Bitech Engineering v Garth Living Pty Ltd [2011] FCA 357 | Case summary

REASONS FOR JUDGMENT 1 The applicant is a company incorporated in the Republic of Ireland. It was the patentee of Australian Patent No 621713 for an invention described in the patent as "Apparatus for simulating flames" (the Patent). The essential object of the invention is to achieve a realistic simulation of flames emanating from a simulated combusting log or coal fire. The Patent had application in electric and gas fired domestic room heaters. The patentee made twenty claims in the Patent with Claim 1 being the broadest and most important claim. The Patent expired on 9 February 2010. 2 In late 2006, the applicant became aware that certain models of electric flame effect heaters were being sold by various retailers and suppliers which the applicant believed infringed the Patent. As a result, the applicant instituted five separate proceedings against the suppliers and retailers of the allegedly infringing electric flame effect heaters. 3 I heard four of those five sets of proceedings together and delivered judgment in those proceedings on 26 November 2009 (Bitech Engineering v Garth Living Pty Ltd (2009) 84 IPR 78). The proceedings which were determined by that judgment were: (1) Bitech Engineering v Garth Living Pty Ltd (ACN 111 145 432) and Cohen Nominees Pty Limited (ACN 008 526 994); Garth Living Pty Ltd (ACN 111 145 432) v Bitech Engineering - NSD 1681 of 2006; (2) Bitech Engineering v Bunnings Group Limited (ACN 008 672 179) - NSD 43 of 2007; (3) Bitech Engineering v Flameglow Pty Ltd (ACN 117 672 518); Flameglow Pty Ltd (ACN 117 672 518) v Bitech Engineering - NSD 105 of 2007; and (4) Bitech Engineering v Hotpoint (Aust) Pty Ltd (ACN 082 599 086); Hotpoint (Aust) Pty Ltd (ACN 082 599 086) v Bitech Engineering - NSD 2056 of 2007 4 The applicant was unsuccessful before me as far as its claims for infringement of the Patent were concerned. However, on appeal, the Full Court concluded that the Patent had been infringed and upheld the appeal (Bitech Engineering v Garth Living Pty Ltd (2010) 86 IPR 468). The Full Court also dismissed the Cross-Appeal. As yet, there has been no special leave application to the High Court. The matters were remitted to me by the Full Court for the purpose of dealing with the applicant's claims for damages or, in the alternative, an account of profits. The Full Court did not grant any injunctive relief to the applicant presumably because, by the time that it delivered its judgment, the Patent had expired. 5 Since the four sets of proceedings referred to at [3] above were remitted to me, the applicant has discontinued the whole of the proceeding which it brought against Flameglow Pty Ltd (In Liquidation) (NSD 105 of 2007). Flameglow Pty Ltd (In Liquidation) was placed into liquidation in June 2009. 6 On 28 July 2010, which was the first listing before me after the proceedings were remitted to me by the Full Court, I made orders against each of the respondents in the remaining three sets of proceedings. Those orders were in the following terms: 1. ORDERS that, without prejudice to the applicant's right to seek discovery from [the respondent(s)] on the question of the quantum of pecuniary relief (including for the purpose of making an election as between damages and an account of profits), the first respondent file and serve an affidavit by 8 September 2010 providing full details of: (a) all instances of the hire, sale, supply or other disposal by it or on its behalf of any of: (i) the heaters known at the trial before Foster J as the [there was here inserted the relevant model numbers] heaters; and (ii) any other heater incorporating an apparatus within the scope of Claim 1 of Australian Patent No 621713 (the Patent). (b) the revenue received by it or on its behalf in respect of each such instance of hire, sale, supply or other disposal; (c) the costs incurred by it or on its behalf in respect of each such instance of hire, sale, supply or other disposal; and (d) such overheads as it would contend should be taken into account in the calculation of its profits should the applicant elect for an account of profits, and annexing or exhibiting copies of documents in its possession, custody or power recording or evidencing the above matters. 7 The model numbers inserted into par 1(a)(i) in proceeding NSD 1681 of 2006 and also in proceeding NSD 43 of 2007 were BH1, BH2, BH4, BH5, BH6, BH7, BH9, BH10 and BH12. In the first of those proceedings, an order in identical terms was also made in respect of the MS-5 heater. The model number inserted in the corresponding paragraph in proceeding NSD 2056 of 2007 was HP1. 8 Subsequently, the applicant elected to claim damages rather than an account of profits from the respondents in the remaining proceedings. 9 On 30 September 2010, I made orders in each of the extant proceedings designed to ready those proceedings for the damages hearing in each case. Included in those orders were orders requiring the parties to give discovery. 10 Subsequently, disputes arose between the applicant, on the one hand, and the respondents, on the other hand, as to the extent to which the respondents were obliged to provide discovery. It became apparent that, at the heart of the parties' disagreement about discovery was a difference of opinion as to whether, in addition to the specific models of heaters which were found by the Full Court to have infringed the Patent, the applicant was entitled to pursue the respondents in respect of other models of heaters which had not to date been considered either by me at trial or by the Full Court on appeal. I considered that there was a question of principle which underlay the parties' dispute concerning discovery. I took the view that the best way of resolving that question of principle was to order in each of the extant proceedings that a separate question be heard separately from and before any further trial