FEDERAL COURT OF AUSTRALIA Vald Pty Ltd v KangaTech Pty Ltd (No 6) [2024] FCA 408 File number(s): QUD 440 of 2019 Judgment of: DOWNES J Date of judgment: 23 April 2024 Catchwords: PATENTS – form of orders following judgment on claim and cross-claim – whether declaration of non-infringement should be made when relief not sought in cross-claim – where respondent offered form of undertaking following trial by email to judge's chambers – whether respondent should be (or needs to be) released from proposed undertaking Cases cited: Vald Pty Ltd v KangaTech Pty Ltd (No 5) [2024] FCA 333 Division: General Division Registry: Queensland National Practice Area: Intellectual Property Sub-area: Patents and associated Statutes Number of paragraphs: 18 Date of last submission/s: 18 April 2024 Date of hearing: Determined on the papers Counsel for the Applicant: Mr D Logan KC with Mr D Larish Solicitor for the Applicant: Holding Redlich Counsel for the Respondent: Mr B Fitzpatrick Solicitor for the Respondent: Wrays ORDERS QUD 440 of 2019 BETWEEN: VALD PTY LTD (ACN 603 446 171) Applicant AND: KANGATECH PTY LTD (ACN 609 070 340) Respondent AND BETWEEN: KANGATECH PTY LTD (ACN 609 070 340) Cross-Claimant AND: VALD PTY LTD (ACN 603 446 171) Cross-Respondent order made by: DOWNES J DATE OF ORDER: 23 APRIL 2024 IN THIS ORDER THE FOLLOWING DEFINITIONS APPLY: Patent means Australian Standard Patent No. 2012388708. patent area has the same meaning as that term as defined in the Dictionary in Schedule 1 of the Patents Act 1990 (Cth). KangaTech Product means the device described in paragraphs 4 and 232 of the Reasons for Judgment in Vald Pty Ltd v KangaTech Pty Ltd (No 5) [2024] FCA 333 (Judgment). KT360 means the devices described in paragraphs 234 to 236 of the Judgment. Pre-SM KT360 means the KT360s sold, leased and supplied, etc, by the Respondent before 31 December 2019, as described in paragraph 249 of the Judgment. THE COURT DECLARES THAT: 1. The Respondent has infringed claims 1, 2, 3, 4, 6, 7, 8, 9, 10, 11, 12, 13, 14, 16, 18, 19 and 20 of the Patent by, in Australia: (a) making, exporting, selling, supplying, hiring, or otherwise disposing of; (b) offering to make, export, sell, supply, hire, or otherwise dispose of; (c) keeping for the purpose of exporting, hiring, selling, supplying, hiring or otherwise disposing of; or (d) authorising persons to use, the KangaTech Product. 2. The Respondent has infringed claims 1, 2, 3, 4, 6, 7, 8, 9, 10, 11, 12, 13, 14, 16, 18, 19 and 20 of the Patent by, in Australia: (a) making, exporting, selling, supplying, hiring, or otherwise disposing of; (b) offering to make, export, sell, supply, hire, or otherwise dispose of; (c) keeping for the purpose of exporting, selling, supplying, hiring or otherwise disposing of; or (d) authorising persons to use, the Pre-SM KT360. THE COURT CERTIFIES THAT: 3. Pursuant to section 19(1) of the Patents Act 1990 (Cth), the validity of each of the claims of the Patent was unsuccessfully questioned in this proceeding. THE COURT ORDERS THAT: 4. The Respondent, whether by itself, its directors, servants, agents or otherwise, is restrained from infringing any of claims 1, 2, 3, 4, 6, 7, 8, 9, 10, 11, 12, 13, 14, 16, 18, 19 and 20 of the Patent within the patent area, during the term of the Patent, without the licence or authority of the Applicant. 5. Without limiting the restraint in Order 4 above, the Respondent, whether by itself, its directors, servants, agents or otherwise, is restrained from engaging in the following acts, without the licence or authority of the Applicant: (a) making, exporting, importing, selling, supplying, hiring, or otherwise disposing of the KangaTech Product or the Pre-SM KT360, or any other product infringing any of claims 1, 2, 3, 4, 6, 7, 8, 9, 10, 11, 12, 13, 14, 16, 18, 19 and 20 of the Patent; (b) offering to make, export, import, sell, supply, hire, or otherwise dispose of the KangaTech Product or the Pre-SM KT360, or any other product infringing any of claims 1, 2, 3, 4, 6, 7, 8, 9, 10, 11, 12, 13, 14, 16, 18, 19 and 20 of the Patent; (c) using the KangaTech Product or the Pre-SM KT360, or any other product infringing any of claims 1, 2, 3, 4, 6, 7, 8, 9, 10, 11, 12, 13, 14, 16, 18, 19 and 20 of the Patent; and (d) authorising any person to engage in any act described in subparagraphs (a) to (c) above. 