Upaid Systems Ltd v Telstra Corporation Limited (No 3)
[2016] FCA 227
•11 March 2016
FEDERAL COURT OF AUSTRALIA
Upaid Systems Ltd v Telstra Corporation Limited (No 3) [2016] FCA 227
File number(s): NSD 1698 of 2013 Judge(s): YATES J Date of judgment: 11 March 2016 Catchwords: PATENTS – standard patent for a convergent communications platform and method for mobile and electronic commerce in a heterogeneous network environment and standard patent for communication services
PRACTICE AND PROCEDURE – application to strike out particulars of infringement and for summary judgment – whether applicant has reasonable prospects of success in prosecuting case – whether particulars of infringement should be struck out as embarrassing or for failure to disclose a reasonable cause of action
Legislation: Federal Court of Australia Act 1976 (Cth) ss 31A, 37AF(1)
Federal Court Rules 2011 rr 16.21, 26.01, 34.42
Macquarie Dictionary (6th ed, 2013)
Cases cited: Butorac v WIN Corporation Pty Ltd [2009] FCA 1503
Dandaven v Harbeath Holdings Pty Ltd [2008] FCA 955
Garford Pty Ltd v DYWIDAG Systems International Pty Ltd (2015) 110 IPR 30; [2015] FCAFC 6
Spencer v The Commonwealth of Australia (2010) 241 CLR 118; [2010] HCA 28
Upaid Systems Ltd v Telstra Corporation Ltd (No 2) [2014] FCA 1377
Upaid Systems Ltd v Telstra Corporation Ltd (2013) 220 FCR 182; [2013] FCA 1441
White Industries Aust Ltd v Federal Commissioner of Taxation (2007) 160 FCR 298; [2007] FCA 511
Date of hearing: 11, 12 March 2015 Registry: New South Wales Division: General Division National Practice Area: Intellectual Property Sub-area: Patents and associated Statutes Number of paragraphs: 524 Counsel for the Applicant/ Cross-Respondent: Mr BN Caine QC with Mr C Burgess Solicitor for the Applicant/ Cross-Respondent: Allens Counsel for the Respondent/ Cross-Claimant: Mr RC Macaw QC with Mr AR Lang Solicitor for the Respondent/ Cross-Claimant: King & Wood Mallesons ORDERS
NSD 1698 of 2013 BETWEEN: UPAID SYSTEMS LTD
Applicant
AND: TELSTRA CORPORATION LIMITED (ACN 051 775 556)
Respondent
AND BETWEEN TELSTRA CORPORATION LIMITED
Cross-Claimant
AND: UPAID SYSTEMS LTD
Cross-Respondent
JUDGE:
YATES J
DATE OF ORDER:
11 MARCH 2016
THE COURT ORDERS THAT:
1.Pursuant to r 16.21 of the Federal Court Rules 2011 (the Rules), paragraph 1 (and all related subparagraphs) and paragraph 19 (and all related subparagraphs) of the consolidated particulars of infringement filed by the applicant on 5 November 2014 be struck out.
2.Pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth) (the Act) and r 26.01 of the Rules, judgment be given for the respondent in respect of the applicant’s claim for infringement of claim 1 of Patent No 2008203853.
3.Costs be reserved.
4.The proceeding be stood over for directions at 9.30 am on 26 April 2016.
5.The respondent file and serve any consolidated submissions on the question of costs by 4.00 pm on 24 March 2016.
6.The applicant file and serve any submissions in answer on the question of costs by 4.00 pm on 14 April 2016.
7.The respondent file and serve its submissions in reply, if any, on the question of costs by 4.00 pm on 21 April 2016.
8.Order 1 made on 6 November 2015 be extended until the determination of the respondent’s amended interlocutory application dated 26 October 2015.
9.Pursuant to s 37AF(1) of the Act, until the determination of the respondent’s amended interlocutory application dated 26 October 2015, the sub-headings below the headings “Pay with my Telstra mobile—pre-paid” and “Pay with my Telstra mobile—post-paid”; paras [47]-[48]; the last three sentences of para [50]; the last three sentences of para [52]; the third, fourth and fifth sentences and the last four words of para [56], and its immediate heading; paras [57]-[64] and their immediate headings; the second sentence of para [65]; the third to sixth sentences of para [70]; the first sentence of para [71]; the fifth, sixth and ninth to twelfth sentences and the last three words of the eighth sentence of para [74]; the fourth and seventh to tenth sentences and the last three words of the sixth sentence of para [75]; the last two sentences of para [79]; the last sentence of para [236] and para [238] of the reasons dated 11 March 2016, not be published and not be disclosed to any person other than in accordance with Order 1 made on 6 November 2015, as extended. This order is necessary to prevent prejudice to the proper administration of justice.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
BACKGROUND
[2]
RELEVANT LEGISLATION
[25]
THE PATENTS AND RELEVANT CLAIMS
[28]
The 853 patent
[28]
The 646 patent
[35]
TELSTRA’S EVIDENCE
[44]
Introduction
[44]
MOG subscriptions
[46]
Establishing a pre-paid Telstra mobile account
[49]
Establishing a post-paid Telstra mobile account
[51]
Creating a BigPond Music account
[53]
Pay with my Telstra Mobile—pre-paid
[56]
[Redacted]
[56]
[Redacted]
[57]
[Redacted]
[59]
[Redacted]
[60]
[Redacted]
[61]
Pay with my Telstra mobile—post-paid
[62]
[Redacted]
[62]
[Redacted]
[63]
[Redacted]
[64]
Subsequent months
[65]
Financial institution
[66]
Payment using a credit card
[70]
Pre-paid recharge; post-paid bill payment
[73]
Introduction
[73]
Pre-paid recharge
[74]
Post-paid bill payment
[75]
Financial institution
[76]
If the customer is roaming
[78]
Streaming / downloading music using MOG
[79]
Access network / transport network
[81]
UPAID’S EVIDENCE
[83]
Dr Nicholls
[84]
Mr Bagga
[88]
Mr Gibb
[92]
THE PARTICULARS
[95]
Upaid’s Particularised Case: claim 1 of the 853 patent
[109]
Introduction
[109]
Post-Paid Service Plans (Digital Purchase)
[110]
Pre-Paid Service Plans (Digital Purchase)
[123]
Post-paid bill payment
[129]
Pre-Paid Service Plans (Recharge)
[141]
International Roaming: Post-Paid Service Plans (Digital Purchase) / International Roaming: Pre-Paid Service Plans (Digital Purchase)
[153]
objections to the particularised case: claim 1 of the 853 patent
[154]
Introduction
[154]
Post-Paid Service Plans (Digital Purchase): the Type 1 infringement
[155]
Objection 1: The products the subject of the “transaction”
[155]
Telstra’s Submissions
[155]
Upaid’s Submissions
[157]
Consideration and Conclusion
[158]
Objection 2: “Convergent communications method”
[161]
Telstra’s Submissions
[161]
Upaid’s Submissions
[163]
Consideration and Conclusion
[172]
Objection 3: Determining and applying steps—the “payment rule”
[177]
Telstra’s Submissions
[177]
Upaid’s Submissions
[183]
Consideration and Conclusion
[191]
Objection 4: Charging and settling steps—“charging” and “settling”
[196]
Telstra’s Submissions
[196]
Upaid’s Submissions
[203]
Consideration and Conclusion
[208]
Objection 5: Charging and settling steps—utilising a “separate” financial network
[227]
Telstra’s Submissions
[227]
Upaid’s Submissions
[233]
Consideration and Conclusion
[239]
Objection 6: Settling step—“plurality of transaction providers”
[244]
Telstra’s Submissions
[244]
Upaid’s Submissions
[247]
Consideration and Conclusion
[248]
Pre-Paid Service Plans (Digital Purchase): the Type 2 infringement
[251]
Objections 1, 2 and 3
[251]
Objection 4: Charging and settling steps—“charging” and “settling”
[254]
Telstra’s Submissions
[254]
Upaid’s Submissions
[256]
Consideration and Conclusion
[261]
Objections 5 and 6
[265]
Post-Paid Bill Payment: the Type 3 infringement
[266]
Introduction
[266]
Objection 2: “Convergent communications method”
[267]
Telstra’s Submissions
[267]
Upaid’s Submissions
[269]
Consideration and Conclusion
[270]
Objection 3: Determining and applying steps—the “payment rule”
[271]
Telstra’s Submissions
[271]
Upaid’s Submissions
[273]
Consideration and Conclusion
[278]
Objection 4: Charging and settling steps—“charging” and “settling”
[281]
Telstra’s Submissions
[281]
Upaid’s Submissions
[285]
Consideration and Conclusion
[288]
Objection 5: Charging and settling steps—utilising a “separate” financial network
[306]
Telstra’s Submissions
[306]
Upaid’s Submissions
[307]
Consideration and Conclusion
[308]
Objection 6: Settling step—“plurality of transaction providers”
[311]
Telstra’s Submissions
[311]
Upaid’s Submissions
[312]
Consideration and Conclusion
[313]
Pre-Paid Service Plans (Recharge): the Type 4 infringement
[314]
Introduction
[314]
Objection 2: “Convergent communications method”
[315]
Objection 3: Determining and applying steps—the “payment rule”
[316]
Telstra’s Submissions
[316]
Upaid’s Submissions
[317]
Consideration and Conclusion
[319]
Objections 4, 5 and 6
[323]
International Roaming: Post-Paid Service Plans (Digital Purchase) / International Roaming: Pre-Paid Service Plans (Digital Purchase)
[324]
UPAID’S PARTICULARISED CASE: CLAIM 1 OF THE 646 PATENT
[326]
Introduction
[326]
A Pre-Paid Service User Acquiring a Third Party Product While Not Roaming
[327]
A Pre-Paid Service User Acquiring a Telstra Product While Not Roaming and Paying for it by Credit / Debit Card
[344]
A Pre-Paid Service User Making Phone Calls To / Receiving Phone Calls From A Non-Telstra Network
[356]
A Pre-Paid Service User Acquiring a Product While Roaming
[362]
A Pre-Paid Service User Using Data Services While Roaming
[364]
A Pre-Paid Service User Making / Receiving Phone Calls While Roaming
[366]
OBJECTIONS TO THE PARTICULARISED CASE: CLAIM 1 OF the 646 PATENT
[368]
Introduction
[368]
A Pre-Paid Service User Acquiring a Third Party Product While Not Roaming: the Type 1 infringement
[369]
Objection 1: “Commercial transactions”
[369]
Introduction
[369]
Telstra’s Submissions
[380]
Upaid’s Submissions
[386]
Consideration and Conclusion
[390]
Objection 2: “Plurality of networks of different types”
[400]
Telstra’s Submissions
[400]
Upaid’s Submissions
[402]
Consideration and Conclusion
[405]
Objection 3: “Charging” step
[409]
Telstra’s Submissions
[409]
Upaid’s Submissions
[410]
Consideration and Conclusion
[414]
Objection 4: “Dynamically calculating usage charges”
[419]
Telstra’s Submissions
[419]
Upaid’s Submissions
[422]
Consideration and Conclusion
[431]
A Pre-Paid Service User Acquiring a Telstra Product While Not Roaming and Paying for it by Credit / Debit Card
[441]
Objections 1, 2 and 3
[441]
Objection 4: “Dynamically calculating usage charges”
[442]
Objection 5: “Verifying” step
[443]
Telstra’s Submissions
[443]
Upaid’s Submissions
[447]
Consideration and Conclusion
[449]
A Pre-Paid Service User Making Phone Calls To / Receiving Phone Calls From A Non-Telstra Network
[454]
Objections 1 and 3
[454]
Objection 2: “Plurality of networks of different types”
[455]
Telstra’s Submissions
[455]
Upaid’s Submissions
[456]
Consideration and Conclusion
[457]
Objection 4: “Dynamically calculating usage charges”
[459]
Telstra’s Submissions
[459]
Upaid’s Submissions
[460]
Consideration and Conclusion
[461]
A Pre-Paid Service User Acquiring a Product While Roaming / A Pre-Paid Service User Using Data Services While Roaming: the Type 4 infringement and the Type 5 infringement
[462]
Introduction
[462]
Objections 1, 2, 3 and 4
[464]
Objection 6: Data services
[468]
Telstra’s Submissions
[468]
Upaid’s Submissions
[472]
Consideration and Conclusion
[473]
A Pre-Paid Service User Making / Receiving Phone Calls While Roaming: the Type 6 infringement
[476]
Objections 1 and 3
[476]
Objection 2: “Plurality of networks of different types”
[477]
Telstra’s Submissions
[477]
Upaid’s Submissions
[478]
Consideration and Conclusion
[479]
Objection 4: “Dynamically calculating usage charges”
[482]
WHAT CONSEQUENCES FOLLOW?
