Evidence relating to the use of the VRC generally
127 Mr Garner's evidence in his affidavit was that he was permitted to access and download information from the VRC by virtue of his sales role, and at no stage during his employment was he specifically instructed by management or senior employees that he was not permitted to download information from the VRC. He deposes, without any meaningful detail, to having observed that it was a "common practice" for Intercad sales staff to access the VRC for a "variety of reasons" connected with and to assist in carrying out their duties, without explaining what those reasons might be. He also says that he observed that it was common practice among staff of Intercad to access and download customer information from the VRC.
128 In support of his assertions, Mr Garner points to the following SolidWorks documents:
(1) a SolidWorks document entitled "EXPORTING INFORMATION FROM THE VRC", which produces dialogue boxes to guide a user in generating and saving a report in comma-separated values (.csv) format, and also opening and saving such a report in Microsoft Excel; and
(2) a screenshot of a search using a VRC tool which he says is called "Slide Maker", also referred to in contemporaneous communications as "SlideMaker".
129 Mr Garner deposes to SlideMaker enabling a VRC user to nominate a postcode or suburb in which all SolidWorks sites are then shown on a map, enabling every SolidWorks account in a particular geographic area to be identified. Mr Garner produces an example of such a search. It is noteworthy that the screenshot of the search has a header which includes the words "confidential information", corroborating Mr Atkinson's evidence as to the character of information in the VRC. Further, in cross-examination, Mr Garner was shown an email that he sent to Mr Atkinson on 18 April 2016 in which he described SlideMaker as a "rarely used SolidWorks sales tool" that was "not used by anyone that I know of". In that email, Mr Garner agreed with Mr Atkinson's reservation expressed in the preceding email about the questionable quality of the data produced using SlideMaker.
130 A further point can be made about this evidence from Mr Garner. Neither of these documents or VRC capabilities assists Mr Garner's case unless I accept that it was part of what he was entitled to do with the VRC while he was employed by Central Innovation. I do not accept this evidence. The fact that SolidWorks facilitated reports being generated from the VRC by someone at a VAR says nothing about how an individual VAR permits access to the VRC by its employees, and collates and makes available that and other information for its business, such as by use of a customer relations management system.
131 Mr Atkinson's evidence was that it was not reasonable for a member of the sales staff to seek up-to-date information from the VRC, because, as noted above, it is information updated by SolidWorks, purely related to licences and not contacts, and does not contain conversations or communications with customers or prospective customers. In response to the suggestion that the period of licences and their expiry dates were a significant part of the selling process, including such things as aligning licence expiring dates, so that VRC information might very well be useful to a salesman, Mr Atkinson responded that this was not necessary, because that information was fully up to date and accurate in SUGAR. The process that Mr Atkinson described for keeping SUGAR data up to date was that order processing staff would update SUGAR and then place an order into the VRC. He accepted that that element of the accuracy of SUGAR data is dependent upon the processing department of Central Innovation or Intercad doing that updating and data input processing correctly. If Mr Garner or any other person observed that there was a problem with the accuracy of SUGAR data, he would expect that person to notify the order processing department to correct it.
132 I prefer Mr Atkinson's evidence about both the VRC and SUGAR to that of Mr Garner, because Mr Atkinson was by far the more credible witness and the evidence he gave was logical and consistent. I find that there was no good reason for sales staff working for Intercad, including in particular Mr Garner, to access the VRC except for the limited purposes identified by Mr Atkinson. I am satisfied, on the totality of Mr Atkinson's evidence, that Mr Garner had no proper reason to be accessing and downloading data in the VRC, and accordingly that any such access that took place was likely to have been for an improper purpose.
133 An important part of the applicants' business is obtaining and acting upon "leads" as to prospective customers, which may lead to a sale of software or related services. From time to time, SolidWorks receives queries through its website from persons or companies who are interested in buying their products. The applicants refer to these enquiries as "inbound leads". When SolidWorks receives an inbound lead, information about it is recorded in the VRC and can be viewed by selected VARs. When an inbound lead is made available to Intercad, it causes information about the lead to be entered into SUGAR.
