Pilatus Training Solutions Australia Pty Ltd v Secure & Innovate Group Pty Ltd
[2024] FCA 1294
•8 November 2024
FEDERAL COURT OF AUSTRALIA
Pilatus Training Solutions Australia Pty Ltd v Secure & Innovate Group Pty Ltd [2024] FCA 1294
File number: NSD 44 of 2024 Judgment of: PERRAM J Date of judgment: 8 November 2024 Catchwords: DISCOVERY – application for preliminary discovery – where documents sought to determine whether to commence proceedings for copyright infringement and breach of confidence – whether anticipated copyright claim would be defeated by s 183 of the Copyright Act (Cth) – whether confidential information adequately defined Legislation: Copyright Act 1968 (Cth) s 183
Evidence Act 1995 (Cth) s 75
Federal Court of Australia Act 1976 (Cth) ss 37AE, 37AF(1)(b), 37AF(1)(b)(i), 37AF(1)(b)(iv), 37AG(1)(a), 37AG(1)(b), 37M
Federal Court Rules 1979 (Cth) Order 15A r 6
Federal Court Rules 2011 (Cth) rr 7.23, 7.23(1)(a), 7.23(1)(b)
Copyright (International Protection) Regulations 1969 (Cth) reg 4(1)(b)
International Convention for the Protection of Literary and Artistic Works concluded at Berne on 9 September 1886
Cases cited: Commonwealth v De Pyle [2024] FCAFC 43
Outback Stores Pty Ltd v Smit [2020] FCA 1785
Steelforce Trading Pty Ltd v Parliamentary Secretary to the Minister for Industry, Innovation and Science (No 2) [2018] FCAFC 47
Telstra Corporation Limited v Phone Directories Company Pty Ltd [2010] FCAFC 149; 194 FCR 142
Telstra Corporation Ltd v Minister for Broadband, Communications and the Digital Economy [2008] FCA 7; 166 FCR 64
The King v Casement [1917] 1 KB 98
Edward Bray, The Principles and Practice of Discovery (Reeves & Turner, 1885)
Division: General Division Registry: New South Wales National Practice Area: Intellectual Property Sub-area: Copyright and Industrial Designs Number of paragraphs: 115 Date of hearing: 17 September 2024 Counsel for the Prospective Applicants: Mr N Murray SC with Ms M Evetts Solicitor for the Prospective Applicants: Corrs Chambers Westgarth Counsel for the Prospective Respondent: Mr R Cobden SC Solicitor for the Prospective Respondent: Maddocks Lawyers ORDERS
NSD 44 of 2024 BETWEEN: PILATUS TRAINING SOLUTIONS AUSTRALIA PTY LTD
First Prospective Applicant
PILATUS AIRCRAFT LTD
Second Prospective Applicant
AND: SECURE & INNOVATE GROUP PTY LTD
Prospective Respondent
ORDER MADE BY:
PERRAM J
DATE OF ORDER:
8 NOVEMBER 2024
THE COURT ORDERS THAT:
1.Pursuant to ss 37AF(1)(b) and 37AG(1)(a) of the Federal Court of Australia Act 1976 (Cth) (‘FCA Act’), until further order of the Court, and subject to Order 3, access to and disclosure (by publication or otherwise) of the unredacted text of the reasons for judgment delivered today be restricted to the external legal representatives of the parties.
2.The parties confer to:
(a)determine a regime for permitting these reasons to be shown to the parties’ relevant internal legal officers; and
(b)determine whether any paragraphs of these reasons require redaction before being publicly released
and bring in short minutes of order concerning the distribution of these reasons within 21 days.
3.The parties provide a copy of these reasons to the Commonwealth and seek its views on redaction.
4.The parties bring in short minutes of order giving effect to the balance of these reasons within 21 days after complying with Order 2.
5.The parties have liberty to apply.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
PERRAM J:
The present application arises in the context of materiel procurement by the Commonwealth for the Royal Australian Air Force (‘RAAF’). The application is for discovery from a prospective respondent. The Prospective Applicants, Pilatus Aircraft Ltd and Pilatus Training Solutions Australia Pty Ltd (collectively ‘Pilatus’), seek discovery to determine whether they should bring a proceeding against the Prospective Respondent, Secure & Innovate Group Pty Ltd (‘Secure’), for copyright infringement and breach of confidence.
The relevant rule is r 7.23(1) of the Federal Court Rules 2011 (Cth) (‘FCR’):
(1)A prospective applicant may apply to the Court for an order under subrule (2) if the prospective applicant:
(a)reasonably believes that the prospective applicant may have the right to obtain relief in the Court from a prospective respondent whose description has been ascertained; and
(b)after making reasonable inquiries, does not have sufficient information to decide whether to start a proceeding in the Court to obtain that relief; and
(c)reasonably believes that:
(i)the prospective respondent has or is likely to have or has had or is likely to have had in the prospective respondent’s control documents directly relevant to the question whether the prospective applicant has a right to obtain the relief; and
(ii)inspection of the documents by the prospective applicant would assist in making the decision.
Only subrules (1)(a) and (b) were in contest.
1. Background
1.1 The factual context
Pilatus is an aircraft manufacturer of Swiss origin. It develops and sells aircraft and associated training products. It was founded in 1939. One of the aircraft which it manufactures is the PC-21. The PC-21 is a trainer aircraft for training pilots to fly fighter aircraft. It is not itself a fighter aircraft and is instead powered by a turboprop engine. It has front and rear cockpits which can be configured to emulate a fighter aircraft. Inside each cockpit are two sets of displays on which computer-generated images appear. The first, mounted in the centre, is known as the Primary Flight Display or ‘PFD’. On the left and right of the PFD are two screens known as the Multi-Functional Displays or ‘MFDs’. The cockpits also contain various systems by which the pilots interact with the aircraft, for example, a ‘hands on throttle and stick’ and various buttons and switches.
The three screens (the PFD together with the two MFDs) display information about the status of the aircraft. The PFD includes, for example, an artificial horizon, an air speed indicator, an altimeter and so forth. The MFDs display a wide variety of other information such as how much fuel is in the tank. Because the PC-21 is a trainer aircraft for fighter pilots, the MFDs also convey information germane to aerial combat. The PC-21 makes extensive use of software to operate both the displays and the controls of the aircraft.
Pilatus also makes ground training systems which are apparatus to assist in training pilots on the ground. Relevant to the present application is a ground training system which Pilatus calls the PC-21 Flight Training Device or ‘PC-21 FTD’. It involves a full-size replica of the PC-21 cockpit, instruments, equipment, panels and controls. It includes the arrangement of equipment and computer software programs necessary to represent the PC-21 in flight operations. It can also include a motion cueing system which utilises motorised seats and pressurised pants. The PC-21 FTD uses simulation software which, through mixed reality goggles, allows the pilot to see both what is in the cockpit but also the simulation-generated outside environs. An important element of both the PC-21 aircraft and the PC-21 FTD are two documents, the aircraft flight manual and the pilot’s checklist. These are integral to the operation by a pilot of the aircraft. They are also integral to this application.
Another name for an FTD is a full flight simulator. It is the PC-21 FTD which is of primary concern in this application. However, the FTD is not the only ground-based training system which Pilatus supplies for the PC-21 and, in due course, it will be necessary to touch upon another known as the PC-21 FNPT.
Pilatus supplied the PC-21 and its related ground-based training systems to the Commonwealth in partnership with Lockheed Martin. Pilatus first contacted Lockheed Martin for that purpose in May 2013. Lockheed Martin entered in contractual arrangements with the Commonwealth for the supply of the PC-21 and a ground-based training system in December 2015 and, at the same time, Lockheed Martin entered into corresponding contractual supply arrangements with Pilatus.
In around 2017, Pilatus commenced delivery of the PC-21. It ultimately appears to have delivered 49 aircraft to Lockheed Martin, who then delivered them to the RAAF by December 2019. Pilatus supplied one PC-21 FTD to Lockheed Martin for delivery to the Commonwealth.
The Prospective Respondent, Secure, was founded in 2019 and provides immersive, augmented, virtual and mixed reality solutions and capabilities. According to one of its brochures, it develops ‘synthetic training solutions for pilot and aircrew training’ using ‘leading edge Mixed-Reality (MR) technology and unique, custom hardware to replicate real-life aircraft textures and functions to deliver a realistic training environment’. The evidence suggests that Secure had already successfully developed a proof of concept for a mixed reality cockpit procedure trainer (‘CPT’) for the RAAF’s F/A-18F Super Hornet. It is useful to observe at this point that a CPT is not a full flight simulator and would not therefore appear to have a motion cueing system utilising motorised seats or pressurised pants.