[483]
Overview: findings on claim 1 of the 853 patent
[483]
Overview: findings on claim 1 of the 646 patent
[490]
The parties’ submissions
[496]
Upaid’s Submissions
[496]
Telstra’s Submissions
[502]
Conclusion
[509]
DISPOSITION
[519]
YATES J:
The respondent, Telstra Corporation Limited (Telstra), moves pursuant to r 16.21 of the Federal Court Rules2011 (the Rules) for orders that the further amended statement of claim and consolidated particulars of infringement filed by the applicant, Upaid Systems Ltd (Upaid), be struck out. Telstra also moves pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth) (the Act) and, or alternatively, r 26.01 of the Rules for orders that judgment be given in its favour.
BACKGROUND
The proceeding was commenced on 21 August 2013 by Upaid filing an originating application, statement of claim and particulars of infringement. The particulars of infringement alleged that Telstra had infringed 53 claims of Patent No 2008203853 entitled “Convergent communications platform and method for mobile and electronic commerce in a heterogeneous network environment” (the 853 patent) and 53 claims of Patent No 770646 entitled “Communication services” (the 646 patent). On 11 October 2013, Telstra filed a defence, notice of cross-claim, statement of cross-claim and particulars of invalidity in respect of each patent.
On 16 October 2013, Telstra filed an interlocutory application seeking to strike out Upaid’s claim or, alternatively, seeking an order that Upaid provide further and better particulars.
On 8 November 2013, Upaid filed an amended statement of claim and amended particulars of infringement as well as a defence to Telstra’s statement of cross-claim.
On 23 December 2013, after a hearing conducted on 3 December 2013, I struck out Upaid’s amended particulars of infringement and ordered that it file (further) amended particulars of infringement by 28 February 2014: Upaid Systems Ltd v Telstra Corporation Ltd (2013) 220 FCR 182; [2013] FCA 1441 (Upaid No 1). In my reasons for judgment, I outlined a number of other background matters which I will not repeat here.
On 24 February 2014, by consent, the time for filing the amended particulars of infringement was extended to 14 March 2014. Subsequently, by consent, the time for filing the amended particulars of infringement was further extended to 17 March 2014.
On 17 March 2014, Upaid filed and served its amended particulars of infringement. These particulars alleged that Telstra had infringed 16 claims of the 853 patent and 11 claims of the 646 patent.
On 8 May 2014, Telstra served a request for further and better particulars in respect of the infringements as then particularised by the amended particulars of infringement.
On 12 May 2014, I ordered, by consent, that Telstra provide, by 28 May 2014, any further request for further and better particulars and that, by 2 July 2014, Upaid provide a response. On 29 May 2014, by consent, I extended the time within which Telstra was to make its request to 4 June 2014 and the time within which Upaid was to make its response to 9 July 2014.
On 5 June 2014, Telstra served separate requests for further and better particulars in respect of the alleged infringements of the 853 patent (the 853 request) and the alleged infringements of the 646 patent (the 646 request). The 853 request was 111 pages in length, containing 839 requests. The 646 request was 43 pages in length, containing 668 requests.
On 19 June 2014, Upaid served “replacement paragraphs” in respect of the amended particulars of infringement that had been filed on 17 March 2014. The “replacement paragraphs” related to the alleged infringements of the 853 patent.
On 26 June 2014, by consent, the time within which Upaid was to respond to the 853 request and the 646 request was extended to 23 July 2014.
On 4 July 2014, Telstra served a request for further and better particulars in respect of the “replacement paragraphs” which Upaid had served on 19 June 2014 (the supplementary request).
On 23 July 2014, Upaid served its response to the 646 request. On 25 July 2014, Upaid served its response to the 853 request. On 1 August 2014, Upaid served its response to the supplementary request. On 15 August 2014, Upaid served amended responses to these requests, correcting certain typographical errors.
On 28 August 2014, I ordered that, by 26 September 2014, Upaid provide Telstra with a draft consolidation of the particulars it had provided. I also ordered that, if Telstra did not consent to the consolidated particulars being filed, then Upaid was to file an interlocutory application seeking the requisite leave. I appointed 3 November 2014 for the hearing of any such interlocutory application. Other orders were made.
On 29 August 2014, Telstra provided Upaid with a document entitled “Outstanding deficiencies in Upaid’s particulars of infringement”. On 2 October 2014, Upaid provided a response to this document, entitled “Upaid’s Response to the Alleged Deficiencies Document”.
On 9 October 2014, Upaid filed an interlocutory application for leave to file the consolidated particulars.
On 29 October 2014, Telstra filed the present interlocutory application. The hearing originally appointed for 3 November 2014 in respect of Upaid’s interlocutory application for leave to file the consolidated particulars did not proceed. On that day, I granted leave to file the consolidated particulars and the matter was listed for directions on 13 November 2014. This step was taken in light of the filing of the present interlocutory application on 29 October 2014, and to facilitate the hearing of the application. On 5 November 2014, the consolidated particulars were filed. In subsequent paragraphs of these reasons, I refer to the consolidated particulars as, simply, the particulars.
On and after 18 November 2014, orders were made to bring the present interlocutory application to readiness for hearing. In that connection, Upaid sought discovery from Telstra. It also sought leave to interrogate. This was opposed (at least in part) and led to a contested hearing on 8 December 2014. Judgment was given in respect of that dispute on 16 December 2014: Upaid Systems Ltd v Telstra Corporation Ltd (No 2) [2014] FCA 1377 (Upaid No 2).
The present interlocutory application came before me for hearing on 11 and 12 March 2015. As originally appointed, the hearing was directed to the case that Upaid has particularised with respect to the alleged infringements of claim 1 of the 853 patent and claim 1 of the 646 patent. The purpose of doing this was to provide a relatively confined framework by which a number of pleading issues could be ventilated and Upaid’s particularised case examined in what is very complex patent litigation, involving a large number of alleged infringements, in which there have been significant and ongoing pleading disputes between the parties. In this connection, Upaid says (and Telstra does not seem to dispute) that the requests made by Telstra since the period 17 March 2014 (when Upaid filed its amended particulars of infringement) to 29 August 2014 (when Telstra served its document concerning outstanding deficiencies in the particulars) have amounted to 213 pages containing some 1,860 questions or requests. Upaid’s responses have amounted to 297 pages.
In Upaid No 1, I stressed the importance of proper particularisation of the alleged infringements, particularly in a case having the size and complexity of the present one. In directions hearings related to the present interlocutory application, I have expressed the hopeful expectation that, by deciding the pleading disputes in respect of claim 1 of each patent, there might be a resolution of at least some of the other pleading disputes between the parties concerning the alleged infringements of other claims of each patent. Certainly, this is likely to be the case where dependent claims are in issue.
In this connection I note that, in respect of the 853 patent, Upaid now sues on claim 1, and claims 5, 6, 8, 10 and 13 (which are each dependent on claim 1). It also sues on claim 30, and claims 32, 36, 37, 40 and 49 (which are each dependent, or in part dependant, on claim 30). It also sues on claim 33, and claims 36, 37, 38, 41 and 49 (which are each dependent, or in part dependent, directly or indirectly, on claim 33). It also sues on claim 51.
In respect of the 646 patent, Upaid now sues on claim 1, and claims 2, 3, 4 and 9 (which are each dependent on claim 1). It also sues on claim 11, and claims 12, 15, 50 and 51 (which are each dependent on claim 11). It also sues on claim 54.
The present interlocutory application involves a consideration of six broad categories of objections in respect of claim 1 of the 853 patent and six broad categories of objections in respect of claim 1 of the 646 patent. With respect to each patent, some of these objections raise common issues across different alleged types of infringement of the one claim.
RELEVANT LEGISLATION
Section 31A of the Act provides:
31A Summary judgment
(1)The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a) the first party is prosecuting the proceeding or that part of the proceeding; and
(b) the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding.
(2)The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a) the first party is defending the proceeding or that part of the proceeding; and
(b) the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.
(3)For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:
(a) hopeless; or
(b) bound to fail;
for it to have no reasonable prospect of success.
(4)This section does not limit any powers that the Court has apart from this section.
(5)This section does not apply to criminal proceedings.
Rule 26.01 of the Rules provides:
26.01 Summary judgment
(1)A party may apply to the Court for an order that judgment be given against another party because:
(a) the applicant has no reasonable prospect of successfully prosecuting the proceeding or part of the proceeding; or
(b) the proceeding is frivolous or vexatious; or
(c) no reasonable cause of action is disclosed; or
(d) the proceeding is an abuse of the process of the Court; or
(e) the respondent has no reasonable prospect of successfully defending the proceeding or part of the proceeding.
(2)The application must be accompanied by an affidavit stating:
(a) the grounds of the application; and
(b) the facts and circumstances relied on to support those grounds.
(3)The application and the accompanying affidavit must be served on the party against whom the order is sought at least 14 days before the hearing of the application.
(4)If an order is made under subrule (1) dismissing part of the proceeding, the proceeding may be continued for that part of the proceeding not disposed of by the order.
(5)If an order is made under subrule (1) giving judgment for the applicant against the respondent for the whole or part of the applicant’s claim, a respondent who has a cross‑claim against the applicant or some other party may:
(a) continue to prosecute the cross‑claim against the applicant or other party; and
(b) apply to the Court for an order staying execution on or enforcement of the judgment until the respondent’s cross‑claim is determined.
Note: See also section 31A of the Act.
Rule 16.21 of the Rules provides:
16.21 Application to strike out pleadings
(1)A party may apply to the Court for an order that all or part of a pleading be struck out on the ground that the pleading:
(a) contains scandalous material; or
(b) contains frivolous or vexatious material; or
(c) is evasive or ambiguous; or
(d) is likely to cause prejudice, embarrassment or delay in the proceeding; or
(e) fails to disclose a reasonable cause of action or defence or other case appropriate to the nature of the pleading; or
(f) is otherwise an abuse of the process of the Court.
(2)A party may apply for an order that the pleading be removed from the Court file if the pleading contains material of a kind mentioned in paragraph (1)(a), (b) or (c) or is otherwise an abuse of the process of the Court.