of any of those proceedings. Accordingly, on 17 March 2011, I made an order in the following terms in each of proceedings NSD 1681 of 2006, NSD 43 of 2007 and NSD 2056 of 2007: 1. Pursuant to O 29 r 2(a) of the Federal Court Rules, the following question be heard separately from and before any further trial in the proceedings, namely: Whether, upon the basis of the pleadings as they currently stand and in light of the judgments of this Court in Bitech Engineering v Garth Living Pty Ltd [2009] FCA 1393, Bitech Engineering v Garth Living Pty Ltd (No 2) [2009] FCA 1460, Bitech Engineering v Garth Living Pty Ltd [2010] FCAFC 75 and Bitech Engineering v Garth Living Pty Ltd (No 2) [2010] FCAFC 93, it is open to the applicant to claim damages for infringement of its patent being Australian Patent No 621713 in respect of the importation, distribution or sale of electric flame heaters bearing model numbers [there was here inserted the relevant model numbers]. 11 The model numbers covered by the orders which I made on 17 March 2011 were model numbers BH3, BH8, BH11, BH13 and BH14 which the applicant alleged were imported and/or sold by the respondents in proceedings NSD 1681 of 2006 and NSD 43 of 2007 and model number DBL-2000-DZ which the applicant alleged was sold by the respondent in proceeding NSD 2056 of 2007. On 17 March 2011, I also fixed 4 April 2011 as the date for the hearing of that separate question in each case and also the hearing of all other discovery applications which the applicant wished to make. 12 The applicant subsequently abandoned its claims for further and better discovery. The only discovery orders which it now seeks are orders requiring the respondents to give discovery in respect of all other potentially infringing electric flame effect heaters imported, sold or distributed by them during the life of the Patent. 13 These Reasons for Judgment determine the separate questions which I referred to at [10]-[11] above and the applicant's application for appropriate consequential orders for discovery.

Consideration 20 The applicant submitted that I should answer the separate questions with a resounding "Yes". Counsel for the applicant submitted that the relevant guiding principles were articulated by the Full Court in Nokia Corporation v Liu (2009) 179 FCR 422 and that the statements of principle made by the Full Court in that case are binding upon me. 21 In Nokia, the applicant (Nokia) had sued the respondent for infringement of its trade marks. In its Statement of Claim, Nokia provided particulars of two instances of the infringements alleged. One instance was a trap purchase. The other was an attempted importation of infringing goods which had been prevented by the Australian Customs Service. Those goods had been seized by Customs. The particulars provided by Nokia in its Statement of Claim otherwise generally referred to acts of manufacture of the offending items from a date unknown up to the date of the filing of Nokia's Application. The particulars provided in par 4 of the Statement of Claim concluded with the statement: The applicant cannot until after discovery give full particulars of all the aforesaid acts of the Respondent, but at the trial of this action the Applicant will rely upon and claim relief in respect of all such acts. ([4] of the Full Court's judgment] 22 In Nokia, the infringement case never went to trial. Consent orders were made before trial which included a permanent injunction restraining further infringement of Nokia's trade marks and an order for delivery up of all goods in the respondent's possession, custody or control which carried any of the infringing trade marks. Additional consent orders were made as follows: THE COURT FURTHER ORDERS BY CONSENT THAT: 5. Within seven (7) days of the date of these orders, the Respondent file and serve on the Applicant an affidavit setting out (and exhibiting all relevant supporting documentation (including, but not limited to, any purchase orders, invoices and receipts) in the possession, power and control of the Respondent whether by himself, his employees or agents) the full details of the supplier of each product that the Respondent has purchased, imported, distributed and sold to which any of the Nokia Trade Marks or any name, word, mark, sign or device which is substantially identical with or deceptively similar thereto has been applied without the licence or authority of the Applicant, such details to include full address, email address, telephone number, corporate and business details. 6. Within fourteen (14) days of the service of these orders upon him, the Respondent make discovery verified by affidavit to the Applicant in respect of all purchases and sales by him or on his behalf of all items bearing the Nokia Trade Marks, or any of them or any name, word, mark, sign or device which is substantially identical with or deceptively similar to any one or more of the Nokia Trade Marks, without the licence or authority of the Applicant. 7. The Respondent pay the Applicant damages for infringement of the Nokia Trade Marks, to be assessed together with interest thereon, or, at the option of the Applicant, the Respondent account for the profits made by him by his infringements of the Nokia Trade Marks and pay the Applicant the amount found to be due on the taking of such account, together with interest thereon. 23 Nokia elected to pursue a claim for damages as the mode of pecuniary relief ultimately pressed by it. 24 Damages were subsequently assessed by the trial judge in the absence of the respondent. The trial judge was not persuaded that Nokia had suffered any loss. That finding was not disturbed on appeal. 