Kafataris v Davis

Case [2016] FCAFC 134

FEDERAL COURT OF AUSTRALIA

Kafataris v Davis [2016] FCAFC 134

Appeal from: Kafataris v Davis [2014] NSWSC 1454
File number: NSD 1230 of 2014
Judges: GREENWOOD, MIDDLETON AND MCKERRACHER JJ
Date of judgment: 5 October 2016
Catchwords:

INTELLECTUAL PROPERTY – characterisation and identification of the invention – applicable principles in relation to co-inventorship – whether change in the content of provisional patent application and PCT application indicative of contribution amounting to co-inventorship – alternatively, whether contributions in the course of negotiations amounted to a material contribution to the invention – contribution by appellant mere example of another embodiment of the invention – alternatively, whether misuse of confidential information

Held: appeal dismissed

Legislation: Patents Act 1990 (Cth) ss 15, 16, 40(1), 40(2)(a), 40(4)
Cases cited:

Coco v AN Clark (Engineers) Ltd [No 2] [1969] RPC 41

Commonwealth v John Fairfax & Sons Ltd (1980) 147 CLR 39

Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41

JMVB Enterprises Pty Ltd v Camoflag Pty Ltd (2005) 67 IPR 68

Lee v Commissioner of Patents [2011] AATA 818

Minnesota Mining and Manufacturing Company v Beiersdorf (Australia) Limited (1980) 144 CLR 253

Polwood Pty Ltd v Foxworth Pty Ltd (2008) 165 FCR 527

University of Western Australia v Gray (2009) 179 FCR 346
Date of hearing: 5 May 2015
Registry: New South Wales
Division: General Division
National Practice Area: Intellectual Property
Sub-area: Patents and associated Statutes
Category: Catchwords
Number of paragraphs: 91
Counsel for the Appellants: Mr SCG Burley SC with Mr PW Flynn and Mr DB Larish
Solicitor for the Appellants: Marque Lawyers
Counsel for the Respondents: Mr JM Hennessy SC
Solicitor for the Respondents: Gilbert + Tobin

ORDERS

NSD 1230 of 2014
BETWEEN:

CON KAFATARIS

First Appellant

OXFORD NO 1 PTY LTD

Second Appellant

GROUP INVESTMENT AUSTRALIA PTY LTD

Third Appellant
AND:

CORY DAVIS

First Respondent

ROWLAND THOMAS

Second Respondent

WILLIAM JOHN DAVIS

Third Respondent

JUDGES:

GREENWOOD, MIDDLETON AND MCKERRACHER JJ

DATE OF ORDER:

5 OCTOBER 2016

THE COURT ORDERS THAT:

1.The appeal be dismissed.

2.The appellants pay the costs of the respondents, to be assessed if not agreed. 

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


REASONS FOR JUDGMENT

THE COURT:

THE APPEAL

  1. Mr Con Kafataris seeks to be recognised pursuant to s 15 of the Patents Act 1990 (Cth) as a co-inventor to a PCT Patent Application lodged in 2013.  The PCT Application is annexed to these reasons (Annexure 1).  Mr Kafataris seeks other relief flowing from that recognition.  Mr Kafataris and related corporate appellants, who played no direct role at trial, were unsuccessful in this claim before the primary judge.

  2. The patent in suit relates to an alternative way of playing card games, whereby a player can play a primary game, while at the same time exercising betting options on a secondary or auxiliary or supplementary game, either separately from the primary game or in cooperation with the primary game. 

  3. The hearings at first instance and…

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Kafataris v Davis [2016] FCAFC 134
Case
[2016] FCAFC 134
Decision Date

CaseChat Overview and Summary

Kafataris v Davis was an appeal against the findings of the primary judge that Mr Kafataris was not an inventor and that there had been no misuse of his confidential information by the respondents, Mr Cory Davis or Mr Rowland Thomas, either directly or through their patent attorney, Mr John Walsh. The primary judge had concluded that there was no fiduciary relationship between the parties and rejected the contention that the parties were in a fiduciary relationship. The appeal was dismissed by the court, which held that the primary judge had approached all relevant questions correctly and reached findings which were open to him. No applicable error had been demonstrated.