134 The lead is assigned to an individual member of the Intercad sales team, who is then responsible for contacting the potential customer. All of the information that the sales team member needs to contact the lead is contained in SUGAR. If Intercad forms the view that an inbound lead represents a potential sales opportunity, it enters that into SUGAR, which then sends a notification to SolidWorks via another program called Topline. The evidence of Mr Garner in cross-examination revealed that Topline was a SolidWorks sales opportunity registration portal, where individual sales staff could enter sales opportunity information. That system would record who had registered the opportunity first, and would be used to allocate sales leads that were generated in this way. If Intercad is the first VAR to provide notice of its interest in the lead, SolidWorks will assign a priority to Intercad in respect of that lead. If the potential customer agrees to purchase any products from Intercad, Intercad places the relevant order through the order processing module in the VRC.
135 From time to time Central Innovation and Intercad also receive enquiries from potential customers via Intercad's website. Mr Atkinson refers to those leads as "Intercad leads". Those leads are entered into SUGAR and allocated to individual members of one of the applicants' sales teams. Once again, all the information that sales team members need to contact Intercad leads are contained in SUGAR. Intercad leads which present likely sales opportunities are also notified to SolidWorks. Again, all customer orders resulting from Intercad leads are processed through the order processing module in the VRC.
136 The CI Group had in place a number of written policies which govern the use of technology and other matters related to activities within the workplace. One of those policies was the IT and Communications Policy, a document which again used the Central Innovation logo. A copy of that policy which had been in force since around 2 December 2009 is in evidence. Mr Garner's affidavit evidence is that he does not recall being provided with a copy of that policy. In evidence is an email sent at 12.27 pm on 2 December 2009 to an internal email group address AllStaff@CentralInnovation.com.au by Ms Kerri McFarlane, Human Resources Manager at Central Innovation. That email refers to a link to a new IT policy that applies to all Central Innovation staff. I readily infer that the email and the link in it directed a recipient to the policy of which a copy is in evidence. Given that Mr Garner does not overtly deny being provided with that policy, and given that, although he was not able to find a copy of this particular email, Mr O'Kane found a copy of an email from Ms McFarlane to the same group email address on the Intercad Laptop, I find that Mr Garner was sent that email and thereby provided with that policy.
137 The IT and Communications Policy discussed above includes as a reference at its conclusion to "Code of Ethics COE 1.0", which is another Central Innovation policy that is in evidence, albeit with a date in the footer of November 2011. That code of ethics policy refers to confidentially and confidential information. Both Contract One and Contract Two required compliance with such policies as varied from time to time, with Contract Two describing them as "practice outlines for the Company to abide by". However, the policies were explicitly not incorporated into either contract, nor were they made separately legally enforceable. Contract One stipulated an acknowledgment by Mr Garner that non-compliance with any policy may result in disciplinary action, including termination of employment under the summary termination clause of that contract. This is a feature that was not retained in Contract Two, most likely because it added nothing of substance or value. Whether that is so or not does not matter, because of the finding that Mr Garner did not enter into Contract Two, such that the express acknowledgment in Contract One applies. Thus Mr Garner was aware of the policy and of the confidentiality expectations that applied to him beyond his contract of employment. It is part of the context in which his conduct falls to be evaluated.
138 Central Innovation's sales and technical support team staff were required from time to time to meet with customers at the customers' premises. To make it easier for them to perform their duties away from the office, Central Innovation provided laptop computers and other portable electronic devices to certain employees. Further, members of Central Innovation's and Intercad's sales and technical support teams were sometimes required to deliver marketing presentations and training seminars to customers or potential customers at conferences and other remote locations. Central Innovation and Intercad made available to those employees portable USB drives for the purpose of enabling them to save and take with them material such as product information brochures, promotional videos and slide decks for use in presentations. The use of all electronic devices provided to Central Innovation employees, including laptops, mobile telephones and USB drives was governed by the IT and Communications Policy and the terms of each staff member's employment contract.
