BUDGMENT No. OP Bo) TRADE PRACTICES - contract - restraint of trade - confidential information - technique for diagnosis and treatment of form of dyslexia- developed in USA - licensing agreement - agreement terminated - licensee varied techniques thereafter ~ prohibition on use of varied techniques - restraint of trade - information in public domain - misleading or deceptive conduct - no monopoly - use of information with common elements not misleading or deceptive - security for costs - corporation based out of the jurisdiction. Trade Practices Act 1974 s.52 Federal Court of Australia Act 1976 s.56 Federal Court Rules 0.28 r.3 Quadramain Pty Ltd v Sevastapol Investments Pty Ltd (i976) 133 CLR Petrofina (Gt. Britain) Ltd v Martin [1966] 1 Ch. 146 Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 PERCEPTUAL DEVELOPMENT CORPORATION v VERSI PTY LTD and DONALD LEE ZIMMERMAN NO. WAG 78 of 1987 FRENCH J. PERTH 7 DECEMBER 1987 IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION we ww No. WAG 78 of 1987 BETWEEN: PERCEPTUAL DEVELOPMENT CORPORATION Applicant and VERSI PTY LTD First Respondent and DONALD LEE ZIMMERMAN Second Respondent MINUTE OF ORDER JUDGE MAKING ORDER: FRENCH J. DATE OF ORDER: 7 DECEMBER 1987 WHERE MADE: PERTH THE COURT ORDERS THAT: A. On the applicant's claim for interlocutory relief:- 1. 2. The claim is dismissed. The costs of the hearing of the claim are reserved. On the respondents' motion for security for costs:- The applicant provide security in the sum of $21,450.00 for costs incurred and to be incurred by the respondents down to the commencement of the hearing of the application. 2. 2. Such security is to be provided within 28 days 1n such form as the parties may agree or, in default of agreement, as the Registrar may determine. 3. There 1s liberty to all parties to apply. 4. The costs of the motion for security for costs will be costs in the application. Note: Settlement and entry of orders 1s dealt with in Order 28 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION we ew NO. WAG 78 of 1987 BETWEEN: PERCEPTUAL DEVELOPMENT CORPORATION Applicant and VERSI PTY LTD First Respondent and DONALD LEE ZIMMERMAN Second Respondent CORAM: FRENCH J. 7 December 1987 REASONS FOR JUDGMENT "Dyslexia", meaning "word blindness", 1S used as an umbrella term to describe impairments in reading ability attributable to a variety of factors, the range and precise nature of which has not been settled. It is a condition notoriously associated with learning difficulties in children, but is said to occur in the adult population as well. There has been controversy over whether, and the extent to which, visual perceptual difficulties play any part in its etiology. There is, apparently, no evidence to suggest that those who are said to be dyslexic suffer any more than normal "yea in Bl 2. people from such abnormalities of vision as refractive error, focussing and stereoscopic deficiencies. However, according to a Californian psychologist, Helen Irlen, there is a species of dysfunction which she has named Scotopic Sensitivity Syndrome, which may be a significant factor in some forms of reading impairment. Although not offering a theoretical model for the syndrome, she has identified its symptoms as photophobia, poor visual resolution, restricted span of focus and poor sustained focus. She hypothesises a retinal problem underlying these symptoms. Ms. Irlen has developed a system which, she says, can improve the lot of those who suffer from this species of visual difficulty. The system, which she has called the Irlen Technology, involves an assessment procedure to identify the presence of the syndrome and the use of coloured plastic lenses to correct it. It has received substantial publicity and was the subject of a segment of the "60 Minutes" television current affairs program shown in Australia in 1985. Ms. Irlen has set up in California a company, Perceptual Development Corporation ("Perceptual"), which has licensed a number of persons in Australia to use the "Technology". One of those licensees was Donald Lee Zimmerman, a guidance officer with the Education Department in Western Australia. 3. Mr Zimmerman was licensed for a period of 12 months under a written agreement dated 24 January 1986. He did not renew the contract at the end of that time, but returned the mater1als with which he had been supplied. He and his wife then began to develop their own system for the testing and correction of "distortion and eye strain problems". It involves a simplified group screening technique progressing, after opthalmological examination, to more individualised assessment in appropriate cases and ultimately the use of coloured lenses where individual testing indicates that these would be helpful. They have formed a company, Versi Pty Ltd ("Versi"), which trades as Rainbow Optics, and under that name have offered the screening and testing services to school children in Western Australia. In proceedings instituted in this Court on 23 July 1987, Perceptual alleges that Zimmerman 1s making unauthorised use of the Irlen Technology and is thereby in breach of a term of the licensing agreement. It also contends that his conduct