The primary judge identified the case as being limited to two issues: whether Mr Kafataris should be regarded as an inventor within s 15 of the Patents Act and whether there had been misuse of his confidential information by the respondents. Mr Davis had filed a provisional patent application for the invention entitled "Baccarat Game with Supplementary Betting Option" with Mr Thomas being described as the sole inventor. The appeal related to whether Mr Kafataris should be regarded as an inventor and whether the information provided to the respondents was used for purposes other than that for which it was communicated, in violation of the equitable rights of confidence held by Mr Kafataris.

The court held that the primary judge's analysis was correct, and that the parties were not in the necessary fiduciary relationship. The court found that the relationship was one of arms-length commercial negotiations, and that there was no evidence that any of the parties undertook to act in the interests of the others. The court rejected the contention that the parties were in a fiduciary relationship, accepting the respondents' contention that there was no evidence that any of the parties undertook nor agreed "to act for or on behalf of the interests of another person in the exercise of the power or discretion which will affect the interests of that person in a legal or practical sense".

The appeal was dismissed, and the appellants were ordered to pay the costs of the respondents. The court held that the primary judge had approached all relevant questions correctly and reached findings which were open to him. No applicable error had been demonstrated.

Orders

Orders of the court

1. The appeal be dismissed.

2. The appellants pay the costs of the respondents, to be assessed if not agreed.

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

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

For reasons set out below, the primary judge approached all relevant questions correctly and reached findings which were open to him. No applicable error has been demonstrated. THE PRIMARY JUDGMENT The primary judge identified the case as, essentially, being limited to the two issues referred to in [3], namely, first, whether Mr Kafataris should be regarded as an inventor, within s 15 of the Patents Act and, secondly, whether there had been misuse of his confidential information by the respondents, Mr Cory Davis or Mr Rowland Thomas, either directly or through their patent attorney, Mr John Walsh. On 3 April 2012, Mr Davis filed a provision patent application with IP Australia (Provisional Application) for the invention entitled “Baccarat Game with Supplementary Betting Option”. The Provisional Application was prepared by Mr Walsh with Mr Thomas being described as the sole inventor of the invention the subject of the Provisional Application. The Provisional Application was in these terms (annexures omitted):BACCARAT GAME WITH SUPPLEMENTARY BETTING OPTIONBACKGROUNDThe present invention relates to games of chance and more particularly relates to a game feature whereby a player can play a primary game and exercise bet options on a secondary or auxiliary game either separate from the primary game or in co-operation with the primary game. The present invention also relates to an alternative to the known baccarat games which provides increased betting options and increase [sic-increased] actual or perceived opportunities for a win.The invention also relates to gaming games of chance in which a player is provided with an increased opportunity to bet during a primary game of chance. More particularly the invention relates to improvements in the gaming game of baccarat. The invention relates to providing such game improvement in real or electronic form.PRIOR ART[This section sets out the existence of special game features to attract player interest, such as jackpots and features associated with an increased probability of winning, and an extended description of the rules of baccarat. The final paragraph of this section says: ‘Third card selections are known in the prior art but it has hitherto been unknown to provide a baccarat game in which primary and secondary wagers are operating concurrently or sequentially.’]INVENTIONThe present invention provides an alternative to the known baccarat game regimes whereby a player can play a primary game and exercise bet options on a secondary or auxiliary game either separate from the primary game or in co-operation with the primary game. The present invention provides increased betting options and increases actual or perceived opportunities for a win during a primary game of chance. The invention also provides the above features in real (table gaming) or electronic form. The invention further provides a betting regime for allowing a player to bet on a third card which is dealt depending upon the [sic]In its broadest form the present invention comprises: A method of playing baccarat comprising the steps of:a)dealing at least one player a first card;b)dealing a banker a first card;c)dealing said at least one player a second card forming a hand with the first player card;d)dealing said banker a second card forming a hand with the first banker card;e)prior to dealing the above hands, placing a bet/wager on the first or second of said hands in favour of a player, the banker, a pair or a tie;f)depending upon the totals of the two cards in the first hands, allowing a player to receive a third card or allowing the banker to receive a third card;g)prior to receiving the third card, placing a bet/wager on an outcome based on the effect of the player or banker's third card on the outcome; andh)determining a “wins status” from the outcome of the third card. According to a preferred embodiment, if the banker draws cards totalling less than 6, the banker will be issued with a third card which he must take. If the Player draws cards totalling less than 6, the player will be issued with a third card which he must take.According to a preferred embodiment, if the two cards drawn by player total less than 6 and the banker draws two cards totalling 6 or 7, then a third card will be issued to the player. The player must accept this card and the banker must stand on 6 or 7. Prior to the dealing of the third card to the player, an opportunity exists to place a second (double up) bet on either the player or the banker. The third card deal is compulsory once first hand criteria are met.In another broad form the present invention comprises:a game of baccarat in which a player is allowed a bet/wager on the effect of a third card dealt after predetermined criteria are met on a first hand dealt to a banker and player.According to a preferred embodiment the dealing of the third card to the banker or player allows an opportunity to a player to place a first or second bet on the outcome of the effect of the third card whether the third card is dealt to the player or banker. According to one