THE PATENTS AND RELEVANT CLAIMS
The 853 patent
The complete specification of the 853 patent describes the field of the invention as follows:
The present invention relates to a convergent communications system for providing services to individual and corporate customers worldwide. More specifically, the invention relates to a convergent communications system that provides mobile commerce, electronic commerce and communication services through existing communication switches without specific hardware located at those switches. This system supports the use of pre-paid and post-paid accounts across heterogeneous networks to provide a large range of advanced communication services regardless of a customer’s location.
Examples of convergence are discussed at [0096] of the complete specification (amongst other paragraphs):
Examples of convergence are to combine a variety of technologies and media together to provide a richer level of service. For example, converged communications can combine: different media, like voice, data, messaging; mobile, fixed or satellite voice, data, messaging offered by different service providers; mobile, fixed or satellite voice, data, messaging media offered by different service providers; mobile, fixed or satellite voice, data, messaging media offered by same service provider; and mobile, fixed or satellite voice, data, messaging offered by different service providers. Converged commerce includes combining telephone, internet, e-commerce or m-commerce. Converged service includes combining communications and commerce services. Converged billing can include such features as offering a single, integrated bill for all communications services, and charges for content or goods that are delivered. Converged commerce can also refer to integrating all charges for a transaction into one transaction and cost that includes such items as surcharges, taxes, telecommunications fees, etc. Converged service can also refer to offering a single help operator that can access, view and modify a customer’s account, even if the account does not reside on a local network.
The complete specification says (at [0098]) that:
… a convergent communications platform can allow a variety of technologies to merge, allowing for enhanced mobile commerce, electronic commerce and customer care.
The complete specification discusses post-paid and pre-paid telephone access accounts. It describes a post-paid account as one established on the basis of a customer’s creditworthiness. It says that, because of arrangements between operators of different telephone networks, post-paid account users are able to make long distance telephone calls or access their home network when roaming in a visiting network. The operator of the home network stands as payment guarantor for the calls made by its customers in the visiting network. Visiting networks provide a facility for making and receiving calls to the home network subscribers and collect, process and forward the usage data to the caller’s home network for payment. The home network then pays the visiting network. However, the periodical billing of post-paid customers and the collection of money from those customers, involves delays. It is in this way that the home network stands as payment guarantor to the visiting network for calls made by its customers.
The complete specification says that, due to this problem, the home network is able to offer roaming only to its post-paid customers whose creditworthiness is established. With the increase in the pre-paid subscriber base, network operators worldwide want to offer roaming services to their pre-paid customers as well. But, due to the inherent nature of non-real-time processing of call usage for roaming customers, operators are not in a position to offer true pre-paid roaming to their customers.
The invention seeks to deal with these and other problems.
Claim 1 of the 853 patent is:
A convergent communications method employing a rule set, comprising:
determining, for an authorized user, at least one payment rule applicable at that time for authorizing a transaction and resultant settling of an account of the authorized user in response to an instruction received via at least one communication network;
applying the at least one payment rule for authorizing the transaction;
charging the account, according to the at least one payment rule, in real time if the transaction is authorized; and
settling charges to the account by one of a plurality of transaction providers in accordance with at least one settlement rule, said charging and settling performed utilizing at least one financial network, separate from the at least one communication network.
The 646 patent
The complete specification of the 646 patent describes the field of the invention as follows:
The present invention relates to communication systems for providing services to individual and corporate subscribers worldwide. More specifically, the invention relates to an advanced intelligent communication system that provides subscriber‑requested services through existing communication switches even in those circumstances in which the hardware communication switch is not configured to provide such services. The system supports the use of personal identification number (PIN) access cards for use in fixed and mobile markets from any communication device located anywhere in the world and provides flexible call processing and switching services that deliver enhanced computer telephony capabilities, utilizing standard communication equipment and operating systems.
Advanced communication services are exemplified as call forwarding, call conferencing, and voicemail services.
The complete specification describes the following prior art deficiencies:
… because such services are dependent on telephone carrier equipment, and because not all telephone switches can presently support all available advanced communication services, many subscribers are still unable to take advantage of these services at their home or at their place of business. Furthermore, even though a subscriber may have such services available at his or her normal place for communication, the services may be unavailable should the user attempt access through another person’s communication device, a personal computer, a portable telephone, or a public phone. In other words, access to such services is extremely limited – restricted by the equipment in use, the equipment offered by the telephone carrier, and the prior sign-up by the particular subscriber.
The complete specification continues:
Specialized equipment and proprietary software are conventionally used to provide various advanced services on a telephone system, such as abbreviated dialing, password service, automatic alarm, multiline hunting, call forwarding (busy, no reply, unconditional, and selective), call accept (selective), call back, distinctive ringing, network voice mail, and interception service. When an analog telephone switch is used in the communication network, as is the case in many remote areas, few of these advanced services are available to the customer. Similarly, if a basic digital switch is used, some of the advanced services described above may not be available depending on the software of the digital switch.
The complete specification describes other deficiencies in the prior art systems (ie apart from hardware and software limitations). These include limitations introduced by the payment platform utilised by the customer. For example, while pre-paid calling cards have become a convenient method by which telephone calling services can be made available to customers worldwide, regardless of the telephone being used, such calling cards do not permit access to more advanced communication services such as voicemail, call forwarding or call conferencing. Another problem is the management, tracking and accounting of transactions associated with the use of telephone calling cards through which advanced communication services may be purchased.
The complete specification then says:
The preferred embodiments of the present invention overcome the problems associated with existing mechanisms for delivering advanced communication services to customers, with or without use of PIN access cards by providing an easily implemented, cost-effective, “open standards” telephony solution that provides value‑added services, such as voice mail, to people and businesses regardless of the sophistication of the switch to which they are connected, at a minimal cost to a local telephone company, service provider, or the subscribing consumer.
The complete specification also says that an object of the invention is to provide enhanced communication services to users, regardless of where the users may be located in the world and regardless of the equipment through which the communication services are directed.
The description of the preferred embodiments is detailed. One embodiment is described by reference to Figure 1. Figure 1 is a block diagram showing an embodiment of the invention that includes an advanced intelligent network platform executing proprietary software called CallManager and NetManager. The written description of this embodiment ranges over 10 pages. It includes many features.
Claim 1 of the 646 patent is:
A communication method using an enhanced services platform for providing pre-paid services and commercial transactions via a plurality of networks, comprising:
accepting, via the enhanced services platform, a request from an authenticated user for providing at least one of a communication service, a commercial transaction and user account information, the request originating from any one of a plurality of networks of different types;
verifying, via the enhanced services platform, that the authenticated user is authorized to receive the at least one of the communication service, the commercial transaction, and the user account information, and that an account associated with the authenticated user has a sufficient amount available for payment of the at least one of the communication service and the commercial transaction;
providing, via the enhanced services platform, the at least one of the communication service, the commercial transaction and the user account information based upon said accepting and verifying;
charging, via the enhanced services platform, an authorized account associated with the authenticated user for providing the at least one of the communication service and the commercial transaction, said charging including using rating engines for dynamically calculating usage charges associated with at least the communication service; and
processing, via the enhanced services platform, real-time settlement data for the at least one of the communication service and commercial transaction .
TELSTRA’S EVIDENCE
Introduction
Telstra has adduced evidence through various witnesses who have described Telstra’s systems relevant to Upaid’s allegations of Telstra’s infringement of claim 1 of each patent. The evidence includes a description of the process of purchasing a premium MOG subscription using an internet browser on a Telstra mobile device. As will be explained in more detail, MOG is a mobile service which Upaid alleges is, amongst other mobile services, implicated in a number of the infringements that have been particularised.
Telstra has prepared an outline of this evidence as it is relevant to the issues arising on this application. Upaid has not challenged Telstra’s evidence or the accuracy of the outline. My own reading of the outline satisfies me that it accurately summarises the evidence. For this reason, it is convenient to rely on the outline and to adopt it (with some minor modifications) as part of these reasons. My adoption constitutes findings of fact for the purposes of this application.
MOG subscriptions
MOG is a subscription music service offered by Telstra. For a monthly subscription price, customers are able to stream music on certain devices. They are also able to download music to their devices for off-line playback. MOG is available as a basic subscription or a premium subscription. There are a number of differences between them. For example, the premium subscription permits streaming and downloading to mobile devices using the MOG “app” whereas the basic subscription does not.
XXX XXXXX XX XXXXX XXXXX XXX XX XXXXX XXXXX X XXX XXXXX XXX XXX XXXXX XXXXX XXX XXX XXXXX XXXXX XX XXX XXXXX XX XXXXX XXXX XXXXX XXX XXXXX XXXXX XXXX XXX XXXXX XXXXX XXXX XX XXXXX XXXX XXXXX X XXX XXXXX XX XXXXX XXXXX XXX XXXXX XXXXX XX XXXX XXX XXX XXXXX XXXX XXXX XX XXXXX XXXXX X XXX XXXXX XXXXX XXX XXX XXXXX XX XX XXXXX XXXXX X XXX XXXXX XXX XXXX X XXXXX XXX XXXXX X XX XXX XXX XXXXX XX XX XXXXX X XXXXX X XXX XXXXX XX XXXXX XXX XXXX XXXXX XX XXX XXX XXXXX XX XX XXXXX XX XXX XXXXX XX XX XXX XXXXX XXX XXX XX XXXXX X XXX XXXXX XXXXX XXX
XXX XXXXX XX XXXXX XXXXX XXX XXXX XXXXX XXXXX XX XXXX XXXXX XXXX XXXXX XX XXXXX XX XXXX X XXXXX XXX XXXX XXX XXXXX XX XXXXX XXX XX XXXXX XXX X XXX XXXXX XXXXX XX XXXXX XX XXXXX XXX XXXXX XX XXXXX XXX XX XXXXX XXXX XXXXX XX XXXXX X XXXXX XXX XXXXX XX XXXXX X XXXXX XXX XXX XX XXXX XX XXXXX XXX X XXX XXXXX XXXXX XX XX XXX XX XXXXX XXXXX XXX XXXXX X XXXXX XXXX XXXXX XXX XXX XXXXX XX XX XXXXX XXXXX XX XXXXX XX XXXXX X XXXXX XXXX XXXXX XXX XX XXXXX X XXXXX XXX XX XXXXX XXXXX
Establishing a pre-paid Telstra mobile account
For a pre-paid account, the customer pays before acquiring a product or service. A pre-paid mobile account is typically established by purchasing a pre-paid mobile device and a pre-paid sim starter pack which includes an amount of credit in a pre-paid account for purchasing certain products or services for use on a mobile device and signing up for a pre-paid service plan on specified terms and conditions. The customer tops up the credit in the account from time to time.
After a pre-paid service is purchased, the customer’s account is activated. Typically, if a
pre-paid mobile package is purchased in a Telstra store, the Telstra staff member will activate the account. XXXX XXXX XX XXXXX XX XXXXX XX XX XXXXX XX XX XXXXX XXXX XXXXX XXX XXXXX XX XXXXX XX XXX XXXXX X XXXXX X XX XXX XXXXX XX XXXXX X XXXX XXXXX X XXXXX XX XXX XXXXX XXX XXXXX X XXXXX XXXX XXXX XXXXX X XXXXX XX XXXXX XX XXXXX XXXX XXXXX XX XXX XXXXX XX
Establishing a post-paid Telstra mobile account
For a post-paid account, the customer pays after acquiring a product or service. The customer selects a plan on specified terms and conditions under which the customer is billed periodically (typically monthly) for mobile products and services acquired in the preceding period.
As described above in relation to pre-paid mobile accounts, the user’s account is activated. When this is done, an account is created in the particular Telstra billing system which is used for post-paid accounts. XXX XXXXX XXXXX XXXX XX XXX XXXXX XX XXXXX XX XXX XXX XXXXX XX XXXXX XXXX XXXX XX XXX XXXXX X XXXXX XX XXX XXXXX XXXX XXXXX X XX XXXX XXXX XXX XXXXX XXXX XXXX X XXXXX X XXX XXXXX XXXXX XX XXXXX XXXXX XX XXXXX X XXXXX XX XXXXX XXXX XXXXX XX XXX XXXXX XX XXX XXXXX XXX XXXXX XX XXXXX X
Creating a BigPond Music account
A customer can purchase a premium MOG subscription using an internet browser on a mobile device by navigating to the website and clicking on the link for the premium MOG subscription. The price of the subscription is advertised on the web page, such that the customer is able to identify the price prior to requesting the subscription. Presently, a customer may choose to receive a 14 day trial, or skip the trial and purchase the subscription straight away. The latter alternative is discussed in this section of my reasons.
The customer must first establish a BigPond Music account. It is a profile for the use of the BigPond Music service, and includes the customer’s name, personal details and other aspects relating to the customer’s use of the MOG service. The BigPond Music account is not a billing account. It is not charged or billed and payments are not made to it. The Telstra accounts which are used in these processes are described in more detail below.
Once the customer has established a BigPond Music account, he or she is presented with three options for paying for the MOG subscription, namely: “Pay with my Telstra Mobile” (which can be pre-paid or post-paid), “Pay using a new credit card” or “Add to my BigPond Broadband Bill”. A BigPond Broadband account is associated with a broadband internet service, and is a different account from a Telstra mobile account, which is associated with a pre-paid or post-paid service plan. The following sections describe the process of paying with a Telstra mobile account (pre-paid and post-paid) and paying with a credit card.
Pay with my Telstra Mobile—pre-paid
[Redacted]
The customer inserts his or her mobile number in the field provided on the web page. If the request is not made from the mobile device itself, a further verification is required using an SMS message sent to the device. X XXX XXXXX XX XXXXX XXXXX XXX XX XX XXXXX XXXXX XXX XXXX XXX XXXXX X XXXXX X XX X XXXXX XXXXX XX XXXXX X XXXXX X XXXX XX XXX XXXXX XXX XX XXX XXX XXXXX X XX XXXX XX XXXXX XXXXX XX XX XXXXX XXX XX XXX XXXXX XXX XXX XXX XXXXX XX XXXXX XXX XXXXX XXX XXXXX X XX XXX XXXXX X XX XXXXX XXXX XX XXXXX XXXX XX X XXXX XX XXXXX XX XXXXX XX XXXXX X XX XXXX XXXXX XXXX XX XX XXX XXXXX XXXXX These prices have been previously specified for the products by the responsible group within Telstra and recorded by the appropriate platform. In the case of MOG, the price of $11.99 for the premium subscription service is a fixed price specified and advertised by the BigPond Music group and recorded in XXX XXXXX XX XXXXX XXXXX XXXX
[Redacted]
XXX XXXXX XXXXX XX XXX XXX XXXXX XX XXXXX XX XXX XXXXX X XX XXXXX X XX XXXXX XX XXX XXXXX XX XXXXX XXXXX XX XXXXX XXX XX X XXXXX XX XXXXX X XX XXXXX XXXXX XXX XXXXX XX XXXXX X XXXXX XX XXXXX XXXXX XXXX XXX XXXXX X XXXXX X XXX XXXXX XXXXX XXX XXXXX XXXXX X XXXXX XX XXXXX X XXX XXXX XXXXX XXX XX XXXXX X XXXXX X XXXXX XX XXXXX XX XXXXX X XXX XXXX XXXXX XXX XXXXX XXXXX XX XXXXX XXXX XXXXX XX XXXXX XX XXXXX XXXX
XXXX XXX XXX XXXXX XXXXX XXX XXXXX XXXXX XXXXX XXX XXXXX XX XXX XXXXX XX XXXXX XX XX XXXXX XXXXX XX XXX XXXXX XX XXXXX X XXX XXXXX X XX X XXXXX X XXXXX XXX XX XX XXXXX X XXX XXXXX XXXXX XXX XXX XXXXX XX XX XXXXX X
[Redacted]
XXXX XXXXX X XXXXX X XXXXX XX X XXX XX XXX XXXXX XXX XXXX XX XXXXX XXX XX XXXX XXXXX X XXXX XXXXX X XXXXX X XXX XXXXX XXX XXX XXXXX XXXXX XXXXX XX XX XXX XX XXX XXXXX XX XXX XXX XXXXX XXXXX XX XXXXX X XXXXX XXXX X XXXXX XX XX XXXX XXXXX XXXXX XXXXX XX XXX XXXXX XX XX XXXXX XXXXX X XX XX XX XXXX XX XXXXX XXXXX XX XX XXXXX XXXXX XXX XXX XXXXX XXX XX XXXXX XXX XX XXXXX XXX XXX XX XXX XXXXX XXX XXXXX XX XX XXXXX XXX
[Redacted]
XX XXX XXXXX XX XX XXXXX XXXXX X XXXXX X XXXXX XX XXX XXXXX X XX X XXXXX XX XXX XXXXX XXXXX XXXXX XX XXX XXX XXXXX XX XXXXX XX XX XXXXX XX XXXXX XXXXX XX XX XXXXX XXXXX XXXX XXX XXXXX XXX XXXXX XXXXX XXXXX XXXX XX XXX XXXXX XXXXX XXXXX XXX XXXXX X XXXXX
[Redacted]
XXXXX X XXXXX XXX X XXXXX XXXXX XX XX XXXX XXXX XXX XXXXX XXX XXXX XXXXX XXX XXXX XXXXX XXXXX XX XX XXXXX XXXXX XX XX XXX XXXXX XX XXXXX XXXXX XXX XXX XXX XXX XXXX XXX XXXXX XX XXXXX XXXXX XXX XXXXX X X XXXXX X XX XXX XXXXX XXXXX XXXXX XXXXX XX XXX XXXXX X XX XXX XXXXX XXXXX XXXXX XXXXX XX XXX XXXXX XX XXXX XX XX XXXXX XX XXXX X XXXXX X XXXXX XXX XX XXXXX X XXXXX XXXXX XX XXX XXX XXXXX XXX XXX XXX XXXXX XXX XX XXXXX XXXX XX XXX XXXXX XX XXXXX XXXXX XX XX XXXXX XX XXX XXXXX XX XX XXX XXXXX XXXXX XX XX XXXXX XX
Pay with my Telstra mobile—post-paid
[Redacted]
XX XXX XXXX XX XXXXX XXXXX X XXX XXXXX XXXXX XX XXXXX X XXXXX XXXX XXXXX X XXXXX XXX XXXX XXX XXX XXXX XXXXX XX XXX XXXX XXXXX XXXX XX XXX XXXXX XXX XXXXX XXX XXXXX XXXX XXXXX X XXX XXXXX XX XXXXX XX XXX XXXXX XX XXXX XXXXX X XX XX XXX XXXXX XXXXX XXXXX XX XXXXX X XXX XXXXX XXXX XXXXX XXXX XXXXX X XXXXX X XXXX XX XXXXX XXX
[Redacted]
XXXXX X XXXX XXXXX XX XXXXX XXX XXX XXXXX X XXXX XXXX XXX XXXXX XX XXX XXXXX X XX X XXXXX XXXXX XX XXX XXXXX XXXXX
[Redacted]
XXXX XXX XXXXX XXX XXXX XXXXX XXXX XXXXX X XXXX X XXXXX XX XXXXX XXX X XXXXX XXXXX XX XX XXXX XXXX XXX XXXXX XXX XXXX XXXXX XXX XXXX XXXXX XXXXX XX XX XXXXX XXXXX XX XX XXX XXXXX XX XXXXX XXXXX XXX XXX XXX XXX XXXX XXX XXXXX XX XXXXX XXXXX XX XXXXX XX X XXXXX X XX XXX XXXXX XXXXX XXXXX XXXXX XX XXX XXXXX XX XXXX XX XX XXXXX XX
Subsequent months
The MOG subscription continues on a monthly basis unless cancelled by the customer. XX XXX XXXXX XX XXXXX XXXXX X XX XXX XXXXX XXXXX XX XXXXX XXX XXXXX XX XXXXX XXXXX XXX XXXXX XXXX X XXXXX X XXX XXX XXXXX XX XXXXX XXXX XXXXX XXX XXXXX XXX XXX XXXXX XXXX XXXXX X XXXXX XXX XX XXXXX XXXX
Financial institution
The processes described in [53]-[65] above do not involve at any stage:
·verifying that any amount owed to Telstra will be paid by a financial institution;
·utilising any information obtained from such a verification;
·interrogating or communicating with the network of a financial institution; or
·recording to a customer’s account that an amount owed to Telstra will be discharged by a financial institution.
The only verification steps which are applied in order to permit the transaction to proceed involve the customer’s Telstra account, as described above, not the account of a financial institution.
In the case of a pre-paid mobile account, the processes described above do not involve any interrogation or recording of the manner in which the customer supplied the credit available in the Telstra pre-paid account. In the case of a post-paid mobile account, the processes described above do not interrogate or record the manner in which the customer will ultimately pay his or her bill.
Paragraphs [66]-[68] above apply equally to any other product purchased using the customer’s pre-paid or post-paid mobile account.
Payment using a credit card
When the customer chooses “pay using a new credit card”, the customer is prompted to enter his or her credit card details. The credit card payment process uses Telstra’s “Billpay" system. XXXXX XX XXXXX XXX XXXXX XX XXX XXXXX XX XX XXXXX XXXXX XX XXX XXXXX XXXX XXXXX XXXX XX XXXX XX XXXXX XX XX XXXXX XXXXX XX XX XXX XXXXX XXX XXXXX XXXXX XXX XXXXX XX XX XXXXX XXXX XXX XXXXX XX XXXXX XXXXX XX XX XXX XXXXX XX XXXXX XXXXX XXX XXXX XXX XXXXX XX XXX XXXX XXXXX XXXXX X XXX XXXXX XX XXXXX XXX XXXXX XX XXX XXX XXXXX XXXXX XX XXX XXXXX XX XXXX XX XX XXXXX XX XXXXX XXXXX XXXXX X XX XXX XXX XXXXX XX XXX XXX XXX XXXXX XXXX
XXXXX XX XXXX XXX XXXXX XX XXX XXX XXXXX XX XXXXX XXXX It is a system for making payments. The process of making a credit card payment for a MOG subscription does not involve a Telstra customer account, and does not involve Telstra’s account billing systems.
This is an ordinary use of a credit card account with a bank to order services.
Pre-paid recharge; post-paid bill payment
Introduction
The following paragraphs describe the process of recharging a pre-paid account and paying a bill for a post-paid account.
