Pilkin v Sony Australia Limited

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FEDERAL COURT OF AUSTRALIA

Pilkin v Sony Australia Limited

[2018] FCA 1018

File number: NSD 214 of 2018
Judge: RARES J
Date of judgment: 28 June 2018
Legislation:

Federal Court of Australia Act 1976 (Cth) s 56

Foreign Judgments Act 1991 (Cth) s 5

Patents Act 1990 (Cth)

Federal Court Rules 2011 r 10.43

Foreign Judgments Regulations 1992
Cases cited:

Baygol Pty Ltd v Huntsman Chemical Co Australia Pty Ltd t/a RMAX [2004] FCA 1248

Commissioner of Taxation v Vasiliades (2016) 344 ALR 558
Date of hearing: 28 June 2018
Registry: New South Wales
Division: General Division
National Practice Area: Intellectual Property
Sub-area: Patents and associated Statutes
Category: No Catchwords
Number of paragraphs: 35
First Applicant: Filed written submissions but did not appear
Counsel for the First and Fifth Respondents: Mr R Cobden SC with Mr P W Flynn
Solicitor for the First and Fifth Respondents: Griffith Hack Lawyers

ORDERS

NSD 214 of 2018
BETWEEN:

VITALY EVGENIEVICH PILKIN

First Applicant

VLADIMIR VITALIEVICH MIROSHNICHENKO

Second Applicant
AND:

SONY AUSTRALIA LIMITED

First Respondent

SONY INTERACTIVE ENTERTAINMENT LLC

Second Respondent

SONY INTERACTIVE ENTERTAINMENT EUROPE LTD (and others named in the Schedule)

Third Respondent

JUDGE:

RARES J

DATE OF ORDER:

28 JUNE 2018

THE COURT NOTES THAT:

1.The second applicant has passed away and the first applicant is unable to appear in person or by video link today, but consents to the hearing proceeding and relies on his written submissions and evidence.

THE COURT ORDERS THAT:

2.Unless the Court otherwise orders, pursuant to r 9.10 of the Federal Court Rules 2011, if no order is made on or before 26 October 2018, in relation to the second applicant (deceased) pursuant to r 9.09, the second applicant’s claim be dismissed.

3.The first applicant pay into Court the sum of $45,000 on or before 27 September 2018, failing which the proceeding be stayed until further order.

4.The first and fifth respondents’ costs of the interlocutory application dated 29 March 2018 be their costs in the cause.

5.The first applicant’s interlocutory application to strike out pleadings dated 21 June 2018 be dismissed with costs.

6.The first and fifth respondents have leave to apply, pursuant to s 56(4) of the Federal Court of Australia Act 1976 (Cth), on 2 November 2018, by filing an interlocutory

7.The proceeding be stood over for case management on 2 November 2018.

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


REASONS FOR JUDGMENT
(REVISED FROM THE TRANSCRIPT)

RARES J:

  1. On 20 February 2018, Vitaly Pilkin and Vladimir Miroshnichenko (the applicants) commenced these proceedings against Sony Australia Limited, the first respondent, the fifth respondent, Sony Interactive Entertainment Australia Pty Ltd (collectively Sony Australia), and three of their related companies, claiming that all respondents had infringed Australian innovation patent number 2010101517 (the patent) in which Mr Pilkin and Mr Miroshnichenko were named as patentees.  The patent claimed an invention of a sensor panel, display and joy stick arrangement in an…

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Details
Case
[2018] FCA 1018
Decision Date

CaseChat Overview and Summary

The case of Pilkin v Sony Australia Limited involves an action concerning the validity and infringement of a patent, brought by the applicant, Mr Pilkin, who represented himself as well as the late Mr Miroshnichenko. The primary respondents are Sony Australia Limited and several other companies, some of which are based overseas. The court was tasked with addressing Sony Australia's application for security for costs and Mr Pilkin's subsequent application to strike out Sony Australia's application and affidavit in support.

The key legal issues before the court were whether to grant Sony Australia's application for security for costs and whether to dismiss Mr Pilkin's application to strike out Sony Australia's application. The court considered the inherent discretion to order security for costs under Section 56 of the Federal Court of Australia Act 1976 (Cth) and the precedent set by Commissioner of Taxation v Vasiliades, which emphasised the significance of the applicant being non-resident and lacking assets in Australia. The court also examined the relevance of Mr Pilkin's patent as a potential asset, considering it only as valuable as its validity.