embodiment a player may decide not to be on the first hand but may elect to bet on the second or auxiliary hand including the third card.In its broadest form the present invention comprises:A baccarat game in which at least one player and banker are dealt a first hand and contingent upon the outcome of the first hand and subject to the first hand meeting game criteria, a player or banker wagers on a hand which includes a third card dealt to either the banker or player subject to game criteria being met.According to a preferred embodiment if game criteria based on the first hand are met a compulsory third card is dealt, prior to which a player or banker has the opportunity to bet on the effect of the third card on the second hand.The present invention provides an alternative to the known prior art and the shortcomings identified. The foregoing and other objects and advantages will appear from the description to follow. In the description reference is made to the accompanying representations, which forms a part hereof, and in which is shown by way of illustration specific embodiments in which the invention may be practiced. These embodiments will be described in sufficient detail to enable those skilled in the art to practice the invention, and it is to be understood that other embodiments may be utilized and that structural changes may be made without departing from the scope of the invention. In the accompanying illustrations, like reference characters designate the same or similar parts throughout the several views. The following detailed description is, therefore, not to be taken in a limiting sense, and the scope of the present invention is best defined by the appended claims.BRIEF DESCRIPTION OF DRAWINGSThe invention will now be described in more detail according to a preferred but non-limiting embodiment and with reference to the accompanying illustration.Figure 1 shows a plan view of a BACCARAT table layout according to a preferred embodiment.Figure 2 shows a plan view of a baccarat table according to an alternative embodiment.DETAILED DESCRIPTIONAccording to one embodiment of the invention a player is dealt the first card, followed by one to the banker. A second card is then dealt to the player followed by second card to the banker. These four cards form the initial hand and first bets can be placed prior to dealing. Bets at this point can be placed on player, banker, tie or pairs according to conventional methodology. Ace counts as one. Tens and all picture cards count as zero as per usual criteria.If the two cards drawn by either player or banker total 8 or 9, this is called a natural and no further card will be issued on the game. If both player and banker have a total of 9, this is deemed a tie. Bets placed on the tie would be paid at 8 to 1. Bets placed on player or banker are refunded. Bets placed on pairs are forfeited.If player totals 9 and the banker totals 8, the player wins.If player totals 8 and the banker totals 9, the banker wins.If player and the banker total 8, this game is deemed a tie and all bets placed on player or the banker are refunded. IF the 8 is made up of 2 X fours in either or both hands, pairs will be paid at 11 to 1.If the two cards drawn by the player total 7, the player must stand and no third card will be issued to player. If the banker draws cards totalling less than 6, the banker will be issued with a third card which he must take. The double up draw on the third card is once relevant criteria are satisfied compulsory.Currently there is no regime to allow betting on an outcome generated by the dealing of the third card. Prior to the dealing of the third card to the banker, an opportunity is provided to a player to place a second bet (irrespective of whether the player has bet on the outcome of the primary game - i.e. dealing of the first two cards) on the outcome of the effect of the third card whether the third card is dealt to the player or banker. Any bets on the initial hand or primary game will stand and can be made independent of the outcome of the secondary betting on the third card or contingent upon the outcome of the betting on the first two cads [sic-cards]. The betting regime can be adjusted as required within the framework of the original bet if made or at least as a consequence of the initial card deal to player or banker.If the two cards drawn by the player total 6, the player must stand and no third card will be issued to the player. If the banker draws 7, the banker wins. If the banker draws 6, tie will be paid at 8 to 1. The player and the banker bets will be refunded if the tie is paid.If the two cards drawn by the player total less than 6 and the banker draws two cards totalling 6 or 7, then a third card will be issued to the player. The player must accept this card and the banker must stand on 6 or 7. Prior to the dealing of the third card to the player, an opportunity exists to place a second (double up) bet on either the player or the banker. Initial bets stand.If the player and the banker draw cards totalling less than 6, both the player and the banker will receive and must accept a third card. Prior to the dealing of these third cards, an opportunity exists to place a second (double up) bet on either the player or the banker. Initial bets stand.If the player draws two cards of the same denomination (eg 2 x 2,2 x KING, 2 x ACE), then the player pair bets will be paid at 11 to 1, irrespective of the final outcome of the game. If the banker draws to cards of the same denomination (eg 2 x 2,2 x 6,2 x 10), then the banker pair bets will be paid at 11 to 1, irrespective of the final outcome of the game. If both the player and the banker draw two cards of the same denomination, then both the player and the banker pair bets will be paid at 11 to 1, irrespective of the final outcome of the game. Pairs do not affect this issuing of third cards when appropriate. This second bet allows patrons to make a more informed decision for investment in the game.Figure 1 and 2 show baccarat tables in alternative forms on which the game regimes according to the invention may be played in casino environments.The above described game play methodology and third card betting regime according to the invention in all its forms, is also adaptable to on line [sic-online] and internet gaming, gaming on electronic hand held devices and on devices such as computers, ipads, iphones and gaming machines. In each case the game rules may be altered to suit regulatory requirements or device capability provided each allows the capacity for a player to wager on a third card separately or in addition to a previously laid wager on a first hand of two cards.. [sic]It will be recognised by persons skilled in the art that numerous variations and modification may be made to the invention broadly described herein without departing from the overall spirit and scope of the invention.Dated this 3rd day of APRIL 2012CORY DAVISBy His Patent AttorneysWALSH & ASSOCIATES