Reference was made above to Pilatus’s other PC-21 ground training system known as the PC-21 FNPT. FNPT is an acronym for Flight and Navigation Procedure Training. The FNPT is a CPT. The recitation of delivery events above might suggest that Pilatus did not supply its CPT to the RAAF (via Lockheed Martin) but only its full flight simulator, the FTD. On the other hand, parts of the affidavit of Mr Stefan Bühler (Pilatus’s general counsel), as well as Pilatus’s written submissions, proceeded by the use of defined terms in a way which was apt to suggest (or at least assume) that the FNPT had also been delivered. That evidence is difficult to reconcile with Mr Bühler’s direct evidence about what had actually been delivered to Lockheed Martin. Either that evidence is incomplete or the assumption otherwise made by Mr Bühler (and in Pilatus’s submissions) is wrong.
It is possible therefore that what Secure was developing was the kind of training unit which Pilatus had not supplied to the Commonwealth (i.e. a training unit like a CPT or an FNPT). However, for the reasons I have just given, it is also possible that the Department of Defence (‘Defence’) wished to acquire from Secure what it seemingly had already obtained from Pilatus (i.e. the FNPT). Although this strikes me as unlikely, I am not prepared to say it is impossible since the inscrutable processes of defence materiel procurement are unknown to me. I therefore make no finding as to whether the FNPT had been delivered or not.
For those interested in such things, not all ground-based pilot training needs to be done on a full flight simulator. There are some kinds of pilot training, principally concerning cockpit procedure, which can be done more cost effectively on a trainer without a motor cueing system or pressurised pants.
Both Pilatus’s PC-21 FTD and Secure’s CPT use mixed reality goggles (as does Pilatus’s PC-21 FNPT). Since mixed reality goggles are a feature of all of the ground-based training systems in this application, it is unnecessary to make any further reference to them.
In June 2022, Secure was retained by the Defence to develop a PC-21 CPT to assist in the initial training of pilots in the use of the RAAF’s Pilatus PC-21 aircraft. The work done by Secure on the development of the PC-21 CPT was done under two purchase orders issued by the Commonwealth. The first, Purchase Order No. 1, was issued on 1 June 2022. Attached to it was an official order containing detailed provisions specifying what Secure was to do. Several provisions in the official order indicate that Secure was to create a CPT which looked and felt very much like, if not precisely the same as, a PC-21. For example, it was required to develop and provide:
(1)‘[a] high-fidelity cockpit that replicates the PC-21 aircraft controls, control panels, interfaces and switches including tactical feel and that mimics the force feedback of the real aircraft’ (although ‘flight control force feedback [did] not need to fully replicate in-flight flight control loads’);
(2)‘[a] high-resolution training environment that realistically replicates PC-21 operation on the ground and in the air while conducting normal, abnormal and emergency operations’;
(3)‘a sufficiently accurate flight model to provide flight stability whilst airborne’;
(4)‘an accurate RAAF PC-21 cockpit environment’; and
(5)‘one high fidelity part task trainer of the PC-21 using custom hardware to replicate the real-life aircraft textures and functions as well as systems providing a realistic environment for [Secure’s] mixed reality training system’.
According to the official order, beta-testing of the system was due to happen by 24 December 2022, it was to be delivered by 30 January 2023 and demonstrations and training were to be provided to Defence personnel in February-March 2023. On 21 February 2023, Secure demonstrated a device to Defence officials. It demonstrated the same device again at the Avalon Airshow held between 28 February 2023 and 5 March 2023.
A second purchase order, Purchase Order No. 2, was issued on 2 June 2023. The works under it were referred to as Phase 2 works. It is unclear from the purchase order what these works comprised, and the evidence does not include, as it does in the case of Purchase Order No. 1, an official order setting out Defence’s requirements. There are two versions of Purchase Order No. 2 in evidence which are different both as to their price and, to an extent, as to what was itemised. It is not possible to extract anything much more meaningful from Purchase Order No. 2 than that there were to be works known as Phase 2 works which were to conclude by 31 December 2023. It is possible that the second version includes an amount which approximates the value of Purchase Order No. 1 but this is only speculation.
1.2 The intellectual property context
In addition to the principal contracts between the Commonwealth and Lockheed Martin, and between Lockheed Martin and Pilatus, there was also a tripartite deed entered into between the Commonwealth, Lockheed Martin and Pilatus which regulated the intellectual property of the parties. The tripartite deed had an effective date of 8 December 2015. It distinguished between three sets of intellectual property rights: first, rights which belonged to third parties (such as Microsoft), referred to as ‘Third Party IP’; secondly, those which did not owe their existence to the performance of obligations under the subcontract with Lockheed Martin, referred to as ‘Background IP’; and, thirdly, those which came into existence under or in connection with the subcontract, referred to as ‘Foreground IP’: cl 1.1.1 definitions. As an example, any of the particular changes required by the RAAF to the PC-21 which resulted in the generation of new IP would have constituted Foreground IP under the tripartite deed.
Pilatus agreed to procure for the Commonwealth licences of any Third Party IP: cl 2.2.1(d). It also agreed that all of the Foreground IP would vest in the Commonwealth (cl 2.2.1(a)) but that ownership of the Background IP was not affected by the tripartite deed: cl 2.1.1. It may be assumed that apart from Third Party IP (such as Microsoft’s), the Background IP associated with the PC-21 was owned by Pilatus and hence the effect of this provision was to leave its ownership in the hands of Pilatus. Pilatus then granted the Commonwealth a royalty-free, irrevocable, worldwide, perpetual and non-exclusive licence to use the Background IP for defence purposes: cls 1.1.1 (definition of ‘Licence’), 2.2.1(c). Also granted to the Commonwealth was the right to sublicense the Background IP: cl 2.2.3. Curiously, the tripartite deed granted the Commonwealth an identical licence to use the Foreground IP even though that IP had already vested in it (or would in the future vest in it upon its creation by reason of cl 2.2.1(a)): cl 2.2.1(c). In either case, the licence was subject to an explicit limitation that prevented the Commonwealth, or any sublicensee from it, commercialising the IP: cl 2.2.3. Finally, the Commonwealth was entitled to obtain from Pilatus technical data: cl 2.5.
The potential import of these provisions should be noted. The Commonwealth was entitled, if it chose, to engage a subcontractor, such as Secure, to develop for it a PC-21 CPT. If it desired, it could license to the subcontractor any necessary Background IP to bring about that result, and the Foreground IP was already vested in it (or would become so upon its creation). To the extent that technical data about the operation of the PC-21 was necessary to allow the development to proceed, the Commonwealth was entitled to have Pilatus provide this to the subcontractor too. The only limitation on these rights was that they could only be exercised for defence purposes which plainly would not include commercial purposes.
Whilst in some cases the concept of defence purposes may be vague at the edges, in this case the development of a PC-21 CPT lies within its core. The tripartite deed gave the Commonwealth the legal option of engaging Secure to develop a PC-21 CPT, licensing Secure to use Pilatus’s IP, and obtaining Pilatus’s technical data.
1.3 The licensing of Secure
The effect of the tripartite deed was that the Commonwealth either held a licence to use Pilatus’s IP if it was Background IP or, if it was Foreground IP, already owned it or would own it once it was created. Further, the licence entitled the Commonwealth to sublicense the IP to Secure for defence purposes.
The Commonwealth used this right to grant Secure a licence to use the aircraft flight manual and pilot’s checklist for the purposes of Purchase Order No. 1. Although Secure contests this, as explained below, it is more than arguable that it did not grant to Secure the right to use any other aspect of Pilatus’s intellectual property. The licence was granted by a deed dated 30 January 2023. There were two effects of this ‘IP deed’. The first was straightforward. The Commonwealth granted a fee-free, non-exclusive licence for defence purposes to use and distribute the ‘Licensed Material’ together with cognate licence rights such as distribution and the creation of derivative works: cl 5.2. Licensed Material was defined to mean the documentation listed in Annex A: cl 1.1. Annex A listed two documents: the aircraft flight manual and the pilot’s checklist.
