Autronic Plastics Inc v DRM Trading Pty Limited [2006] FCA 764

FEDERAL COURT OF AUSTRALIA

Autronic Plastics Inc v DRM Trading Pty Limited [2006] FCA 764 AUTRONIC PLASTICS INC v DRM TRADING PTY LIMITED NSD 1082 of 2005 ALLSOP J 16 JUNE 2006 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NSD1082 of 2005

BETWEEN: AUTRONIC PLASTICS INC

APPLICANT

AND: DRM TRADING PTY LIMITED

RESPONDENT

JUDGE: ALLSOP J

DATE OF ORDER: 16 JUNE 2006

WHERE MADE: SYDNEY

THE COURT ORDERS THAT: 1. The Applicant/Cross-Respondent be granted leave to amend its Defence to Cross-Claim in the manner marked-up in Annexure A to the Notice of Motion filed 3 May 2006, such amendment to be filed no later than Friday 24 June 2006. 2. The costs of the cross-claimant thrown away by the amendment be paid by the applicant/cross-respondent. 3. In relation to the motion filed on 3 May 2006 dealing with the Defence to Cross-Claim, each party's costs be costs in the cause. 4. The Respondent send a letter to each of the appropriate corporate entities known to it answering the description of the parties discussed in Court as Dubois and MeadWestvaco in the terms set out in annexure A hereto. 5. The motion be adjourned to 2.15 pm on Wednesday, 28 June 2006 for any further argument. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NSD1082 of 2005