and that of his company is misleading or deceptive or likely to mislead or deceive contrary to s.52 of the Trade Practices Act 1974, that it amounts to passing off and that it is "in breach of the applicant's right of property ain confidential information concerning the Irlen Technology". Perceptual seeks interlocutory relief restraining Zimmerman and Versi from using the Irlen Technology or any part thereof and from representing in any way that any technique for the testing and treatment of visual dysfunction used by them, has the sponsorship or approval of or any association or affiliation with Perceptual. The respondents seek orders for payment by Perceptual of an amount for security for the costs of the action. At this stage the applicant relies only upon. the contractual and trade practices aspects of its statement of claim to support the interlocutory injunctive relief that it seeks. It is convenient in considering that claim to look first to the terms of the licensing agreement. The Licensing Agreement The document in question 1S entitled "NON-EXCLUSIVE AGREEMENT". It recites that its purpose 1S:- "...to establish a working relationship between PDC [Perceptual Development Corporation] and Recipient [Zimmerman] such that Recipient may utilize certain confidential, unique, proprietary and secret methods, technology and techniques (hereinafter referred to as "Technology") which have been developed by PDC and are confidential and proprietary to PDC. The Technology is more particularly defined and described as: "The Irlen Differential Perceptual Schedule" (hereinafter referred to as "IDPS"), various test protocols, The Irlen Lenses 5. and the Irlen System for the diagnosis and treatment of an eye dysfunction defined by PDC as_ Scotopic Sensitivity, consisting of many symptoms which affect visual perception." By clause 1 Perceptual agreed to disclose to Zimmerman sufficient particulars of the Technology that Zimmerman could diagnose and prescribe treatment for persons suffering from Scotopic Sensitivity. Perceptual would also permit him to use current versions of the IDPS as they were developed for use in diagnosing Scotopic Sensitivity and to use the Proprietary Lens Kit with which Zimmerman could prescribe appropriate treatment for "clients". Zimmerman undertook to pay the sum of $3,000 upon execution of the agreement. The protective provisions invoked by Perceptual are to be found in clauses 3 and 4 of the agreement. In particular sub~clauses 3B., E. and G. provided as follows:- "B. All of the Technology and all of the tools, publications, literature and materials relative thereto, disclosed or distributed to Recipient by PDC or otherwise, are and shall remain. the exclusive proprietary property of PDC constituting valid trade secrets and confidential information of PDC whether or not patented or whether or not patentable. Recipient shall not disclose or make available to any other person or entity, not authorized hereby, any portion of or details of the Technology in any fashion or manner whatsoever without the express prior written consent of PDC." 6. E. All tinting of lenses reguired to treat clients will be done through PDC. The cost to Recipient for such lens tinting is set forth on the attached price list. PDC reserves the right to change the prices thereon from time to time, with or without notice to Recipient. G. Recipient shall disclose, make available and transfer to PDC, for PDC's exclusive use, any different or new methods, technology or techniques developed by Recipient to vary, augment or enhance the use of the Technology. All such matters shall become a part of the Technology and shall be the sole and exclusive property and proprietary right of PDC, provided however, that Recipient shall be entitled to use such matters developed = and discovered by 1t without additional cost." Clause 4 provided in part:- ",..In the event that this Agreement 1s not extended by the Recipient as provided herein, it shall terminate upon the one-year anniversary date hereof. Upon termination, Recipient shall immediately return to PDC all of the Technology and other materials which the Recipient has received including, but not limited to, lens kits, IDPS materials and any other materials provided by PDC. irrespective of the fact that Recipient may have paid for such materials (sic). Recipient shall further immediately cease and desist from applying any of the Technology. The termination of this Agreement shall not relieve Recipient of its agreement of nondisclosure as provided elsewhere herein. Such agreement for nondisclosure shall run in perpetuity." The Systems Compared of Helen identify, The amended statement of claim verified by the affidavit Irlen describes the Irlen Technology as "a technique to diagnose and treat using spectral modification a visual 7. dysfunction associated with the condition commonly known dyslexia". claim, is "7.1 7.3 paper presented by Ms. Psychologi as Its operation, set out in para.7 of the statement of as follows:- a person 1s assessed, by testing, to determine whether he or she has a visual dysfunction; if, after the testing referred to in sub-paragraph 7.1 hereof, a person is assessed