139 Mr Garner was responsible for supervising all customer relations and sales activities in relation to Central Innovation's and Intercad's customers located in Victoria and Tasmania. His duties included communicating with customers regarding subscription renewals and the purchasing of additional licences or support services from Central Innovation or Intercad and coordinating and supervising marketing and sales activities directed at prospective customers, including by ensuring that customer events and seminars took place at agreed intervals throughout each year. He was also responsible for managing the team of sales representatives who carried out those marketing activities. On any view, he had a senior and responsible role, with all that entails in terms of knowledge and understanding of the applicants' business, especially that of Intercad.
140 Mr Garner and his team were given individual and team sales targets to meet each quarter. In March 2013, Mr Garner reported to Intercad's national sales manager for Australia.
141 Among the customers in Victoria and Tasmania for whom Mr Garner had overall responsibility, he was expected to pay particular attention to certain customer accounts known as "focus accounts" which related to Central Innovation's and Intercad's most valuable and/or longstanding customers. In evidence is a list of all 87 customers for whom Mr Garner was responsible at different points during the time in which he was employed as Team Leader for Victoria. Also in evidence are extracts from SUGAR which record Mr Garner's role in relation to those customers.
142 The Intercad Laptop was able to be connected to Intercad's computer system. USB memory devices were freely available to staff in the Melbourne office where Mr Garner worked. Although Mr Atkinson was based in Sydney, he was fairly familiar with the way in which the Melbourne office worked, because he travelled there regularly. As detailed further below, there were policies in place about what should not be done with data, whether on a USB device or not. Mr Atkinson was taken to the IT and Communications Policy detailed above. He confirmed that despite a general prohibition on using any removable storage device, including a USB stick, to copy or transfer files from a CI Group computer, in practice some copying did take place for the purpose of the business, beyond the original use of giving a customer "product collateral", which I took to mean more general information. However, this was not necessary because such information could be provided by electronic means, such as email. Mr Atkinson doubted that would be done for the purpose of improving marketing or assisting in marketing strategies, but did not think it would be wrong for data to be given to another employee in the office for such a purpose.
143 Mr Garner was also provided with access to the VRC, having received login details on 2 December 2009. He was provided with access to the VRC for the reasons outlined above. Mr Garner also had access to SUGAR for the purpose of carrying out his duties and responsibilities as a Team Leader. In about early July 2016, the access permissions in SUGAR pertaining to all persons employed in the position of Team Leader were modified so that no Team Leader was permitted to download any information stored within SUGAR. Those changes took effect while Mr Garner was employed as a Team Leader. It is impossible to conclude that Mr Garner would not have been aware of that important change. It is also likely that this was an early warning to Mr Garner of other changes that might be coming, especially in the context of what follows.
144 Mr Atkinson agreed with a proposition put to him in cross-examination that in June and July 2016, in his capacity as General Manager of Intercad and Intercad (NZ) Pty Ltd, he had discussions with Mr Garner, in his capacity as Team Leader for Victoria, about the possible restructure of Intercad and Central Innovation, and about the way in which the sales department might be restructured. While Mr Atkinson agreed that nothing in those conversations overtly suggested that Mr Garner's position might be at risk in such a restructure, that does not exclude other workplace sources of information by which Mr Garner was capable of becoming aware that adverse changes might take place. This includes inferences he might readily draw about restrictions imposed on him and other Team Leaders on downloading information stored within SUGAR. Nor does it exclude Mr Garner having an apprehension that could have caused him to take steps to secure his position.
145 There is telling evidence adduced from Mr Garner in his cross-examination as to just how astute he was in forming the apprehension that his position may have been in danger. A revealing part of that evidence was when Mr Garner taken to a company email about pricing strategies sent to him by Mr Piper on 16 February 2011, that appeared to have been forwarded to his private email address after he found out about his redundancy. While denying that he had sent the email at the timestamp displayed on the printout of the email tendered, he accepted that he had sent it at some point and described that action as taking out "insurance". When asked in what way it was like insurance, he replied that it was because he considered that the practice outlined in the forwarded emails was "illegal".