The second effect of the IP deed was less straightforward. Secure agreed with the Commonwealth that it would ‘only use the Confidential Information for the Permitted Purposes’: cl 7.1(d). The Permitted Purposes were described in Annex A to be the purposes of performing Purchase Order No. 1. ‘Confidential Information’ was then defined in cl 1.1 to mean the following:
‘Confidential Information’ means all IP that is the subject of this Deed, together with all information (whether or not owned by the Commonwealth or [Pilatus Aircraft Ltd]) that meets all of the following criteria:
a.is specifically identified at Annex A to this Deed;
b.is commercially sensitive (not generally known or ascertainable);
c.disclosure would cause unreasonable detriment to the owner of the information or another party; and
d. was provided with an express or implied understanding that it would remain confidential;
e. but does not include information which :
f. is or becomes public knowledge other than by breach of this Deed;
g. is in the possession of the party without restriction in relation to disclosure before the date of receipt; or
h.has been independently developed or acquired by the receiving party … .
As noted, the only materials disclosed in Annex A are the aircraft flight manual and the pilot’s checklist. The drafting of cl 1.1 gave rise to a dispute on the hearing of the present application. Mr Cobden SC, for Secure, submitted that the phrase which appears before the comma in the first line (i.e. ‘“Confidential Information” means all IP that is the subject of this Deed,’) was not governed by the list in subclauses (a) to (h) and, in particular, was not governed by the requirement in sub-clause (a) that it be specifically disclosed in Annex A. He noted that ‘IP’ was defined in the same clause in the broadest possible terms so that it would include any species of intellectual property subsisting in any aspect of the PC-21 or the PC-21 FTD. Through these means, Secure submitted that the licence granted to it by the Commonwealth covered all of Pilatus’s IP and not just the intellectual property in the aircraft flight manual and the pilot’s checklist.
I accept the breadth of the definition of ‘IP’ under the IP deed, but the intellectual property must nevertheless still be ‘IP subject to this deed’. That expression then gives rise to a problem of circularity in the IP deed. Apart from the licence in relation to the aircraft flight manual and the pilot’s checklist, the only intellectual property expressly dealt with in the deed is the Confidential Information. By cl 7.1(a)-(f), Secure agreed to keep that information confidential. On their own, the words ‘IP that is subject to this Deed’ and cl 7.1(a)-(f) achieve nothing beyond adding the Confidential Information to itself.
On the other hand, cl 7.2 provides:
[Secure] acknowledges that it may be provided with the ability to access Commonwealth-held information (in addition to the Confidential Information) in connection with its performance of the Permitted Purposes, including through access to Commonwealth information technology systems. Without limiting [Secure’s] other obligations under this Deed or otherwise at law, [Secure] shall not seek to access or use Commonwealth-held information except to the extent strictly required to undertake the Permitted Purposes.
The effect of this clause and the words ‘IP that is subject to this Deed’ in cl 1.1 is to expand the concept of ‘Confidential Information’ to include the additional information with which cl 7.2 is concerned. Without dwelling too long on this, the effect of cl 7.2 may be that each time Secure encountered some fresh confidential information, it became ‘Confidential Information’. Here the thinking would be that such information would be ‘IP subject to this deed’ and hence fall within the opening words of the definition of Confidential Information. On this view, the concept of ‘IP subject to this deed’ is potentially inflationary depending on what Secure encountered by way of other confidential information during the development process.
Mr Murray SC, for Pilatus, submitted that the definition of ‘Confidential Information’ did not work in the way that Mr Cobden SC had suggested and that the list in sub-clauses (a)-(h) qualified the words appearing before the comma. On this view, the IP deed gave Secure no rights in any intellectual property apart from the aircraft flight manual and pilot’s checklist.
The resolution of this debate probably turns largely on what one makes of the comma in the definition. Commas can be very important as the decision in The King v Casement [1917] 1 KB 98 is sometimes said to show and as Sir Roger Casement himself undoubtedly believed at the end. However, I do not think that a preliminary discovery application provides a suitable occasion on which to embark upon a definitive investigation of the semantic consequences of comma placement. I proceed therefore on the basis that it may well be the case that the sublicence to Secure from the Commonwealth gave it no rights in any of Pilatus’s intellectual property beyond that inhering in the aircraft flight manual and pilot’s checklist.
I note for completeness that the parties refer to two additional IP deeds between Secure and Defence. Due to what appears to have been an error in the execution of the first IP deed, Defence and Secure executed a second IP deed on 17 May 2023, which in its terms stated that it was effective from 30 January 2023. In addition, on 20 June 2023, Defence and Secure executed a third IP deed. The terms of these deeds are not materially different for purposes of this application, except that the first and second IP deeds apply to Purchase Order No. 1 whereas the third deed applies to Purchase Order No. 2. I further assume without deciding that one of the first or second IP deeds was in effect as of 30 January 2023.
2. Whether Pilatus’s concerns are objectively reasonable
Pilatus’s concerns are twofold. First, it suspects that Secure had access to its aircraft flight manual and pilot’s checklist before Secure was granted a licence on 30 January 2023 and that Secure’s development of a CPT prototype prior to that date had involved an infringement of Pilatus’s intellectual property in both documents. Secondly, it suspects in any event that Secure’s CPT was developed using more of its intellectual property than was comprised in the aircraft flight manual and pilot’s checklist. Although Mr Cobden submitted that Pilatus’s general counsel Mr Bühler (who gave evidence about Pilatus’s concerns) was hypersensitive, I do not accept this characterisation of his evidence.
2.1 Use of the aircraft flight manual and pilot’s checklist prior to 30 January 2023
Purchase Order No. 1 is dated 1 June 2022. The managing director of Pilatus Training Solutions Australia Pty Ltd is Ms Jennifer Marshall. Ms Marshall said that in about late 2022 she attended a meeting with RAAF representatives at which they referred to Secure, a firm with which she was not previously familiar. (Strictly this was hearsay evidence elicited through Mr Bühler – however, evidence of this kind is receivable on an interlocutory application such as the present: Evidence Act 1995 (Cth) s 75.) Subsequently, at a time unspecified, Ms Marshall said that she became aware that Secure was involved in an RAAF initiative and that its representatives had been stating to sundry persons that it had a PC-21 ‘simulator’ (which I would take to be a reference to a CPT). Although it is unclear when these utterances were pronounced or by whom, it is at least apparent from a letter dated 10 January 2023 sent by Pilatus to a corner of the Department of Defence known as Air Training and Aviation Commons Systems Program Office (‘ATACSPO’) that this must have occurred prior to the date of the letter. In that regard, the Chief Executive Officer of Secure, Mr Ayyalasomayajula, gave evidence that a prototype of its CPT had been demonstrated to Defence in December 2022. This is consistent both with what Ms Marshall says and with the timing requirements articulated in the official order attached to Purchase Order No. 1.
As already observed, the first IP deed was executed on 30 January 2023. The Commonwealth had written to Pilatus on 5 January 2023 notifying it of its intention to sublicence Secure to use the aircraft flight manual and pilot’s checklist. A draft deed for its approval was enclosed. The letter indicated that the Commonwealth needed the aircraft flight manual and pilot’s checklist by 16 January 2023. It was thus in response to this letter that the letter from Pilatus dated 10 January 2023 was sent. Further correspondence ensued – not necessary here to relate – and the deed was executed on 30 January 2023.
Around late February 2023, Ms Marshall was informed by a subcontractor that Secure had demonstrated its CPT at the Avalon Airshow, which was held between 28 February and 5 March 2023. Ms Marshall also obtained a brochure directly from Secure through a LinkedIn conversation with Mr Ayyalasomayajula. This occurred on 28 March 2023. This is the brochure to which I refer at [10] above. Ms Marshall says that there is a depiction of a cockpit in this brochure with a PFD and two MFDs and that the graphics which are displayed ‘appeared to be identical to the PC-21 User Interface’ (meaning, identical to Pilatus’s graphics). I would accept for present purposes that it is arguable that they do appear to be identical.
From this one may infer that Secure’s CPT was sufficiently far advanced to be shown to Defence on 21 February 2023. If the aircraft flight manual and pilot’s checklist were only provided on 30 January 2023 then this arguably implies the occurrence of substantial development work in 22 days. This may be contrasted with the 8 months contemplated under Purchase Order No. 1 from its execution date (1 June 2022) to the date of delivery (30 January 2023).
There is additional material which suggests that the aircraft flight manual and pilot’s checklist were provided before 30 January 2023. This comes from Purchase Order No. 1 itself. Section Five of the purchase order dealt with materials the government would furnish to Secure, including when they were to be furnished. It records that the Commonwealth was to provide Secure with the aircraft flight manual and the pilot’s checklist by 1 November 2022. This is consistent with a letter from Secure’s solicitors to Pilatus’s solicitors dated 28 July 2023 which contains statements consistent with the development having happened after December 2022.