Pre-paid recharge
A pre-paid mobile account can be topped up in a variety of ways. The terms and conditions for recharging the account, including how the account can be recharged and the timing of payments, are specified in the terms and conditions for the pre-paid plan. One way of topping up the account is by making an ad hoc payment at a time and in an amount of the customer’s choosing using the online service at The customer can access his or her account details using this service by entering a username and password associated with the account. XXX XXXXX X XXXXX XX XXXX XX XXXXX XXXXX X XXXXX XX XXXXX X XXXXX XX XX XXXX XXX XXXXX XXXX XXX XXXXX XXXXX XXXXX XX XXXXX XX XXXX XXXXX XX The customer can then navigate to the payment function. Upon requesting a credit card payment, the customer is directed to a website operated by XXX XXXXX XX XXXXX XX XXXXX XX XXXXX XXX XXXXX XX XXX XXXXX XX XX XXXXX XXXXX XX XXX XXXXX X XXXX XXXXX XXXX XX XXXX XX XXXXX XX XX XXXXX XXXXX XX XX XXX XXXXX XXXX XX XXX XXX XXXXX XX XX XXXXX XXX XXX XXXXX XX XXXXX XXXXX XX XX XXXXX X XXXX XXX XXXXX XX XXX XXXX XXXXX XXXXX X XXXXX X XXXXX XX XXX XXXXX XXXXX XXXXX XXX XXXXX X XXXXX XX XXX XXXXX XXXX XXX XXXXX XX XXXXX XXXXX XX A payment may be made successfully in this way regardless of the amount of the payment or the time at which payment is made, as the customer is free to choose the amount and timing of ad hoc recharges.
Post-paid bill payment
A bill for a post-paid mobile account can be paid in a variety of ways. The terms and conditions for paying the bill, including how the bill can be paid, and the time for paying the bill, are specified in the terms and conditions for the post-paid plan. One way of making a bill payment is by making a credit card payment using the online service at as described above in relation to pre-paid mobile accounts at a time and in an amount of the customer’s choosing. XX XXX XXXX XX XXXXX XXXX XXXXX X XXXXX XXXX XXX XXXXX XXXX XXX XXXXX XX XXXXX XX XXXX XXXXX X XXXX X XXXXX XXX XX XXX XXXX XXX XXX The customer can then navigate to the payment function. Upon requesting a credit card payment, the customer is directed to a website operated by XXX XXXXX XX XXXXX XX XXXXX XX XXXXX XXX XXXXX X XXX XXXXX XX XX XXXXX XXXXX XXX XXX XXXXX X XXXX XXXXX XXXX XX XXXX XX XXXXX XX XX XXXXX XXXXX XX XX XXX XXXXX XXXX XX XXXX XXX XXXXX XX XX XXXXX XXX XXX XXXXX X XXXXX XXXXX XX XX XXXXX X XXXX X XXXXX XX XXXX XXX XXXXX XX XXX XXXX XXXXX XXXXX X XXXXX X XXXX X XXXXX XX XXXXX XX XXX XXXXX XXXXX XXXXX XXX XXXXX X XXXXX XX XXX XXXXX XXXX XXX XXXXX XX XXXXX XXXXX XX A payment may be made successfully in this way even if it is after the date due for payment, or for an amount less than the amount of the bill.
Financial institution
The processes described in [74]-[75] above do not involve:
·verifying that any amount owed to Telstra will be paid by a financial institution;
·utilising any information obtained from such a verification.
Rather, when the customer selects the option of paying using their credit card, Billpay contacts the relevant card issuer and if the payment is authorised, executes the payment. There is no separate verification step occurring prior to this.
If the customer is roaming
The processes described at [53]-[75] above are no different if the customer is roaming. The customer may incur roaming charges for using the internet in the course of purchasing the MOG subscription. However, the process of obtaining and paying for the MOG subscription is the same.
Streaming / downloading music using MOG
The transmission of data to a Telstra mobile device may be metered or unmetered. Charges are applied to mobile accounts for metered data sessions. XXX XXXXX XX XXX XXXXX XXXXX XXX XXX XXXXX XX XX XXXXX X XXXX XXXXX XXX XXXXX X XXXXX XXXX XX XXXX XXXX XXXXX XXXX XXXXX X XXXXX XXXX XXXX XX XXXXX XXXX XX XXX XXXXX XX XX XXXXX XXXXX XX XXXXX XX XXXXX XXXXX XX XXXX
Some Telstra products involve metered data sessions and others are unmetered. In the case of MOG, once a MOG subscription has been purchased, Telstra does not charge for the usage of MOG. The usage of data as part of the MOG service in Australia is unmetered.
Access network / transport network
The particulars include the following definition of “access network” and “transport network” as applied to Telstra’s 3G, NextG and 4G mobile telecommunications networks:
In general terms, the access network is the part of the network that conveys the communication from the user to a mobile telecommunications tower using the radio spectrum and the transport network is the part of the network that conveys the communication from the tower to the recipient (who may be receiving the communication through use of a separate access network).
A customer’s request to purchase a MOG subscription, or to recharge a pre-paid account, or to pay a post-paid account bill, as described above, does not originate from Telstra’s transport network, so understood. The request originates from the user’s device, which must first use the access network in order to communicate on the network. The transport network is used to transport the request from one part of the network to another after the request has been initiated.
UPAID’S EVIDENCE
Upaid relied on evidence from:
·Robert John Nicholls;
·Amant Singh Bagga; and
·Stephen Gibb.
Dr Nicholls
Dr Nicholls is an engineer specialising in communications technologies. He described himself as a “consultant in the field of technology, associated strategy and access regulation in the communications and networked industry sectors.”
He is a Research Fellow at the Institute for Social Research at Swinburne University of Technology where his research seeks to identify and assess the economic and policy consequences of innovative wireless applications. He is also a Research Fellow at the Centre for International Finance and Regulation where he investigates the intersection between financial services regulation and competition law. Since July 2012, he has been the Independent Telecommunications Adjudicator, handling and investigating certain disputes between one or more Telstra Wholesale Customers and Telstra. He is also a member of the NBN Co arbitration pool.
Dr Nicholls made an affidavit concerning the 853 patent and the 646 patent. He set out his understanding of a number of expressions used in claim 1 of each patent. He discussed a number of background matters relevant to each claimed invention.
Telstra provided a list of objections to Dr Nicholls’ evidence, although I was not asked to rule on these objections at the hearing. In general terms, Telstra submits that the admissibility and weight of Dr Nicholls’ evidence is affected by a number of matters. First, Telstra submits that Dr Nicholls purports to give evidence of the construction and application of ordinary words which are not, and not said to be, terms of art. Secondly, Telstra submits that Dr Nicholls frequently expresses opinions which are no more than assertions which are either not supported by reasoning or not supported by matters of expertise. Thirdly, Dr Nicholls was presented with the particulars at the time of receiving his instructions from Upaid’s solicitors, and was asked to express his views having read that document. I will deal with relevant aspects of Dr Nicholls’ evidence when considering Upaid’s responses to the various objections to the particulars on which Telstra relies. However, for the avoidance of doubt, I will admit the following paragraphs (or parts of paragraphs) of Dr Nicholls’ affidavit subject to a limitation under s 136 of the Evidence Act 1995 (Cth) that they be treated as submission only: 60 (second to fourth sentences), 63 (second sentence), 65-69, 70 (second and third sentences), 74 (second sentence), 78 (second sentence), 99 (second and third sentences), 105 (second sentence), 106 (third to fifth sentences), 112 (second sentence), 113, 115 (second sentence), 116, 117 (second sentence to end of paragraph), 119-120, 136, 138-146, 149-159, 172-179, 181-183, 186-193, 198, 203-205, 207, 208 (all but first sentence), 212, and 215-220. I admit paragraphs 102-104 over Telstra’s objection.
Mr Bagga
Mr Bagga is a project analyst in the Applied Legal Technology Team at Upaid’s solicitors. He made an affidavit in which he described various activities he undertook in connection with a Telstra pre-paid plan and a Telstra post-paid plan.
With respect to the pre-paid plan, Mr Bagga described:
·subscribing to the plan;
·purchasing a premium MOG subscription using a debit card;
·attempting to purchase a premium MOG subscription using incorrect credit card details;
·subscribing for a free trial of a MOG subscription using a credit card;
·cancelling and resuming a MOG trial subscription;
·purchasing a premium MOG subscription using pre-paid credit on the plan;
·attempting to purchase a premium MOG subscription using pre-paid credit from another pre-paid plan;
·using MOG on a pre-paid plan; and
·recharging a pre-paid plan using MyAccount.
With respect to the post-paid plan, Mr Bagga described:
·subscribing to the plan;
·purchasing a premium MOG subscription using a credit card;
·purchasing a premium MOG subscription using the Telstra account associated with the plan;
·attempting to purchase a premium MOG subscription on the plan using pre-paid credit from a pre-paid plan; and
·bill payment.
Mr Bagga also described purchasing a basic MOG subscription on a notebook computer using a credit card.
Mr Gibb
Mr Gibb is Upaid’s Chief Information Officer. He made an affidavit in which he described various activities he undertook in connection with a Telstra pre-paid plan and a Telstra post-paid plan.
With respect to the pre-paid plan, Mr Gibb described:
·purchasing a MOG subscription using a credit card while roaming in the United States;
·purchasing a MOG subscription using a credit card while roaming in France;
·purchasing a MOG subscription using a credit card while roaming in the United Kingdom;
·using MOG while roaming in the United States; and
·using MOG while roaming in France.
With respect to the post-paid plan, Mr Gibb described:
·purchasing a MOG subscription using a credit card while roaming in France; and
·purchasing a MOG subscription using the Telstra account associated with the plan while roaming in France.
THE PARTICULARS
In Upaid No 1, I discussed the requirement of r 34.42(3) of the Rules that particulars of infringement of a standard patent must give at least one instance of each type of infringement alleged. I also discussed what constitutes a “type” of infringement: see at [26]-[43]; see also [67]-[74] thereof.
The particulars in relation to the infringement of claim 1 of the 853 patent specify six types of infringement, designated as:
·Post-Paid Service Plans (Digital Purchase);
·Pre-Paid Service Plans (Digital Purchase);
·Post-Paid Bill Payment;
·Pre-Paid Service Plans (Recharge);
·International Roaming: Post-Paid Service Plans (Digital Purchase); and
·International Roaming: Pre-Paid Service Plans (Digital Purchase).
As particularised, the last two types of infringement concerning international roaming are essentially the same as the first two types of infringement, except that the user is engaged in international roaming. The particulars do not appear to identify any material difference arising from the fact of international roaming other than that a connection is made across heterogeneous networks. The existence of heterogeneous networks is not of relevance to the present application. Telstra says that, as a matter of fact, its systems operate no differently in relevant respects when a customer is engaged in international roaming. Subject to one matter referred to [325] below, Upaid has not challenged that proposition. For this reason, Telstra has not treated the last two types of infringement differently from the first two types, respectively.
The particulars in relation to the infringement of claim 1 of the 646 patent also specify six types of infringement, designated as:
·A Pre-Paid Service User Acquiring a Third Party Product While Not Roaming;
·A Pre-Paid Service User Acquiring a Telstra Product While Not Roaming and Paying for it by Credit / Debit Card;
·A Pre-Paid Service User Making Phone Calls To / Receiving Phone Calls From A Non-Telstra Network;
·A Pre-Paid Service User Acquiring a Product While Roaming;
·A Pre-Paid Service User Using Data Services While Roaming; and
·A Pre-Paid Service User Making / Receiving Phone Calls While Roaming.
The particulars are 171 pages in length. They are prefaced by a number of definitions. The particulars also contain schedules.
It is necessary to refer to only some of the definitions.
A Financial Provider is defined as a financial institution described in Part C of Schedule 1 to the particulars (Schedule 1).
Post-Paid Service Plans are defined by reference to a description of 12 post-paid service plans offered by Telstra for individuals and 17 post-paid service plans offered by Telstra for small business identified in Part A1 of Schedule 1.
