FEDERAL COURT OF AUSTRALIA Neurizon Pty Limited v Jupiters Limited [2003] FCA 950 PRACTICE AND PROCEDURE - discovery - patent infringement action - confidentiality claimed for certain documents - disclosure made to the applicant's legal advisors and will be able to be made available to experts on the basis of certain undertakings - whether disclosure should be made to the applicant or any other person associated with the applicant Cases Harman v Secretary of State for the Home Department (1983) 1 AC 280 Cited Index Group of Companies Pty Ltd v Nolan [2002] FCA 608 Cited NEURIZON PTY LIMITED v JUPITERS LIMITED, JUPITERS MACHINE GAMING PTY LIMITED, EASTERN SUBURBS LEAGUES CLUB LIMITED, WYNNUM MANLY LEAGUES CLUB LIMITED and QUEENSLAND LIONS SOCCER CLUB Q44 of 2003 KIEFEL J 9 SEPTEMBER 2003 BRISBANE IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY Q44 OF 2003 BETWEEN: NEURIZON PTY LIMITED APPLICANT AND: JUPITERS LIMITED FIRST RESPONDENT JUPITERS MACHINE GAMING PTY LIMITED SECOND RESPONDENT EASTERN SUBURBS LEAGUES CLUB LIMITED THIRD RESPONDENT WYNNUM MANLY LEAGUES CLUB LIMITED FOURTH RESPONDENT QUEENSLAND LIONS SOCCER CLUB FIFTH RESPONDENT JUDGE: KIEFEL J DATE OF ORDER: 9 SEPTEMBER 2003 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. Upon oral and written undertakings in the terms of Annexure D to Mr Johnson's affidavit filed 4 September 2003, inspection of the documents numbered 23, 24, 27, 29-31, 34 and 35, (but not 36) in the respondents' list of documents be made available to Mr Steven Johnson; and further upon written undertakings in those terms that each of those documents, together with document 36, be available to the independent expert or experts appointed by the applicant. 2. The documents produced to the Court will be maintained in a sealed envelope which is not to be opened save by order of a Judge. 3. Costs of the motion be the parties' costs in the proceedings. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY Q44 OF 2003 BETWEEN: NEURIZON PTY LIMITED APPLICANT AND: JUPITERS LIMITED FIRST RESPONDENT JUPITERS MACHINE GAMING PTY LIMITED SECOND RESPONDENT EASTERN SUBURBS LEAGUES CLUB LIMITED THIRD RESPONDENT WYNNUM MANLY LEAGUES CLUB LIMITED FOURTH RESPONDENT QUEENSLAND LIONS SOCCER CLUB FIFTH RESPONDENT JUDGE: KIEFEL J DATE: 9 SEPTEMBER 2003 PLACE: BRISBANE REASONS FOR JUDGMENT 1 The applicant is the proprietor of Australian patent No 714299 entitled 'Prize Awarding System'. The patent claims relate to methods of awarding a prize in a gaming system in at least one electronic gaming machine. The system is also described as a jackpot method. The patent was applied for on 9 August 1999 and it identifies Steven Brian Johnson as the inventor. Mr Johnson is a software engineer. One or both of the first and second respondents have developed, operate and provide a system which the first respondent describes as the 'Cougar System'. The applicant alleges that that system is a method or system of awarding a prize as claimed in the patent. 2 The respondents deny infringement. In relation to the patent a number of claims are made by the respondents, but the principal cross-claim alleges that the methods and means of claims 1 and 17 of the patent were invented by Mr Steven Johnson whilst he was employed by Jupiters Limited to develop computer codes and software for electronic gaming machines. In its reply the applicant has pleaded an estoppel, alleging that the respondents have stood by whilst it has developed and licensed intellectual property rights in the patent and has indeed undertaken the prosecution of a claim for infringement to conclusion. 3 The respondents have identified a number of documents including computer discs, as confidential documents. Disclosure has been made to the applicant's legal advisors and will be able to be made to experts yet to be appointed on the basis of certain undertakings. They resist an order which would permit Mr Steven Johnson or any other person associated with the applicant, access to them. The market (of licensed monitoring operators) in which the first and second respondents operate is highly competitive. The cost of the Cougar System is said to have been between $8M and $10M. The system consists of a number of modules including modules for connection with electronic gaming machines. The design and architecture, including these modules, is a trade secret. It is said that access to 'the source code and technical documentation relating to the Cougar System' is strictly controlled by Jupiters Limited. They are only disclosed to employees and contractors and to regulators if necessary. Employees are subject to confidentiality agreements. The respondents' concern is that if another licensed monitoring operator was made aware of the internal design and architecture of the system, they would be able to reproduce it. It is then specifically alleged that if Mr Steven Johnson had access to the source code and technical documentation relating to the Cougar System he would be able to understand and reproduce aspects of it. 4 Document 36, a disc, contains lines of software source code and a table of contents to the code. During argument on the respondents' motion, counsel for the applicant excepted that document from inspection by Mr Steven Johnson. I take it that the exception does not extend to disclosure to an independent expert to be appointed by the applicant. The source code is of especial importance to the first and second respondents. It is not installed where the system is used. It is described as 'highly confidential'. It is said, in connexion with this 'document', that a software engineer would be able to understand the internal design and operational principles of the Cougar System. It is not however said, in connexion with the other documents, that access to each of them or together, absent this source code, would similarly enable such a person to understand or reproduce the system. The other references in the affidavits, to what is necessary to put a person in such a position, speak of the technical information contained in these documents in conjunction with the source code. 5 The applicant is a small company operated by Mr Johnson and his wife. His son appears to have a connexion with it as well. Its business is said to differ from Jupiters in that it does not provide monitoring or jackpot services. It does, however, licence licensed monitoring organisations which are competitors of the respondents. 