Qudos Mutual Limited v Infosys Limited

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FEDERAL COURT OF AUSTRALIA

Qudos Mutual Limited v Infosys Limited [2019] FCA 702

File number(s): NSD 2075 of 2018
Judge(s): BURLEY J
Date of judgment: 20 May 2019
Catchwords: PRACTICE AND PROCEDURE – application for preliminary discovery – whether prospective applicant already had sufficient information under r 7.23(1)(b) of the Federal Court Rules 2011 (Cth) – application granted
Legislation:

Copyright Act 1968 (Cth), ss 14(1), 31(1), 36(1)

Federal Court Rules 2011 (Cth) r 7.23

Cases cited:

Alphapharm Pty Ltd v Eli Lilly Australia Pty Ltd [1996] FCA 391

Aristocrat Technologies Australia Pty Limited v Ainsworth Game Technology Limited [2018] FCA 1511

CA, Inc. v ISI Pty Limited [2012] FCA 35; 95 IPR 424

IceTV Pty Ltd v Nine Network Australia Pty Ltd [2009] HCA 14; 239 CLR 458

Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd [2017] FCAFC 193

Date of hearing: 2 May 2019
Registry: New South Wales
Division: General Division
National Practice Area: Intellectual Property
Sub-area: Copyright and Industrial Designs
Category: Catchwords
Number of paragraphs: 61
Counsel for the Applicant: Mr R Cobden SC with Mr Flynn
Solicitor for the Applicant: Gilbert and Tobin
Counsel for the Respondents: Mr Hennessy SC with Mr Burgess
Solicitor for the Respondents: Allens

ORDERS

NSD 2075 of 2018
BETWEEN:

QUDOS MUTUAL LIMITED ACN 087 650 557

Prospective Applicant
AND:

INFOSYS LIMITED (A FOREIGN COMPANY TRADING AS A FOREIGN REGISTERED COMPANY IN AUSTRALIA, REGISTERED IN AUSTRALIA AS INFOSYS TECHNOLOGIES LIMITED) ABN 52 090 591 209

First Prospective Respondent

INFOSYS TECHNOLOGIES AUSTRALIA PTY LIMITED ACN 054 141 365

Second Prospective Respondent

JUDGE:

BURLEY J

DATE OF ORDER:

20 MAY 2019

THE COURT ORDERS THAT:

1.The Prospective Applicant is to file and serve any submissions in relation to the costs of the application and the time required for compliance with the form of order set out in [5] of the reasons within 7 days of the delivery of these reasons.

2.The First Prospective Respondent is to file and serve any submissions in response within 7 days thereafter.

3.The Prospective Applicant is to file and serve any reply submission of no longer than 2 pages within 7 days thereafter.

4.If no submissions are made in accordance with (1) and (2), the orders for discovery will be finalised on the papers.

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


REASONS FOR JUDGMENT

1         INTRODUCTION

[1]

2         THE EVIDENCE

[8]

3         FACTUAL BACKGROUND

[14]

4         CONSIDERATION

[34]

4.1      The dispute

[34]

4.2      Is there an insufficiency of information?

[38]

4.3      Qudos categories are overbroad and unclear

[52]

4.4      Discretionary factors

[56]

5         DISPOSITION

[61]

BURLEY J:

1.               INTRODUCTION

  1. Qudos Mutual Limited trades as Qudos Bank. Prior to April 2016 it traded under the name Qantas Credit Union. In March 2015 Qudos entered into a Master Banking Services Agreement with Infosys Limited pursuant to which Infosys agreed to provide a range of services relevant to a major overhaul of the Qudos digital banking arrangements. With the assistance…

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Details
Case
[2019] FCA 702
Decision Date

CaseChat Overview and Summary

Qudos Mutual Limited sought an order for preliminary discovery against Infosys Limited in the Federal Court of Australia. Qudos alleged that Infosys may have infringed copyright, breached contractual obligations, and misused confidential information in the development of software for AMB. In support of their application, Qudos relied on evidence suggesting similarities between software developed by Infosys for Qudos and AMB, which raised concerns about potential misuse of Qudos' intellectual property and confidential information. The court had to determine whether Qudos had established a reasonable belief that it may have the right to relief against Infosys, as required by rule 7.23 of the Federal Court Rules 2011. The court found that Qudos had indeed established a reasonable belief based on the evidence presented, including similarities between the software and Qudos' concerns about potential misuse of its intellectual property.

The key legal issue was whether Qudos had a reasonable belief that it may have the right to obtain relief from Infosys, which was a prerequisite for granting the preliminary discovery application under rule 7.23. The court considered the evidence provided by Qudos, particularly the similarities between the software developed for Qudos and AMB, and the concerns about potential misuse of Qudos' intellectual property and confidential information. The court concluded that Qudos' belief was reasonable, as it was based on the evidence of similarities and the concerns about potential misuse. The court also noted that Infosys did not challenge the reasonableness of Qudos' belief, which further supported the conclusion that Qudos had met the requirement under the rule. The court found that Qudos had established a reasonable belief that it may have the right to relief against Infosys.

The court granted the application for preliminary discovery, ordering Infosys to provide a detailed list of categories of documents that Qudos sought. The court directed that Qudos file submissions regarding the costs of the application and the time required for compliance with the order within seven days. Infosys was also directed to respond within seven days, with Qudos then having a further seven days to reply. The court noted that unless either party requested otherwise, it would determine the balance of the application on the papers. The court's decision was based on the evidence and legal principles established in previous cases, such as Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd, which highlighted the requirements for establishing a reasonable belief under rule 7.23.

In summary, the court granted Qudos' application for preliminary discovery against Infosys, finding that Qudos had established a reasonable belief that it may have the right to relief against Infosys for alleged copyright infringement, breach of contract, and misuse of confidential information. The court ordered Infosys to provide a detailed list of categories of documents that Qudos sought and directed the parties to file submissions regarding the costs of the application and the time required for compliance. The court's decision was based on the evidence presented by Qudos and the legal principles established in previous cases. The question of costs of the application and the time required to produce documents remained unresolved and would be determined in subsequent submissions.

Orders

Orders of the court

1. The Prospective Applicant is to file and serve any submissions in relation to the costs of the application and the time required for compliance with the form of order set out in [5] of the reasons within 7 days of the delivery of these reasons.

2. The First Prospective Respondent is to file and serve any submissions in response within 7 days thereafter.

3. The Prospective Applicant is to file and serve any reply submission of no longer than 2 pages within 7 days thereafter.

4. If no submissions are made in accordance with (1) and (2), the orders for discovery will be finalised on the papers.

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

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

The question of costs of the application is unresolved. In addition, the parties have not had an opportunity to make submissions as to the time required to produce documents in accordance with the orders in [5] above. Accordingly, I direct that Qudos file any submissions going to the costs of the application and the time for compliance, limited to no more than 4 pages in length, within 7 days. I direct that Infosys respond within 7 days with submissions of no more than 4 pages in length, and Qudos reply with submissions of no longer than 2 pages within 7 days thereafter. Unless either party requests otherwise, I will determine the balance of the application on the papers. 2. THE EVIDENCE Qudos read the evidence of 4 witnesses. Rodney David McKemmish is the director and principal of Cyter Pty Ltd, a forensic consultancy firm. In this capacity, he provides forensic technology and cyber forensic consultancy services in a range of technology matters. He has over 20 years’ experience in both law enforcement and the private sector specialising in computer forensics. In October 2018, he conducted an examination of certain materials about which he gives evidence in his first affidavit sworn on 31 October 2018. In his second affidavit, sworn on 26 February 2019, he gives further forensic evidence based on source code produced by Infosys. In his third affidavit, sworn on 16 April 2019, he replies to the evidence of Darren Michael Andrew, Infosys’ expert witness. Cindy Lea Hansen is the general counsel and company secretary of Qudos. She has been practising law for over 25 years and has held her current position since 2007. Ms Hansen gives evidence as the relevant decision maker within Qudos who must determine whether or not to commence proceedings. In her first affidavit, affirmed on 5 November 2018, she gives evidence about the contractual relationship between Qudos and Infosys, and the work undertaken by Infosys for Qudos. She gives evidence of Qudos’ concerns that Infosys may have used Qudos’ intellectual property and confidential information in developing software for AMB, and provides a history of the correspondence prior to the commencement of proceedings between Qudos, Infosys, and AMB. In her second affidavit, affirmed on 27 February 2019, Ms Hansen gives evidence of the documents produced by Infosys to Qudos during the current proceedings, and as to the further information she believes is necessary to ascertain whether Qudos may have a right to relief against Infosys. In her third affidavit, affirmed on 18 April 2019, Ms Hansen replies to the evidence of Rachael Zavodnyik. Christopher Alfred Rodrigues is employed in the role of Manager of Application and Digital Services at Qudos, where he is responsible for providing support, administration, and management for all business and banking applications for staff and customers. In an affidavit affirmed on 2 November 2018, he gives evidence about the business relationship between Infosys and Qudos, about the online banking platform developed by Infosys for Qudos, and about Qudos’ engagement with HeathWallace, an independent firm that was engaged to assist Qudos. He also gives evidence of the alleged similarities between the software developed by Infosys for Qudos and AMB respectively.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

In her affidavit of 27 February 2019, Ms Hansen deposes that she has heightened concern about potential misuse by Infosys because it seems that AMB did have access to some Qudos materials in developing its own website and mobile application. However, it is unclear whether and to what extent Infosys used or copied or provided the Qudos materials. She lists some 16 other categories of documents that Qudos contends would assist in deciding whether to start a proceeding. 4. CONSIDERATION4.1 The dispute Qudos seeks preliminary discovery of a detailed list categories of documents pursuant to FCR 7.23. It submits that it has reason to believe that it may have the right to obtain relief in the Court from Infosys for infringement of copyright, breach of contract and misuse of confidential information. It relies on the affidavit evidence of Ms Hansen, who has deposed to such a belief. The basis upon which orders in accordance with FCR 7.23 are sought is apparent similarities between the AMB UX and that of the Qudos UX/UI and the underlying code for each. In summary, the contention is that those similarities signify that there has been a substantial reproduction of the copyright works owned by Qudos as well as violation of the confidence reposed in Infosys by Qudos when it disclosed information concerning its business and the UX/UI developed by HeathWallace, including internal Qudos business processes, process maps and data mapping and similar materials. As I have noted, Infosys does not challenge the proposition that Qudos reasonably believes that it has the right to obtain relief in respect of the alleged unauthorised use of the Qudos UX/UI when developing the AMB UX/UI. In this context, and without any admission that it has infringed copyright, misused confidential information or acted in breach of the Master Banking Services Agreement, Infosys accepts that Qudos has established the requisite belief for the purposes of FCR 7.23(1)(a). I accept that this is the case. The relevant question under this part of the rule is whether the prospective applicant has a reasonable belief that it may have the right to obtain relief; Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd [2017] FCAFC 193 (Allsop CJ, Perram and Nicholas JJ) at [17] and [69]-[70] (Allsop CJ) and [101]-[126] (Perram J). In that case Perram J said (emphasis in original): 120The following propositions about preliminary discovery applications should be accepted:(i)the prospective applicant must prove that it has a belief that it may (not does) have a right to relief;(ii)it must demonstrate that the belief is reasonable, either by reference to material known to the person holding the belief or by other material subsequently placed before the Court;(iii)the person deposing to the belief need not give evidence of the belief a second time to the extent that additional material is placed before the Court on the issue of the reasonableness of the belief. That belief may be inferred;(iv)the question of whether the belief is reasonable requires one to ask whether a person apprised of all of the material before the person holding the belief (or subsequently the Court) could reasonably believe that they may have a right to obtain relief; and(v)it is useful to ask whether the material inclines the mind to that proposition but very important to keep at the forefront of the inclining mind the subjunctive nature of the proposition. One may believe that a person may have a case on certain material without one’s mind being in any way inclined to the notion that they do have such a case.121In practice, to defeat a claim for preliminary discovery it will be necessary either to show that the subjectively held belief does not exist or, if it does, that there is no reasonable basis for thinking that there may be (not is) such a case. Showing that some aspect of the material on which the belief is based is contestable, or even arguably wrong, will rarely come close to making good such a contention. Many views may be held with which one disagrees, perhaps even strongly, but this does not make such a view one which is necessarily unreasonably held. Nor will it be an answer to an application for preliminary discovery to say that the belief relied upon may involve a degree of speculation. Where the language of FCR 7.23 relates to a belief that a claim may exist, a degree of speculation is unavoidable. The question is not whether the belief involves some degree of speculation (how could it not?); it is whether the belief resulting from that speculation is a reasonable one. Debate on an application will rarely be advanced, therefore, by observing that speculation is involved.