Motorola Solutions, Inc. v Hytera Communications Corporation Ltd (No 2)
[2018] FCA 17
•25 January 2018
FEDERAL COURT OF AUSTRALIA
Motorola Solutions, Inc. v Hytera Communications Corporation Ltd (No 2) [2018] FCA 17
File number: NSD 1283 of 2017 Judge: PERRAM J Date of judgment: 25 January 2018 Catchwords: PRACTICE AND PROCEDURE – application for suppression or non-publication order – whether order necessary to prevent prejudice to proper administration of justice – consideration of appropriate duration of order Legislation: Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth)
Federal Court of Australia Act 1976 (Cth) ss 37AE, 37AF, 37AF(2), 37AG, 37AG(1)(a), 37AI, 37AJ(2)
Federal Court Rules 2011 (Cth)
Cases cited: ASE16 v Australian Securities and Investments Commission [2016] FCA 321
Australian Broadcasting Commission v Parish (1980) 29 ALR 228
Australian Competition and Consumer Commission v Air New Zealand Ltd (No 3) [2012] FCA 1430
Australian Competition and Consumer Commission v Air New Zealand Ltd (No 12) [2013] FCA 533
Australian Competition and Consumer Commission v Cement Australia Pty Ltd (No 2) [2010] FCA 1082
Australian Competition and Consumer Commission v Origin Energy Electricity Ltd [2015] FCA 278
Australian Competition and Consumer Commission v Valve Corporation (No 5) [2016] FCA 741
Chief Executive Officer of Australian Transaction Reports and Analysis Centre v TAB Limited (No 4) [2017] FCA 1532
Cyclopet Pty Ltd v Australian Nuclear Science and Technology Organisation [2012] FCA 1326
Hogan v Australian Crime Commission [2010] HCA 21; (2010) 240 CLR 651
LHRC v Deputy Commissioner of Taxation (No 4) [2015] FCA 70; (2015) 326 ALR 150
Date of hearing: Determined on the papers Registry: New South Wales Division: General Division National Practice Area: Intellectual Property Sub-area: Patents and Associated Statutes Category: Catchwords Number of paragraphs: 19 Counsel for the Respondents: Mr C Burgess Solicitor for the Respondents: Minter Ellison ORDERS
NSD 1283 of 2017 BETWEEN: MOTOROLA SOLUTIONS, INC.
Applicant
AND: HYTERA COMMUNICATIONS CORPORATION LTD
First Respondent
HYTERA COMMUNICATIONS (AUSTRALIA) PTY LTD ACN 165 879 701
Second Respondent
JUDGE:
PERRAM J
DATE OF ORDER:
25 JANUARY 2018
THE COURT ORDERS THAT:
1.Pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth), access to and disclosure (by publication or otherwise) of the following documents be restricted to the parties and the legal representatives of the parties:
(a)Confidential Annexure A to the Respondents’ Defence dated 12 October 2017 and Amended Defence dated 20 October 2017;
(b)Confidential Annexure 1 to the Applicant’s Reply dated 7 November 2017 and Amended Reply dated 12 December 2017;
(c)Confidential Annexures RKC-10 and RKC-11 to the Affidavit of Robert Cooper sworn 22 December 2017 in support of this application.
2.Order 1 shall operate until 4 pm on the date that is 3 years after the final day of the trial in this proceeding, or further order.
3.The parties have liberty to apply to the Court to extend the date referred to in Order 2, provided any such application is filed with the Court at least one month prior to its expiry.
4.Order 1 is made on the ground that it is necessary to prevent prejudice to the proper administration of justice.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
PERRAM J:
1. Introduction
This is an application by the Respondents (collectively, ‘Hytera’), for an order pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) (‘FCAA’) which I indicated to the parties at a case management hearing on 20 November 2017 that I would determine on the papers.
It is worth noting at the outset that some of the material referred to in the present application is already covered by an interim non-publication order which I made at that case management hearing under ss 37AG, 37AG(1)(a) and 37AI of the FCAA. The order sought in this application, however, would extend until 10 years after the final day of the trial in this proceeding (whereas the Court’s previous Order expires at the conclusion of the trial). It would also cover some new material not previously considered by the Court. An additional point which is relevant, but not determinative, is that the current application is not opposed by the Applicant (‘Motorola’).
The underlying dispute in this proceeding relates to allegations made by Motorola that Hytera has infringed its patents. The subject matter of those patents is technical and complex but can generally be described as methods or systems which relate to digital mobile radio communication products manufactured and sold by Motorola throughout the world and across a wide range of industries. This litigation too has a cosmopolitan flavour in that proceedings have been commenced by Motorola against Hytera in the United States, China, and in Dusseldorf, Germany, in addition to this Court. The proceeding in this Court may prove to be a complicated affair and is set down for a 5-week trial before me commencing on 22 July 2019. However, the present application is less complicated and can be dealt with relatively briefly. For the reasons which follow, I will make the suppression and non-publication orders sought by Hytera with one material amendment, which is that they remain in place for 3 years rather than the 10 which was submitted to be appropriate. If Hytera considers a further order is necessary on the expiration of 3 years it can approach the Court at that time.
2. The Confidential Information
The confidential information the subject of the proposed order is described by Hytera in its interlocutory application as follows:
‘1. Pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth), access to and disclosure (by publication or otherwise) of the following documents to be restricted to the parties and the legal representative of the parties:
(a)Confidential Annexure A to the Respondents’ Defence dated 12 October 2017 and Amended Defence dated 20 October 2017;
(b)Confidential Annexure 1 to the Applicant’s Reply dated 7 November 2017 and Amended Reply dated 12 December 2017;
(c)Confidential Annexures RKC-10 and RKC-11 to the Affidavit of Robert Cooper sworn 22 December 2017 in support of this application.’
This, on its face, does not tell one very much, but as 1(c) above suggests there was filed in support of the application an affidavit of Robert Kelvin Cooper sworn on 22 December 2017 which provided particulars of the information deemed by Hytera to be confidential. Each of the documents, by the information contained within, either directly or in summary form, disclosed terms of an agreement entered into in 2010 between Motorola’s predecessor entity (Motorola Inc) and one of the Hytera parties domiciled in China. It was called the ‘Digital Mobile Radio Essential Properties Cross Licence Agreement’ (‘the Agreement’). The Agreement remains in force and Hytera pleads reliance on its terms to defend some of the claims made against it by Motorola in this proceeding. It is information relating to those terms which Hytera claims is required to be suppressed and not published. The terms, it is argued, have never been publicly disclosed nor made available for public consumption by any lawful means.
3. Principles
This Court has recently set out the principles to be applied when it is considering whether or not to make a suppression or non-publication order: Chief Executive Officer of Australian Transaction Reports and Analysis Centre v TAB Limited (No 4) [2017] FCA 1532 (‘CEO of AUSTRAC v TAB (No 4)’ at [9]-[12]. The present application does not call for any greater elaboration of those principles but they may be distilled as follows:
(1)the FCAA contains Part VAA which relates to suppression and non-publication orders;
(2)the power of the Court to make such orders is contained in s 37AF and the grounds for making them are to be found in s 37AG which includes within it that ‘the order is necessary to prevent prejudice to the proper administration of justice’: s 37AG(1)(a);
(3)such an order is not lightly to be made. It must be necessary to prevent prejudice to the proper administration of justice and not merely desirable: see Hogan v Australian Crime Commission [2010] HCA 21; (2010) 240 CLR 651 at 666 [39]; Australian Competition and Consumer Commission v Valve Corporation (No 5) [2016] FCA 741 at [8] per Edelman J;
(4)the Court may make any other order necessary to give effect to the primary order: s 37AF(2) of the FCAA.
(5)the order, once made, must remain in place no longer than is reasonably necessary to achieve its purpose: s 37AJ(2); and
(6)the Court must take into account that a primary objective of the administration of justice is to safeguard the public interest in open justice (s 37AE) but no balancing exercise need be carried out between the utility of the order and the interest which open justice assumes under the FCAA: Australian Competition and Consumer Commission v Air New Zealand (No 12) [2013] FCA 533 at [21].
In CEO of AUSTRAC v TAB (No 4), the Court concluded that disclosure of the confidential information in that case would have undermined the purposes of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) which was apt to prejudice the proper administration of justice. This was significant in the context of an Act of Parliament which had amongst its purposes the thwarting of terrorism financing.
It might be thought that the mere protection of commercial-in-confidence information, which is essentially what Hytera seeks in this case, fits less comfortably within the statutory words ‘necessary to prevent prejudice to the proper administration of justice’. But this Court has held in a number of cases that commercial sensitivity can be an appropriate basis for making a suppression or non-publication order: see Australian Broadcasting Commission v Parish (1980) 29 ALR 228 at 235 per Bowen CJ; Australian Competition and Consumer Commission v Cement Australia Pty Ltd (No 2) [2010] FCA 1082 at [23] per Greenwood J; Cyclopet Pty Ltd v Australian Nuclear Science and Technology Organisation [2012] FCA 1326 at [7] per Jacobson J; Australian Competition and Consumer Commission v Air New Zealand Ltd (No 3) [2012] FCA 1430 (‘Air New Zealand (No 3)’) at [35]; Australian Competition and Consumer Commission v Origin Energy Electricity Ltd [2015] FCA 278 (‘Origin Energy’) at [148] per Katzmann J; ASE16 v Australian Securities and Investments Commission [2016] FCA 321 at [93] per Markovic J.
There are cogent reasons for this which have variously been described in those cases, but they are generally associated with preserving the integrity of the litigious process, likely to be jeopardised if commercial competitors could benefit from court ordered production of trade secrets by parties to a suit.That said, it is important to recall that the order must be necessary to protect the administration of justice. It can readily be imagined that a carte blanche approach to applications for s 37AF orders for which commercial confidentiality is claimed as a basis, would jeopardise the interest the public has in being able to access court documents under the Federal Court Rules 2011 (Cth) or to engage meaningfully with reasons published by the Court. As I have explained at [6(6)] of these reasons above, the safeguarding of that interest as a primary objective of the administration of justice is a mandatory consideration for the Court. Particularly is that so in cases such as the present, where the Agreement, and its interpretation, may become a central plank in the ultimate resolution of the proceeding, and thus, to the intelligibility of future reasons delivered by the Court.
With these principles in mind, I turn now to the submissions made in support of Hytera’s application.
4. Hytera’s Submissions
Hytera’s submissions on the application were as follows.
First, as I have already indicated, it was submitted that neither the Agreement, nor its terms, have ever been publicly disclosed. Confidential Annexure RCK-10 to Mr Cooper’s affidavit was the Agreement itself and Confidential Annexure RCK-11 was information and belief evidence of an interpretation of its terms undertaken by Ms Olivia Sun, an in-house lawyer for one of the Hytera parties. (The confidential information covered by the existing Court Order is similarly descriptive of the Agreement).
Next, it was submitted that disclosure of the summary of the terms of the Agreement, or the Agreement itself, would prejudice Hytera in any future licensing negotiations with third parties, because:
(1)those parties would know licence terms to which Hytera would be prepared to agree (including royalty rates they would be prepared to pay);
(2)Hytera would not be armed with corresponding knowledge of the business practices of any third parties with whom it negotiates in the future; and
(3)this would, therefore, put Hytera at a distinct competitive disadvantage.
Finally, as to the duration of the order, it was submitted that 10 years was an appropriate length given:
(1)the nature and lifespan of the digital mobile radio technology that is the subject of the Agreement;
(2)Hytera’s estimation that the life cycle for a professional telecommunication standard can, apparently, be more than 30 years; and
(3)‘the additional circumstances identified in Confidential Annexure RKC-11’ which predominantly went to the ongoing nature of the Agreement.
5. Consideration
I accept that disclosure of the confidential information referred to above would place Hytera at a competitive disadvantage in future negotiations with third parties and it is certainly relevant that the Agreement remains in force, will continue to do so in the future, and is not of historical interest to the parties only: cf. Air New Zealand (No 3) at [34]. I also consider that disclosure of the information would be prejudicial to the proper administration of justice because it would tend to ‘destroy or diminish’ (Origin Energy at [148]) the value of confidential information with the possible consequence that commercial parties will be more reticent to approach the Court to settle their disputes. I am therefore satisfied that an order under s 37AF in this case is appropriate.
However, given the significant impact of such an order on the public interest in open justice, I am not satisfied on the evidence before the Court that 10 years is an appropriate duration for the order. The submissions at [14] above were made on the basis of information and belief only by the solicitor for Hytera. No direct evidence of the nature and lifespan of the digital mobile radio technology covered by the Agreement was proffered, nor in support of the proposition that the life cycle of professional telecommunication standards, central to the Agreement, is generally longer lasting than 30 years. I would need to be provided with more compelling evidence than has been filed to date to accede to a submission that 10 years is an appropriate length for the order, especially where s 37AJ(2) requires the Court to ensure that it operates for ‘no longer than is reasonably necessary to achieve the purpose for which it is made’.
In support of its application, Hytera provided evidence to the Court of email correspondence with Motorola demonstrating that the parties were in agreement that a s 37AF order over the confidential information was appropriate in the circumstances. Motorola also confirmed in an email to the Court on 18 January 2018 that it consented to the suggested duration of the order, viz, 10 years. However, it did not provide any reasons why that length was necessary to prevent prejudice to the proper administration of justice to supplement what was filed by Hytera in support of its application.
As I have mentioned, that the order is agreed is a relevant factor for the Court (see Australian Broadcasting Commission v Parish (1980) 29 ALR 228 at 254 per Deane J; LHRC v Deputy Commissioner of Taxation (No 4) [2015] FCA 70; (2015) 326 ALR 150 at 157 [25] per Perry J) but, as I have endeavoured to explain, the Court must nevertheless satisfy itself of the requirements of the FCAA, which here include as an essential feature, the element of necessity. In light of the paucity of evidence received by way of affidavit, Motorola’s consent is not enough currently to satisfy me that 10 years is appropriate. Instead, I will make an order that the duration be 3 years which I consider a reasonable timeframe having carefully reviewed the Agreement and the substance of the information disclosed. If Hytera wishes to put on further evidence in a fresh application I will reconsider my decision at that time. Lastly, Motorola indicated that, in its opinion, proposed order 3 of Hytera’s orders, ‘that any application to extend the confidentiality order be filed one month prior to the expiry of the order’ was an unnecessary gloss. I do not agree. I consider it a sensible addition.
6. Conclusion
I will make the orders sought by Hytera in its interlocutory application except that Order 1 will be amended to reflect that the Order will last for 3 years only and not the 10 which was sought. I make no order as to costs.
I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram. Associate:
Dated: 25 January 2018
38
12
3