BETWEEN: AUTRONIC PLASTICS INC

APPLICANT

AND: DRM TRADING PTY LIMITED

RESPONDENT

JUDGE: ALLSOP J

DATE: 16 JUNE 2006

PLACE: SYDNEY

REASONS FOR JUDGMENT 1 In this matter the applicant sought various orders concerned with both its defence to the cross-claim and in relation to infringement. I grant leave to the applicant to amend its defence to the cross-claim in the manner sought in the notice of motion subject to particulars being provided in the terms that have been handed up today in Court, such defence to a cross-claim to be formalised by a document filed no later than Friday, 23 June 2006. 2 In relation to the part of the motion filed on 3 May 2006 dealing with the defence to cross-claim, I order that each party's costs be costs in the cause. I also order that any costs thrown away by the amendment to the defence to cross-claim, being costs of the respondent/cross-claimant, be paid by the applicant/cross-respondent. 3 As to the second part of the motion a number of orders were sought which, through the process of discussion and debate today, have really been abandoned. I do not think that the applicant should necessarily pay all the costs because those issues have been abandoned, however, I think it can be fairly said that the matter has been distilled to a more manageable level in discussion, and I do not say that critically of those who prepared the documents. 4 During the course of discussion in relation to the question of the steps taken in the course of its business by the respondent in the selling of cases, and cases and tags, and tags, various matters were stated by Mr Shavin QC on behalf of the respondent/cross-claimant. I suggested that those matters be formalised by admissions so as not, on a later occasion, to cause embarrassment to all the parties by reason of a misunderstanding in court. An admission was drafted by the applicant which the respondent says is an unsatisfactory reflection of what was said in the morning. I propose to leave the question of the formalising admission to the parties, recognising that the Court expects in a matter of commercial litigation, including hard fought commercial litigation (if there be any other kind), that the parties will make admissions to the limits of proper admissions and not leave matters disguised or undealt with for later tactical gain. I refer to what I said in White v Overland [2001] FCA 1333 which has been approved by the Court of Appeal in New South Wales in Nowlan v Marson Transport Pty Ltd (2001) 53 NSWLR 116about both parties ensuring that litigation, which is a costly exercise, does not proceed on a misunderstanding or false premise. That is an obligation not only on counsel and solicitors but on the parties themselves. That said, I do not propose to order any formal admission, but I would expect the parties to conduct themselves in a way that I have identified. 5 The second matter about the question of infringement that has arisen involves claims by the applicant that it wishes to have documentation which will underpin some of its arguments in relation to s 117 of the Patents Act 1990 (Cth). The respondent says that what is being sought is not pleaded properly and that in fact we have a species of pre-action discovery to identify a possible further cause of action that has not been pleaded. 6 If this were the case as a matter of substance it would be a good answer to any use of the compulsory powers of the Court in relation to discovery and interrogatories. I am not persuaded as a matter of substance that that is right. I think there is a case pleaded about the Case (that is the box without the red-tag) in paragraphs 11 to 15. The pleader has, however, only particularised sales to a company called Keston Holdings Pty Limited which one can tell from the particulars to paragraph 8 is a sale of cases and locks. It may be that the pleading needs to be brought into line with the arguments made today. 7 There is certainly no doubt that the respondent sells cases alone to various parties. The question is whether the applicant is able to prove that any of those sales have been made in circumstances where it can be concluded that section 117 applies. It is to be recognised in this respect that there is probably no issue subject to statutory construction issues that if the case is sold, together with the tag, together with instructions, then the operation of s 117 will be attracted. The subject of present argument is the sales of cases alone to third parties. 8 In this respect it should be understood that the respondent asserted in a letter of its solicitors dated 20 February 2006 that the respondent has reason to believe, and does believe, that the customers to whom it sells only red‑tag boxes do not use them in combination with tags. Mr Gleeson SC, on behalf of the applicant, says that what is sought is an elucidation of what the respondent has reason to believe, and does believe, about persons who receive the red-tag boxes from customers to whom they are delivered by the respondent. 9 I think there is force in the criticism of the pleading. However I think it is likely to be an empty point. I think the applicant should have an opportunity to bring the case about the Case in paragraphs 11 to 15 into line with its current understanding of what it proposes to argue at the hearing on liability (liability and quantum having been separated). In this respect I think Mr Shavin has a point where he adds that at paragraph 13 of the statement of claim should be attended to by way of particulars. 10 After lunch, a document was provided by Mr Gleeson that identified a discovery order that was being sought in relation to the s 117 case. I do not propose to make this formal order at the moment. I think it is inadequate to make clear the related groups of documents that are really sought and I do not propose to do the drafting on behalf of the applicant. It may be that a short body of interrogatories is necessary after the pleadings have been brought into line. Though in this day and age interrogatories have lost judicial and professional favour, in some cases they can be of utility and this may be one of them. However, I caution against any overenthusiastic use of them in this case beyond what is strictly necessary. Those are the issues about infringement. 11 One further issue of the matter first discussed is the position of an American third party, MeadWestvaco, also known in the debate we have had today as Dubois. 12 In relation to the issue about the defence to the cross‑claim and the operation of s 24 of the Patents Act, after discussion and debate this morning I indicated that I would not make orders requiring communications in the terms that were set out in the notice of motion, I indicated that I would make an order that the respondent write to relevant United States companies with whom it has dealt and who may be able to assist in resolution of the issues propounded in the defence to cross-claim. 13 In that respect Mr Gleeson has brought to Court after lunch a draft document which contains a draft letter to MeadWestvaco. The letter should, in my view, go to the relevant holding company which, as I understand it, is MeadWestvaco and also Dubois Limited which is a company that supplies tags to the respondent. There should be separate letters to those companies. The draft provided by Mr Gleeson, shorn of some of the typographical errors that are understandably present given the shortness of time in drafting it, in my view is appropriate to be sent. 14 I order the respondent to send that letter to each of the appropriate corporate entities known to it answering the description of the parties discussed today as Dubois and MeadWestvaco in the form annexed. As to the question of discovery I do not propose to make any order today. I propose to adjourn the motion to 2.15 pm on Wednesday, 28 June 2006 for any further argument about that matter. I have indicated already my approach to the question. It seems to me that the parties should be able to resolve a sensible and non-oppressive regime for the testing of issues as to whether uncontested sales took place in a factual environment that attracted the operation of s 117 on at least one occasion. 15 As to the costs of this part of the motion, that is the discovery on the infringement, my present view for the benefit of the parties to consider for the next occasion is that I would order that the respondent's costs be costs in the cause but I need to be persuaded at the moment why the applicant should have today costs as costs in the cause. I think the requests were somewhat ambitious, but I will deal with that issue on the next occasion. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop.