FEDERAL COURT OF AUSTRALIA Chamberlain Group, Inc v Giant Alarm System Co, Ltd [2017] FCA 1472 File number: NSD 804 of 2017 Judge: YATES J Date of judgment: 8 December 2017 Catchwords: PRACTICE AND PROCEDURE – patent infringement proceedings – application for leave to serve originating application outside Australia under r 10.43 Federal Court Rules 2011 (Cth) Legislation: Federal Court Rules 2011 (Cth) rr 10.42, 10.43, 10.64, 10.65 Patents Act 1990 (Cth) s 154 Cases cited: Australian Competition and Consumer Commission v Yellow Page Marketing BV [2010] FCA 1218 Bell v Steele [2011] FCA 1390; (2011) 198 FCR 291 GE BetzDearborn Canada Company v Memcor Australia Pty Ltd [2013] FCA 78 Ho v Akai Pty Ltd (in liq) [2006] FCAFC 159 (2006); 247 FCR 205 Vringo Infrastructure Inc v ZTE (Australia) Pty Ltd (No 4) [2015] FCA 177; (2015) 323 ALR 138 WSGAL Pty Limited v Trade Practices Commission (1992) 39 FCR 472 Date of hearing: 20 November 2017 Registry: New South Wales Division: General Division National Practice Area: Intellectual Property Sub-area: Patents and associated Statutes Category: Catchwords Number of paragraphs: 39 Counsel for the Applicants: Mr P Flynn with Dr A Hughes Solicitor for the Applicants: Corrs Chambers Westgarth Counsel for the First Respondent: The First Respondent did not appear Counsel for the Second Respondent: The Second Respondent did not appear Counsel for the Third Respondent: The Third Respondent did not appear Solicitor for the Fourth Respondent: Mr J Lawrence of Mills Oakley ORDERS NSD 804 of 2017 BETWEEN: THE CHAMBERLAIN GROUP, INC First Applicant CHAMBERLAIN AUSTRALIA PTY LTD Second Applicant AND: GIANT ALARM SYSTEM CO, INC First Respondent AUTOGA CO LTD Second Respondent CODEEZY PTY LTD Third Respondent NATIONAL GARAGE REMOTES AND OPENERS PTY LTD Fourth Respondent JUDGE: YATES J DATE OF ORDER: 8 DECEMBER 2017 THE COURT ORDERS THAT: 1. Pursuant to r 10.43 of the Federal Court Rules 2011 (Cth), leave be granted to the applicants to serve the originating application on the first respondent in the People's Republic of China in accordance with the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters done at the Hague on 15 November 1965. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT YATES J: Introduction 1 The applicants seek leave pursuant to r 10.43 of the Federal Court Rules 2011 (Cth) (FCR) to serve the originating application filed on 25 May 2017, on the first respondent, Giant Alarm System Co, Ltd, which is a company located in the People's Republic of China (PRC). 2 The first applicant, The Chamberlain Group, Inc., is registered as the owner of three patents: Australian Patent Number 2006200340 (the 340 patent); Australian Patent Number 2007203558 (the 558 patent); and Australian Patent Number 2006202850 (the 850 patent). 3 The second applicant says that it is the exclusive licensee of the rights granted by the patents. 4 The applicants allege that the first respondent has infringed each patent by acts of direct exploitation and by authorising others to exploit the patents. 5 The specification filed in respect of the 340 patent is entitled "Method and apparatus to facilitate transmission of ternary movable barrier operator information". The invention involves the conversion of ternary data into a binary format which is then transmitted to or from a movable barrier operator, such as would be used for a garage door. This conversion is a form of encryption which makes the underlying code more difficult to detect. 6 Claim 28 of the 340 patent is: An apparatus comprising at least one of a moveable barrier operator and a device that communicates with a movable barrier operator, comprising: - a first memory having ternary data to be transmitted as between the movable barrier operator and the device that communicates with a movable barrier operator; - a ternary-to-binary converter being operably coupled to the first memory and having a binary data output; - a transmitter operably coupled to the binary data output configured and arranged to externally transmit a binary-formatted version of the ternary data to one of the movable barrier operator and the device that communicates with the movable barrier operator. 7 The specification filed in respect of the 558 patent is entitled "Method and apparatus to facilitate transmission of an encrypted rolling code". A rolling code is an encryption method which involves the transmission of a code which changes over time, according to a pre-determined plan or algorithm. The benefit of rolling codes is that they prevent third parties using interception to detect the code with a view to using it in the future. 8 Claim 21 of the 558 patent is: An apparatus comprising: a first memory having a fixed value stored therein; a second memory having an encrypted rolling code stored therein; a first lookup table that correlates a first plurality of different encrypted rolling code values with corresponding differing data bit order patterns; a second lookup table that correlates a second plurality of different encrypted rolling code values with corresponding differing data inversion patterns; a processor that is operably coupled to the first and second memory and the first and second lookup table and that is configured and arranged to use the encrypted rolling code to select ones of the particular data bit order patterns and data inversion patterns to provide selected patterns; a transmitter operably coupled to the first and second memory and to the processor and being configured and arranged to transmit at least a part of the encrypted rolling code and the fixed value using the selected patterns as transmission characteristics. 