These matters persuade me that it is more than mere conjecture that Secure had access to both documents prior to 30 January 2023. Making, at this stage, the assumption that Pilatus’s claims for misuse of confidential information and copyright infringement are legally viable (a different question), I accept that Pilatus has reasonable grounds for suspecting that its aircraft flight manual and pilot’s checklist were used by Secure in the development of its CPT prior to 30 January 2023.
2.2 Use of intellectual property beyond the aircraft flight manual and pilot’s checklist?
I have already observed that Purchase Order No. 1 required Secure to produce a CPT which felt very similar to, if not exactly the same as, a PC-21. There was evidence on the present application that to achieve the baseline functionality expected of a prototype to be used for training would require access to certain information and material not publicly available.
Mr Bühler’s knowledge of these matters came from Mr Fontana, Pilatus’s Director of Training Systems (again, permissible hearsay evidence on an application such as the present). This information included what Mr Fontana referred to as ‘aircraft performances’. In essence, this is how the PC-21 flies: for example, the speed at which it takes off, how fast it can turn, how it moves in the air and brakes on the ground, its speed in levelled flight (or during a dive) and how it flies with the engine turned off. It also included information known as ‘malfunctions’. By this Mr Fontana meant the way in which the aircraft recognised and then signalled to the pilot that something was, to use a technical term, wrong. It was Mr Fontana’s view that the aircraft flight manual and the pilot’s checklist were also insufficient to enable the development of a CPT. I am unpersuaded by Secure’s submission that I should conclude that Mr Bühler’s evidence was unreliable because he had not read Purchase Order No. 1 when he swore his second affidavit.
Secure adduced evidence from Mr Ayyalasomayajula denying the use of Pilatus’s intellectual property and confidential information, other than as authorised by the purchase orders and IP deeds. Secure’s version of events is that it had produced a prototype CPT which was demonstrated to Defence in December 2022 and did so without access to the aircraft flight manual or the pilot’s checklist. This accords, at least in part, with what Ms Marshall says she had heard from the RAAF personnel with whom she had spoken and with the development timeline disclosed in the official order (although not with Section Five of the order which suggests that the Commonwealth was to deliver the aircraft flight manual and pilot’s checklist on 1 November 2022). Mr Ayyalasomayajula also says that Defence did not think that this initial prototype had sufficient fidelity with the PC-21. He says that it was in that context that Secure sought to obtain access to the aircraft flight manual and the pilot’s checklist. It was then with that additional material that an improved CPT proof-of-concept was demonstrated to Defence on 21 February 2023 (and thereafter at the Avalon Airshow).
Mr Ayyalasomayajula says that in developing the CPT, which was demonstrated in December 2022, Secure used a range of publicly available materials. These were as follows:
(1)a blog post from the blog ‘Thai Military and Asian Region’ regarding the Pilatus PC-21 turboprop trainer aircraft’s functionality, engine, cockpit, customers, and other such information;
(2)a wiki titled ‘FlightGear’ also discussing the PC-21’s components and functionality;
(3)a two-page article titled ‘JSBSim’ describing a flight dynamics model written in C++ by the same name, initially written for the open source FlightGear flight simulator and not specific to any aircraft;
(4)two conversations from an online forum associated with the combat flight simulation game ‘Digital Combat Simulator’, which were focused on the Pilatus PC-21 aircraft;
(5)downloadable livery for a digital model of a PC-21 from a flight simulator website;
(6)a series of webpages showing the various aircraft used by ‘RAAF Virtual’, a flight simulator website operated by a non-profit group of volunteers and not endorsed by the Australian Government, Defence, or the RAAF;
(7)‘a general guide about the workflow’ for how to create a flight simulator found on what appears to a webpage and developer community forum organised by the video game and software developer, Epic Games; and
(8)flight simulation software related to the PC-21 aircraft from IRIS Simulations, a company that develops and sells flight simulation software.
This evidence must be weighed against the evidence of Mr Fontana. According to him, the IRIS software is not a CPT for military purposes, does not encompass military mission related functionalities and is not sufficient for training purposes. Rather, to develop a CPT with such capabilities would require access to non-public information.
Mr Ayyalasomayajula also says that Secure had access to other sources of information: an inspection of a PC-21 aircraft; discussions with RAAF personnel; detailed discussions with RAAF PC-21 qualified flight instructors; and commercially available gaming simulation software such as X-Plane and Microsoft Flight Simulator. He does not say what information was garnered from the various RAAF personnel with whom Secure’s representatives spoke or from its physical access to a PC-21 cockpit or what that access entailed.
Mr Ayyalasomayajula further notes that Defence provided Secure with a 3D scan of a PC-21 aircraft cockpit, a PC-21 standardisation manual, and a course curriculum for the PC-21 flight training school. Clause 5.1 of the official order attached to Purchase Order No. 1 confirms that the 3D scan was to be provided by 1 July 2022, and that the manual and curriculum were to be provided by 1 November 2022. The evidence does not disclose what these were and I mention them only for completeness.
If Mr Fontana is correct, then it may be rather difficult to see how the CPT demonstrated to Defence on 21 February 2023 could have met Defence’s fidelity requirements. The software it used could not achieve a military standard CPT and the aircraft flight manual and pilot’s checklist could not have provided Secure with the aircraft performance or the malfunctions information which would have been necessary to achieve Mr Fontana’s baseline functionality. It remains possible, of course, that Secure obtained that information from its inspection of a PC-21 and its discussions with various RAAF personnel, although this seems intuitively somewhat unlikely and was not at the forefront of Secure’s submissions.
During the hearing, Mr Cobden instead endeavoured to demonstrate that the performance information could be obtained from a publicly available brochure about the PC-21 which, for example, indicated its maximum speed and length of runway needed for take-off. However, I do not accept that this exercise was sufficiently complete. No doubt, basic concepts such as the PC-21’s maximum level flight speed were publicly available in the trade but Mr Fontana’s account of performance information ranges much more broadly than that. Further, there is of course Mr Fontana’s evidence that the performance information could not be extracted from the aircraft flight manual or pilot’s checklist, which it may be assumed would be far more detailed than the brochure.
In any event, Secure’s efforts to show that the performance information came from a public brochure in no way meets Mr Fontana’s point about the malfunctions information. Mr Cobden did not seek to demonstrate that any part of the publicly available brochure contained information of this kind. In relation to both the performance and malfunctions information, I was not taken to any part of the aircraft flight manual or the pilot’s checklist to make good Mr Ayyalasomayajula’s suggestion that this information could be gleaned from either (no doubt, because they were not in evidence). Mr Fontana’s evidence is to the contrary.
Into the same category may be placed Mr Ayyalasomayajula’s implication that the information could have come from the commercially available software for X-Plane and Microsoft Flight Simulator. Mr Fontana said that this was not so and that, whilst recreational flight simulators do emulate the PC-21, those emulations are not of a military standard.
Whilst it may ultimately transpire that Mr Ayyalasomayajula is right about this and Mr Fontana is wrong, on the hearing of the present application the question is whether Pilatus’s concerns are objectively reasonable. It is Mr Bühler, as Pilatus’s general counsel, who has these concerns. In light of what Mr Fontana said to Mr Bühler, I am satisfied that Mr Bühler’s concern that Secure’s CPT was developed using more of Pilatus’s intellectual property than appears in the aircraft flight manual and pilot’s checklist is objectively reasonable. I am also satisfied that Pilatus has reason to suspect that Secure’s CPT was not derived from information obtained during the examination of the PC-21 aircraft or the discussions had with the RAAF personnel.
3. Legal problems with Pilatus’s possible proceeding for breach of confidence and copyright infringement?
The fact that it is objectively reasonable for Pilatus to suspect that Secure may have used Pilatus’s confidential information without a licence to develop its CPT does not entail that Pilatus meets the requirements of FCR r 7.23(1)(a). This is because the rule requires a reasonable belief that Pilatus ‘may have the right to obtain relief in the Court’ from Secure. Mr Cobden submitted, not without force, that this required one to attend not only to the events above but also to what their legal characterisation properly was.