25 The trial judge also held that, in any event, the only damages which Nokia could recover were those which flowed from the importation of the goods seized by Customs. This was because there had been no other proven or admitted case of infringement. In particular, the trial judge did not consider awarding damages for losses flowing from the trap purchase. This is not surprising as the likely loss from that purchase was only a few hundred dollars. The trial judge therefore concluded that Nokia was entitled to an award of nominal damages only. 26 Nokia appealed from this decision. It also appealed from the trial judge's costs order. 27 At [22]-[28] (p 429) of its Reasons, the Full Court said: The appeal Issue One: The assessment of damages 22 By way of preface, it is necessary that we make preliminary comments, first upon Nokia's pleading, secondly, upon the Consent Orders and, thirdly, upon the construction and interpretation of court orders. 23 First, the pleading. All that needs to be emphasised are that (i) the manner in which Nokia's four, specified, trade marks were alleged to have been infringed in paragraph 4 of the Statement of Claim was by conduct which contravened s 120(1) of the TM Act; and (ii) that "manner" of infringement had been particularised in a way that complied with the requirement of O 58, r 18 of the Federal Court Rules, ie "at least one instance" of the type of infringement alleged has been particularised. 24 Secondly, the consent orders. Paragraph 1 of the orders described the importation of the goods containing the offending marks without Nokia's licence or authority as having constituted an infringement of the four Nokia trade marks. A contravention of s 120(1) of the TM Act had thus been found (by consent) and, as provided in paragraph 2 of the orders, a final injunction was ordered. That injunction in substance enjoined Mr Liu, his employees, etc from infringing any of the four marks in the manner proscribed not only by s 120(1) but also by s 120(2)(a) and (b) of the Act. This enlargement of the conduct prohibited by the injunction was, seemingly, in response to evidence of the manner of infringements filed by Nokia in support of its application. What we would emphasise is that the injunction itself was general in its terms. It was not qualified by reference to specific and particularised instances of infringement. We would also note in passing that, in his reasons, the primary judge found other instances of infringement of the Nokia marks beyond that agreed in paragraph 1 of the orders. 25 Paragraph 3 presupposed the very possibility of such further instances. It required Mr Liu to deliver up for destruction all goods to which an infringing mark had been applied, which were in his or his employee's, etc possession, power, custody or control. 26 Importantly, paragraphs 5 and 6 imposed disclosure and discovery obligations on Mr Liu in respect of his suppliers of, and of his purchases and sales of, infringing items. Those orders were not limited to already proved or found instances of infringement. They were, we would note, relatively characteristic of orders made on an inquiry as to damages. 27 Order 7 presupposed that Nokia "may be able to recover substantial damages" (cf Kerly's Law of Trade Marks and Trade Names (14th ed, 2005) 19-129) in ordering that Nokia be paid damages to be assessed or, at its option, "the Respondent account for the profits made by him by his infringements of the Nokia Trade Marks". 28 The final matter we would note relates to the formatting of the consent orders themselves. While the finding of infringements by importation in paragraph 1 took the form of a Court "order", it had in substance the character of a declaration. Paragraphs 2 to 4 of the orders fell under the heading: "BY WAY OF FINAL JUDGMENT UNDER PARAGRAPHS 1, 3 AND 4 OF THE APPLICATION HEREIN THE COURT ORDERS BY CONSENT THAT:" The paragraphs in the Application so referred to were the claims for injunctive relief (paragraph 1) and delivery up and destruction (paragraphs 3 and 4). Paragraphs 2 to 4 in the orders reflected these. The remaining substantive consent orders dealt with disclosure and discovery (paragraphs 5 and 6), the assessment of damages (paragraph 7) and costs (paragraph 8). These orders came under the heading: "THE COURT FURTHER ORDERS BY CONSENT THAT:" and, in the case of orders 5 to 6, were clearly intended to be in aid of the alternative claims for relief by way of damages or an account of profits, sought in paragraphs 5 and 6 of the Application. 28 The Full Court held that Nokia had made clear in its pleading that it reserved the right to prove further instances of infringement at the trial. It also observed that the allegations of the "manner" of the infringement of Nokia's trade marks by the respondent was in conformity with the pleading rules laid down by O 58 r 18 of the Federal Court Rules. 29 The Full Court then discussed the principles which govern the interpretation of Court orders. It followed that discussion with the following general observations concerning the practice in intellectual property cases of splitting the trial of liability (including the grant of injunctive relief) from the trial of all claims for pecuniary relief (at [33]-[46]) (pp 431-433): 33 It has been a long established practice in intellectual property proceedings to split the determination of liability for infringement and, if appropriate, the grant of injunctive relief on the one hand, and the award of relief by way of damages or (at the injured party's election) an account of profits on the other: see eg AG Spalding & Bros v AW Gamage Ltd (1913) 30 RPC 388 esp at 400; affd AG Spalding & Bros v AW Gamage Ltd (1915) 32 RPC 273; LED Builders Pty Ltd v Eagle Homes Pty Ltd (1996) 70 FCR 436; and see generally Kerly, Ch 19. The present consent orders reflect that practice. The practice itself has in some degree influenced, and has led to accepted understandings about, the proper function of, and the limits to, the two stages of a split proceeding. 