Pre-Paid Service Plans are defined by reference to a description of five pre-paid service plans identified Part A4 of Schedule 1.
Telstra’s Communications Network is defined as at least one of Telstra’s 3G, NextG and 4G mobile communications networks. These networks include one or more access networks and one or more transport networks. An access network is the part of the network that conveys the communication from the user to a mobile telecommunications tower using the radio spectrum. The transport network is the part of the network that conveys the communication from the tower to the recipient. The recipient may be receiving the communication through a separate access network.
A user account and similar expressions mean one or more accounts within Telstra’s system which correspond to or are associated with a Post-Paid Plan or a Pre-Paid Plan to which a user has subscribed.
Parts A2, A3, A5 and A6 of Schedule 1 list and describe certain data packs that are relevant to Upaid’s particularised case.
Part B1 of Schedule 1 lists 29 services provided by Telstra and Part B2 lists seven services provided by third parties that are relevant to Upaid’s particularised case.
Schedule 2 to the particulars (Schedule 2) identifies and lists 44 enhanced communication services that are relevant to Upaid’s particularised case.
UPAID’S PARTICULARISED CASE: CLAIM 1 OF THE 853 PATENT
Introduction
The following is a summary of each type of infringement of claim 1 of the 853 patent as particularised. I have included a reference to the relevant paragraph numbers in the particulars.
Post-Paid Service Plans (Digital Purchase)
This alleged type of infringement concerns the purchase of products using the user’s
Post-Paid Service Plan with Telstra.
Members of the public have subscribed to certain Post-Paid Service Plans (described in Part A1 of Schedule 1) and have thereby become authorised by Telstra to use Telstra’s Communications Network. Certain data packs (described in Parts A2 and A3 of Schedule 1) and mobile services (described in Part B of Schedule 1) are available to authorised users for purchase. The particulars refer to the Post-Paid Service Plans, data packs and mobile services as, collectively, “products”: paras 1.2 and 1.3.
The products are supplied by Telstra or third parties. The products provided by third parties are provided by third parties to Telstra for sale (or other provisions) to Telstra’s customers: para 1.4.
Telstra is a transaction provider for all products provided by Telstra and for all transactions where the authorised user pays Telstra as part of the transaction (ie where the price for the product is charged to the user’s Telstra account). Both Telstra and third parties act as transaction providers for products provided by third parties. A Financial Provider is also a transaction provider in all transactions: para 1.4.
Authorised users have instructed Telstra via Telstra’s Communications Network that they wish to purchase a product from among those described: para 1.6.
Telstra has determined for each authorised user at least one payment rule from a rule set by which the price to be charged to the user’s Telstra account for the transaction, together with provisions by which the user will be required to pay the amount, is determined: para 1.7.
In response, Telstra has applied the payment rule and thereby approved the user to purchase the product at the price and on the terms specified. This constitutes Telstra “authorising” the transaction: para 1.8.
Telstra has verified with a Financial Provider via a financial network (of that Financial Provider) that the amount owed to Telstra will be paid by the Financial Provider. The financial network is separate from Telstra’s Communications Network: para 1.8A.
Telstra has supplied the product to the approved authorised user and, using the verification information (see para 1.8A), charged, in real time, the user’s Telstra account in accordance with the payment rule (ie Telstra has recorded the price for the acquisition of the product as a debit against the user’s Telstra account). The user has a contractual obligation to pay to Telstra the amount charged: para 1.9.
Telstra has determined at least one settlement rule from a rule set by which an amount for the product will be settled to the user’s Telstra account and the amount owed to Telstra will be paid by a Financial Provider: para 1.10.
Using the verification information (see para 1.8A), Telstra has settled the value of the user’s Telstra account in accordance with the settlement rule, thereby settling the charge by recording to the user’s Telstra account that the obligation to pay Telstra will be discharged by the Financial Provider: para 1.11.
In the additional particulars relating to paras 1.1-1.11, Upaid says that “by providing telecommunications services together with other services such as data and multimedia to authorised users, as described in paragraphs 1.1-1.11, Telstra is using a convergent communications method”: (para (a)). Upaid also says that the rule set employed in the method includes one or more rules for payment, as described in para 1.7, and one or more rules for settlement, as described in para 1.10: para (b).
In the context of the allegations of infringement of claim 1 of the 853 patent, I will refer to this alleged type of infringement as the Type 1 infringement.
Pre-Paid Service Plans (Digital Purchase)
This alleged type of infringement concerns the purchase of products using the user’s
Pre-Paid Service Plan with Telstra.
Members of the public have subscribed to certain Pre-Paid Service Plans (described in Part A4 of Schedule 1) and thereby become authorised by Telstra to use Telstra’s Communications Network. Certain data packs (described in Parts A5 and A6 of Schedule 1) and mobile services (described in Part B of Schedule 1) are available to authorised users to purchase. The particulars refer to the Pre-Paid Service Plans, data packs and mobile services as, collectively, “products”.
The description of this type of infringement corresponds closely to the description of the Type 1 infringement summarised at [110]-[122] above. Specifically, paras 1.15-1.22 of the particulars correspond to paras 1.4-1.11, respectively, and additional paras (a) and (b) relating to paras 1.12-1.22 correspond to additional paras (a) and (b) relating to paras 1.1-1.11, respectively, subject to the following important exceptions.
First, authorised users have instructed Telstra via Telstra’s Communications Network that they wish to purchase a product among from those described: para 1.17.
Secondly, with respect to charging, Telstra has supplied the product to the authorised user and, using the verification information (see para 1.19A), charged, in real time, the authorised user’s Telstra account in accordance with the payment rule (ie Telstra has recorded the price for the acquisition of the product as a debit against the user’s Telstra account “and/or decremented [the account] by the amount of the price charged for [the transaction]”). The user has a contractual obligation to pay to Telstra the amount charged: para 1.20.
In the context of the allegations of infringement of claim 1 of the 853 patent, I will refer to this alleged type of infringement as the Type 2 infringement.
Post-Paid Bill Payment
This alleged type of infringement concerns paying a bill issued by Telstra in relation to the user’s Post-Paid Service Plan with Telstra.
Telstra has billed authorised users of its Post-Paid Service Plans (see [102] above) for products purchased by those users. Each activity by which an authorised user pays a bill constitutes a transaction: para 1.23.
Authorised users have instructed Telstra via Telstra’s Communication Network that they wish to pay a bill that has been rendered by Telstra: para 1.24.
Telstra has determined for each authorised user at least one payment rule from a rule set by which the value adjustment of the user’s Telstra account for the transacation, together with the time at which the authorised user will be required to pay that account, is determined. The value adjustment refers to the fact that the value of the user’s Telstra account will be adjusted to reflect the amount of the bill which will be paid: para 1.25.
In response, Telstra has applied the payment rule and thereby approved the authorised user’s bill payment. This constitutes Telstra “authorising” the transaction: para 1.26.
Telstra has verified with a Financial Provider via a financial network (of that Financial Provider) that the amount owed to Telstra for the bill will be paid by the Financial Provider. The financial network is separate to Telstra’s Communications Network. The authorised user has a contractual obligation to pay to Telstra the amount stated on the bill: para 1.26A.
Where a user has paid a bill using a Financial Provider, Telstra and the Financial Provider are transaction providers: para 1.27.
Telstra has applied the payment rule to effect payment of the bill. It has charged the approved authorised user’s Telstra account in real time, using the verification information (see para 1.26A): para 1.28.
Telstra has determined at least one settlement rule from a rule set by which payment of the bill will be credited to the user’s Telstra account and the amount owed to Telstra will be paid by the Financial Provider: para 1.29.
Using the verification information (see para 1.26A), Telstra has settled the value of the user’s Telstra account in accordance with the settlement rule, thereby settling the charges by recording to the user’s Telstra account that the obligation to pay Telstra will be discharged by the Financial Provider: para 1.30.
Upaid has provided additional particulars relating to paras 1.23-1.30 in terms materially the same as the additional particulars referrable to the Type 1 infringement and the Type 2 infringement: see [121] above.
In the context of the allegations of infringement of claim 1 of the 853 patent, I will refer to this alleged type of infringement as the Type 3 infringement.
Pre-Paid Service Plans (Recharge)
This alleged type of infringement concerns a user recharging his or her Pre-Paid Service Plan with Telstra.
Telstra has sold mobile phone voice and data services to authorised users of its Pre-Paid Service Plans described in para 1.12 of the particulars: para 1.31.
Authorised users have instructed Telstra via Telstra’s Communications Network that they wish to purchase Pre-Paid Credit to be allocated to Pre-Paid Accounts which the users already have with Telstra. This is for the purpose of “recharging” these accounts (ie increasing the amount credited to the users in the accounts): para 1.32.
Telstra has determined for each authorised user at least one payment rule from a rule set by which the value adjustment of the user’s Telstra account for the transaction, and the terms by which the value adjustment will be made, are determined. An amount payable for the purchase of the Pre-Paid Credit will adjust the value of the user’s Telstra account by being recorded as a credit to the account: para 1.33.
Where a user has purchased Pre-Paid Credit using a Financial Provider, Telstra and the Financial Provider are transaction providers: para 1.34.
In response to receiving a request from an authorised user to purchase a Pre-Paid Credit, Telstra has applied the payment rule to approve payment for the purchase of the Pre-Paid Credit. This approval constitutes Telstra “authorising” the transaction: para 1.35.
Telstra has verified with a Financial Provider via a financial network (of that Financial Provider) that the amount owed to Telstra for the Pre-Paid Credit will be paid by the Financial Provider. The financial network is separate from Telstra’s Communications Network. The user has a contractual obligation to pay to Telstra the value of the Pre-Paid Credit which the user has purchased: para 1.35A.
In response to receiving a request from an approved authorised user to increase that person’s account value, Telstra has “adjusted”, in real time, an amount equal to the amount specified by Telstra for the Pre-Paid Credit from the user’s Telstra account. This is by charging the user’s Telstra account in accordance with the payment rule using the verification information (see para 1.35A): para 1.36.
Telstra has determined at least one settlement rule from a rule set by which a payment for Pre-Paid Credit will adjust the value of the user’s Telstra account by recording a credit to the user’s Telstra account and the amount owed to Telstra by the user will be paid by the Financial Provider: para 1.37.
Using the verification information (see para 1.35A), Telstra has settled the value of the user’s Telstra account in accordance with the settlement rule, thereby settling the charge by recording to the user’s Telstra account that the obligation to pay Telstra will be discharged by the Financial Provider: para 1.38.
Upaid has provided additional particulars relating to paras 1.31-1.38 in terms materially the same as the additional particulars referrable to the earlier types of infringement: see [121] above.
In the context of the allegations of infringement of claim 1 of the 853 patent, I will refer to this alleged type of infringement as the Type 4 infringement.
International Roaming: Post-Paid Service Plans (Digital Purchase) / International Roaming: Pre-Paid Service Plans (Digital Purchase)
As I have noted, for the purposes of this application, Telstra has not treated these two types of alleged infringement differently from the first two types. For this reason, it is not necessary for me to summarise the particulars given with respect to them. However, for the purposes of identification, and in the context of the allegations of infringement of claim 1 of the 853 patent, I will refer to these alleged types of infringement as the Type 5 infringement and the Type 6 infringement, respectively.
