Samsung Electronics Co. Limited v Apple Inc

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FEDERAL COURT OF AUSTRALIA

Samsung Electronics Co. Limited v Apple Inc. [2013] FCA 1142

Citation: Samsung Electronics Co. Limited v Apple Inc.
[2013] FCA 1142
Parties: SAMSUNG ELECTRONICS CO. LIMITED and SAMSUNG ELECTRONICS AUSTRALIA PTY LIMITED ACN 002 915 648 v APPLE INC. and APPLE PTY LIMITED ACN 002 510 054
File number(s): NSD 315 of 2013
Judge(s): BENNETT J
Date of judgment: 4 November 2013
Catchwords:

PRACTICE AND PROCEDURE – application to rely on evidence filed out of time – nature and complexity of evidence – expansion of case – amendment of pleadings – imminent commencement of hearing – case management principles

EVIDENCE – application to rely on evidence of negotiations – whether evidence is excluded under s 131(1) – whether evidence is admissible under s 131(2) exceptions

EVIDENCE – exclusion of evidence under s 135 – probative value of evidence outweighed by s 135 factors

Legislation: Evidence Act 1995 (Cth) ss 131, 135, 192A
Competition and Consumer Act 2010 (Cth) s 46
Cases cited: Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175 applied
Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited (2010) 241 CLR 357 cited
Solahart Industries Pty Ltd v Solar Shop Pty Ltd (No 1) (2010) 88 IPR 337 applied
Date of hearing: 24 and 25 October 2013
Date of last submissions: 30 October 2013
Place: Sydney
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 158
Counsel for the Applicants: Mr NJ Young QC with Mr IS Wylie and Ms K Williams
Solicitor for the Applicants: Ashurst Australia
Counsel for the Respondents: Mr SCG Burley SC with Mr CA Moore SC and Mr C Dimitriadis
Solicitor for the Applicants: Herbert Smith Freehills

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 315 of 2013
BETWEEN:

SAMSUNG ELECTRONICS CO. LIMITED
First Applicant

SAMSUNG ELECTRONICS AUSTRALIA PTY LIMITED ACN 002 915 648
Second Applicant
AND:

APPLE INC.
First Respondent

APPLE PTY LIMITED ACN 002 510 054
Second Respondent

JUDGE:

BENNETT J

DATE OF ORDER:

4 NOVEMBER 2013

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.The Applicants’ application dated 6 September 2013 be dismissed with costs.

2.These reasons not be published and must be kept within the confidentiality regime agreed by the parties, until further order.

3.The parties email submissions regarding publication of these reasons to the Associate to Bennett J by 5.00 pm on 11 November 2013.

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


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 315 of 2013
BETWEEN:

SAMSUNG ELECTRONICS CO. LIMITED
First Applicant

SAMSUNG ELECTRONICS AUSTRALIA PTY LIMITED ACN 002 915 648
Second Applicant
AND:

APPLE INC.
First Respondent

APPLE PTY LIMITED ACN 002 510 054
Second Respondent

JUDGE:

BENNETT J

DATE:

4 NOVEMBER 2013

PLACE:

SYDNEY

REASONS FOR JUDGMENT

  1. The background of this case is, of course, well known to the parties and I do not propose to set…

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Details
Case
[2013] FCA 1142
Decision Date

CaseChat Overview and Summary

The Federal Court of Australia dealt with an application by Samsung Electronics Co. Limited against Apple Inc. regarding the admissibility of certain proposed lay evidence. The case revolves around allegations of patent infringement concerning Universal Mobile Telecommunications System (UMTS) standards, specifically around licensing obligations under the European Telecommunications Standards Institute (ETSI) and fair, reasonable and non-discriminatory (FRAND) terms. Apple alleges that Samsung has not offered to license its SEPs on FRAND terms, while Samsung denies this and seeks to introduce new evidence in its defence.

The court was tasked with deciding whether Samsung's proposed evidence, including statements from Mr Kim and Mr Korea, should be admitted. The key legal issues included the timeliness of the evidence, the potential for undue delay and prejudice to the proceedings, and the relevance and probative value of the proposed evidence against the risk of unfairness. The court needed to balance Samsung's right to present its defence against the principles of case management and the potential for disrupting the established hearing timetable.