34 In trade mark infringement proceedings in this country, for example, the liability stage is focused on establishing the fact and manner of infringement(s) of the applicant's mark(s) and, where appropriate, the award of injunctive relief prohibiting such infringing conduct. It is not directed to the proof of each and every instance of infringement which, at the second stage of the proceedings, would justify the award of damages or an account of profits. So it is that O 58, r 18 of the Federal Court Rules requires that in trade mark infringement proceedings: " ... particulars of the infringement must specify the manner in which the trade mark is alleged to be infringed and must give at least one instance of each type of infringement alleged." As we have noted, the present Statement of Claim gave two such particularised instances. 35 Establishing the manner of infringement (though not necessarily all the instances of such infringement) will, in turn contrive both the type of act(s) prohibited by such injunctive relief as may be granted and/or the scope of any order made as to the assessment of damages (or an accounting for profits made) on account of such past act(s). 36 The link between the manner of infringement found - and often enjoined - and the subsequent award of relief by way of damages (or an account) is reflected in the notion that: "the scope of the inquiry as to damages corresponds to that of the injunction" See National Broach & Machine Company v Churchill Gear Machines Ltd [1965] 1 WLR 1199 at 1204-1205; or as put in Kerly (at 19-131): "The proper form of an order for an inquiry as to damages occasioned by the infringement of a mark is, therefore, what damage (if any) has the claimant sustained by reason of the acts, repetition of which is restrained by the judgment." See also the form of the orders in AG Spalding 30 RPC at 400. 37 The reason an applicant is not required to establish at the liability stage all the instances of infringement which may have given rise to loss is essentially an expedient one, given the purpose behind the common practice of splitting intellectual property proceedings. It was explained by Harman LJ in National Broach [1965] 1 WLR at 1204-1205 in relation to an inquiry as to damages in a breach of confidence case: "It was the plaintiffs' initial complaint that the defendants had, in breach of the agreement, made use of confidential information in the form of drawings supplied by the plaintiffs for the purpose of the licence only. This was a matter in contest right up to the first day of the trial, when the defendants admitted that they had made use of the plaintiffs' drawings and submitted to an injunction which is the initial relief in Cross J's order. Cross J, however, when he came to the inquiry into the damages arising out of this breach, limited it to damages arising out of drawings of which particulars had been delivered under paragraph 15 of the statement of claim. The particulars enumerated something like 100 of such drawings and were put forward as instances on which, for the purposes of the trial, the plaintiffs proposed to rely. The plaintiffs sought to reserve the right to add to the instances and claimed relief in respect of wrongful user of drawings "whether particularised or not." Cross J, however, limited the inquiry to the drawings already so particularised. In my judgment, this is not in accordance with the practice in actions of this nature. It is only in patent actions that the rules (Ord 53A, r 12) specifically direct that instances only shall be given, but a similar practice prevails in trade mark and passing-off actions where, in my experience, the scope of the inquiry as to damages corresponds to that of the injunction granted - see A G Spalding & Brothers v A W Gamage Ltd - and it seems to me that it would unduly lengthen the trial of this kind of action for a plaintiff to be obliged to give in advance details of every instance of wrongful dealing on which he intends to rely on the inquiry." 38 As we have noted, the Federal Court Rules mandate the practice in trade mark cases to which his Lordship referred. 39 While there was some early reserve expressed about allowing an inquiry as to damages which encompassed instances of infringement particularised but not proved at the liability hearing: see eg Aktiebolaget Manus v RJ Fullwood & Bland Ltd (1949) (1949) 66 RPC 285 at 288-289; it is well settled both in England and Australia since National Broach, that on an inquiry as to damages the claimant is "entitled to orders designed to identify any further [instances of] infringement in the past": Sun Microsystems Inc v Amtec Computer Corporation Ltd [2006] FSR 35 at [24]; Independiente Ltd v Music Trading-on-Line (HK) Ltd [2007] FSR 21 at [54]; Sony Computer Entertainment Australia Pty Ltd v Stirling [2001] FCA 784 at [8] and [14]. We note in passing that the disclosure and discovery orders in the consent orders in this matter (ie orders 5 and 6) had precisely this purpose. 40 Having regard both to the principles to be applied to the construction of consent orders and to the practices in trade mark infringement litigation to which we have referred above, we are satisfied that the consent orders in the present matter not only reflected those practices but were intended to - and can - be given their full force and effect. 41 The finding in paragraph 1 of the orders merely instantiated the manner of infringement pleaded consistent with the requirements of O 58, r 18 of the Federal Court Rules. It was not a limitation upon the scope either of the injunction or of the assessment of damages: cf National Broach [1965] 1 WLR at 1204-1205. The remaining orders in consequence were to take effect according to their terms. 42 Orders 2 to 4 were the final orders made. As we have noted, the scope of the assessment of damages envisaged in order 7 was as to the damage (if any) Nokia sustained by reason of the acts, the repetition of which was restrained by order 2. Both the evidence filed in support of the application and the findings actually made by his Honour at the assessment hearing clearly demonstrated there were further instances of infringement beyond that found in order 1. We refer in particular to the trap purchase and to the infringing conduct the evidence of that purchase revealed. Such instances were within the scope of the assessment ordered. 