Orion Marine Limited v Leybourne - [2021] NZHC 3207

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-202-404-2488

[2021] NZHC 3207

UNDER Part 18 of the High Court Rules 2016 and/or the inherent jurisdiction of the Court

UNDER

the Patents Act 2013

BETWEE

ORION MARINE LIMITED

First Plaintiff/First Counterclaim Defendant

DARREN PAUL LEYBOURNE

Second Plaintiff/Second Counterclaim Defendant

Cont/…

Hearing: 28 June 2021

Appearances:

A Hyde and AM Ryder for the Plaintiffs/Applicants G Arthur for the Defendant/Respondent

Judgment:

26 November 2021

JUDGMENT OF ASSOCIATE JUDGE SUSSOCK

This judgment was delivered by me on 26 November 2021 at 4.30pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:
Goodwin Turner, Auckland Keegan Alexander, Auckland Clifton Chambers, Wellington

ORION MARINE LTD v SEALEGS INTERNATIONAL LTD [2021] NZHC 3207 [26 November 2021]

VLADAN ZUBCIC
Third Plaintiff

SMUGGLER MARINE LIMITED
Fourth Plaintiff/Third Counterclaim Defendant

DAVID JEFFERY PRINGLE
Fifth Plaintiff

PAULINE SIGNA PRINGLE
Sixth Plaintiff

ANDSEALEGS INTERNATIONAL LIMITED
Defendant/Counterclaim Plaintiff

Introduction

[1] When the defendant, Sealegs International Ltd, first sued Orion Marine Limited and others for breach of copyright in 2016 Sealegs obtained an interim injunction preventing Orion and the other parties from producing, displaying or selling allegedly infringing products until Sealegs’ claim was determined. As a condition of that injunction, Sealegs gave an undertaking as to damages so that if it did not establish that its copyright was infringed, Sealegs would pay those parties the loss suffered as a result of the injunction.

[2] Sealegs succeeded in its copyright claim at first instance1 but not in the Court of Appeal.2 Leave to appeal to the Supreme Court was declined in December 2019.3

[3] Orion and others now sue on the undertaking seeking $6.8 million in damages plus interest and costs.

[4] Sealegs has filed a statement of defence and counterclaim pleading that any production, display or sale by Orion or the other parties would have infringed Sealegs’ patent and so no amount is owing on the undertaking.

[5] Orion and the other plaintiffs in this claim apply to strike out the counterclaim and the parts of the defence relying on patent infringement on the basis that the pleadings are an abuse of process. Orion and the other parties submit that the pleadings offend against the rule in Henderson v Henderson,4 as the breach of patent claim could and should in all the circumstances have been brought together with the copyright claim.

[6] Orion and the other parties say that either Sealegs substantively abandoned its patent claim or deliberately misled the courts and the plaintiffs as to its intention in this regard. They submit that allowing Sealegs to bring the patent claim would cause

1      Sealegs International Ltd v Zhang [2018] NZHC 1724.
2      Zhang v Sealegs International Limited [2019] NZCA 389, [2020] 2 NZLR 308.
3      Sealegs International Ltd v Zhang [2019] NZSC 147.
4      Henderson v Henderson (1843) 67 ER 313 (Ch).

unjustifiable prejudice to them, that they are owed redress pursuant to the undertaking…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] NZHC 3207
Decision Date: 26 November 2021

CaseChat Overview and Summary

In the High Court of New Zealand, Orion Marine Limited and others sued Sealegs International Ltd for breach of copyright in 2016. Sealegs obtained an interim injunction preventing Orion and others from producing, displaying, or selling allegedly infringing products until the copyright claim was determined. Sealegs subsequently succeeded in the copyright claim at first instance but lost on appeal. Orion and others now seek $6.8 million in damages plus interest and costs under Sealegs' undertaking as to damages. Sealegs defends by pleading breach of patent and counterclaims patent infringement. Orion and others apply to strike out the counterclaim and parts of the defence relying on patent infringement as an abuse of process.

The court considers whether Sealegs' counterclaim and defences relying on patent infringement should be struck out as an abuse of process. The court finds that while a patent infringement claim could technically have been brought together with the copyright proceedings, there were practical issues that prevented this from happening. Sealegs did not abandon its patent claim, nor did it deliberately mislead the court. The court concludes that strike out would not be a justified limit on Sealegs' right to defend itself or bring a claim. The court dismisses the application to strike out parts of Sealegs' statement of defence and the whole of its counterclaim. The court orders the parties to confer and attempt to agree costs. If the parties cannot reach an agreement, they may file memoranda of no more than five pages within a specified time frame.

Orders