OBJECTIONS TO THE PARTICULARISED CASE: CLAIM 1 OF THE 853 PATENT
Introduction
Telstra’s objections fall within the following broad categories:
·The products the subject of the “transaction” (Objection 1);
·“Convergent communications method” (Objection 2);
·Determining and applying steps—the “payment rule” (Objection 3);
·Charging and settling steps—“charging” and “settling” (Objection 4);
·Charging and settling steps—utilising a “separate” financial network (Objection 5);
·Settling step—“plurality of transaction providers” (Objection 6).
Post-Paid Service Plans (Digital Purchase): the Type 1 infringement
Objection 1: The products the subject of the “transaction”
Telstra’s Submissions
Telstra submits that there is a lack of clarity in the particulars as to the identification of the products the subject of the “transaction” of the claimed method. Claim 1 refers to a method for a transaction that involves someone who is already an authorised user. However, Upaid’s particulars refer to the acquisition of “products” in terms which include the service plan itself, by which a person becomes an authorised user. Telstra submits that the particulars therefore conflate the means by which a person has the status of an authorised user (for the purposes of the claimed method) and the transaction that is to be authorised as part of the claimed method.
Telstra submits that if, contrary to its submission above, “products” is to be taken as including services available to an authorised user under the Post-Paid Service Plans (Digital Purchase) themselves—which is the literal reading of para 1.3 of the particulars—then no services are specified in this regard in the particulars and no indication is given as to how the provision of those services engage the features of the claim. Telstra argues that this problem is compounded by the reference in the particulars to the data packs as “products”. It submits that it is unclear whether the “transaction” is the acquisition of the data pack itself or something else. If it is not the acquisition of the data pack, then the particulars are not clear as to what is being acquired.
Upaid’s Submissions
Upaid submits that this objection should be rejected because the products of the transaction are referred to in para 1.5 of the particulars. Upaid says that these products are the data packs and mobile services (which include the MOG product) identified in Parts A2, A3 and B of Schedule 1. Upaid says that it does not rely upon the subscription by the user to a service plan identified in Part A1 as constituting a transaction.
Consideration and Conclusion
I accept Telstra’s submission. Upaid’s definition of “products” explicitly includes the plans identified in Part A1 of Schedule 1. Paragraph 1.6 of the particulars states that authorised users have instructed Telstra via Telstra’s Communications Network that they wish to purchase products from amongst a group of products which include each of the service plans identified in Part A1 of Schedule 1. The case which Upaid advances in submissions is not the case it has particularised.
I also accept Telstra’s submission that Parts A2 and A3 of Schedule 1, to the extent that they refer to “services provided under” the data packs, are unclear and insufficient in that they fail to distinguish whether the transaction is the acquisition of the data pack or something else.
The particulars are capable of being amended so as to remove the difficulties and deficiencies identified by this objection.
Objection 2: “Convergent communications method”
Telstra’s Submissions
In its additional particulars relating to paras 1.1-1.11, Upaid refers to the “convergent communications method” as the provision of “telecommunications services together with other services such as data and multimedia to authorised users, as described in paragraphs 1.1-1.11”. Telstra argues that paras 1.1-1.11 do not describe “telecommunications services together with other services such as data and multimedia”. Rather, they speak of the acquisition of plans and the acquisition of products. Telstra submits that the acquisition of a product may involve the provision of data, but the particulars given in paras 1.1-1.11 do not describe the plans and data as being provided “together”. This, according to Telstra, is confirmed by the evidence concerning the acquisition of a MOG subscription (ie first, the customer subscribes to a Post-Paid Service Plan, which permits the customer to use the Telstra communications network; and, secondly, the customer may then purchase the MOG subscription). The purchase of the MOG subscription does not involve the provision of “telecommunications services together with other services such as data and multimedia”.
Telstra also argues that certain evidence given by Dr Nicholls of this feature does not contradict Telstra’s evidence. Telstra also argues that Dr Nicholls’ evidence does not support Upaid’s particularised case. Rather, Telstra says, Dr Nicholls’ evidence conflates the acquisition of a MOG subscription and the use of that subscription, and treats both as “one transaction” for the purposes of claim 1. Telstra submits that this is not Upaid’s case as particularised in paras 1.1-1.11. Telstra also criticises the suggestion in Dr Nicholls’ evidence that all that is required for a convergent communications method is the capacity to use different technology for different transactions. Telstra submits that this suggestion is contrary to Upaid’s particularised case and plainly untenable.
Upaid’s Submissions
With regard to the Type 1 infringement, I have found Upaid’s particularised case:
·is not, in a number of fundamental respects, the case that Upaid has advanced in submissions: Objections 1-2 and 4; and
·is not tenable as an infringement of claim 1: Objections 1-4.
I have also found that, to the extent that Upaid has advanced alternative cases in submissions, those cases are not clear. Unless clarified, it is not possible to form a concluded view as to whether the alternative cases are tenable as infringements of claim 1.
With regard to the Type 2 infringement, I have found that Upaid’s particularised case:
·is not, in a number of fundamental respects, the case that Upaid has advanced in submissions: Objections 1-2;
·is not tenable as an infringement of claim 1: Objections 1-3 and 5; and
·is not, in any event, clear: Objection 5.
With regard to the Type 3 infringement, I have found that Upaid’s particularised case:
·is not, in a number of fundamental respects, the case that Upaid has advanced in submissions: Objections 1-2; and
·is not tenable as an infringement of claim 1: Objections 1-3.
With regard to the Type 4 infringement and the Type 5 infringement, I have reached conclusions similar to those I have reached for the Type 1 infringement in relation to Objections 1 to 3. For additional reasons, I have found that the distinction between the Type 4 infringement and the Type 5 infringement in the particulars is not clear. This is largely due to the fact that, for the reasons I have given, the particulars compound Upaid’s failure to distinguish between infringements allegedly arising from acquiring a product (in the sense of purchasing a product) and infringements allegedly arising from using a product that has been acquired. Upaid’s explanations in submissions have not assisted in providing greater clarity.
With regard to the Type 6 infringement, I have reached conclusions similar to those I have reached for the Type 1 infringement in relation to Objections 1 and 3.
The parties’ submissions
Upaid’s submissions
Upaid submits that Telstra has not established that it (Upaid) has no reasonable prospect of successfully prosecuting its claims for infringement of claim 1 of the 853 patent and claim 1 of the 646 patent. Thus, according to Upaid, Telstra’s application for summary judgment under s 31A of the Act (and I infer r 26.01 of the Rules) should be dismissed.
Upaid also submits that Telstra has not established any basis for striking out the particulars under r 16.21 of the Rules. Alternatively, Upaid submits that if the Court reaches the conclusion that the particulars are deficient in any respect, it should be given the opportunity to consider the Court’s reasons and to make application for leave to re-plead in a manner that it (Upaid) considers to be appropriate.
In amplification of this position, Upaid submits that s 31A of the Act requires Telstra to show that Upaid has no reasonable prospect of prosecuting the relevant parts of the proceeding that are the subject of the summary dismissal application. Upaid submits that this is not a power activated by mere deficiencies in pleading. The existence of a reasonable cause of action and the pleading of a reasonable cause of action are distinct concepts: Spencer v The Commonwealth of Australia (2010) 241 CLR 118; [2010] HCA 28 (Spencer) at [23]; White Industries Aust Ltd v Federal Commissioner of Taxation (2007) 160 FCR 298; [2007] FCA 511 at [47]; Butorac v WIN Corporation Pty Ltd [2009] FCA 1503 at [19]. Thus, even if a pleading falls foul of r 16.02 of the Rules, the evidence before the Court may, nonetheless, disclose that a party (against whom a summary dismissal application is brought) has a reasonable cause of action or reasonable prospects of success.
Upaid refers to the statement by French CJ and Gummow J in Spencer (at [24]-[26]) that the exercise of the power to summarily terminate a proceeding must be attended with caution. Upaid submits that the power under s 31A of the Act is generally inapt to resolve complex issues of law and fact, or of mixed law and fact. It submits that the present case is of that nature.
Upaid also refers to the following convenient summary of relevant principles in relation to the application of s 31A of the Act in Dandaven v Harbeath Holdings Pty Ltd [2008] FCA 955 at [6]:
Success under s 31A does not require a demonstration that the case is hopeless or bound to fail. The following principles are of general application to an application under s 31A:
(a)the Court must be very cautious not to do a party an injustice by summarily dismissing proceedings;
(b)the Court ought not dismiss a claim based on a predictive assessment of prospects, where it is possible that if the claim went to trial, it may succeed;
(c)in a case where evidence can give colour and content to allegations, and where questions of fact and degree are important, the Court should be more reluctant to dismiss a proceeding on the face of a pleading;
(d)it is not Parliament’s intention to require the Court to engage in lengthy and elaborate trials on an interlocutory basis for the purposes of determining whether or not a proceeding has no reasonable prospects of success. It may be necessary for the opposing party to provide no more than an outline of evidence, sufficient to show that there is a genuine dispute, to prevent the summary application becoming a trial;
(e)if there is a real issue of fact or law to be decided, and the rights of the parties depend upon it, it is obviously appropriate that the matter goes to trial. It cannot be said that where there is a real factual dispute and that factual dispute must be resolved to determine whether the claim succeeds that there is ‘no reasonable prospect of success’;
(g)it ought not be used to shut out proceedings where, on a proposition of law, there may be room for doubt. On questions of law, an inquiry as to their merit should not be for the purpose of resolving them and also not simply to determine whether the argument is hopeless, but in order to decide if it is sufficiently strong to warrant a trial;
(h)evidence of an ambivalent character will usually be sufficient to amount to reasonable prospects;
(i)in determining if there are real issues of fact in issue so as to preclude summary judgment the courts must draw all reasonable inferences in favour of the non-moving party.
See Genovese v BGC Construction Pty Ltd [2007] FCA 923 at [5]; Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd (2006) 70 IPR 146 at [42]-[48]; Hicks v Ruddock (2007) 156 FCR 574 at [13]; Bond v Barry (2007) 73 IPR 490 at [46]; Commonwealth Bank of Australia v ACN 000 247 601 Pty Ltd (in Liq) (formerly Stanley Thompson Valuers Pty Ltd) [2006] FCA 1416 at [30]; Fortron Automotive Treatments Pty Ltd v Jones (No 2) [2006] FCA 1401 at [21]; Jefferson Ford Pty Ltd v Ford Motor Company of Australia Limited [2008] FCAFC 60.
(Emphasis in original.)
Upaid submits that the evidence before the Court demonstrates that there are real issues to be tried on infringement, both as to claim construction and as to how Telstra’s systems operate. It submits that the procedural limitations associated with a summary dismissal application reinforce the conclusion that it cannot fairly be found that these issues will ultimately be resolved in Telstra’s favour.
Telstra’s submissions
Telstra submits that the case that Upaid has particularised in respect of the infringement of claim 1 of the 853 patent and claim 1 of the 646 patent is unsupportable and that Upaid has conceded as much. Telstra submits that a finding in its favour on this point is sufficient to dispose of its application for summary dismissal. Telstra also submits that the different case which Upaid has advanced in submissions is based on untenable allegations. I pause here to note that, in the analysis I have undertaken above, I have endeavoured to identify the principal points of Upaid’s departure from its particularised case and whether, in the case of either claim 1 of the 853 patent or claim 1 of the 646 patent, the case advanced by Upaid in submissions is tenable. In this connection, it notes that Upaid has advanced no alternative set of particulars. Telstra further submits that, contrary to Upaid’s position, the Court should not exercise its discretion to permit Upaid a yet further opportunity to amend its particulars, for the following reasons.