In its reasoning, the court highlighted that Samsung had not provided a satisfactory explanation for the nearly 12-month delay in presenting the proposed evidence. The court found that allowing the new evidence would likely cause substantial delay and increased costs, disrupt the carefully set hearing timetable, and potentially prejudice Apple. The court emphasised the importance of case management principles and the discretion provided under section 135 of the Evidence Act. It concluded that the probative value of the proposed evidence was substantially outweighed by the danger of undue waste of time and unfair prejudice to Apple. Therefore, the court dismissed Samsung's application to admit the proposed evidence, with costs awarded against Samsung.

This decision underscores the importance of timely presentation of evidence and the potential consequences of late applications to introduce new evidence, particularly in complex litigation involving significant costs and resources.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

The other affidavits relevant to the subject matter of the Proposed Statements and the dates of their filing are as follows:CHRONOLOGY OF FILING (AND SERVICE) OF LAY EVIDENCE AS TO NEGOTIATIONS BETWEEN THE PARTIES It should be noted that the last of these affidavits was filed on 3 October 2012.THE PLEADINGS I shall only refer to the aspect of the pleadings of particular relevance to this application. The pleadings have been subject to a number of amendments. I shall refer to the pleadings as relied upon in the interlocutory application, dealing with amendments and the timing of those amendments as relevant. Broadly, the chronology of the pleadings is as follows: Samsung’s Notice of Cross-Claim for an Early Final Hearing (as originally filed in the proceeding commenced by Apple) and Amended Points of Cross-Claim for the Early Final Hearing are dated 13 February 2012 and concerned the alleged infringement of the three Samsung SEPs by various Apple devices. In its Defence to Samsung’s Points of Cross-Claim for Early Final Hearing, Apple relies on licensing and estoppel issues. The licensing issues concern membership of ETSI and its involvement in developing the Universal Mobile Telecommunications System (UMTS) standards. Put simply, this aspect of the case concerns, in part, the obligation of a member of ETSI to offer a licence on fair, reasonable and non-discriminatory (FRAND) terms for those patents defined as essential to adopt in order to conform to UMTS standards. Put, perhaps in its most basic and simplistic terms, Apple alleges that Samsung has breached its obligations and has not offered to Apple a licence on FRAND terms. Apple relies upon three matters on which it bases its allegation that Samsung has failed to comply with its obligations:·The offer made by Samsung on 25 July 2011, which proposed a specific royalty for each relevant end product (the 25 July 2011 Offer);·XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXX; and·The commencement of proceedings for an injunction against Apple in respect of Samsung’s three SEPs. Apple asserts that:XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXX, Apple has sought to reach agreement with Samsung Electronics regarding FRAND royalty terms inter alia in respect of any use of that Samsung UMTS declared essential patents [and that] at all material times, Apple has remained ready, willing and able to pay FRAND royalties to Samsung Electronics with respect to [Samsung’s SEPs]. Apple also asserts that Samsung has refused and continues to refuse to offer FRAND royalty terms. On 5 March 2012 Samsung filed a defence to Apple’s Amended Statement of Cross-Claim. The defence relevantly refers to another filed document, Samsung’s Reply to Apple’s Amended Defence to Samsung’s Amended Points of Cross-Claim for Early Final Hearing. In the defence Samsung admits ‘that the parties have not agreed a FRAND royalty rate for licencing of the patents’. XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXX.