146 There is no reason to conclude that this forwarding email was sent at any time other than the date and time stamp on its face, being at 5.12 pm on 22 August 2016, after Mr Garner was told he was redundant earlier that day. Mr Garner did not adduce evidence to rebut the statutory presumption that this timestamp was when the email was sent: see s 161(1)(c) and (d), Evidence Act.
147 Whether the forwarded 16 February 2011 email in fact involved any illegality is only important to this proceeding because of what Mr Garner did with it. It is clear that Mr Garner viewed such information as being some kind of bargaining tool that could "insure" his position. In context this meant keeping available to him information that might help him in the future to use against Central Innovation or Intercad. It is reasonably clear that the word "insurance" was not being used by Mr Garner in as benign a way as that word might ordinarily be used. Rather it seemed to be marshalled euphemistically, conveying something in the nature of improper leverage, more in the nature of blackmail, to attempt to get his own way on some issue or to avoid some adverse consequence. That approach by Mr Garner to taking steps with information to protect his position is a mindset that cannot help but inform the view to be taken about his activities that occurred at around the same time.
148 In about July or August 2016, Central Innovation decided to implement an internal restructure and as part of that determined that the positions of Team Leader were no longer necessary for the business. As noted above, Mr Atkinson had discussions with Mr Garner about a possible restructure before this decision was made.
149 Mr Atkinson also went on to say that he knew there was concern in the organisation on the topic of redundancy, and I find as a matter of logic that Mr Garner, given his senior role, would most likely have been aware of that. That is, he would have at least been aware of a risk of being made redundant, not least because of the restriction imposed on him and other Team Leaders in July 2016 on downloading information from SUGAR.
150 At 9.03 am on 18 August 2016, Mr Atkinson sent an email to senior staff within Central Innovation, with the subject line "Rumours" in which he referred to Mr Garner by his first name. The body of that email is as follows:
Just so you are aware there are many rumours flying around right now, the two most concerning ones for me are:-
1) It would appear that Dinesh and Gary have both heard the Team Leader role is redundant. Dinesh called me just now and asked me up front. I told him that the function "may" well not exist in a future structure however there are no plans to make the people redundant nor change the base salary.
2) There are rumours coming out of GS staff in Melbourne that in the new structure the sales staff will be able to sell all products from SWX, Archicad and the Ci range. I have said this is not strictly correct and everything will become clear when Max presents at his roadshow next week.
3) Furthermore there are rumours that we will be changing our business model to rental [licences]. I have categorically denied this but have said [that] Solidworks will be providing a Term Licensing option.
The sooner we get the real message out there the better.
151 An important thing to note from Mr Atkinson's 18 August 2016 email above is that there were rumours "flying around" at that time, in context concerning the restructure being contemplated, and that Mr Atkinson was aware that Mr Garner had apparently heard that his Team Leader role was redundant. There is no reason not to accept that as evidence of the truth. This email, in the context of the evidence referred to above, is an important part of the reason that I do not accept Mr Garner's evidence and submissions that he had no idea that he was about to be made redundant until that actually took place four days later on 22 August 2016, as detailed below. Those reasons are as follows:
(1) Mr Garner's evidence was given in a way which made it clear that he was very mindful of how the evidence he gave would affect the outcome of this proceeding, causing him to tailor parts of his evidence to assist him.
(2) I did not find Mr Garner a reliable witness, and especially did not find him a reliable historian as to his own knowledge and understanding of events that were at the heart of this litigation, some of which are considered in more detail below. While it is not clear from the email when it was that the rumours started "flying around", Mr Atkinson became aware of them at least a few days earlier, so they most likely would have been circulating before then.
(3) Issues to do with the adequacy of the performance of Team Leaders had been brewing for some time. On 6 November 2015, Mr Atkinson sent an email to Mr Garner and other Team Leaders, to clarify expectations of them in that role, and the expectations of sales staff, and expressing increasing disappointment with continuing "below par performance for new sales in Intercad".
(4) Mr Atkinson discussed restructuring with Mr Garner in the middle of 2016.
(5) In July 2016, Team Leaders were no longer permitted to download information from SUGAR.