Generally, I would accept that one ought not to grant preliminary discovery under FCR r 7.23(1)(a) if the contemplated proceeding would be liable to be summarily dismissed. This was certainly the case under the procedure in Chancery from which FCR r 7.23(1)(a) is descended. That procedure allowed a defendant to demur to the bill of discovery: Edward Bray, The Principles and Practice of Discovery (Reeves & Turner, 1885) 611-612. In terms of the current rule, this former practice may be reflected in the fact that a belief that a party may have a right to obtain relief would not be a reasonable belief if any proceeding leading to the proposed relief was liable to be summarily dismissed. Alternatively, it may find expression in the fact that the decision to grant preliminary discovery is ultimately discretionary so that the discretion would not be exercised where the contemplated suit was liable to be summarily dismissed. It is not necessary to choose between these two routes. The general point may be accepted. Preliminary discovery ought not to be granted where the anticipated claim for relief would be summarily dismissed.
Pilatus believes that it may have a right to obtain relief against Secure for copyright infringement and breach of confidence. Mr Cobden submitted that neither case could succeed. It is necessary to attend to why Mr Cobden submitted this to be so.
3.1 Pilatus’s contemplated copyright suit
Pilatus’s contemplated copyright suit has two limbs. The first concerns the PFD and MFDs whilst the second relates to the copyright it has in the software which operates its PC-21 aircraft and ground trainers.
3.1.1Copyright in the PFD and MFD layouts?
Pilatus says that the layout of these screens is an artistic work in which copyright inheres under the Copyright Act 1968 (Cth) (‘the Copyright Act’). The evidence suggests that the layout of screens was designed by a team of individuals working at Pilatus and that in coming up with it this team used software to assist them; that is to say, the case is one which presents as an example of computer assisted drafting.
It is apparent that whatever this work was, it took place in Switzerland. Switzerland is one of the original States party to the International Convention for the Protection of Literary and Artistic Works which was concluded at Berne on 9 September 1886. The question of whether the layout constitutes an artistic work is to be gauged therefore by the application of the Copyright Act as if the layout was an Australian work: Copyright (International Protection) Regulations 1969 (Cth) reg 4(1)(b).
Secure has five points, the first three of which go to the submission that no copyright inheres in the PFD and MFD layouts. First, to look at the PFD and MFDs is to see that they are dynamic. Thus, whilst the image of them which appeared in the Secure brochure (assuming it to be a copy) was necessarily still, the actual display was constantly altering; for example, the artificial horizon on the PFD moves depending on the attitude of the aircraft as does the fuel gauge display on the MFDs. It was true that there were various depictions of the PFD and MFDs put in evidence by Pilatus, but these too were static screenshots. Significantly, Pilatus did not suggest that any of these static screenshots was the artistic work in question. These observations then distilled into a more general observation that Pilatus had failed to identify the actual material form of the alleged ‘artistic work’ under s 10(1) of the Copyright Act which it said had been infringed.
Allied to this point was Secure’s second point which was that, even if that problem could be surmounted, any such work would again not be one in which there could be copyright because the PFD and MFDs were no more than commonplace schematics. To continue with the example of the artificial horizon, a graphical representation of an artificial horizon was just that and its depiction could not be an artistic work since it was not original, including because similar images would appear on other commercial and military aircraft.
A closely related third point was that the fact that the layout had been composed with the aid of computer software entailed that it lacked a human author and could not therefore be a work in which copyright inhered.
The fourth point was that the layout was available in a publicly available brochure so that Secure was entitled to use it for its own purposes because it had had access to the brochure. (I was not taken to the flight manual to show that it contained depictions of the PFD and MFDs so that any copying was within the licence granted under the IP deeds between Secure and Defence.)
Secure’s fifth point was that even if all of those problems could be surmounted, Pilatus was required to come to grips with s 183 of the Copyright Act. It provides, relevantly, that the copyright in an artistic work is not infringed by a person doing any of the acts comprised in that copyright if that person is authorised in writing by the Commonwealth and if the acts were done for the services of the Commonwealth. Here Secure’s point was that (a) what it had done had been done under the auspices of Purchase Orders Nos. 1 and 2 which were authorisations in writing from the Commonwealth; and (b) its actions in creating its CPT were done for the services of the Commonwealth.
These submissions may ultimately be correct. However, I am not prepared to say at this stage that it is not possible for Pilatus to obtain relief from this Court for the infringement of copyright in the layout for its PFD and MFDs.
As to the first point, whilst it may be accepted that the PFD and MFDs are dynamic displays, this does not mean that there is not an embodiment of the underlying layout and I am prepared to draw the inference on the present application that there is. I think it unlikely that schematics on the PFD and MFDs appeared fully formed without any anterior work and Mr Bühler’s evidence about the team who created them strongly suggests that they created something. It may be – one need not presently say – that it will appear that different elements of the PFD and MFDs are separate artistic works. Indeed, it may transpire that Mr Cobden’s submissions about originality do find a mark so that some elements are artistic works whilst others are not. The point for present purposes is that I do not think that one can say that Secure is going to prevail completely on this point or correlatively that Pilatus will fail.
At any hearing, there may be a further debate as to whether any particular instance of Secure’s displays constitutes an infringement of that underlying layout. Here questions of identicality and substantial part may well intrude. Whilst I accept that it is readily foreseeable that Secure will have much that it can deploy on that front, these are trial issues and this is not a trial.
I accept the force of Mr Cobden’s submission that Pilatus has failed on the present application to produce this underlying layout and hence to identify with precision what the work in suit is. However, at the risk of repetition, this is not a trial and the question is whether Pilatus may have a right to obtain relief for copyright infringement. Accepting the first difficulty identified by Mr Cobden, I am not persuaded that it entails that it cannot be the case that Pilatus may have that right.
As to the second point, I do not accept that Secure has established that Pilatus cannot succeed in demonstrating that the underlying layout is an artistic work. On the contrary, I think this is an interesting question the answer to which is not obvious. I certainly I accept that there are points to be made on this issue on Secure’s behalf which are not trivial. But the question of whether the layout of the PFD and MFDs lacks originality because of its utilitarian and derivative nature is a question for trial. Issues of degree will be involved: what are the utilitarian elements upon which Secure relies; is the layout composed solely of such items; if it is not, has original effort been applied in selecting the way in which they have been positioned (as with an anthology of poems, for example); and, among other questions, do the components of the display differ materially from those which are otherwise present in the industry?
As to the third point, the same kind of reasoning also makes it impossible to accept Secure’s submission that because computer assisted drafting was involved in the creation of the layout that this means that it lacks a human author. This will turn on whether drafting software involved was used as a tool by humans to produce the material form of the layout or whether, as in Telstra Corporation Limited v Phone Directories Company Pty Ltd [2010] FCAFC 149; 194 FCR 142 at 178-179 [118]-[119], the material form was itself composed by the software. This will involve a close analysis of the software involved and the process by which the material form was produced. The outcome of that analysis cannot be assayed on an application such as the present.
As to the fourth point, Secure did seek to show that the PFD and MFDs were depicted in the publicly available brochure. It is likely that this submission was really directed at the confidential information case but it may be that it was also aimed at the copyright case. If it was, it is not self-evident that possession of the brochure gave Secure a licence to use images contained within it. Ownership of a book containing an artistic work does not ordinarily confer upon the owner of the book the rights to reproduce that artistic work in a material form.
As to the fifth point, I do not accept that s 183 is necessarily a complete answer to any proposed suit for copyright infringement by Pilatus. Whether a defence based on s 183 succeeds will depend on the proper construction of the contractual documentation and whether it can be inferred that the Commonwealth authorised Secure in writing to copy the layout of the PFD and MFDs.
Among other documents, relevant to the resolution of that question are, first, the provisions of Purchase Order No. 1 to which I have referred which required Secure to make a CPT closely resembling a PC-21 cockpit; secondly, cl 13 of the general terms and conditions attached to Purchase Order No. 1 by which Secure warranted that it had all the intellectual property rights necessary to provide the CPT and that it would not infringe the intellectual property of any third party; thirdly, the identification in the Intellectual Property Schedule (Attachment G) of Purchase Order No. 1 of the background intellectual property which Secure would provide, including the physical shell, aesthetics, switchology and button layout for the MR CPT training devices; and fourthly, the terms of the IP deeds from the Commonwealth to Secure which, at least for purposes of this application, gave Secure a licence only to use Pilatus’s aircraft flight manual and pilot’s checklist.
It is arguable that the effect of these provisions is that Secure was not authorised to use any of Pilatus’s intellectual property, including any copyright, which it had not been authorised under the IP deeds to use. Were it otherwise, the IP deeds would be redundant which, whilst possible, certainly sounds like a question to be determined at trial.