9 The specification filed in respect of the 850 patent is entitled "Method and apparatus to facilitate message transmission and reception using different transmission characteristics". The invention claimed in this patent concerns the encoding of transmission data where a "recovery identifier" identifies for a receiver a set of "transmission characteristics" which are used for an encrypted message. A transmitter sends the recovery identifier in a fixed format, followed by the message content, encoded according to a selected scheme. The recovery identifier can be changed at random before each message or according to a pre-determined plan. 10 Claim 12 of the 850 patent is: An apparatus comprising: a transmitter capable of various selectable types of transmission, wherein the various selectable types of transmission differ from one another as a function, at least in part, of corresponding transmission characteristics, and wherein the transmitter is configured to transmit a joint message comprising a message content transmitted according to a selected at least one of the transmission characteristics, selected based at least in part on at least a portion of the message content, and with at least one specific recovery content indicator transmitted according to at least one different transmission characteristic, the at least one specific recovery identifier configured to allow a receiver to configure itself in response to receipt of the joint message to receive the message content of the joint message, wherein a plurality of recovery content indicators each individually has at least a portion that corresponds to a given corresponding one of the transmission characteristics; and a joint message formatter having an input operably coupled to receive the message content and the plurality of recovery content indicators and having a joint message output operably coupled to the transmitter and configured to output both the message content and the at least one specific recovery content indicator as corresponds to a presently selected at least one of the transmission characteristics. 11 Claim 48 is: A portable movable barrier remote control transmitter comprising: a transmitter configured to communicate with a movable barrier operator, and capable of various selectable types of transmission, wherein the various selectable types of transmission differ from one another as a function, at least in part, of corresponding transmission characteristics, and wherein a plurality of recovery content indicators individually has at least a portion that corresponds to a given corresponding one of the transmission characteristics; and a joint message formatter having an input operably coupled to receive message content and the plurality of recovery content indicators and having a joint message output operably coupled to the transmitter to provide a joint message comprising both the message content and the at least one specific recovery content indicator as corresponds to a presently selected at least one of the transmission characteristics selected based at least in part on at least a portion of the message content, wherein the joint message is configured to allow a receiver to configure itself in response to receipt of the joint message according to the presently selected at least one of the transmission characteristics to allow the receiver to receive the message content of the joint message. The applicants' case 12 In a nutshell, the applicants' case is that the invention of each patent is implemented in a movable barrier operating system that involves the transmission and reception of highly secure encrypted signals between a wireless transmitter and a movable barrier operated by a range of remote controllers (remotes) and receivers using what the applicants call Security +2.0 Technology. This technology is implemented in movable barrier operating systems supplied by the applicants under the Merlin brand name. 13 The applicants allege that the first respondent has offered for sale in Australia, or disposed of in Australia, remotes for garage doors using the Merlin movable barrier operating systems (the accused products). The applicants allege that, by these acts, the first respondent has infringed each patent, including the claims set out above. 14 Further, the applicants allege that, by means of instructions or inducements to use the accused products in Australia with a Merlin Security +2.0 receiver, the first respondent has authorised others, including the third and fourth respondents, to exploit the accused products in Australia. 15 The applicants further allege that, pursuant to an agreement or understanding between the first respondent and the third and fourth respondents, the first respondent acted in concert in a common design with the third and fourth respondents to engage in conduct that infringes the patents or, alternatively, aided and abetted, counselled and procured and/or induced and incited the third respondent and/or the fourth respondent to engage in infringing conduct. The evidence 16 For the purposes of the present application, the applicants read the following affidavits: James Joseph Fitzgibbon, affirmed 15 November 2017; Odette Margaret Gourley, sworn 16 August 2017; and Odette Margaret Gourley, sworn 16 November 2017. 