114] per Gummow, Hayne, Crennan, Kiefel and Bell JJ; Cement Australia Pty Ltd v Australian Competition and Consumer Commission (2010) 187 FCR 261 at [38]-[45], [51] per Keane CJ, Gilmour and Logan JJ; Tamaya Resources Limited (in liq) v Deloitte Touche Tohmatsu (A Firm), in the matter of Tamaya Resources Limited (in liq) [2015] FCA 1098 at [120]-[146] per Gleeson J (affirmed on appeal: Tamaya Resources Limited (in liq) v Deloitte Touche Tohmatsu (A Firm) [2016] FCAFC 2).Evidence in support IPC Global relies on an affidavit of Jane Owen sworn 24 February 2016 and an affidavit of Bhathiya Fernando sworn 7 March 2016.The proposed amendments Putting to one side the amendment described in paragraph [16] above, which is not opposed, the amendments seek to add an allegation that IPC Global’s copyright in the IMACS firmware has been infringed by Pavetest. IPC Global submits that this is an important amendment and it would be an unsatisfactory state of affairs if all the allegations of copyright infringement by the respondents were not determined in the course of one proceeding. IPC Global submits that the infringement arises out of one course of conduct by the respondents – the development of Pavetest’s materials testing equipment (and the software and firmware underpinning it) in circumstances where Mr Sinadinos and Mr Feeley were former employees and/or contractors of IPC Global. IPC Global also submits that the questions of copyright infringement of the Pavetest TestLab software and the source code for the CDAS firmware are inextricably intertwined. It submits that the nature of the amendment is such that both questions are appropriately ventilated in these proceedings. IPC Global submits that it has acted as expeditiously as possible to seek the proposed amendments. It is not necessary to set out the detail of those submissions. The respondents submit that leave to amend (in relation to the amendments concerning the CDAS firmware) should be refused for the following reasons:(a)IPC Global’s new case about the respondents’ firmware source code is based substantially on opinion evidence that is, in the circumstances, inherently unreliable;(b)the circumstances leading to that new case, including the role of the independent expert whose work underpins it, have been inadequately explained, and remain obscure; the Court should infer that the evidence the independent expert could have led would not have supported its new case; and(c)in the course of building its new case, confidential information of the respondents was exposed directly to IPC Global; the respondents submit that it should not have been exposed to IPC Global in the manner in which it was. The respondents expand on these matters in paragraphs 12-44 of their written submissions.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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