(6) Mr Garner downloaded reports from both the VRC and from SUGAR in the period of less than two months from about 30 June 2016 to days before his retrenchment on 22 August 2016, as considered in detail below.
(7) Specifically, later the same day that the email reproduced above at [150] was sent, between about 2.10 and 2.49 pm on 18 August 2016, Mr Garner generated a substantial number of reports in SUGAR. The evidence establishing this is considered in some detail in the issues section dealing with the question of whether Mr Garner took and used confidential information belonging to the applicants.
152 On Monday, 22 August 2016, Mr Atkinson came to Melbourne for a meeting with Mr Garner, for the purpose of telling Mr Garner that his position had become redundant. He agreed that he probably said something like "I have something to tell you. It's not what I wanted, but your position is redundant". Mr Atkinson agreed that making Mr Garner redundant was indeed not something he wanted. Mr Atkinson had not said anything before that time which gave Mr Garner any warning that his position might be redundant. From a "factual point of view" this was the first express knowledge Mr Garner had that his position might become redundant, but for a week prior to that there were rumours around that one or two people might be made redundant, with Mr Atkinson not knowing how they started. Trouble in relation to the performance of the sales teams had been brewing since the end of 2015, and early signs consistent with significant change had been communicated to Mr Garner since July 2016. As already concluded, I do not accept that Mr Garner was unaware of the risk of redundancy well prior to being expressly told he was redundant. The weight of the evidence is against that naïve conclusion.
153 Shortly after that Mr Atkinson observed Mr Garner place the Intercad Laptop and his security pass on his desk and then leave the office for the last time. That accords with Mr Garner's evidence that he left soon after being told he was retrenched, being that morning. The cross-examination of Mr Garner revealed that he forwarded a series of emails sent from his Intercad email address to his private Yahoo email address after 5.00 pm that day for no apparent proper purpose; that in 2012, 2013 and 2015 he had forwarded Intercad emails to his private Yahoo email address; and, that he was able to remotely access the Intercad email system to send and receive emails in a way that was not confined to use of the Intercad Laptop.
154 Mr Garner's evidence is that he was unable to explain how emails were sent after 5.00 pm on 22 August 2016, after he said he had left the applicants' premises for the last time. He certainly did not say he had done that by use of a device or remote log on after leaving the premises. I strongly suspect that Mr Garner knows exactly how those emails came to be sent, but did not see it as being in his interest in the outcome of this proceeding to disclose that. Be that as it may, the state of the evidence is such that it is abundantly clear that Mr Garner still had access to the Central Innovation email system after 5.00 pm on 22 August 2016. He used that access to forward at least one email to himself at his Yahoo email address, but it is unclear as to whether that access took place at the applicants' premises or remotely.
155 My clear perception of Mr Garner was that he was an astute individual, well accustomed to looking after his own interests. I find that he would have detected that his job was in possible peril at the very first sign of that being available to him. That is an important finding to reach in assessing what he did in the period prior to him being formally made redundant. Intermediate findings of fact of this kind do not have to be found against any particular standard of proof, unless the relevant finding is an indispensable basis for any ultimate findings of fact: see by analogy Shepherd v The Queen (1990) 170 CLR 573. It is only ultimate findings on the issues in dispute that must be established on the balance of probabilities. This is notwithstanding such ultimate findings being contingent on a collective quality, and thereby weight, of evidence necessary to make any serious adverse findings, by the familiar application of the principles in Briginshaw v Briginshaw (1938) 60 CLR 336, as legislated by s 140(2) of the Evidence Act. That said, I am in any event satisfied that, on the balance of probabilities, Mr Garner was aware of a real risk of being made redundant well prior to that taking place on 22 August 2016, and that his appreciation of that possibility and thus his apprehension in that respect increased from the time that the option of downloading reports from SUGAR was at least meant to have been removed in July 2016.