For the foregoing reasons, I do not accept that Secure’s arguments about this mean that Pilatus’s proposed copyright suit in relation to the PFD and MFDs cannot succeed.
3.1.2Copyright in the software?
As I understood Pilatus’s case, its PC-21 aircraft and ground trainers operated on software in which copyright inhered. This was known as the PC-21 Mission Computer Software and the Rehosted Mission Computer Software. It may be assumed that these were literary works in which copyright inhered and that, for the reasons already given, that copyright was subject to the Copyright Act.
The evidence that Secure had copied this software was the same evidence which supported its copyright case on the PFD and MFDs and its confidential information case. Whilst that evidence can sustain an inference that confidential information (in the form of, for example, the performance and malfunctions information) has been taken and that the layout of the PFD and MFDs has been copied, I do not think it points to Secure having copied actual computer code of Pilatus’s. Pilatus submits that because its software is integral to the ground-based trainer and its ability to replicate the performance of the aircraft, the Court may infer that its software was infringed. I would not draw that inference. I would draw an inference that data reflecting the handling characteristics of the aircraft and so forth might have been copied. But the idea that executable computer code had been copied seems to me an inference based on nothing more than the facts that Pilatus’s and Secure’s systems both use computers and are functional. Nothing inclines my mind towards the proposition that Pilatus’s computer code may have been copied and I do not think that its concerns about this rise higher than curiosity.
3.2 The breach of confidence case
I have accepted above that the performance and malfunctions information would appear arguably to have been necessary for Secure to have developed its proof-of-concept CPT. Mr Fontana said that this information was confidential to Pilatus and was not publicly available. On the face of it, therefore, Pilatus does have good reason to suspect that some of its confidential information has been used by Secure. Secure submitted that such a case could not be maintained because it was licensed by the Commonwealth to use Pilatus’s intellectual property in the development of its CPT. I have explained in relation to the copyright case why I do not accept that submission for the purposes of this application. The same reasoning applies here.
Secure further submitted that Pilatus had failed to identify the confidential information with sufficient clarity. I do not agree. Mr Fontana gave a clear explanation of what the performance and malfunctions information was and why it was confidential. Mr Fontana further explained that certain information regarding how the indications on the PFD and MFDs behave (which he referred to as ‘logic and dynamics’ information) and certain checklists for specific procedures that may be undertaken by the PC-21 (which he referred to as ‘checklist procedures’) were also necessary to developing a prototype with baseline functionality to be used for training, and that such information was not publicly available.
Secure also submitted that the information was not confidential because it was in the public domain. I have explained above why I do not accept that submission.
For the reasons I have given, I accept that Pilatus has sound reasons for thinking that this information may have been misappropriated by Secure.
4. The nature of the contemplated relief
In neither of his affidavits does Mr Bühler explicitly identify the relief which he thinks Pilatus may have the right to obtain. He does however say at §41(c) of his second affidavit that he requires preliminary discovery to consider ‘both the nature and quantum’ of Pilatus’s right to relief. Secure submits that Pilatus has not led evidence of the nature of the relief which is the subject of Mr Bühler’s belief. It was said by the Full Court of the old preliminary discovery rule, Order 15A r 6 of the Federal Court Rules 1979 (Cth), that satisfaction of the requirement of that rule that ‘there is reasonable cause to believe that the applicant has or may have the right to obtain relief’ does ‘require identification of the nature of the relief the subject of the hypothesised belief’: Telstra Corporation Ltd v Minister for Broadband, Communications and the Digital Economy [2008] FCA 7; 166 FCR 64 at 79 [58] per French, Weinberg and Greenwood JJ (citation omitted). That principle has been applied to the new form of the rule, FCR r 7.23, introduced by the Federal Court Rules 2011 (Cth): Outback Stores Pty Ltd v Smit [2020] FCA 1785 at [39] per White J.
The question then becomes whether one can infer from Mr Bühler’s fleeting reference to quantum that the relief he believes Pilatus may have against Secure is damages for infringement of copyright and equitable compensation for breach of confidence. It would have been preferable for Mr Bühler to say this was what he believed rather than leaving it to be teased out from the word ‘quantum’.
In answering the question of whether this inference should be drawn in Pilatus’s favour there are two interrelated practical matters that should be observed. First, the hearing was conducted by both sides on the basis that what was being discussed was the viability of Pilatus’s claims for breach of confidence and infringement. There would be a certain air of unreality in non-suiting Pilatus because Mr Bühler failed to mention beyond the word ‘quantum’ that what it thought it might have an entitlement to was relief in the nature of damages and equitable compensation. Secondly, that unreality would provide a basis for permitting Pilatus to re-open so that Mr Bühler could put on a one sentence affidavit stating what is otherwise obvious. These two matters, together with the injunction in s 37M of the Federal Court of Australia Act (‘FCA Act’), persuade me that I should read the reference to ‘quantum’ as discharging Pilatus’s obligations to identify the hypothesised relief. Were I wrong in construing the word ‘quantum’ in that way, I would grant Pilatus leave to re-open to put on a third affidavit from Mr Bühler identifying that the hypothesised relief was for damages and equitable compensation
For completeness, I reject Secure’s submission that there was no evidence of any threat to use Pilatus’s copyright or confidential information. The question is not whether it is threatening to infringe Pilatus’s copyright or to use its confidential information to do so but rather whether it has already done so.
5. Failure to make inquiries
A party cannot seek preliminary discovery unless it has made reasonable inquiries: FCR r 7.23(1)(b). Secure submitted that Pilatus had failed to do so. There were two points. First, Secure submitted that Pilatus had failed to make reasonable inquiries of the Commonwealth. Secure says that the sole source of information on which it relied to perform the work was the Commonwealth. This is Mr Ayyalasomayajula’s evidence referred to above about what the Commonwealth granted to Secure by way of access. I do not accept this submission. It will be apparent from what has been said that I am not persuaded on the present application that Mr Ayyalasomayajula’s evidence is necessarily correct.
Assuming in favour of Secure that Pilatus was required to make reasonable inquiries of the Commonwealth before commencing this proceeding, it is clear that it did so by means of a letter dated 8 May 2023. This letter set out in considerable detail the concerns that Pilatus had about the development of Secure’s CPT. Having done so it then stated that ‘Our clients are concerned to understand the way in which the SIG CPT was developed and the extent to which access to the PC-21 Training System was provided by the Commonwealth, whether pursuant to the SIG IP Deed or otherwise’. The letter then finished this way:
Accordingly, our clients ask that the Commonwealth:
1 confirm whether the SIG IP Deed was executed and provide a signed copy;
2explain the extent to which SIG was given access to the PC-21 Training System or any aspect of it (including the PC-21 Aircraft Flight Manual and PC-21 Pilot’s Checklist) including the circumstances, purposes and timing of any access (including Purchase Order Number 4501158600 dated 1 June 2022).
Secure described this letter as ‘tepid’ but I think that involves a misreading of its temperature. The Commonwealth replied to this letter on 19 May 2023. It said that it had provided the aircraft flight manual and pilot’s checklist but not before 30 January 2023 and that ‘to the best of Defence’s knowledge, no other licensed material from [Pilatus] has been provided by Defence to [Secure] in this matter’. The Commonwealth then invited Pilatus to ‘confirm’ any ‘further details in relation to such material’ with Secure directly.
Upon receipt of that letter, it is inevitable that Pilatus had made reasonable inquiries as required by FCR r 7.23(1)(b). It had reason to think that access was granted to the aircraft flight manual and pilot’s checklist before 30 January 2023 and it had reason to think that its confidential information concerning performance and malfunctions had been utilised in Secure’s CPT. The Commonwealth was denying any such involvement. The only conceivable next step was the commencement of this proceeding.
For completeness, I reject Secure’s submission that Pilatus was bound by the answer it received from the Commonwealth. No authority was cited for the proposition that a party inquiring about an intellectual property infringement is bound by the terms of any letter it receives inquiring of a third party about that topic. I doubt that such an authority exists and I would be surprised if any judge has ever so held. The closest the law gets to such a proposition is the principle of the law of agency that a person who ratifies the authority of an agent cannot thereafter deny it and the principle in the law of evidence that a cross-examiner is, in some circumstances, bound by the answer a witness gives. Neither principle is of assistance to Secure in the present circumstance.
