ObjectiVision Pty Ltd v Visionsearch Pty Ltd [2014] FCA 1087
Citation:
ObjectiVision Pty Ltd v Visionsearch Pty Ltd [2014] FCA 1087
Parties:
OBJECTIVISION PTY LIMITED (ACN 090 253 697) v VISIONSEARCH PTY LIMITED (ACN 150 067 271) and UNIVERSITY OF SYDNEY (ABN 15 211 513 464)
File number:
NSD 2433 of 2013
Judge:
PERRY J
Date of judgment:
9 October 2014
Catchwords:
PRACTICE AND PROCEDURE – Application for preliminary discovery – Nature of evidence appropriate to be led on an application under r 7.23 of Federal Court Rules 2011 – Need to avoid trial before an action –Questions of resolving conflicts in the evidence on substantive issues a matter for trial
PRACTICE AND PROCEDURE – Application for preliminary discovery – Potential right to relief arising from alleged copyright infringement and misuse of commercially confidential information in confidential computer source code and development documentation – Reasonableness of belief in ownership of copyright and infringement – Whether reasonable belief in right to relief compatible with existence of reasonable contrary view – Relevance of earlier admission no longer maintained by prospective defendant to determining reasonableness of belief – Whether prospective applicant lacks sufficient information to decide as to whether to institute proceedings where it cannot compare its work with the potentially infringing work – Relevance of confidential nature of documents sought to reasonableness of enquiries – Whether documents “directly relevant” – Whether preliminary discovery sought too wide – Relevance of delay to discretion in r 7.23(2)
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
ObjectiVision Pty Ltd v Visionsearch Pty Ltd [2014] FCA 1087
Case
[2014] FCA 1087
Decision Date
CaseChat Overview and Summary
ObjectiVision Pty Ltd sought an order for preliminary discovery from Visionsearch Pty Ltd, alleging infringement of copyright and misuse of commercially confidential information in computer source code and development documentation. The Federal Court of Australia had to determine whether ObjectiVision had a reasonable cause to believe in the infringement and misuse, and if the requested discovery was appropriate. The court examined the evidence and submissions from both parties, considering the principles set forth in Optiver and St George. It noted that the evidence provided by Visionsearch, including expert evidence, went beyond the permissible scope for such an application, venturing into resolving factual conflicts.
The court concluded that ObjectiVision had a reasonable cause to believe in the potential right to relief, despite uncertainties in some elements of the claim. The court held that on an application for preliminary discovery, it should not embark on a trial before an action, which involves resolving conflicts in evidence. The court also found that the documents sought for discovery were directly relevant to the potential causes of action and were necessary to compare ObjectiVision's work with the potentially infringing work. However, the court deemed the application for preliminary discovery to be too wide, given the confidential nature of the documents and the delay in seeking the order.
The court allowed the amended originating application for preliminary discovery in part, directing the parties to file and serve agreed minutes of orders within 21 days or, failing agreement, to submit written submissions on their respective positions. The question of costs was reserved.
Orders
Orders of the court
1. The Amended Originating Application for preliminary discovery, including Annexure 1 as amended by leave on 30 April 2014, against the Prospective First and Second Respondents is allowed in part.
2. Within 21 days, the parties are to file and serve agreed minutes of orders which give effect to the reasons for judgment, or in the absence of agreement, written submissions limited to 5 pages as to their respective positions together with draft proposed minutes of order.