The court concluded that while the fact that Mr Pilkin was non-resident and lacked assets in Australia was a significant factor in favour of ordering security for costs, it was not determinative. The court exercised its discretion to order security for costs, considering the quantification of costs by Sony Australia, and determined that an amount of $45,000 was appropriate. The court dismissed Mr Pilkin's application to strike out Sony Australia's application and ordered Mr Pilkin to pay the specified amount by a certain date, failing which the proceedings would be stayed. The court also set dates for the proceeding to be regularised by having Mr Miroshnichenko’s estate represented.

The orders made by the court include the dismissal of Mr Pilkin's application to strike out Sony Australia's application, the requirement for Mr Pilkin to pay $45,000 into Court by a specified date, the awarding of costs to Sony Australia, and a case management hearing set for a future date. These orders ensure the proceeding progresses while addressing the financial implications for the parties involved.

Orders

Orders of the court

2. Unless the Court otherwise orders, pursuant to r 9.10 of the Federal Court Rules 2011, if no order is made on or before 26 October 2018, in relation to the second applicant (deceased) pursuant to r 9.09, the second applicant’s claim be dismissed.

3. The first applicant pay into Court the sum of $45,000 on or before 27 September 2018, failing which the proceeding be stayed until further order.

4. The first and fifth respondents’ costs of the interlocutory application dated 29 March 2018 be their costs in the cause.

5. The first applicant’s interlocutory application to strike out pleadings dated 21 June 2018 be dismissed with costs.

6. The first and fifth respondents have leave to apply, pursuant to s 56(4) of the Federal Court of Australia Act 1976 (Cth), on 2 November 2018, by filing an interlocutory

7. The proceeding be stood over for case management on 2 November 2018.

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

Background

Background to the litigation

Subsequently on 23 April 2018, Mr Miroshnichenko passed away and Mr Pilkin has continued to represent himself thereafter. Sony Australia have applied for security for costs.Background The matter came before me for the first case management hearing on 23 March 2018 at which Mr Pilkin appeared in person in his own right and on behalf of Mr Miroshnichenko. In the course of the first case management hearing, I raised with Mr Pilkin some of the difficulties that attended his appearing for himself in the litigation. He appeared to be quite fluent in English and, indeed, the pleadings and other documents that he has filed in the course of the proceeding demonstrate that he has a substantial degree of fluency in the English language and an understanding of patent terminology, patent law, the complexities of the Patents Act 1990 (Cth), the Federal Court Rules 2011 and the Court’s practice notes, to which he has made numerous detailed and apparently relevant references. However, Mr Pilkin, both during the first case management hearing and in his subsequent filing of an interlocutory application seeking to strike out or remove from the Court file Sony Australia’s interlocutory application for security for costs and the affidavit in support of it by their solicitor, Derek Baigent, affirmed 29 March 2018, has approached the proceeding on the basis that, first, the patent is valid before there has been any judicial determination of that question and, secondly, all the respondents have no defence. I explained to him on 23 March 2018 that the role of the Court was to determine both validity of the patent and any question of its infringement and that was something that had to happen after the parties had had a hearing. Additionally, Sony Australia are the only two respondents that have been served. That is because the other three respondents are companies incorporated in the United Kingdom and the United States of America for which the applicants had sought an order for service outside the jurisdiction under r 10.43, but which application has not yet been determined. At the first case management hearing on 23 March 2018, Sony Australia said that they wished to seek an order for security for costs. It is that application and Mr Pilkin’s application to strike out with which I am dealing today. Sony Australia filed their application for security on 29 March 2018 with Mr Baigent’s affidavit in support of it. Mr Pilkin filed a document in response to it on 21 June 2018 entitled “affidavit” that is unverified. During the course of the first case management hearing Mr Pilkin, on a number of occasions, said that he and Mr Miroshnichenko had been unable to find a lawyer in Australia because of lack of funds. He said that he had had to come to Australia to appear personally rather than have a lawyer appear for him, and he wished in the future to be able to appear from Russia by a video link, at least, for case management hearings. He said that he would not be able to find funds to provide by way of security in four weeks and sought three months in which to do so. In the circumstances I considered that that was an appropriate period during which to adjourn the proceeding to give Mr Pilkin and the late Mr Miroshnichenko an opportunity to find money to provide by way of security for the preliminary part of the proceeding. I would then be able to manage any further orders for security as any need might arise later in the course of the proceedings.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