17 The applicants tendered the following affidavits: John Patrick McMahon, sworn 28 July 2017; and Stuart Kelaher, sworn 27 July 2017. 18 Mr McMahon is a director of the third respondent, which is a company based in New South Wales. It carries on business as an after-market remote dealer. In his affidavit, he deposed that his company received samples of the accused products (it would seem, unsolicited) which were tested by him and found to be satisfactory. By this I take Mr McMahon to mean that the samples he received operated satisfactorily with Merlin movable barrier operating systems used with garage doors. As a result, the third respondent placed orders for the accused products, which were subsequently received by the third respondent and supplied to garage door repairers in Australia. It appears that, when the accused products were supplied to garage door repairers, the third respondent also sent information, supplied by the first respondent, as to how the accused products could be used in a way which allowed their operation with Merlin systems using the Security +2.0 Technology. 19 Mr Kelaher is a director of the fourth respondent, which is also a company based in New South Wales that carries on business as an after-market remote dealer. He deposed that the fourth respondent received, unsolicited, seven test samples of the accused products. Two samples were sent to another after-market remote retailer. It seems that, subsequently, the fourth respondent received a shipment of remotes which included the accused products. Mr Kelaher deposed that all the accused products in this shipment were subsequently returned to the first respondent. 20 There is evidence that the first respondent also approached another business based in New South Wales, eGarage Systems (eGarage), offering to supply the accused products. This approach included instructions on how the accused products could be used with Merlin movable barrier operating systems using the Security +2.0 Technology. 21 Mr Fitzgibbon is the first applicant's Director of Intellectual Capital. Mr Fitzgibbon deposed to the testing of the accused products supplied by the third respondent and eGarage. The testing of products supplied by the third respondent involved operating six of them repeatedly with the first applicant's Merlin Security +2.0 receivers. Mr Fitzgibbon said that these tests were carried out by Grant Emanuel, the first applicant's Head of Marketing Oceania. The testing was carried out in Australia. 22 Mr Fitzgibbon said he carried out the testing of the products sourced from eGarage. He tested two products. The testing was carried out 100 times on each product. 23 Mr Fitzgibbon gave evidence of the conclusions to be drawn from the testing. The effect of his evidence is that the test products follow the Security +2.0 algorithms claimed in the patents. 24 Mr Fitzgibbon provided claims tables in respect of claim 28 of the 340 patent; claim 21 of the 558 patent, and claims 12 and 48 of the 850 patent. These tables were prepared on the basis of a sample (referred to as the first sample remote) which was sourced in Australia, apparently from another local supplier supplied by the first respondent), which was tested and analysed by Mr Fitzgibbon. The first sample remote had the model number JJ-RC-SM12 on its transmitter board. 25 Based on Mr Emanuel's testing of the accused product supplied by the third respondent, and on his own testing of the accused products sourced from eGarage, Mr Fitzgibbon deposed to his belief that the conclusions in the claims table apply equally to those products. Given the nature of the present application, I see no reason why I should not proceed on that evidence: WSGAL Pty Limited v Trade Practices Commission (1992) 39 FCR 472 at 476; GE BetzDearborn Canada Company v Memcor Australia Pty Ltd [2013] FCA 78 at [12]; Vringo Infrastructure Inc v ZTE (Australia) Pty Ltd (No 4) [2015] FCA 177; (2015) 323 ALR 138 (Vringo) at [107]-[109]. 26 Ms Gourley's affidavit of 16 November 2017 provides evidence of certain formal matters that are required to be shown. The Legal Framework 27 Rule 10.43 of the FCR provides that service of an originating application on a person in a foreign country is effective for the purpose of a proceeding if the Court has given leave under r 10.43(2) before the application is served. Rule 10.43(2) provides that a party may apply to the Court for leave to serve an originating application on a person in a foreign country in accordance with a convention, the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters done at the Hague on 15 November 1965 (the Hague Convention), or the law of the foreign country. Here, service under the Hague Convention is sought. Rule 10.43(3) sets out certain procedural requirements: see below at [37]. 