to have a visual dysfunction, further tests are undertaken to identify whether a particular colour of tinted lenses and/or coloured overlays will remedy in whole or in part the visual dysfunction; and, the visual dysfunction 1s then treated by the wearing of glasses fitted with appropriate lenses and/or overlays of the colour/s identified pursuant to the testing referred to in sub-paragraph 7.2 hereof." The procedure followed is described in more detail ina cal Association in 1982. Irlen to the annual meeting of the American Assessment for determining the existence of the relevant visual dysfunction is carried out by putting to the subject a number of questions contained in a lengthy document known as the "Irlen Differential Perceptual Schedule". The answers to these questions, it is said, will reveal, 1f they exist, symptoms of the relevant visual dysfunction. 8. The test applies a scoring system so that a subject who scores more than 30% is submitted to an opthalmologist' to eliminate eye pathology or refractive errors. After that examination and the elimination of the visual factors referred to, the subject is prescribed "the newly developed photopic transmittance lenses which attenuate only specific frequency bands predetermined to be causing the difficulty". This latter expression I take to be a reference to tinted lenses. Pursuant to the licence agreement, Zimmerman was provided with a copy of the questions and instructions comprising the Irlen Differential Perceptual Schedule for children. He was given a similar document for testing adults. Also exhibited to Ms. Irlen's affidavit 1s a document entitled "Scotopic Sensitivity Syndrome Screening Manual" which, 1t was said, "1s the most recently revised copy of the applicant's screening manual which is the collection of materials provided to the second respondent during the period of his licence granted by the applicant". It is not clear whether this means that a copy of the manual was in fact given to Zimmerman. Its content overlaps considerably with that of the [Irlen Differential Perceptual Schedule in relation to questions asked and visual tests administered. Ss aeeietnl 9. According to Zimmerman, he found the Irlen technique unsatisfactory and did not renew the licence agreement at the expiry of the first 12 month period. His criticisms of 1t were summarised in his affidavit as follows:- 1. The assessment material provided was too cumbersome and lengthy and the results were not clear cut. 2. The lenses provided were in a limited number of primary or combined primary colours and there was difficulty in obtaining light shades. 3. The lenses were of soft plastic which would scratch and fade. 4. The Irlen Technique was limited to the narrow area of dyslexia, whereas he was more interested in distortion or eye strain problems in all students. 5. Questions asked in the assessment tests were leading. 6. There was no back-up research to verify the Irlen methods. Having returned all the materials received from Perceptual to that company, Zimmerman and his wife say they decided to look at treating the more general problems of distortion and eye strain on a practical basis. They had in mind the development of a procedure which could be simply and efficiently used in the general school system. 10. The technique they developed required that a pre-screening test of approximately 10 minutes duration would be given to a full class of students at one time to separate those who suffered no visual distortion and eye strain from those who did. The test involves showing to the students five successive cards. The first shows three sides of an exploded and distorted cube, each divided into distorted rectangles or parallelograms. These students are to count the number of parallelograms in one of the rows through all three sides of the exploded cube. This resemplies one of the IDPS tests which requires the subject to count squares on the surface of a cube. The other four cards show a series of parallel black lines with a small bar intersecting one of the lines in the middle. The cards are respectively coloured white, yellow, blue and pink. The students are asked some nine questions 1n relation to these figures. Following the administration of the pre-screening test, those students who are thought to have displayed distortion and to benefit from the use of colour in the pre-screening test are assessed by a further procedure known as the colour vision screening assessment. wae ll. This involves some seven questions seeking general background information. The students are shown two figures in black and white, followed by a third figure with differently coloured overlays. Their visual responses are recorded. At the end of this procedure, test subjects are Classified as either "positive", "borderline" or "optical". A positive classification refers to a student who would benefit to a marked degree through the use of coloured glasses. A borderline classification refers to one who would gain some benefit. Those subjects classed as optical are referred to an optometrist for testing for standard visual defects. If, after the colour vision screening assessment, the subject is classified