6. Within 40 days after the date of these Orders, the Respondent is to deliver up to the Applicant's solicitors, or destroy with verification on oath or affirmation: (a) all KangaTech Products and Pre-SM KT360s in the possession, custody or power of the Respondent; and (b) all promotional material promoting or marketing the KangaTech Product and Pre-SM KT360 in the possession, custody or power of the Respondent. 7. The Respondent is released from the undertaking dated 31 July 2023 and provided to the Associate to Justice Downes. 8. In the event that no appeal is lodged by either party within 28 days of the date of these Orders: (a) On or before 4.00 pm on 24 May 2024, each party file and serve any submission (limited to 5 pages) and any evidence in support of the orders on costs for which it contends (such orders to be identified in the submissions). (b) On or before 4.00 pm on 31 May 2024, each party file and serve any submissions in answer (limited to 3 pages) and any evidence in answer on the question of costs. (c) The question of what orders are to be made with respect to costs of the proceeding to date (including the cross-claim) be listed for hearing at 9.30 am on the first available date after 5 June 2024, to be advised administratively, with an estimate of 2 hours. 9. Within 14 days after the determination of the question of costs, or the final determination of any appeal (if lodged): (a) the parties are to approach the Associate to Justice Downes for the purpose of listing the proceeding for case management in respect of an inquiry as to the quantum of damages (including any additional damages) or an account of profits or interest; and (b) the parties are to confer and provide the Court (at least 1 working day before the listing date) with agreed short minutes of order or, in the event of disagreement, competing short minutes of order, as to interlocutory steps to progress such inquiry. 10. The Respondent's Notice of Cross-claim is dismissed. 11. The Applicant's Amended Originating Application is otherwise dismissed. 12. The parties have leave to appeal and, if necessary, leave to cross-appeal. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT DOWNES J: 1 Following delivery of my decision on 5 April 2024 being Vald Pty Ltd v KangaTech Pty Ltd (No 5) [2024] FCA 333 (Judgment) and orders made on that date, the parties obtained an extension of time to attempt to agree upon orders, and each subsequently provided a draft order and brief submissions to my chambers. 2 In these reasons, I will adopt the same definitions as in the Judgment. 3 Most of the orders sought by Vald are either agreed between the parties or are not the subject of opposition by KangaTech. Having reviewed the proposed orders which fall into these categories, I agree that they are appropriate and should be made. 4 The two topics of disagreement will now be considered. Declaration of non-infringement 5 KangaTech seeks a declaration in these terms: The exploitation (as that term is defined in the Patents Act 1990 (Cth)) of the Respondent's Post - SM KT360 within the patent area since January 2020, does not infringe any of the claims of the Patent. 6 It submits that the "critical issue in dispute between the parties at trial on infringement was whether the modified KT360 machines infringed any of the claims of the patent". KangaTech's position at trial was that there was no infringement. That being the case, it ought to have sought a declaration in these terms as part of the relief sought by it in its cross-claim. No explanation is provided as to why that did not occur, and no application is made to amend the cross-claim. 7 In any event, there is no utility in granting the declaration. The findings made in the Judgment suffice to make the position clear insofar as it concerns the Post-SM KT360. 8 For these reasons, the declaration sought by KangaTech will not be granted. Release from undertaking 9 During closing submissions on the final day of trial, the topic of the injunctions sought by Vald was raised with counsel who appeared for KangaTech. This was in the context that Vald complained in its submissions that no undertaking had been offered by KangaTech. I inquired of KangaTech's counsel about any "proposed undertaking" which his side was prepared to give as it would be "useful". A form of undertaking was provided by email to my chambers following the trial, on a without admissions basis, and the fact that the undertakings had been offered was recorded in [253] of the Judgment. However, as the Judgment addressed issues of liability only, it was not then necessary to hear from the parties any further about the undertaking. 