156 The next day, 23 August 2016, Ms Wilma Finlayson, Human Resources Manager, wrote to Mr Garner on Central Innovation letterhead. The heading and contents of that letter, omitting unnecessary detail including how his entitlements had been calculated, are as follows:
Notification of Termination Due to Redundancy
We refer to our discussions with you. As you are aware Central Innovation Pty Ltd ('CI Group') has made a decision to restructure, resulting in your position being made redundant.
At our meeting yesterday we discussed the redundancy process with you, alternatives to termination of your position as Team Leader, including redeployment within CI Group and its related entities. You were given a list of these to consider. You have chosen not to apply for any of these roles. Unfortunately, there are no other alternative positions within CI Group and its related entities that you could reasonably be deployed to at this time and no other steps can be taken to avoid termination of your employment by reason of redundancy. Accordingly, as your position has been made redundant as of the 22nd August 2016, you will be retrenched and leave the business today.
As advised, the CI Group does not require you to work out your notice period. Your last day of employment with CI Group is today, 23rd August 2016. Your notice period will be paid out to you as soon as final calculations are checked and arranged with Payroll.
Attached to this letter is a schedule of estimated monetary entitlements that will be paid to you on the termination of your employment. …
157 The letter thus makes it clear that Mr Garner's redundancy took place from that day, and reinforces the conclusion already reached that he had been employed by Central Innovation, and that it was the entity that decided to terminate his employment. The schedule enclosed with the redundancy letter referred to the entity used to pay Mr Garner on behalf of Central Innovation, Central Innovation Holdings.
158 In about early September 2016 Mr Garner rang Mr Atkinson, said that he was applying for a job at "Leap" and asked Mr Atkinson if he could put his name down as a referee. Mr Atkinson understood that Mr Garner was referring to Leap Australia, which he was aware was a company that distributes CAD software and other related products which are not developed by SolidWorks.
159 In about late November 2016, Mr Atkinson received a telephone call from Ms Leisha Micallef of SolidWorks. During the course of the conversation she advised Mr Atkinson that Mr Garner had left Leap Australia and joined NCCS, the second respondent (against whom the proceeding could not continue). NCCS was another SolidWorks VAR and was in direct competition with Intercad, and, to the extent that Central Innovation was involved in the sale of SolidWorks CAD software, or provision of support in relation to that software, was in indirect competition with Central Innovation. Mr Garner's defence only denies Central Innovation being in direct competition with NCCS.
160 Competition law, which does not need to be considered in any detail, talks in terms of being able to constrain the operations of another entity in relation to the supply of goods or services: Australian Competition and Consumer Commission v Cascade Coal Pty Ltd [2019] FCAFC 154; 374 ALR 90 at [85] and [157], citing and quoting respectively Australian Gas Light Company v Australian Competition and Consumer Commission (No 3) [2003] FCA 1525; 137 FCR 317, where French J observed at [350]):
Competition in a market is not assessed by a snapshot view of participant behaviour at a particular time. The theatre of competition is a theatre of real actors and shadow actors. The shadows are cast by the potential for new entry. The competitive process is informed by the rivalry of the participants and the potential rivalry of potential participants. Competition so understood is conceptually distinct from the idea of the market and the elements of market structure which may constrain or facilitate it.
161 The Full Court in Cascade Coal commented at [158], immediately after that quote (emphasis added):
None of this is controversial, but nor does this assist the [Australian Competition and Consumer Commission (ACCC)]. It may be accepted that competition and likely competition requires looking at actual and potential dynamics. It may be accepted that shadow actors and their actual and potential behaviour are to be considered. And there are two types of shadow actors to consider. One type is a potential actor who aspires to be an actual actor. Another type is an entity who does not aspire to be an actual actor but controls or aspires to control an actual actor. French J was dealing with the first type. But even to include the second type does not assist the ACCC.
162 NCCS was plainly enough in direct competition with Intercad and, at the very least, in indirect competition with Central Innovation. Central Innovation was at least a shadow actor in competition with NCCS by its control of, and involvement in the operations of, Intercad, and as the parent of Intercad stood to gain from Intercad's commercial success. As such, Central Innovation had a real and legitimate interest in keeping information about customers, relevantly SolidWorks subscriber customers, confidential, as that information could harm them in that competition. NCCS had corresponding incentives to obtain and use such information to advance its competitive objectives.