as positive and wishes to proceed further, he or she is first referred to an optometrist for examination for any necessary corrections of visual defects. Then follows what is called a colour vision assessment. In the case of a student this is done with the student and his or her parents. The assessment takes about an hour. Following that, a further appointment is made _ for determination of the appropriate colour tint to correct the visual distortion problems. This 1s done by using acrylic coloured overlays to determine which intensities or ranges of colour or colours are thought to be hindering vision. The correct tint 1s submitted to an optometrist who prepares a set of lenses with the 12. necessary correction for visual acuity, has them tinted by Rainbow Optics and fitted to the frames already chosen. The use of the overlays is referred to as the Meares Method Colour Overlay Process and is named after one Olive Meares who, 1t was said, used coloured overlays in New Zealand in the early 1970's to assist students with reading disabilities. Ms. Irlen refers to the work of Meares in her affidavit and says that to her knowledge she published two articles in which she "non-systematically presented quotes from her reading students about the appearance of the pages to those student". It 1s said that she did not create any procedure for screening, diagnosing or treating the reading problems of her students and never connected her observations to eye strain and problems with reading. It 1s said that she only observed that she could use coloured overlays or neutral density filters to alleviate the problem to some degree. In the course of promoting the technique in Western Australian schools, Zimmerman wrote to the principal of the Helena School on 28 February 1987. In that letter the following two paragraphs appeared:- "The enclosed material will give you a_e general background regarding the use of coloured glasses to alleviate reading and associated problems which was first seen on the 60 MINUTES program about 18 months ago. My wife and I started the tinted lens program in the Kalgoorlie/Kambalda area during the last school year 13. where I had been appointed District Guidance Officer. We have over 130 people wearing the tinted glasses there now, and the success of the program has been remarkable. To further this system, I have taken a year's leave from the Education Department, completly (sic) remodeled (sic) the lens system, researched for new assessments and material, and now have a program that is suited to the Western Australian school system, both public and private." Perceptual's Complaints Perceptual accuses Zimmerman of continuing to use the Irlen Technology after the termination of the licence agreement and contrary to clause 4 thereof. It will be remembered that clause 3 which is also expressly pleaded, embraces within the term Irlen Technology any "new methods, technology or techniques" developed by Zimmerman to "vary, augment or enhance the Irlen Technology". Zimmerman says that his new techniques were developed after termination of the licence and were therefore not caught by clause 4. A little incongruously, Perceptual also complains that Zimmerman and his company are misleading or deceiving, or likely to mislead or deceive, the public into believing that their method is identical or equivalent to the Irlen Technology. Although it was suggested by the applicant's counsel that this allegation is put in the alternative, that is not how the statement of claim is drawn. 14, In dealing with the claim so far as 1t 1S based in contract 1t 1s, I think, necessary to proceed on the assumption that the information comprising the Irlen Technology 1s not confidential. The applicant placed no reliance on confidentiality at this stage. Indeed, on the material before the Court, it seems that there has been public disclosure of the substance of the Irlen system. Ms. Irlen's 1982 paper, delivered to the American Psychological Association annual meeting, described a test in whicr the Irlen Differential Perceptual Schedule was administered to various subjects to determine whether scotopic sensitivity existed. The broad content of the IDPS was outlined in the paper as follows:- "The IDPS consists of questions which identify the various symptoms of this syndrome which 1s manifested in four condititons (sic): reduced visual resolution, impaired depth perception, ocular vertigo and impaired peripheral vision. Impaired visual resolution manifests itself in the distortion of the clarity and stability of the outline of visual units (letters, numbers or musical notes). The first section of the IDPS concentrates on problems of ocular vertigo, depth perception and symptoms of eye strain. The primary emphasis of the second section is to delineate the specific symptoms of impaired visual resolution as they appear in the reading process. Section three explores the specific breakdowns in visual resolution as they affect handwriting, written composition, mathematical calculations and _ reading music. Finally, eye strain and focusing ability are measured in terms of near point vision, midpoint vision and far point vision. The number of "yes" responses on "the IDPS provides a directional measure for determining whether or not the treatment is likely to be successful." 