In the end, the question of whether to award security for costs against a person resident out of the jurisdiction and the amount of such security essentially involves the Court engaging in an instinctive synthesis of the various relevant factors in the exercise of its discretion. I have had regard to Mr Baigent’s quantification of the costs that are likely to be incurred at litigation were an order for security to be made. In all of the circumstances, I consider that I should make some discount to the $50,000 sought. That is because some of the material is likely to have already been considered and collated by Sony companies elsewhere in the world including, in particular, in the Rospatent proceeding.Conclusion Accordingly, I consider that it is appropriate and just to order that Mr Pilkin pay into Court the sum of $45,000 on or before 27 September 2018. I am mindful that he may have difficulties as a result of the unfortunate death of Mr Miroshnichenko and it will also be necessary at some point, reasonably soon, for this proceeding to be regularised by having Mr Miroshnichenko’s estate represented in the proceeding in his place. I propose to make an order that that be done by 26 October 2018 and to bring the proceedings before me for case management on 2 November 2018. In the event that Mr Pilkin does not pay into Court the amount I have ordered as security the proceeding must be stayed until further order.

Ratio Decidendi

Legal Principle Established

Mr Pilkin argued that he had a valuable asset in Australia, being his patent. However, it is only as valuable as its validity. If it be found invalid (as it may be found to be should the litigation proceed), it will be worthless and Mr Pilkin will be liable to pay the costs of the proceeding. Of course, if Mr Pilkin’s patent is found to be valid, he will be entitled to whatever costs, as a litigant in person, he may be able to claim and he will not be liable for any costs payable to any respondent who appears. The basis of the application for security for costs is that, as is now the case since Mr Miroshnichenko’s decease, that the remaining applicant, Mr Pilkin, is resident out of the jurisdiction. Consideration Under s 56 of the Federal Court of Australia Act 1976 (Cth), the Court has power to order security for costs and to vary any such order from time to time. The Court may also have inherent power to do so, as discussed by Kenny and Edelman JJ in Commissioner of Taxation v Vasiliades (2016) 344 ALR 558 at 578 [70]-[71]. As their Honours said:The discretion conferred by s 56 is a broad one, subject only to the limitation that it must be exercised judicially. The discretion is not fettered by any a priori rules and does not fall to be applied in a mechanical way by encrusted procedures (see 344 ALR at 584 [90]). Importantly, their Honours pointed out, a significant consideration relevant to the exercise of the Court’s discretion in such a case is that the person against whom security for costs is sought is not ordinarily resident in the jurisdiction and has no assets here. Kenny and Edelman JJ said (344 ALR at 579-580 [74]‑[75]): it was common ground that [Mr Vasiliades] was an Australian non-resident without apparent assets in Australia. The significance of this consideration was emphasised in PS Chellaram & Co Ltd v China Ocean Shipping Co (1991) 102 ALR 321; 5 ACSR 633 …(in which the respondents applied for an order that the appellant provide security for the costs of its appeal). In reasons for judgment awarding security, McHugh J stated (at ALR 323; ACSR 635):To make or refuse to make an order for security for costs involves the exercise of a discretionary judgment. That means that the court exercising the discretion must weigh all the circumstances of the case. The weight to be given to any circumstance depends not only upon its own intrinsic persuasiveness but upon the impact of other circumstances which have to be weighed. A circumstance which may have very great weight when only two or three circumstances have to be weighed may be of minor significance when many circumstances have to be weighed. However, for over 200 years the fact that a party, bringing proceedings, is resident out of the jurisdiction and has no assets within the jurisdiction has been seen as a circumstance of great weight in determining whether an order for security for costs should be made. Indeed, for many years the practice has been to order such a party to provide security for costs unless that party can point to other circumstances which overcome the weight of the circumstance that that person is resident out of and has no assets within the jurisdiction.The fact that a party, bringing proceedings, is resident out of the jurisdiction and has no assets within the jurisdiction is clearly a significant circumstance militating in favour of an applicant for security for costs. As the above passage highlights, however, there is no rule that security for costs will be awarded as of course where an applicant is resident out of the jurisdiction and has no assets within the jurisdiction. A case may disclose countervailing circumstances that properly justify refusing an application. (emphasis added)