43 The construction we have given the consent orders is one that gives effect to them according to their terms. It admitted of the possibility that there may have been infringing items that had to be delivered up for destruction under order 3; that there may have been disclosable or discoverable material which would evidence sources of loss to Nokia or of profit to Mr Liu or which might disclose further instances of infringements (cf orders 5 and 6). On the construction placed on the orders by the primary judge, these orders had no practical function. 44 We are in consequence satisfied that his Honour erred in the approach he took to the scope of the assessment inquiry. To this extent the appellant has made out ground 2 of its notice of appeal. While we appreciate the practical significance to Nokia of this conclusion - it confirms the continuing vitality and utility of the practices in trade mark infringement litigation we have described - it brings with it no practical financial benefit to Nokia in the form of any entitlement to damages beyond nominal damages. We turn briefly to this matter which embodies two subsidiary matters in the appeal (see Grounds 4 to 6), on both of which Nokia must fail. 45 The party claiming damages resulting from the infringement of its trade mark bears the onus of demonstrating what loss it actually sustained by reason of the infringer's conduct. The evidence, as we have indicated, revealed several instances of infringing conduct (beyond the importation of the seized goods) which may have occasioned actual loss to Nokia. However, as his Honour observed, Nokia had not provided the Court with the means for putting a dollar value on its alleged losses and he declined to do so. We agree. On the appeal Nokia argued only faintly to the contrary. 46 Furthermore, Nokia's omission in failing to provide an evidentiary basis for assessing its loss cannot be overcome by the assertion that it was Mr Liu's inadequate compliance or non-compliance with court orders that disabled it from proving the dimensions of its loss. An award of damages is compensatory only: General Tire & Rubber Company v Firestone Tyre & Rubber Company Ltd [1976] RPC 197 at 212. An infringer's non-cooperation which renders available evidence inaccessible to a claimant may justify "speculation and even guesswork" in the quantification of a claimant's loss: see Paramount Pictures Corporation v Hasluck (2006) 70 IPR 293 at [41]-[42]. It does not justify "guesswork" occasioned by a claimant's failure to provide evidence basic to the calculation of damages which it has within its own power. Again Nokia has accepted the limitations of its own case in this respect. 30 In the passages quoted from Nokia at [21]-[29] above, the Full Court distinguished "… the fact and manner …" of the alleged infringements of the applicant's trade mark from "… instances …" of infringement. In a split proceeding, the fact and manner of infringement have to be established as part of the liability hearing. The instances of infringement may be held over to the second stage - the damages or account of profits stage. 31 The Full Court in Nokia went on to hold that, in the circumstances of that case, the trial judge had erred by confining the damages to the one proven case of infringement (the importation seized by Customs). 32 In AG Spalding & Bros v AW Gamage Ltd (1913) 30 RPC 388, a passing off case, Sargant J (who was the trial judge) found that the defendant had passed off its goods (soccer balls) as those of the plaintiff. At 399/50-400/7, Sargant J said: I have not now to decide as to the basis on which the damages will ultimately have to be assessed, but I am not in any way prepared to say that the Defendants would not be liable for the consequences of the mis-statement and the loss of trade to Spaldings. I do not think that you can calculate how much loss of trade would have been caused to Spaldings if Gamages had stated the facts with absolute accuracy, and then subtract from the damage that had been so caused the damage which would have been caused by a statement exactly within the limits of the law. It seems to me that, a tort having been committed, the Plaintiffs are entitled to such damages as naturally flow from the whole of the act, and not from that part of the act which is unlawful. So much as to the question of damages, although, as I say, I have not at the moment to consider precisely what those damages are. 33 His Lordship granted an injunction by which he restrained the further sale of the offending goods. In that context, his Lordship ordered: … an inquiry to be made, by the Official Referee in rotation, what damages the Plaintiffs had sustained by reason of the acts, the repetition of which was restrained by the judgment. 34 The restraint applied to the further sale (etc) of the offending goods. 35 National Broach and Machine Co v Churchill Gear Machines Ltd [1965] 1 WLR 1199, which was cited with approval by the Full Court in Nokia, was a confidential information case. In that case, the plaintiff provided particulars of the misuse of its confidential information in its Statement of Claim. The trial judge limited the inquiry as to damages to the use by the defendants of the drawings particularised in the Statement of Claim. The Court of Appeal held that the damages should not have been so limited. At 1202/F-G, Willmer LJ noted that the plaintiffs had expressly reserved the right to claim relief in respect of all of the defendants' wrongful use, whether particularised or not. His Lordship observed that, in passing off cases, the settled practice is to direct an inquiry covering the same field as the injunction which is granted. His Lordship cited Aktiebolaget Manus v RJ Fullwood & Bland Ltd (1949) 66 RPC 285 and AG Spalding & Bros v AW Gamage Ltd (1915) 32 RPC 273. This latter reference was the report of Spalding in the House of Lords. The House of Lords had overturned the Court of Appeal's decision and restored the orders made by Sargant J at trial (as to which see 30 RPC at 400). 