Secure’s second point on reasonable inquiries was that Pilatus had failed to obtain in a timely fashion Purchase Order No. 1. The thinking underpinning this submission is that before Pilatus sought preliminary discovery from Secure it was bound to ask Secure what it was that it had been retained to do. For example, Purchase Order No. 1 might have shown that Pilatus had been retained to acquire the performance and malfunctions information from the PC-21, to copy the layout of PFD and MFDs and to use Pilatus’s software.
Pilatus was aware of the existence of the purchase order although not its content from no later than 5 January 2023. This is because at that time the Commonwealth consulted Pilatus on the terms of the draft IP deed and the deed referred to the purchase order. At this stage, however, Pilatus had no reason to ask for the purchase order since it would not know until February 2023 about the nature of Secure’s CPT.
Pilatus commenced this proceeding on 17 January 2024 without the benefit of Purchase Order No. 1 at which time it also filed the first affidavit of Mr Bühler. That affidavit did not refer to Purchase Order No. 1. Pilatus had previously requested Purchase Order No. 1 from Secure, at least as early as 8 May 2023, but had not received a copy. On 31 May 2024, Secure filed an affidavit from its solicitor, Mr Atkin, on information and belief from Mr Ayyalasomayajula. Mr Atkin referred to the purchase order at paragraphs 3(c) and (d) but did not annex a copy. On 1 July 2024, Pilatus issued a notice to produce the purchase order. On 4 July 2024, Secure responded that before producing the purchase order it required confidentiality undertakings from Pilatus’s legal representatives. There were then negotiations about the form of these undertakings which resulted in their being provided on 2 August 2024. It appears that the purchase order was provided shortly after that. Pilatus then sought Secure’s permission to show the purchase order to Mr Bühler which permission was forthcoming on 20 August 2024. Shortly before that Pilatus served Mr Bühler’s second affidavit on 15 August 2024. Since permission had not at that time been obtained for Mr Bühler to review the purchase order, he did not include the purchase order in his second affidavit. On 16 September 2024, an affidavit of Mr Ayyalasomayajula was served which was to replace the information and belief affidavit of Mr Atkin. This affidavit annexed the purchase order. The hearing was conducted on Tuesday 17 September 2024.
I do not agree that it can be said that Pilatus failed to make reasonable inquiries because it did not seek the purchase order more promptly. It is evident from the chronology in the previous paragraph that the process of extracting the purchase order from Secure was not straightforward. I also do not think that it can be said during the pendency of this litigation that there has been any relevant delay. If the point is that Pilatus should have made greater efforts to seek the purchase order before the commencement of the present proceeding, that submission falls short given Pilatus’s correspondence of 8 May 2023 seeking a copy of Purchase Order No. 1 and its subsequent letters on 21 July 2023 and 28 August 2023 repeating that request. In addition, I fail to see the relevance of this in circumstances where Pilatus did in fact seek the purchase order once the proceeding was commenced and, after some effort, succeeded in obtaining it.
Secure made some other points about Mr Bühler’s inquiries principally relating to the IP deeds. However, these submissions were based on its construction of the deed which, for the reasons I have given, are contestable.
6. Conclusions
In principle, there should be an order for preliminary discovery. I do not agree with Secure’s ambitious submission that relief should be refused on discretionary grounds because Pilatus should be pursuing the Commonwealth. The articulation of this submission will sufficiently explain why I reject it.
The parties should have an opportunity to consider these reasons. Debate was foreshadowed about the categories of discovery which were appropriate. If the parties continue to be unable to agree this then it can be resolved on the papers either by me, or if the disagreement is substantial, by a Registrar in due course.
In relation to costs, the parties foreshadowed that they wished to be heard. Without wishing to forestall that, my present inclination is that the costs of this application should abide the outcome of any substantive proceeding commenced within 3 months of the date when Secure completes the provision of its discovery. If a proceeding is not commenced within that time, then Pilatus would pay Secure’s costs of this proceeding.
The only orders I will make at this stage are that:
(1)distribution of these reasons be limited to the external legal practitioners for the parties;
(2)the parties confer to determine a regime for permitting the reasons to be shown to the relevant legal officers within their clients and to determine whether any paragraphs of the judgment require redaction before being publicly released; and
(3)the parties provide a copy of these reasons to the Commonwealth as well and solicit its views on redaction.
The parties should bring in short minutes of order concerning the distribution of these reasons within 21 days. Then, within a further 21 ways, the parties should bring in short minutes of order giving effect to the balance of these reasons, including as to the confidentiality issues discussed below.
In addition to the substantive matters between the parties, there are also issues concerning the making of confidentiality orders in relation to much of the material before the Court with which it is now necessary to deal.
7. Suppression and Non-Publication Orders
The parties apply for confidentiality orders over the following categories of materials relied on or filed with the Court in connection with Pilatus’s application for preliminary discovery:
(1)agreements and deeds between the parties and various third parties and any extracts of those agreements and deeds (documents 1-9, 11, 13, 16-19, and 25 in the tables below);
(2)confidential annexure SB-21 to the first affidavit of Mr Bühler (document 12 in the tables below);
(3)various annexures containing all of the PFD and MFDs graphics (documents 10 and 20 in the tables below);
(4)the purchase orders between Defence and Secure and extracts of those purchase orders (documents 14-15, 21-22, and 24 in the tables below);
(5)an extract from the correspondence with Commodore Darren Rae which relates to the provision of certain Pilatus information by Defence to Secure (document 23 in the table below); and
(6)the transcript of the hearing in this matter on 17 September 2024 (document 26 in the table below).
The parties submit that the specific documents falling into the above categories are contained in the tables below. Each table corresponds to one source for the confidential materials (e.g. an affidavit or a written submission), with the right-most column indicating the parties to which confidentiality would apply.
No. Annexures to the Affidavit of Stefan Patrick Bühler affirmed 12 January 2024 Party(s) to which confidential (as applicable) 1. Paragraphs 51 – 54. Defence, LMA and Pilatus 2. Confidential Annexure SB-3. UED and Pilatus 3. Confidential Annexure SB-4. LMA and Pilatus 4. Confidential Annexure SB-5. Defence, LMA and Pilatus 5. Pages 371 – 379 of Confidential Annexure SB-6. Defence and Pilatus 6. Pages 383 – 390 and the extract of clause 5.3 of the “Subcontract” on pages 381 - 382 of Confidential Annexure SB-7. Defence and Pilatus 7. The extract of clause 2.4.1 of the “Tripartite IP Deed” included on pages 423-424 of Confidential Annexure SB-12. Defence, LMA and Pilatus 8. Pages 428 – 436 of Confidential Annexure SB-13. Defence and Pilatus 9. Paragraph 11.4 on page 444 of Confidential Annexure SB-15. Defence, LMA and Pilatus 10. Pages 451 – 469 of Confidential Annexure SB-16. Defence and Pilatus 11. Paragraphs 7, 8 and 10 of the letter included at page 473 of Confidential Annexure SB-17. Defence, Pilatus and S&IG 12. Confidential Annexure SB-21. Defence, Pilatus and the companies represented at the meeting.
No. Affidavit of Stefan Patrick Bühler affirmed 14 August 2024 Party(s) to which confidential (as applicable) 13. The extract of clause 5.3 of the “Subcontract” on pages 14 - 15 and the extract of clause 2.4.1 of the Tripartite IP Deed included on pages 20 – 21 of Confidential Annexure 22. Defence, LMA and Pilatus
No. Affidavit of Satyanarayana Rao Ayyalasomayajula affirmed on 16 September 2024 Party(s) to which confidential (as applicable) 14. Confidential Exhibit SRA-1. Defence and S&IG 15. Confidential Exhibit SRA-2. Defence and S&IG 16. Confidential Exhibit SRA-3. Defence, Pilatus and S&IG 17. Confidential Exhibit SRA-4. Defence, Pilatus and S&IG
No. The Prospective Applicants’ outline of written submissions dated 20 August 2024 Party(s) to which confidential (as applicable) 18. The second and third sentence of paragraph 23. Defence, Pilatus and S&IG 19. Footnote 33. Defence, Pilatus and S&IG 20. Confidential Annexure A. Pilatus
No. The Prospective Applicants’ outline of written submissions in reply dated 16 September 2024 Party(s) to which confidential (as applicable) 21. The second and third sentence of paragraph 12. Defence, Pilatus and S&IG
No. The Prospective Respondent’s outline of written submissions in answer dated 11 September 2024 Party(s) to which confidential (as applicable) 22. Paragraph 8. Defence and S&IG 23. The words in paragraph 20 that are quoted from the letter from Commodore Darren Rae to CCW dated 19 May 23. Defence and Pilatus 24. Paragraph 42(c). Defence and S&IG 25. The second and third sentence of paragraph 47. Defence, Pilatus and S&IG
No. Transcript Party(s) to which confidential (as applicable) 26. A full version of the transcript of the hearing on 17 September 2024 Defence, Pilatus and S&IG
The confidentiality of these documents has been protected by interim orders made under s 37AF of the FCA Act, initially made at the 17 September 2024 hearing and then varied on 1 October 2024.