Ratio Decidendi

Legal Principle Established

Mr Kafataris argues that, on viewing the substance of the dealings as a whole, the primary judge ought to have concluded that the consent of Mr Kafataris to the conclusion in the PCT Application of the information in the emails of 10 March and 18 March 2013 in relation to the supplementary betting opportunity for blackjack was for the limited purpose of furthering the expected joint venture arrangement between the parties as to the exploitation of the invention in the PCT Application (including, that the PCT Application would proceed in the name of a joint venture company or would otherwise be jointly owned). The appellants argue that given that no commercial arrangement was concluded between the parties, the information was used in the PCT Application for purposes other than that for which it was communicated and that this was in violation of the equitable rights of confidence held by Mr Kafataris. It is argued that the facts fall squarely within the category of the case of confidential information communicated in contemplation of and for the limited purpose of a business arrangement that did not materialise. The appellants argue there should be a constructive trust imposed over the PCT Application, which uses the information.Confidential information - consideration The transcript of the proceeding before the primary judge reveals that the appellants accepted that if they failed on inventorship, they would fail on confidential information. On appeal, they appear to have changed their position or seek to do so. This is not an instance in which the appellants should be permitted to depart from their pleaded case. They now seek to distinguish between odds relating to baccarat and Mr Kafataris’ new concept in relation to blackjack. No such distinction was advanced on their pleaded case and the evidence did not involve examination of such an approach. That departure should not be permitted. That is an end to this aspect of the appeal, but in any event, the concession was appropriate. That can be seen from the analysis by the primary judge. First (and unchallenged), his Honour concluded that the parties were not in the necessary fiduciary relationship. His Honour rejected the contention that the parties were in a fiduciary relationship, accepting on the evidence the contention advanced by the respondents that there was no evidence that any of the parties undertook to act in the interests of the others and that their relationship was one of arms-length commercial negotiations: see, for example, Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 per Gibbs CJ (at 70). His Honour was well satisfied that the relationship was not one in which the respondents had undertaken nor agreed “to act for or on behalf of the interests of another person in the exercise of the power or discretion which will affect the interests of that person in a legal or practical sense”, to use the words of Justice Mason in Hospital Products (at 96-97).