36 Harman LJ, at 1204/E-F-1205//E-F, was of the same mind. The Full Court in Nokia quoted most of his Lordship's judgment on the point. However, his Lordship continued (at 1205/B-1205/E-F) as follows: The plaintiffs here proved all, or practically all, the instances given in the particulars, and I think that the inquiry into damages in those circumstances ought to follow the form of the injunction which is perfectly general in its terms, that is to say, "any confidential information … in any drawings relating to the plaintiffs' … machines or any parts thereof supplied by the plaintiffs for the purpose of manufacturing under licence such machines …" The order for delivery up is couched in similar general terms. The learned judge supported his decision by reference to In re Wrightson [1908] 1 Ch 789, a decision of Warrington J in an administration action, but that case does not seem to me to be in point. There the plaintiff had taken a common decree for administration, the defendant admitting a breach of trust alleged in the statement of claim. All inquires were stayed. Subsequently the plaintiff took out a summons to proceed with the accounts and for certain further inquiries based on breaches of trust not mentioned in the pleadings. Warrington J refused to accede to that claim on the footing that no claim on a wilful default basis had been made, and, in the absence of that, no breach of trust not alleged in the pleadings could be relied on. I do not find that this decision in any way covers the present case, and I would vary the order by directing an inquiry corresponding to the terms of the injunction. 37 The third member of the Court in National Broach, Salmon LJ, did not specifically deal with the question of the scope of the inquiry as to damages. As was the case in Nokia, the plaintiff in National Broach had expressly reserved the right to claim damages in respect of more instances of wrongful conduct than those particularised in the pleading. To similar effect were the following remarks made by the Full Court in Elecon Australia Pty Ltd v PIV Drives GmbH [2010] FCAFC 56 at [46] and [47]: 46 PIV Drives and Brevini Australia submitted that the primary judge's findings in this regard were simply instantiation of the acts of infringement of the PIV Trade Marks and that the extent of infringement was a question to be considered as part of any subsequent inquiry as to damages or an account of profits (see Nokia Corporation v Liu (2009) 179 FCR 422 at [39]-[41]). In conformity with that submission, they accepted that, ultimately, it will be a matter for them, in connection with the holding of any inquiry as to damages or on the taking of any account of profits, to establish all infringements for which they seek damages or profits. In that connection they said that they would not insist upon the primary judge's findings to which we have referred as the starting point for that purpose. 47 The scope of an inquiry as to damages, and, it would follow, an account of profits, normally corresponds to the width of the injunction that is granted (see National Broach and Machine Co. v Churchill Gear Machines Ltd [1965] 1 WLR 1199 at 1204-1205, Nokia at [34]-[36]). Here, the injunction is in broad terms, unconfined by reference to particular infringements or, indeed, any form of infringement. The declaration is similarly unconfined. The order providing for the inquiry or, alternatively, the account, relevantly refers to "the infringements of the PIV Trade Marks". Those orders comprehend all infringing use of the PIV Trade Marks by Elecon Engineering and Elecon Australia to be established at the inquiry or at the time of taking the account. 38 In LED Builders Pty Ltd v Eagle Homes Pty Ltd (1999) 44 IPR 24, a copyright case, Lindgren J allowed a copyright owner (LED) to pursue at the damages stage of a split hearing claims for damages in respect of nine sets of house plans used by the infringer (Eagle) which had been found by the trial judge at the initial liability hearing (Davies J) to have infringed the copyright owner's copyright in certain specific drawings. 39 Evidence filed after the liability hearing established that Eagle had built 57 houses using the nine infringing plans. Later still, it was revealed that a further 36-45 additional houses had possibly been built using the nine infringing plans. There was, however, a dispute as to exactly how many houses in addition to the original 57 homes had been built using those plans. Lindgren J treated these additional infringements as "instances" of the infringements originally found by Davies J. The plans for the additional 36-45 houses were reproductions of the nine offending Eagle plans listed at [5] (pp 27-28) of the judgment of Lindgren J. These additional instances of infringement had all occurred prior to the hearing before Davies J. 40 In Miller, Terrell On the Law of Patents (17th ed, Sweet & Maxwell, 2011) at par 19-56, the authors state: Types of infringement not fully determined Where certain of the types of alleged infringement were not exemplified in the particulars of infringements and so were not the subject of any express findings it was ordered that this question should be determined as a preliminary issue in the inquiry (Cleveland Graphite Bronze Co Ltd v Glacier Metal Co Ltd (1951) 68 RPC 181). 