First, Telstra submits that Upaid has been given a number of opportunities to properly plead a case of infringement. Telstra refers to the history of the proceeding since its commencement on 21 August 2013, particularly the striking out of Upaid’s amended particulars on 23 December 2013 (Upaid No 1) and the events of 2014 in which the parties engaged in an extensive exchange of correspondence on the adequacy of the various iterations of what finally came to be the particulars, the subject of the present application. Telstra argues that Upaid failed to undertake the detailed work necessary to explain how Telstra’s conduct engaged with the features of the claims. Telstra argues that it has been forced to lead Upaid through this exercise by way of voluminous commentary and requests for further and better particulars. Telstra submits that Upaid has had more than an ample opportunity to formulate its particulars and that it (Telstra) should not be required to bear the burden of further attempts by Upaid to properly advance a case on infringement.
Secondly, Telstra submits that, having regard to the broad allegations of infringement, the number of claims alleged to have been infringed, and the paucity of the particulars originally given, Upaid’s claim, as originally commenced, is property characterised as an ambit claim that is speculative in nature. Telstra submits that, having regard to the lack of support for the case has now particularised—despite various iterations of its particulars up to the present time—and the failure by Upaid to identify an evidentiary basis on which its particularised case is advanced, Upaid’s persistence in the proceeding to date should also be regarded as speculative.
Thirdly, and relatedly, Telstra submits that the present application has been conducted on the basis that the particulars represent Upaid’s final and considered position. The utility of dealing with a strike out/summary dismissal application for an exemplified claim in respect of each patent was intended to lead to a position which would be informative of a likely outcome in relation to the balance of the proceeding. Telstra submits that, consistently with that approach, orders for discovery and interrogatories were made on Upaid’s application. Telstra says that these measures were not undertaken on the basis that Upaid might then seek to make further amendments to its particulars. These steps were taken to provide evidentiary support for the case that Upaid had particularised.
In this connection, Telstra directs attention to the observations I made in Upaid No 2 where I said (at [14]):
14The present application for discovery is not made in the context of the trial of the action or of the determination of a separate question. It is sought by Upaid to assist it in resisting Telstra's application for summary dismissal – in other words, to assist Upaid to positively demonstrate that it has a case that has sufficient prospects of being successfully prosecuted. One might have thought that such a case could be demonstrated without the need for any extensive discovery or, indeed, for discovery at all. As I remarked at the directions hearing on 3 November 2014, one would think that the role for discovery in the present circumstances must be limited.
I should also refer to the additional observations I made at [15]-[16] of those reasons:
15As a general rule, the Court will not grant an application for discovery where to do so would permit “fishing” in the sense explained in Associated Dominions Assurance Society Pty Ltd v John Fairfax & Sons Pty Ltd (1952) 72 WN (NSW) 250 at 254; see also in this regard the observations of Lockhart J in W A Pines Pty Ltd v Bannerman (1980) 30 ALR 559 at 574-576. Thus, the Court will not order discovery simply to allow a party to “fish” for evidence to support a claim or a defence which is, essentially, speculative in nature.
16It is also noteworthy that Upaid has not relied on evidence specifically directed to supporting the discovery it seeks. Thus, where there is a contest between the parties, particularly as to the scope of the documents sought, Upaid has relied, substantially, on argument, not evidence, to seek to persuade the Court that the discovery it wants should be granted.
With regard to Upaid’s reliance on Spencer, Telstra seeks to distinguish the facts and circumstances of the present case. In Spencer, it was found that the case was not appropriate for summary dismissal pursuant to s 31A of the Act. There, the case which the applicant sought to raise involved important question of public and constitutional law. It also raised questions of fact about the existence of an arrangement between the Commonwealth and the State of New South Wales which might justify the invocation of pre-trial processes, such as discovery and interrogatories. Telstra submits that the present case does not have features of that kind. Further, the present case has a different procedural history in which discovery and interrogatories in aid of Upaid’s particularised case have been given.
Conclusion
The context in which the present application arises is important.
At the time that Upaid sought leave on 3 November 2014 to file the particulars, I have no doubt that it advanced them as its considered case on infringement of the 853 patent and the 646 patent, based on many months of debate in correspondence with Telstra. It was on this basis that I considered it to be expedient to grant leave to Upaid to file the particulars, without further debate at that time, so that Telstra’s application for summary dismissal and/or to strike out the particulars could proceed on what I thought to be the most appropriate framework for deciding those questions. I was satisfied that there was utility in that course. I believed that, by proceeding in this manner, it was likely that the position would be reached where it could be determined, one way or the other, whether Upaid had a tenable case for infringement, at least in respect of claim 1 of each patent. I believed that my conclusions in respect of claim 1 of each patent might well decide the fate of Upaid’s case on infringement in respect of a number of other claims it had pleaded.
Another important aspect of the context in which the present application arises is that, in Upaid No 1, I had previously considered Upaid’s particulars (then relied upon) to be inadequate and struck them out. The present application is, therefore, not the first occasion on which the Court has been called upon to determine the adequacy of the case advanced by Upaid. Indeed, at that time, Telstra sought an order that, because of the inadequate particularisation of Upaid’s case, the statement of claim should be struck out. I was not persuaded that such a course was appropriate at that time, and granted leave to Upaid to provide further amended particulars. This decision led to the lengthy debate between the parties to which I have referred.
In Upaid No 1 I discussed, in considerable detail, the requirements of pleading a case of patent infringement, and the importance of the requirement for proper particulars to the orderly conduct of litigation of this kind. Those considerations are particularly important here because Upaid’s claims of infringement are extensive, as evidenced by the fact that the particulars are now 171 pages in length. Patent litigation of this kind can only be conducted sensibly upon proper particularisation of the patentee’s case. To proceed to a trial otherwise would not only result in unfairness to the opposing party, but would be quite unmanageable and place enormous burdens on the Court so far as reaching a just and correct decision on the case. Indeed, as I explained in Upaid No 1 at [27], proper particularisation is important not only for defining the scope of the case for ultimate decision, but also the scope of the case for the purpose of the interlocutory steps to be taken to bring the proceeding to a state of readiness for hearing.
Proceeding on the basis that the particulars reflected Upaid’s considered case on infringement, and recognising the importance of the present application for both parties, I acceded to Upaid’s application for discovery and interrogatories. This occurred after a contested application, leading to the judgment in Upaid No 2. As my reasons in Upaid No 2 make clear, I would not have permitted these steps to have occurred had I considered them to be a “fishing exercise”. These steps were permitted to assist Upaid to support its particularised case, even though, at that stage, Upaid had adduced no evidence to support the discovery it had sought: Upaid No 2 at [15]-[16], quoted at [506]-[507] above.
With those matters of context in mind, it is somewhat surprising (to say the least) that, on the hearing of the present application, Upaid either abandoned or departed from its particularised case in a number of fundamental respects.
My conclusions in respect of Upaid’s particularised case regarding infringement of claim 1 of the 853 patent, as summarised at [483]-[489] above, lead me to further conclude that the particulars in para 1 (and all related subparagraphs) should be struck out. Although I have indicated that, in some respects, certain defects and deficiencies in the particulars might be overcome by further amendment, there are fundamental aspects of the particularised case for each alleged type of infringement which render Upaid’s case untenable as an infringement of claim 1 of the 853 patent. I am satisfied that Upaid has no reasonable prospect of successfully prosecuting its particularised case concerning the infringement of claim 1 of the 853 patent. Further, where, in submissions, Upaid has advanced what is, in reality, a substitute case for its particularised case, I am satisfied, for the reasons I have given, that Upaid has no reasonable prospect of successfully prosecuting that alternative case.
I conclude, therefore, that Upaid’s case for infringement of claim 1 of the 853 patent should also be dismissed under s 31A of the Act and r 26.01 of the Rules.
My conclusions in respect of Upaid’s particularised case regarding infringement of claim 1 of the 646 patent, as summarised at [490]-[495] above, lead me to further conclude that the particulars in para 19 (and all related subparagraphs) should be struck out. However, I have not reached a level of satisfaction that Upaid has no reasonable prospect of successfully prosecuting that part of the proceeding that relates to the alleged infringement of that claim. I have indicated that a number of the objections made by Telstra are capable of being overcome by amendment. Some aspects of Upaid’s particularised case are not tenable as infringements of claim 1 of the 646 patent, but it is possible—I say no more than that—that Upaid might be able to particularise a tenable case on infringement taking into account my findings and conclusions in relation to its case as presently particularised.
In coming to this conclusion I am conscious of the fact that, despite the opportunities already provided to it, Upaid has failed, since the commencement of the proceeding and over a considerable period of time, to properly formulate a case on infringement of this claim. I am also conscious of the fact that Telstra has been put to considerable trouble and expense as a consequence. Nevertheless, on balance, I think that, in light of the particular findings I have made, and at this stage of the proceeding, Upaid should be given a further, albeit limited, opportunity to consider its position in this regard.
DISPOSITION
I will order that paragraph 1 (and all related subparagraphs) and paragraph 19 (and all related subparagraphs) of the particulars be struck out and that Upaid’s case for infringement of claim 1 of the 853 patent be dismissed under s 31A of the Act and r 26.01 of the Rules.
Telstra has provided written submissions on the question of costs. At the time of the hearing, Upaid had not responded to those submissions. It seeks the opportunity to do so. I will, therefore, reserve the question of costs for later determination.
I will stand over the proceeding for approximately six weeks to enable the parties to consider these reasons, with a view to them seeking to come to an agreement as to the consequences that my findings and conclusions have for the fate of the other allegations of infringement of the 853 patent and the 646 patent that have been pleaded. I will list the proceeding for directions only at 9.30 am on 26 April 2016. If the parties have reached agreement as to the further orders that should be made in that regard, then I will make the orders at that time.
At that time, Upaid must also be in a position to indicate to the Court whether it wishes to avail itself of the opportunity to seek further leave to amend its particulars of infringement of claim 1 of the 646 patent. If so, I will make directions for that purpose. If not, I will dismiss its case for infringement of that claim.
As to reserved costs, it may be that Telstra wishes to supplement the submissions it has already made. I will give it that opportunity. However, the submissions must be in a consolidated form. Telstra is to file and serve any consolidated submissions on the question of costs by 4.00 pm on 24 March 2016. Upaid is to file and serve its answering submissions by 4.00 pm on 14 April 2016. Telstra is to file and serve its submissions in reply, if any, by 4.00 pm on 21 April 2016.
Telstra has made certain claims for confidentiality in respect of certain affidavits or parts of affidavits filed and read in support of its interlocutory application. That question has been argued but not yet determined. An interim order has been made. I will order, pursuant to s 37AF(1) of the Act, that, until that question is determined, the sub-headings below the headings “Pay with my Telstra mobile—pre-paid” and “Pay with my Telstra mobile—post-paid”; paras [47]-[48]; the last three sentences of para [50]; the last three sentences of para [52]; the third, fourth and fifth sentences and the last four words of para [56], and its immediate heading; paras [57]-[64] and their immediate headings; the second sentence of para [65]; the third to sixth sentences of para [70]; the first sentence of para [71]; the fifth, sixth and ninth to twelfth sentences and the last three words of the eighth sentence of para [74]; the fourth and seventh to tenth sentences and the last three words of the sixth sentence of para [75]; the last two sentences of para [79]; the last sentence of para [236] and para [238] of these reasons not be published and not be disclosed to any person other than in accordance with Order 1 made on 6 November 2015. This order is necessary to prevent prejudice to the proper administration of justice.
I certify that the preceding five hundred and twenty-four (524) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Yates. Associate:
Dated: 11 March 2016
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