15. In note 16 to the Paper, the following statement 15 made:- "Request for coptes of IDPS should be directed to this author c/o School of Education, CSULB, Long Beach, California, 90840". It appears then, that the IDPS in the form that it took in 1982 was not treated as confidential and was available on request. The same paper referred to the need for opthalmological examination of those whose responses to the IDPS questions indicated visual difficulty. It went on to disclose that, after receiving opthalmological examination and necessary changes in prescription if they were already wearing glasses, subjects scoring 30% or more on the IDPS were prescribed "the newly developed photopic transmittance lenses which attenuate only specific frequency bands predetermined to be causing the difficulty". A note in relation to the lenses indicates that there 1s a patent pending. Assuming that the techniques being used by the respondents fall within the general description of the "Irlen Technology", as expanded by clause 3 of the agreement, the question arises whether the prohibition in clause 4 is properly characterised as a restraint of trade. 16. Such a characterisation is, I think, reasonably open. The categories of restraint of trade are not closed ~ Quadramain Pty Ltd v Sevastapol Investments Pty Ltd (1976) 133 CLR 390, 401 (Gibbs J.), Petrofina (Gt. Britain) Ltd v Martin [1966] 1 Ch. 146, 169. Although put to counsel for Perceptual in the course of argument, he would not concede that the characterisation was correct. The point not having been argued for the respondents, it would be inappropriate to express a concluded view. However, in assessing the strength of Perceptual's case it is proper to take into account the probability that the contractual claim relies upon a rather wide provision in restraint of trade. To the extent that the provision hampers the free flow and use of information already in the public domain, its reasonableness would be closely scrutinised. There is, apart from the restraint issue, a constructional question. Clause 4 prohibits the continued application of "any of the Technology" by the licensee after the agreement has been terminated. Reading clause 4 and sub-clause 3G, it seems that this prohibition extends to the use of the technology as varied, augmented or enhanced by any different or new methods, technology or techniques developed by Zimmerman. Further it is reasonably 17. arguable that the clause prohibits the use of the derivative technology whether or not it was developed after the termination of the licence agreement. The question then arises whether the system devised by Zimmerman after termination of the licence agreement, falls within the description under sub-clause G. of clause 3 of "different or new methods, technology or techniques developed by Recipient to vary, augment or enhance the use of the Technology". The sub-clause must be read together with the definition of "the Technology" in the opening recital to the agreement. It seems that the use of "the Technology" as so defined, necessarily involves the use of the Irlen Differential Perceptual Schedule and the Irlen lenses. Accepting for present purposes Zimmerman's uncontradicted evidence on the nature of his system, 1t 1S open to conclude that 1t applies neither the IDPS nor lenses developed to the specifications of those used by Perceptual. Although Perceptual's case on the cause of action in contract raises a serious question to be tried, 1t cannot be described, on the materials so far before the Court, as strong. The amended statement of claim also alleges that the respondents have been using "the Irlen Technology or part thereof to identify, diagnose and treat persons with visual dysfunctions." 18. It 1s contended that the conduct is misleading or deceptive or likely to mislead or deceive in that it 15 likely to lead persons to believe that:- "(a) the first and/or second respondents are authorised by, or have the approval of, the applicant to use the Irlen Technology; (b) the first and/or second respondents have some connection or affiliation with the applicant; (c) the method used by the first and/or second respondents 1S identical to the Irlen Technology; (d) the method used by the first and/or Second respondents 1S equivalent to the Irlen Technology and will treat and correct a visual dysfunction as in the same manner and as effectively as the Irlen Technology when, in fact, the respondent may be mistreating persons with the dysfunction." Zimmerman's promotional letter to the principal of the Helena School certainly gave the impression that the technique was linked to that shown on the "60 Minutes" program in 1985. It suggested that the Rainbow Optics' procedures evolved from that technique. It is possible that some person who had seen "60 Minutes" might, in the absence of a convincing disclaimer, be led to believe that what Zimmerman was offering was a variant of the Irlen system. It may well be right to characterise the Rainbow Optic system as a variant of the "Irlen Technology" and to that extent the public would not be misled. 19. If people believed that there were some institutional relationship by way of sponsorship, approval or affiliation between the Irlen organisation and the respondents, then that would be a wrong belief. But 1t 1s, if held, likely to be based on the erroneous belief that anybody who offers a system of diagnosis and treatment based on the use of coloured lenses, has something to do with the Irlen organisation. So far as the evidence presently before the Court goes, there is little else that could support such an opinion. If held, it 1S about as logical as the view that all who espouse Marxist-Leninist dogma are members of the Communist Party. One could be forgiven for forming the impression that Perceptual seeks to apply rather similar logic. That impression is conveyed by Ms. Irlen's affidavit at para. 19.2:- "The Irlen Technology 1s typically referred to in the press in Australia and elsewhere as "the coloured lens or glass technique". Accordingly, any reference to the coloured lens or glass technique has become synonymous with the Irlen Technology." Precisely the same statement is made in the affidavit of Patricia Marie Stanley, one of Perceptual''s licensees in Western Australia. 20. In Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 230, Stephen J., with whom Barwick CJ, Jacobs and Aicken JJ agreed, said of s.52 of the Trade Practices Act:- "To allow this section of the Trade Practices Act to be used as an instrument for the creation of any monopoly in descriptive names would be to mock the manifest intent of the legislation. Given that a name 15 no more than merely descriptive of a particular type of business, 1ts use by others who carry on that same type of business does not deceive or mislead as to the nature of the business described." A fortiori, it would be a mockery of the legislative antent to allow the section to restrict the application of information in the public domain because some people make urrational connections between different users. To restrict the use by one party of a technique for the treatment of reading impairment involving coloured plastic lenses because the first entrant into the market has already established a reputation in connection with such a system, would be to misconceive the meaning and intent of s.52. The section 1s directed to consumer protection, not the protection of competitors from competition. Balance of Convenience The principal contention of the applicants on the question of balance of convenience is that if the respondents are 21. allowed to continue promoting and applying their system, they will damage the applicant's reputation through screening which is manifestly inadequate and through consequential misdiagnosis and mistreatment. Ms. Irlen and her local licensee, Patricia Stanley, deposed to their belief that the main screening used by the respondents is inadequate and "must inevitably lead to misdiagnosis and mistreatment in relation to at least some of the children screened". Beyond the broad brush prediction of errors, 10 explanation of their likely nature and causation was advanced. In particular it is not clear whether it was contended that mass screening would miss some children, or would identify for further assessment, children without any problem. The Zimmermans' activities have led to some adverse publicity in Western Australia. In the West Australian Newspaper of 24 October 1987 an article was published under the headline "Colour-Vision Tests Worry Eye Experts". It referred to the Mass screening program and the fact that the Z1immermans have "no orthodox qualifications for vision testing". Two eye specialists were quoted as saying there was no proof that coloured lenses worked. When children reported that the lenses helped them, it seemed to be a placebo effect or a psychological boost from receiving extra attention. 22. Zimmerman denies that he or his company are suggesting any relationship with Perceptual or the Irlen organisation. Indeed, he says, he asserts his dissatisfaction with the Irlen Techniques. In the first edition of the Rainbow Optics Manual "The How and Why of Coloured Glasses", he referred to the Irlen Lens Method as successful, but described the assessment as "complicated and expensive". In the second 1987 edition he referred to the method as "somewhat successful" and described the assessment as "complicated, unsatisfactory and expensive". Zimmerman contends that if enjoined from carrying on his activities and those of Versi Pty Ltd, he would suffer loss in that:- 1. Research that has been under way for 6 months would be halted. 2. The testing program for 1988 would not proceed. 3. He would have lost time which he has taken by way of leave of absence from his employment' to continue research into the coloured lens technique. 4. He would be unable to complete detailed follow-up work on students from city schools or commence follow-up on country students. The evidence does not give any satisfactory detail of the "research" which would be interfered with or the "detailed follow-up work". 