The parties rely on the affidavits of Mr Bühler, Ms Marshall, and Mr Ayyalasomayajula, as well as the parties’ oral submissions. The only point of difference between the parties is that Secure opposes Pilatus’s request for suppression and non-publication orders in respect of the materials included in documents numbers 10 and 20 above. The parties jointly apply for suppression and non-publication orders over the other documents above.
The principles applicable to the parties’ request are relatively straightforward and well-known. I summarise them only briefly. The Court may make suppression or non-publication orders on various grounds, including where such an order is necessary to prevent prejudice to the proper administration of justice or to national security: FCA Act s 37AG(1)(a) and (b). It is well-recognised that commercial sensitivity can be an appropriate basis for making a suppression or non-publication order under this rule: Steelforce Trading Pty Ltd v Parliamentary Secretary to the Minister for Industry, Innovation and Science (No 2) [2018] FCAFC 47 at [4]. Provided that s 37AG is satisfied, the Court may then prohibit or restrict the publication or other disclosure of information that relates to a proceeding before the Court and which is, among other kinds of information, information that comprises evidence, is about evidence, or is lodged with or filed with the Court: FCA Act ss 37AF(1)(b)(i) and (iv). In making such orders, the Court must also take into account that a primary objective of the administration of justice is to safeguard the public interest in open justice: FCA Act s 37AE.
Turning to the parties’ first and fourth categories of materials, I am satisfied that suppression and non-publication orders are necessary within the meaning of FCA Act ss 37AG(1)(a) and (b) for documents 1-9, 11, 13-15, 18, 19, 21-22 and 24-25 in the tables above. As to the subset of these materials included in or attached to Mr Bühler’s affidavits, being largely Pilatus’s commercial agreements with various third parties and extracts or discussions thereof, Mr Bühler submits that these materials are not publicly available, remain confidential to Pilatus, and that their disclosure would, or could reasonably be expected to, adversely affect Pilatus in respect of its commercial affairs. Further, insofar as these documents relate to Pilatus’s PC-21 training systems, Mr Bühler also explains that such materials are ‘not publicly available and [its training systems are] only sold to military defence customers who keep [them] confidential in accordance with military confidentiality protocols and contractual obligations of confidentiality’. In light of the contents of the materials, I accept Mr Bühler’s evidence. I also accept that Mr Bühler’s evidence applies with equal force to the subset of materials comprising the parties’ first and fourth categories of materials which are attached to Mr Ayyalasomayajula’s affidavit – namely, the Commonwealth’s purchase orders with Secure and the corresponding IP deeds.
As to confidential annexure SB-21 of Mr Bühler’s first affidavit (i.e. the parties’ second category of materials), I am also satisfied that suppression and non-publication orders are necessary within the meaning of FCA Act ss 37AG(1)(a) and (b) given Ms Marshall’s evidence as to the contents of this document. She explains that this document comprises the meeting minutes of a quarterly meeting between industry stakeholders and Defence. As such, it contains information pertaining to Defence’s strategy, funding, performance, and commercial decisions. In addition, these minutes are not publicly available and are treated as confidential by Pilatus given its commercial and contractual arrangements with Defence.
The parties’ fifth category of materials is comprised of a single quote from a letter sent by Defence to Pilatus regarding the provision of certain Pilatus information to Secure. Given the contents and limited nature of this quotation, I am sceptical that suppression and non-publication orders are necessary within the meaning of FCA Act ss 37AG(1)(a) and (b). I would not, at present, grant such orders. To the extent the parties are in a position to make additional submissions or provide further evidence that explains the need for such orders, they may further apply for suppression and non-publication orders of this material.
As for the parties’ sixth category of materials, I am satisfied that suppression and non-publication orders over the transcript of the hearing in this matter on 17 September 2024 are necessary within the meaning of FCA Act ss 37AG(1)(a) and (b) as the transcript includes discussion of the parties’ confidential commercial affairs with various third parties (including the Commonwealth) and matters relevant to national security.
Lastly, turning to the third category of materials, the parties dispute whether suppression and non-publication orders are necessary over documents 10 and 20 in the tables above, which consist of various annexures containing Pilatus’s PFD and MFDs graphics. Pilatus submits that the graphics are confidential and relies on the evidence of Mr Bühler who, as noted above, explains that materials relating to Pilatus’s training programs (as these graphics do) are not publicly available and are treated as confidential by both Pilatus and their defence customers. Pilatus also relies on the evidence of Ms Marshall, who states that these graphics are confidential to Pilatus and their third-party defence customers because they comprise precise graphics used by those customers in their training programs. She adds that these graphics were drawn from confidential documents and were only provided to Secure on a confidential basis.
On the other hand, Secure contends that many of these graphics appear not to be confidential and that, at a minimum, any suppression and non-publication orders should not include graphics which have been published by Pilatus to the world at large. At the hearing, Secure conceded that suppression and non-publication orders may be appropriate if the publicly available materials could be excised from such orders. To this, Ms Marshall makes two points: (1) many of the MFD pages are not publicly available and (2) the graphics are not available to the public as a set of works gathered in one document. Ms Marshall thus presses, on behalf of Pilatus, that the graphics are commercially sensitive and that their disclosure would, or could reasonably be expected to, adversely affect Pilatus in respect of its commercial affairs because the set of PFD and MFD pages would be available for copying by third parties.
In light of the parties’ submissions and evidence, I conclude that, as to any graphics found in documents 10 and 20 above which are not in the public domain, suppression and non-publication orders are necessary within the meaning of FCA Act ss 37AG(1)(a) and (b). The confidentiality of these images arises both from the fact that they comprise part of Defence’s military training programs and from the commercial risks that may result from their disclosure.
As for the as yet undefined subset of graphics which Secure contends are in the public domain, ‘it is necessary to consider the extent of actual dissemination’ of such graphics given the Court’s authority to protect documents from further disclosure: Commonwealth v De Pyle [2024] FCAFC 43 at [50] per O’Callaghan, Raper and Button JJ (citation omitted). ‘The question of whether it is futile to make a suppression order [over a document] because of its public disclosure depends upon the degree of such disclosure’: ibid.
Here, there is some evidence to suggest that at least some of the graphics may be in the public domain. First, Ms Marshall states that ‘some of the PFD or MFD pages may be reproduced in brochures or photos’. Secondly, Mr Bühler attaches a Pilatus brochure to his first affidavit and states that it ‘has been publicly available since about 21 January 2022’ to which may be added Mr Cobden’s submission that some of the graphics in dispute appear in that brochure. Thirdly, Mr Atkin also attaches to his affidavit Pilatus brochures and images for the PC-21 aircraft and ground training facilities which may depict the PFD and MFD graphics.
Nonetheless, there is insufficient evidence to conclude that any of the materials in documents 10 and 20 above are in the ‘public domain’ such that the ‘necessity’ test under ss 37AG(1)(a) and (b) of the Act is failed here. First, it is not clear from the parties’ submissions or evidence which, if any, of the specific images contained in documents 10 and 20 are contended to be in the public domain. Secondly, Ms Marshall does not expressly concede that those graphics are in public materials – only that they may be. Thirdly, while the brochures attached to Mr Bühler’s first affidavit and Mr Atkin’s affidavit seem to contain some PFD and MFD graphics in certain photographs, it is not clear to me from that evidence that these graphics are the same as those found in documents 10 and 20. Fourthly, it is unclear the extent to which these brochures have been disseminated or are in the public domain.
I consider it appropriate that any suppression and non-publication orders resulting from this judgment should expire five years after this proceeding concludes (including any appeal from this proceeding). There is nothing to prevent the parties from seeking an extension of those orders as the expiration date approaches or to seek further confidentiality orders in the context of any subsequent proceeding filed by the Prospective Applicants against the Prospective Respondent.
The short minutes of order prepared by the parties should give effect to these conclusions.
I certify that the preceding one hundred and fifteen (115) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Perram. Associate:
Dated: 8 November 2024
0
4
7