41 Cleveland Graphite Bronze Co Ltd v Glacier Metal Co Ltd (1951) 68 RPC 181 was a patent infringement case. In that case, certain of the types of the alleged infringement were not exemplified in the particulars of infringement and, for that reason, were not the subject of any express findings by the appellate court which determined the action. Judgment was entered for the plaintiffs and an inquiry as to damages ordered. A dispute arose as to the extent of discovery required on the inquiry: The plaintiffs contended that the defendants were obliged to give discovery in respect of the additional unparticularised types of infringement and the defendants contended otherwise. 42 Romer J ordered that the question of whether the additional types of alleged infringement infringed the plaintiffs' patent should be heard and determined as questions preliminary to the inquiry. His Lordship deferred further consideration of the discovery dispute until after those questions had been heard and determined. 43 This approach has been followed in subsequent cases (see General Tire & Rubber Company v Firestone Tyre & Rubber Company Ltd (No 2) [1973] FSR 79 at 83; Unilin Beheer BV v Berry Floor NV [2007] EWCA Civ 364 at [49]; and MMI Research Limited v Cellxion Limited [2009] EWHC 1938 (Pat) at [1]). It is also consistent with the decisions in Nokia, LED Builders and National Broach. 44 In the present case, in its Statements of Claim filed in the extant proceedings, the applicant pleaded a very precise case. The infringing articles were specified as those articles which fell within the definition of Electric Flame Effect Heaters in the Statement of Claim in each case. 45 The infringing heaters were identified in the pleadings by model number. They were model numbers BH1, BH2, BH4, BH5, BH6, BH7, BH9, BH10, BH12, MS-5 and HP1. The identification of those specific models was in the pleadings themselves. That identification was not specified by way of particulars. No right to supplement that identification was reserved by the applicant. 46 The applicant now seeks to add to this list of infringing articles after the Full Court's decision and in light of that decision by seeking damages in respect of additional heaters which bear model numbers BH3, BH8, BH11, BH14 and DBL-2000-D2. At the hearing of the separate questions, the applicant abandoned its claims in respect of model number BH13. 47 The Full Court did not make any findings to the effect that any of these additional models of electric flame effect heaters infringed the Patent. These additional heaters were simply not considered by the Full Court (or, for that matter, by me at the original trial). These additional models are not merely instances of the type and manner of infringement which were the subject of the Full Court's findings on infringement. They are not simply additional versions or examples of articles which the Full Court found were infringing articles. They are different models. On the face of things, it is not self-evident that they infringe the Patent. Whether they do infringe the Patent or not is a question which must be tried and determined. 48 The applicant has not sought to amend any of the Statements of Claim or Applications filed in the extant proceedings nor has it sought to have the Court hear and determine as questions preliminary to the inquiry as to damages the question of whether or not these additional heaters infringe the Patent. 49 The approach adopted by the applicant is to seek to include in the inquiry as to damages itself in each case the question as to whether or not these additional heaters infringe the Patent. In order for that question to be determined, the applicant says that it needs discovery of all documents and things that bear upon the issue of infringement as well as the issue of damages. It submits that, in order for it to secure discovery of these items, it is sufficient for it to show that there is a real possibility that the additional heaters infringe the Patent. In essence, the applicant contends that all of the remaining issues can be resolved at the damages hearing. 50 But this is not the approach taken by Romer J in Cleveland Graphite Bronze Co Ltd. In that case, his Lordship took the view that, before any discovery would be ordered, the Court should determine whether the additional articles (liners) infringed the patent. The cases referred to at [43] above took a similar approach. 51 Nokia is not authority for any different proposition. Nor is LED Builders Pty Ltd. In Nokia, the applicant had expressly reserved the right to rely upon further instances of infringement. In that case, Nokia sought to rely upon several additional instances of infringement including the trap purchase which had been particularised in the pleading. It failed to prove any loss flowing from those additional instances of infringement. In LED Builders Pty Ltd, the additional matters were, in substance, further "instances" of the same type and manner of infringement as had been found by Davies J at the original liability hearing. National Broach was also a case where the plaintiff expressly reserved the right to claim wider relief in respect of all wrongful use by the defendant, whether particularised or not. 52 In the present case, the trial and the appeal were both conducted upon the basis of the pleadings. The allegations of infringement pleaded in the Statements of Claim were precise - they confined the scope of the allegations of infringement to those apparatus which fell within the definition of Electric Flame Effect Heaters in the relevant Statements of Claim. 