163 At 2:09 pm on 23 November 2016, Mr Garner sent an email to Mr Mark Ryan, a contractor employed by the Defence Science and Technology Organisation, a Commonwealth Government agency, now a part of the Department of Defence. The subject line was "SOLIDWORKS contact details at NCCS". The email was as follows, omitting salutations (emphasis in original):
Just a quick note to say hello and introduce myself. I am the new Sales Manager with NCCS your local SOLIDWORKS channel partner. My Name is Gary Garner, and I am replacing Steven Komninos who has moved on to the next chapter of his career. N.B. Steven's old mobile number has been discontinued so you can contact me directly on [mobile number] for any queries.
I have been in the CAD industry for over a decade, with seven years in the SOLIDWORKS community in Victoria. As your trusted strategic partner, I am looking forward to adding value throughout the life of your technology investment, to help you maximise your use of the application as your knowledge deepens and as your business grows.
I specialise in SOLIDWORKS, Data Management, Integrating SOLIDWORKS and related products into business processes and workflows and SOLIDWORKS Simulation.
I am very excited about my new role at NCCS, and I look forward to working with you throughout the next few years.
I would like to hear from you if you have any comments or questions.
You can connect with me on LinkedIn
[LinkedIn link]
Please call or e-mail if you have any queries.
164 Some 11 minutes later Mr Ryan forwarded that email to Suzanne Holden at Intercad as follows after the salutation:
Is there any particular reason why my contact details may have been passed on to this 3rd party without my consent? (see email below) It appears to be directly related to Solidworks, and a quick check of my correspondence shows Intercad (aside from 3DS) as the only external party I have had communication with on the topic. There should be no reason for me to receive correspondence from anyone else, and may be an indication of a data leak at your end?
Are you able to highlight what other information may have been passed onto [sic] this third party?
165 Ms Holden replied less than half an hour later, stating after the salutation (emphasis in original):
Thank you very much for forwarding this e-mail to me.
Gary Garner is a former employee of Intercad.
I have brought this to Senior Management's attention.
Intercad do NOT share our customers [sic] information and we do have security measures in place to enforce this policy.
We are starting an investigation with SolidWorks regarding this matter.
Intercad management will be in touch with you at some point very soon.
166 The email chain starting with Mr Garner's email and ending with Ms Holden's reply was forwarded to Mr Atkinson. Two days later, on 25 November 2016 at 3.00 pm, Mr Atkinson sent an email to Mr Ryan as follows (omitting salutations and signature):
Suzanne has passed your correspondence on to me. Gary Garner was a previous employee of Intercad who left approximately 2 months ago. During his time at Intercad Gary would have had access to your contact information as a client of Intercad's.
Please note that we are taking this matter very seriously. Our IT department are investigating what additional information (if any) may have been copied and we have contacted our lawyers to discuss options to ensure that any information (including all copies) that may have been taken are returned to us and to consider other potential legal action that may be available to Intercad based on the apparent breach by Gary of his ongoing confidentiality obligations contrary to the terms of his employment agreement.
We will be in touch as soon as possible to highlight what additional information (if any) may have been copied.
If you have any questions or would like to discuss this matter directly please do not hesitate to contact me.
167 In keeping with the email sent to Mr Ryan, Mr Atkinson caused an investigation to be carried out, the initial results of which are addressed below.
168 Mr Atkinson sent a further email to Mr Ryan at 5:04 pm on 12 December 2016, which was copied to Mr Douglas Binns, as follows (omitting salutations and signature):
Further to my earlier email below I thought I would give you and [sic] update. So far our investigation has established that Gary Garner may have downloaded customer information but it would appear not from our systems but those of DS Solidworks Corporation. We do not have any conclusive evidence as yet but have secured the services of a forensic IT specialist to further investigate.
I will keep you updated as things develop. In the meantime can I take this opportunity to introduce Douglas Binns who is our new Key Account Manager looking after our top twenty accounts across ANZ of which DSTO is one. Douglas will be in touch to discuss our ongoing business relationship in due course.
169 On 16 January 2017, Mr Atkinson sent emails to a select number of Central Innovation's and Intercad's key customers in Victoria and Tasmania, stating that Intercad was investigating a potential breach of confidential information. The recipients of these emails were confined to customers who had been included in a particular data file called Output 26 which is considered in further detail below. Mr Atkinson asked if the customers could "revert straight back" to him if they had been contacted by any party other than Intercad concerning their SolidWorks licences or subscription services of those licences at any time since the beginning of November 2016 to the date of the email and asking for particular details about any such contact.
170 Mr Atkinson received two responses to those emails the same day, 16 January 2016:
(1) At 2:01 pm Mr Atkinson received an email from Mr Nick Neville, the product design manager of a business called Adshel, attaching a copy of an email sent by Mr Garner to Mr Neville on 23 November 2016, and his response to the effect that they already had a provider of SolidWorks taking care of their annual subscription. The email that Mr Neville received from Mr Garner had the same content as the one that Mr Garner sent to Mr Ryan, reproduced above, later on the same day.
(2) At 2:30 pm, Mr Rod Sultana, the Engineering Manager at a business called Natures Organics, forwarded an email that had been sent by Mr Garner to a former employee of Natures Organics on 16 December 2016. The former employee at Natures Organics was Mr Bill Seremetis. The content of the email that Mr Garner sent was the same as the emails sent to Mr Ryan and to Mr Neville. The reply by Mr Sultana to Mr Garner advised that Mr Seremetis no longer worked at Natures Organics and asked him to update his contact details. In relation to that reply email, Mr Sultana's email to Mr Atkinson said that when he was contacted by NCCS, he assumed it was Natures Organics' current supplier, so gave Mr Garner new contact details to update. He noted this would explain why Intercad's emails were still being sent to Mr Seremetis and expressed interest in finding out what the findings of the investigation were.
171 The next day, 17 January 2017, Mr Atkinson received the following telephone calls:
(1) A call from Mr Mark Turner of APS Innovations, during which Mr Turner said that he was calling about the email the previous day and described receiving an unsolicited telephone call from Mr Garner in November or December 2016. Mr Turner said to Mr Atkinson that Mr Garner had suggested that his firm should move their licences over to NCCS as they were due to expire in December 2016, but that he had informed Mr Garner that they were happy with their current suppliers and that Mr Garner should not call back.
(2) A call from Mr Jason Wiggins from Modra Technologies Innovations, during the course of which he said to Mr Atkinson words to the effect of "John, in relation to your email about the data breach, Gary Garner called me a little while ago asking if we were happy with you guys and whether we wanted to switch to NCCS".
172 Throughout the time that Mr Atkinson worked for Intercad and Central Innovation, Intercad purchased SolidWorks products in United States dollars. In his role as General Manager of Intercad, he received price lists and other pricing information from SolidWorks which related to SolidWorks' products that Intercad sold to its customers from Central Innovation's finance director, and reviewed these on a regular basis. As noted earlier in these reasons, that pricing information was usually provided to Intercad by email. He produces a sample email, and also, on a USB stick, copies of SolidWorks' pricing data for the period from about November 2016 to about March 2019.
173 The price charged to customers by Intercad for SolidWorks products reflected SolidWorks' recommended retail price, converted to Australian dollars with a small currency hedging component. Whilst SolidWorks' recommended retail price remained constant during the period from May 2016 to May 2019, the prices charged by Intercad to its customers fluctuated due to movements in the exchange rate between Australian and United States currency.
174 During the period in which Mr Atkinson worked for Central Innovation and Intercad:
(1) he did not receive from Mr Garner any oral or written communication by which he sought consent to download, copy or otherwise remove any information from the VRC or SUGAR, including any of the information contained in certain output files and SUGAR reports (defined below) that he reviewed; and
(2) he did not personally provide any such consent.
Mr Garner has never delivered to Mr Atkinson any USB drive or any other portable electronic device containing any information that Mr Garner downloaded, copied or otherwise removed from the VRC or from SUGAR.