Decision

Reasons for decision

I do not accept that the fact that, for these reasons and in the light of the various steps that Apple’s solicitor said would be necessary to respond to the proposed evidence, Apple has acted unreasonably in awaiting the outcome of this application and the receipt of all of the relevant material from Samsung before preparing the potentially complex evidence it would need to seek to file in response.CONCLUSION Samsung’s application to rely on the evidence of Mr Kim and Mr Korea takes place in the context of a case in which Samsung has always sought an early final hearing. In that context, Samsung has sought, a year after the date set for the filing of its evidence in relation to this part of the case, to rely on new evidence. They have provided no satisfactory explanation of the delay. The inclusion of the Proposed Statements would likely significantly extend and disrupt a carefully set hearing timetable. This would increase the parties’ costs and impact on the utilisation of the resources of the Court. For the reasons set out above, I am satisfied that, at the least, on the basis of the case management principles set out in Aon, the Court’s discretion should not be exercised in favour of admission into evidence of the Proposed Statements. Further, for the reasons outlined above and, in particular, because of the limited relevance of, and impact on the proceedings of, the evidence of Mr Korea, it is appropriate in my view to exercise the discretion in s 135 of the Evidence Act to refuse to admit the Proposed Statements. The probative value is substantially outweighed by the danger that the evidence is likely to cause, or result in an undue waste of time. Further, it is appropriate in my view to refuse to admit the proposed evidence on the basis that its probative value is substantially outweighed by the danger that it might be unfairly prejudicial to Apple. It follows that Samsung’s application should be dismissed with costs. Much of the evidence and submissions in this application is subject to a high level of confidentiality. For that reason, I will not publish my reasons until the parties have had an opportunity to consider them. It may be that the reasons can be redacted and subsequently published in redacted form. I will await submissions from the parties before any publication, which should be sent to my chambers within 7 days.

Ratio Decidendi

Legal Principle Established

The need for a satisfactory explanation has been emphasised in cases applying Aon. In Solahart Industries Pty Ltd v Solar Shop Pty Ltd (No 1) (2010) 88 IPR 337, Perram J refused an amendment application largely on the basis of the lack of any evidence of a satisfactory explanation.Consideration All matters relevant to the exercise of the Court’s discretionary power to permit the further proposed evidence and amendment to the pleading should be weighed, including:·This is not a case, even if it were sufficient, that payment of costs would in any way compensate the parties for the consequences of this application.·On any view, substantial costs would be wasted and it is more probable than not that the hearing date would need to be vacated, resulting in a substantial delay to a hearing that was originally sought by Samsung on an urgent final basis. Samsung has been given more than sufficient opportunity to agitate its case and to file its evidence prior to this application.·The litigation is well-advanced in that it commenced on 28 July 2011, with Samsung’s cross claim commenced 19 September 2011. There has been discovery; there have been multiple rounds of evidence, both lay and expert; the hearing dates have been allocated; the timetable for the calling of evidence of local and overseas witnesses have been put in place in circumstances where both parties have said that the process of timetabling for expert witnesses to attend and to meet and to prepare joint expert reports has been complex and not without difficulty.·Samsung has not given any good reason why the discretion should be exercised in its favour, other than submitting that they are entitled to raise these matters as a defence. In particular, Samsung has provided no good explanation as to the reason for the substantial delay in seeking to file this evidence. That delay is one of nearly 12 months and is still completely unexplained, despite numerous attempts to elicit an explanation during the hearing of this application.·Apple would need to be given the opportunity fully to consider the proposed evidence and Samsung’s proposed amended pleading. Apple would need to be given the opportunity to adduce further evidence in answer to the matters raised in relation to licensing correspondence and negotiations between Apple and Samsung extending well into 2013. ·Samsung cannot, as it apparently seeks to do, attempt to limit Apple’s response to the Proposed Statements (if admitted) to the evidence of Mr Watrous. XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXX. Apple is entitled fully to consider what its response would be, and that response is not necessarily limited to Mr Watrous’ evidence.·Apple has indicated that the likely extent of evidence that it may seek to adduce if the proposed evidence is allowed is not limited to Mr Watrous’s evidence. Apple’s solicitor has explained that XXXXX XXXXX XXXXX XXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXX and has stated that any lay evidence adduced by Apple relating to XXXXX XXXX XXXXX XXXXX XXXXX would take a significant amount of time to prepare and that such preparation might impact upon the present hearing timetable. ·Apple has also said that it would need to adduce further evidence from its licensing expert witness and further evidence from its economic expert witnesses. This would necessitate additional joint meetings between the experts, which would in turn necessitate new sets of conclave questions and a consideration of the witnesses’ availability to take part in such meetings and prepare such reports. Present indications are that at least some of Apple’s expert witnesses would have difficulty in making themselves available for additional meetings during the existing timeframe.·Apple says that it would require further discovery from Samsung in relation to the settlement correspondence and negotiations that are the subject of the Proposed Statements, and in particular would require Samsung to provide discovery in relation to XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX X XXXXX X.·Apple points to the need to investigate fully the confidentiality breaches and the relevance of those breaches to the matters raised in the Proposed Statements.