53 In the absence of an application for leave to amend its Statement of Claim in each of the extant proceedings, I am not disposed to allow the applicant to include in the damages stage of the proceedings claims for damages in respect of any of the additional heaters. Nor am I prepared to order the respondents to give discovery in relation to any of the additional heaters, at this stage. I think that to allow such claims in the absence of appropriate amendments to the pleadings in order to raise the case of infringement in appropriately precise terms would be unfair to the respondents and would offend the case management principles with which the Court, parties and practitioners must live (see, in particular, s 37M of the Federal Court of Australia Act 1976 (Cth)). Furthermore, the applicant has not explained why these additional heaters were not included in the definition of "Electric Flame Effect Heaters" prior to the original trial before me. 54 In support of its broad contention, the applicant submitted that: (a) In each of the extant proceedings, the injunction which was claimed was an injunction to restrain infringements which corresponded with the breadth of the relevant claims of the Patent. In addition, the claim for delivery up is similarly broadly framed. Therefore, the claim for pecuniary relief is also not restricted in any way. (b) Despite the fact that the way in which the offending apparatus was identified in each of the relevant Statements of Claim was for the description of those apparatus to be pleaded, the Court should regard that mode of identification as nothing more than providing at least one instance of each type of infringement as required by the Federal Court Rules (esp O 58 r 11(2)). (c) Although no injunction was actually granted by the Full Court, this was not for any reason other than that the Patent had expired by the time the Full Court's judgment was delivered. Had the Patent not expired, an injunction in wide terms would have been granted. (d) The disclosure affidavits ordered to be filed on 28 July 2010 required the respondents to identify other infringing heaters. (e) The pre-proceeding correspondence made clear that more than the model numbers defined in the Statements of Claim would ultimately be the subject of a claim for pecuniary relief. 55 It is and has for a considerable time been the practice of courts in this country to express injunctive relief in respect of patent infringements by reference to the claims made in the patent. For example, this was the approach taken in Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (No 2) (2007) 235 CLR 173. In that case, the High Court restrained the infringer from infringing identified claims made in the patent but also went on to specify the restraint in respect of particular infringements. This is apparent from the orders which the Court made at pp 229-230 of the report. Another example of this approach is the judgment of Heerey J in Welcome Real-Time SA v Catuity Inc (No 2) (2001) AIPC 91-736. 56 But this does not mean that, in every case, as a matter of course, pecuniary relief will be awarded upon the basis that all proven infringements at the damages hearing will be taken into account, whether or not the subject of any particularisation in the Statement of Claim or the subject of any findings made at the liability hearing. Nor does it authorise the litigation of claims for money in respect of allegedly infringing articles which have not, either before the damages stage of the proceeding or as a preliminary finding at that stage, been held to infringe. 57 I do not think that the applicant gains any assistance from its submission that the very precise pleading which it propounded should be regarded as simply an exemplification of at least one instance of infringement. The fact is that the pleading was carefully drawn and confined the case at trial and on appeal to the identified models of heaters. 58 The disclosure orders made on 28 July 2010 do not carry with them the consequence that the applicant can expand the length and breadth of the damages inquiry so as to include the additional heaters now sought to be relied upon. As I have already indicated, it may be that, after the appropriate procedures have been undertaken and the respondents have been given a fair opportunity to meet the case put against them in respect of the additional heaters, the additional heaters might be taken into account at the damages hearing which is ultimately held in the extant proceedings. However, as matters presently stand, this cannot be done. 59 Finally, the pre-proceeding exchanges of correspondence cut both ways. In my view, the terms of that correspondence are irrelevant to the questions with which I am currently dealing. 60 The applicant also submitted that it did not propose to call at the damages hearing any expert evidence directed to establishing that the additional heaters had infringed the Patent. It also submitted that the Court would not be required to conduct a detailed assessment of the workings and features of the additional models. The simple proposition advanced by the applicants was that it would ask the Court to infer that those models infringed the Patent from documentary material which it expected to be able to tender and from general observations made by its Chief Executive. 61 In my view, this is no answer to the difficulties presented by the applicant's approach. Both the Court and the respondents are entitled to know why the additional heaters infringe the Patent. Both the Court and the respondents are entitled to know, in advance of any further trial, the evidence that the applicant intends to adduce in respect of any additional infringements sought to be relied upon. The respondents are entitled to have a fair and reasonable opportunity to meet that case and to meet that evidence. 62 The applicant has not applied to amend any of its Statements of Claim nor has it sought to obtain findings that the additional heaters infringed the Patent before embarking upon the inquiry as to damages. It has always been open to the applicant to attempt to do both of these things. 63 As matters stand at the moment, however, the separate question in each case should be answered: "No". The applicant's applications for discovery orders in respect of the additional heaters are refused. Costs should follow the event. I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster.

Bitech Engineering v Garth Living Pty Ltd

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