10 By their present submissions, both parties appear to be proceeding on the basis that an undertaking which is sent to a judge's chambers, and which is not offered in Court or accepted by the Court, or otherwise recorded in any official manner (such as a transcript or an Order), constitutes an undertaking which is binding, such that the party offering the undertaking must be released from the undertaking by an order of the Court. 11 I have doubts about the legal correctness of that position. At my invitation, KangaTech provided a form of undertaking by email from its solicitor after the trial had concluded. At that time, I had not heard from Vald about whether the form of that undertaking was adequate or ought to be accepted by the Court and if not, why that was so (and nor did I seek submissions about those matters). 12 I had also not formed a view as to whether such an undertaking was necessary or required, as it was not relevant to the question of liability (notwithstanding that it had been raised by Vald in its submissions). Further, there is no formal record of the form of the undertaking (or accompanying email) whether in the evidence, transcript or Judgment. 13 The undertaking stated as follows: The respondent, KangaTech Pty Ltd, hereby undertakes to the Court, for itself and on behalf of its directors, officers, employees and agents, during the term of Australian Patent 2012388708 (the Patent) and whilst the Patent remains in force: 1. Not to import, manufacture, offer for sale, sell lease or in any other way exploit or otherwise provide to the market in Australia, any KangaTech 360 Product, unless that product has been modified in the manner described in each of: a. the affidavit of David Charles Scerri (affirmed on 18 July 2023), which forms Exhibit 18 (the Scerri Affidavit); and b. the third affidavit of Steven Wayne Saunders (affirmed on 19 July 2023), which forms Exhibit 21 (the third Saunders Affidavit); and 2. Not to reverse, alter or otherwise change the modifications to the KangaTech KT 360 Product, as described in the Scerri Affidavit and/or the third Saunders Affidavit. 14 Now that I am at the stage of making orders following the Judgment, the issue of whether the undertaking ought to be accepted and included in the orders, in addition to or in lieu of any injunction sought by Vald or with any modifications, is a live one. 15 Vald seeks injunctive relief (which relief KangaTech does not oppose) as well as requiring that KangaTech be bound by the undertaking provided after the trial, although I note that Vald does not seek that the undertaking be recorded in its draft order. KangaTech seeks an order that it be released from its undertaking but it also might be said that, in the circumstances, it withdraws its offer of that undertaking. 16 However one characterises these somewhat unusual events and without engaging in the task of resolving the precise status of the document which was sent to my chambers, I regard it as disproportionate for Vald to obtain its injunctive relief as well as having the benefit of KangaTech's undertaking (assuming that it has legal force). That is because the undertaking does not add to the level of protection which is provided by the injunctions. 17 Further, KangaTech might, in the future, wish to further modify the software associated with the Post-SM KT360 in a manner which does not cause the KT360 to infringe the claims of the Patent, but will be prevented from doing so unless it returns to Court in order to be released from the undertaking. This level of supervision of KangaTech's conduct by the Court is excessive in circumstances where the Post-SM KT360 does not infringe the claims, there is no evidence that KangaTech intends to infringe the claims of the Patent in the future, KangaTech has agreed to the injunctions sought by Vald and Vald has adequate protection by reason of those injunctions. 18 For these reasons and out of an abundance of caution, I will make an order which releases KangaTech from the undertaking which was provided by email to my chambers. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Downes. Associate: Dated: 23 April 2024