23. Nevertheless 1t seems likely that the injunctive relief claimed would substantially inhibit the respondents' activities. Whether Interlocutory Relief Should be Granted The applicant has, I think, failed to make out any substantial case that the respondents have been holding themselves out as having its sponsorship or approval or any association or affiliation with it. The use by the respondents of techniques with elements common to the procedures adopted by the applicant, does not give rise to such an inference. Nor does mere similarity in technique do so. The letter of 28 February 1987 to the principal of Helena School refers to the use of coloured glasses as shown on "60 Minutes" and to the development of a new system by Zimmerman and his wife. Accepting that "60 Minutes" identified procedures there shown as associated with Ms. Irlen or Perceptual, 1t does not follow that any third party who uses these procedures or any part of them is to be taken as identifying itself with Irlen or Perceptual. 24. In relation to the contractual claim, the applicant has, in my opinion, demonstrated an arguable, but not very strong case, that the respondents' procedures may fall within the scope of the Irlen Technology as defined in the licensing agreement. This element of the claim 1s weakened by the probable characterisation of the contractual provision relied upon as a restraint of trade. It is further weakened by the fact that the definition of the Irlen Technology used 1n the licensing agreement 1s tied to the IDPS and the Irlen lenses, neither of which, 1t appears, are used by the Zimmermans. I am inclined to think that the balance of convenrence favours the respondents. Given the nature of the applicant's case 1t would require a marked balance of convenience in its favour to justify the grant of interlocutory relief. The applicant's concern about damage to its reputation flows from the fear that the Zimmermans may, by inadequate screening and misdiagnosis, give the "coloured lens" generally a bad name. That fear may be well-founded but 1f it is, it 1s not because of any contractual breach or contravention of the Trade Practices Act. In my opinion the interlocutory relief sought should be refused. 25. Security for Costs The respondents seek an order for security for costs against Perceptual. The general power to order security 1s to be found in s.56 of the Federal Court of Australia Act 1976 and specific cases 1n which security may be ordered are set out in 0.28 r.3 of the Federal Court Rules. In particular, the court may order security where 1t appears that the applicant 1s ordinarily resident outSide Australia. Perceptual 1s a Californian corporation, whose principal resides in California. The respondents do not suggest that the applicant is impecunious. What they say is that, 1f they are ultimately successful in these proceedings and have a judgment for costs against the applicant, there 1s no way of enforcing 1t except by commencing fresh proceedings in California. There is no suggestion that Perceptual has any tangible assets in Australia. The respondents estimate their costs at $23,450.00 on the assumption that the trial will occupy five days of hearing. The estimate is challenged only to the extent that there is an overlap between an amount of $6,000.00 for getting up the me, 26. case for trial and $2,000.00 for "communication with client and proofing of witnesses". I agree with that criticism and for present purposes, accept the proper estimate of $21,450.00. I take into account the merits of the case and the fact that the applicant and its principals are based outside the jurisdiction and evidently do not have any significant assets in this country. There are uncertainties connected with the recovery of costs overseas even in cases where there 1S provision for reciprocal enforcement of judgments - Kent Heating Ltd v Cook-On-Gas Products Pty Ltd (1984) 59 ALR 277. I also note counsel's concession that the applicant will not be prevented from continuing in these proceedings by the making of an order to provide security. In these circumstances I am of the opinion that such an order should be made and that security should be provided by the applicant in the amount of $21,450.00. I will hear from the parties as to the precise directions I should make in that regard, including directions as to the form which the security should take. St ed al 27. CONCLUSION It is, I think, desirable in this case to make clear that the Court has, at this stage, not been concerned to enquire into the merits or otherwise of the procedures propounded by the parties for the diagnosis and treatment of visual difficulties. Nothing said in this judgment should be taken as an expression of Opinion one way or the other in that regard. That is not to say that their effectiveness may not be an issue at trial. I certify that this and the preceding twenty six (26) pages are a true copy of the Reasons for Judgment of His Honour Justice French. Associate: cero Date: ~™ hae Qn lear 87. Counsel for the Applicant: Mr C.J. Pullin Solicitors for the Applicant: Messrs. Jackson McDonald Counsel for the Respondents: Mr S.G. Leslie Solicitors for the Respondents: Phillips Fox Date of Hearing: 30 November 1987 Date of Judgment: 7 December 1987