28 Rule 10.43(4) provides: For subrule (2), the party must satisfy the Court that: (a) the Court has jurisdiction in the proceeding; and (b) the proceeding is of a kind mentioned in rule 10.42; and (c) the party has a prima facie case for all or any of the relief claimed in the proceeding. Note 1: The law of a foreign country may permit service through the diplomatic channel or service by a private agent—see Division 10.5. Note 2: Rules 10.63 to 10.68 deal with service of local judicial documents in a country, other than Australia, that is a party to the Hague Convention. Note 3: The Court may give permission under subrule (4) on conditions—see rule 1.33. 29 Rule 10.42 sets out, in tabular form, the kinds of proceeding for which an originating application may be served on a person in a foreign country. In the present case, the applicants rely on the following items of the table: 1 (proceeding based on a cause of action in Australia); 4 (proceeding based on a tort committed in Australia); 5 (proceeding based, or seeking the recovery of damage, suffered wholly or partly in Australia caused by a tortious act or omission wherever occurring); 15 (proceeding for any relief or remedy under an Act); 20 (proceeding properly brought against a person who is served in Australia if properly joined as a party); 21 (proceeding in which the subject matter is property in Australia); and 23 (proceeding seeking an injunction ordering a person to refrain from doing something in Australia). 30 In Australian Competition and Consumer Commission v Yellow Page Marketing BV [2010] FCA 1218 at [25], Gordon J said: 25 The requirement to demonstrate a prima facie case in this context is not particularly onerous. The question is whether on the material before the Court, inferences were open which, if translated into final findings of fact, would support the relief claimed. A prima facie case exists, provided there is such evidence, even on a hearsay basis, as to sufficient elements of the proceeding leading to any (and not necessarily all) of the relief sought: Bray v F Hoffman-La Roche Ltd (2003) 130 FCR 317 at [39], [55], [58] and [97]. 31 In Ho v Akai Pty Ltd (in liq) [2006] FCAFC 159 ; (2006) 247 FCR 205 at [10], the Full Court said: 10 As has been observed on many occasions, the prima facie case requirement has to be met at the outset, usually on an ex parte basis, and without the advantage of discovery and other procedural aids to the making out of a case: see e.g. Merpro Montassa Ltd v Conoco Specialty Products Inc (1991) 28 FCR 387 at 390. It "should not call for a substantial inquiry": WSGAL Pty Ltd v Trade Practices Commission (1992) 39 FCR 472 at 476; see also Sydbank Soenderjylland A/S v Bannerton Holdings Pty Ltd (1996) 68 FCR 539 at 549. For present purposes it is sufficient to say that a prima facie case for relief is made out if, on the material before the court, inferences are open which, if translated into findings of fact, would support the relief claimed: Western Australia v Vetter Trittler Pty Ltd (in liq) (1991) 30 FCR 102 at 110. Or, to put the matter more prosaically as Lee J did in Century Insurance (in provisional liquidation) v New Zealand Guardian Trust [1996] FCA 376: "What the Court must determine is whether the case made out on the material presented shows that a controversy exists between the parties that warrants the use of the Court's processes to resolve it and whether causing a proposed respondent to be involved in litigation in the Court in Australia is justified." 32 These observations were adopted by Collier J in Bell v Steele [2011] FCA 1390; (2011) 198 FCR 291 at [21] when considering r 10.43(4)(c). 33 In Vringo at [41], I observed that: 41 In considering whether a prima facie case has been established, it is not the task of the Court to reach a definitive conclusion as to the accuracy of the facts advanced by the parties or to express any preference for competing accounts. The question is whether the evidence supports the facts for which the party seeking leave contends: Caterpillar Inc v John Deere Ltd (1999) 48 IPR 1 at [31]. Findings 34 I am satisfied that the Court has jurisdiction in the proceeding: see s 154(1) of the Patents Act 1990 (Cth). 35 I am satisfied that the proceeding is of a kind mentioned in r 10.42. I accept that each item on which the applicants rely is relevant to the present case. 36 In light of the matters noted at [18]-[25] above, I am satisfied that the applicants have established a prima facie case for at least the relief claimed in prayers 1 and 2(b) and (c) of the originating application in relation to the direct infringement by the first respondent of claim 28 of the 340 patent, claim 21 of the 558 patent and claims 12 and 48 of the 850 patent, and in relation to the first respondent authorising the third respondent and the fourth respondent to exploit the accused products in Australia. 37 The applicants have filed an affidavit in compliance with r 10.43(3) FCR stating that: the first respondent is to be served in the PRC; application will be made to the Registrar for a request for service abroad under r 10.64 and for the Registrar to forward the documents to be served to the Central Authority of the PRC in accordance with r 10.65; and the proposed method of service is permitted under Art 3 of the Hague Convention. Disposition 38 On the basis of these findings, I am satisfied that leave should be granted to the applicants to serve the originating application on the first respondent in the PRC. 39 An order will be made accordingly. I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Yates. Associate: Dated: 8 December 2017