6 More importantly, the applicant says that it is unable effectively to provide instructions to its lawyers or assist in briefing an expert without access to the technical documents. Mr Steven Johnson's role in this litigation is to explain or, as he says, to teach the lawyers the technical aspects of the invention to enable them to properly comprehend it. He spends about fifteen hours per week working on the litigation. He will be a witness on the issue of infringement, as he has been in the earlier litigation. He says that he cannot give meaningful instructions on that issue without access to the further technical information on the components which make up the system. He has been able to deduce sufficient about the respondents' system from what he has observed of the system in operation and from some other information, to enable the matter to be pleaded, but his understanding is limited. No experts have been briefed by the applicant because its solicitors are reliant upon Mr Johnson's advices as to what material is necessary for their purposes concerning the invention. The use of an expert as a 'go-between', a matter which I raised with the parties during the hearing, is not considered to be practicable. 7 As I have said, the status of the documents providing technical information, without access to the source code, is not entirely clear. Accepting for present purposes that those documents are confidential in the sense discussed, it is necessary for the Court to undertake a balancing exercise having regard to what might result from the disclosure of that information and the effect upon the litigation if it is not disclosed: Harman v Secretary of State for the Home Department (1983) 1 AC 280 at 308, Index Group of Companies Pty Ltd v Nolan [2002] FCA 608 at [8]. 8 The disclosure here is to be limited, in the sense that it will only be to Mr Steven Johnson and not a wider group of persons within a corporation. It will be subject to the undertakings proposed by the respondents which would substantially restrict his ability to retain the information so as to be able to pass it on. It is complex information and he will not be able to copy or retain notes of it. He has given undertakings in previous litigation. 9 Balanced against the respondents' interests is the effect on the applicant's conduct of its case and its ability to prepare for trial. The first and second respondents observe that, to an extent, Mr Johnson has chosen to conduct the litigation in the way described. A Court would of course be alert to a party putting themselves in a position so as to require resort to the information and to the possibility that litigation might just as efficiently be managed in a different way. In this case though Mr Johnson is undertaking the same role as was found to be necessary in previous litigation on the patent. He is the inventor and he represents the applicant. It is not difficult, it seems to me, given the level of technical complexity which the lawyers must grapple with, to accept that Mr Johnson has a special role, one which requires him to understand the technical aspects of the Cougar System if he is to give meaningful instructions. I have considered the use of an expert and also whether at least attempts ought to be made to manage the case by means of an expert. I am however unpersuaded that it is likely to be an efficient means of litigating and one which would not put the applicant at risk. Experts may not have the depth of knowledge of the applicant's system . Mr Johnson is the person who has developed it. The applicant would understandably feel less than confident in effectively entrusting the conduct of its case to a third party, even if they are capable of comprehending the systems. I consider that there is a real likelihood that the applicant would be prejudiced in the conduct of its case. All of the respondents' witnesses will be able to understand the technical issues relating to both systems, but the applicant will not be in that position. Indeed on the respondents' proposal Mr Johnson would not be able to have input into the expert's brief, nor would he be able to follow what the expert was saying and, where appropriate, to make comments on it. This is not a case where it seems to me possible to keep what is said to be very important information from the applicant's representative. This is especially so because of his combined role. 10 On the respondents' motion of 29 August 2003 I then propose to order that, upon oral and written undertakings in the terms of Annexure D to Mr Johnson's affidavit filed 4 September 2003, inspection of the documents numbered 23, 24, 27, 29-31, 34 and 35, (but not 36) in the respondents' list of documents be made available to Mr Steven Johnson; and further upon written undertakings in those terms that each of those documents, together with document 36, be available to the independent expert or experts appointed by the applicant. The documents produced to the Court will be the subject of a order that they be maintained in a sealed envelope which is not to be opened save by order of a Judge. 11 I will hear further submissions as to what other orders listed in the motion may be necessary. I would propose that the costs of the motion be the parties' costs in the proceedings. I do not think it could be suggested that the respondents were not justified in attempting to retain their documents as confidential. It is not so much a case where a party is successful or not, as one where the Court has to balance the interests of the parties, an outcome which cannot always be predicted. They are truly the costs necessary to the litigation and which should be recovered by the successful party. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kiefel. Associate: Dated: 16 September 2003 Counsel for the Applicant: Ms K Downes Solicitor for the Applicant: Phillips Fox Counsel for the Respondent: Mr C Crowe SC and Mr D Williams Solicitor for the Respondent: Corrs Chambers Westgarth Date of Hearing: 5 September 2003 Date of Judgment: 9 September 2003