3. The question of costs is reserved.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
I also accept the prospective respondents’ submissions that appropriate orders should be made protecting the confidentiality of the documents the subject of the orders for pre-action discovery whereby an independent expert (and not Mr Sizer) should be appointed to review that documentation and that access to it should be limited otherwise to ObjectiVision’s legal representatives.2. BACKGROUND2.1 ObjectiVision ObjectiVision was incorporated in 1999 as a vehicle to commercially exploit technology developed by Associate Professor Alexander Klistorner and Professor Stuart Graham at the Save Sight Institute (SSI), a business area within the University of Sydney. ObjectiVision designs and develops ophthalmic diagnostics devices. Its first product, the AccuMap™ Multifocal Objective Perimeter (AccuMap) device tests visual function, and can detect visual field loss in patients with glaucoma. It also provides a means by which to monitor recovery of nerve function in optic neuritis which is a condition that causes visual loss and is a common feature of Multiple Sclerosis (MS). The original shareholders in ObjectiVision were Associate Professor Klistorner and Professor Graham, Mr Alex Kozlovski, Dr Iouri Malov, Professor Frank Billson (founding Director of SSI) and Mr Ben Meek (a member of the SSI Board). In 2000, Medical Corporation Limited (Medcorp) exchanged its own shares for a 40% shareholding in ObjectiVision held by its six founding shareholders, and by the injection of new equity capital into ObjectiVision. The University of Sydney also acquired a 24% shareholding in return for entering into a licensing agreement with ObjectiVision. The University of Sydney, Associate Professor Klistorner and Professor Graham have remained shareholders since that time and the University of Sydney was represented on ObjectiVision’s Board of Directors from 2004 until 2007. 2.2 The licencing agreements between the University and ObjectiVision On 4 September 2000, the University of Sydney and ObjectiVision entered into a licensing agreement granting ObjectiVision the exclusive right to commercially exploit the intellectual property that was the subject of a patent owned by the University, namely, the “Electrophysiological Visual Field Measurement” (EVFM) invented by Associate Professor Klistorner and Professor Graham while at the SSI. That agreement was varied on 10 May 2004. On 25 October 2001, the University and ObjectiVision entered into a supplementary licensing agreement which exclusively licensed a second patent to ObjectiVision entitled “Method & Apparatus for Objective Electrophysiological Assessment of Visual Function” (EEG Scaling and Goggles Patent). Together it was said that the two patented inventions enabled the creation of the reproducible normative database and therefore the use of the mfVEP technique for the first time in the clinical environment. The EEG Scaling and Goggles Patent also covered the application of Virtual Reality Goggles to record mfVEPs, following a proof of concept study that showed for the first time that it was possible to record for both eyes simultaneously by appropriate modifications to the stimulus design. As a result, ObjectiVision was the exclusive licensee of both the EVFM Patent and the EEG Scaling and Goggles Patent (Licenced Patents) until mid-January 2011 when the licenses were purportedly terminated. 2.3 The AccuMap1 and AccuMap2 and OPERA software
Evidence
Evidence Before The Court
On the other hand, as Hely J explained in St George, “if there is no reasonable cause to believe that one of the necessary elements of a potential cause of action exists, that would dispose of the application insofar as it is based on that cause of action…”: (at 154 [26](e)). Furthermore, while uncertainty as to only one element of a cause of action might be compatible with a “reasonable cause to believe”, uncertainty as to a number of such elements may be sufficient to undermine the reasonableness of the cause to believe: St George at [26](f). There is no reason, in my opinion, to apply any different standard in determining the reasonableness of a belief under the rule in its current form.3.3 Proper approach to evidence relating to the reasonableness of the belief It follows from these principles that an application for preliminary discovery cannot be sustained “without evidence that must incline the mind towards the matter of fact in question” (Optiver at 445-446 [48]). However this does not mean that it is appropriate for the Court on an application of this kind to embark upon a process of resolving conflicts in evidence from the prospective respondents as to the matters of fact on which the prospective applicant relies to establish a reasonable belief. It does not justify, in other words, effectively embarking upon a trial before a trial, or more accurately a trial before an action, with all of the risks inherent in that process from a procedural fairness perspective, in terms of the spectre of inconsistent findings if the substantive issues are ultimately litigated, and in terms of the effective use of the parties’ and court resources. As the Full Court held in Optiver at 446 [49]:Before [the primary judge] Tibra argued that there were significant shortcomings in the evidence in this regard. On the appeal, senior counsel for Tibra elaborated on these alleged shortcomings at some length. We do not think it necessary in the circumstances to review these arguments, which in essence go to the ultimate merits of Optiver’s case. Optiver of course accepts that it does not have the evidence to support a case – that is the raison d’être for the present application. However, there is sufficient evidence, irrespective of the shortcomings relied upon by Tibra, to conclude that there is reasonable cause to believe Optiver may have a right to obtain relief. I raised concerns regarding these matters with the parties during the hearing given the nature of the evidence that the parties relied upon. While all parties agreed in effect with the approach of the Full Court in Optiver on this issue, with respect I do not consider that the prospective respondents’ evidence and submissions in fact observed the proper boundaries for an application of this nature. The extensive evidence led by Visionsearch in particular in opposition to the application, including expert evidence on substantive issues, went well beyond adding to, or providing, context to the evidence in chief led by the prospective applicant which the parties agreed were the limited permissible uses to which such evidence could be put. To a substantial extent, that evidence took issue with the ultimate merits of ObjectiVision’s case and raised factual conflicts which it was not possible for me to determine on an application of this kind, there being no cross-examination among other difficulties. This is illustrated by much of the affidavit of Mr Alkhimov read by Visionsearch which joins issue with factual matters deposed to by Mr Cheng and in turn triggered the affidavit of Mr Cheng sworn on 21 March 2014 rebutting aspects of Mr Alkhimov’s evidence.