Consideration
29 In my view, this is a case where it is in the interests of justice to make appropriate orders which will have the effect of permitting the proceedings in IP Australia to take their course. My reasons are as follows.
30 First, there is a plain overlap between the proceedings in the Court and the applications which have been made to IP Australia. The Court proceedings involve an action for infringement of a registered design which is itself the subject to a cross-claim. The cross-claim seeks a Court order revoking the registered design on grounds relating to both "entitled persons" as well as a claim that the design should not have been registered because it was not new and distinctive in comparison with the prior art base.
31 Similar issues are raised in the applications to IP Australia by the first and second respondents. Although IP Australia has indicated that it cannot conduct an examination of the design because of the bar imposed by s 63(3) of the Act, its investigation of the revocation request is ongoing and is relatively well advanced. Based on information supplied by the second respondent, IP Australia reached a preliminary view in November 2012, that the request for revocation on grounds relating to "entitled persons" was "plausible". Then, in March 2013, IP Australia received further detailed submissions and material from the second respondent in support of his request for revocation. I was informed from the Bar table that IP Australia recently granted the applicant an extension of time for it to provide its evidence and submissions in response.
32 As noted above, the examination sought by the first respondent on 6 December 2012 has not progressed in the light of s 63(3), but that bar can be removed by an order of the Court. In my view, such an order should be made to enable IP Australia to consider and determine both the applications which have been made to it. The two applications are plainly related.
33 Secondly, while acknowledging the significance of the prima facie right of a plaintiff to have its case heard and determined in the ordinary course of the procedure and business of the Court, I do not regard that right as absolute. The Court has clear power to modify that right in appropriate circumstances. For example, under s 53A of the FCA Act, the Court may order that proceedings in the Court, or any part thereof, be referred to arbitration, mediation or to a suitable person for resolution by alternative dispute resolution. I am not suggesting that those particular powers ought to be exercised in the current case, but they simply highlight options which are available to the Court in an appropriate case which do not involve the Court hearing and determining proceedings brought in its jurisdiction. It is also clear that the Court has power under s 63(3) of the Designs Act to order the Registrar to examine a design in an appropriate case notwithstanding that relevant Court proceedings are on foot. In addition, the Court's general power to grant a stay of proceedings is capable of being used in an appropriate case to allow the Registrar to consider and determine an application made under s 51 of the Act for revocation of a registered design under s 52. The bar imposed by s 52(6) of the Act can be lifted in an appropriate case by the Court ordering a stay of legal proceedings which will then have the effect that those proceedings are no longer "pending" for the purposes of s 52(6).
34 Thirdly, I consider that a stay of the legal proceedings in the circumstances here is consistent with and best promotes the overarching purpose of civil practice and procedure provisions set out in s 37M of the FCA Act. In particular:
(a) substantial costs are being incurred by the parties in conducting the legal proceedings, in circumstances where it is clear that the businesses involved are relatively modest. Moreover, as noted above, both the first and second respondents have serious financial difficulties. The costs of the litigation will inevitably grow for all the parties preparing for, and conducting, a final hearing which, on current indications, will be hotly contested and occupy several hearing days. To date numerous interlocutory applications have been filed on behalf of both the applicant and the respondents, several of which are yet to be heard. They too will generate significant costs for the parties. Of course the parties will have incurred and will continue to incur costs in participating in the IP Australia proceedings, but it is highly likely that those costs will be of a lesser magnitude than their litigation costs;
(b) there is some prospect that the parties' dispute may be finalised if the IP Australia proceedings are allowed to take their course. In any event, those processes may lead to some narrowing of the issues in dispute between the parties in the legal proceedings;
(c) if any of the parties does not accept a decision of the Registrar under s 52 of the Act, the party may avail itself of the right of appeal under s 52(7). If this occurs, consideration could be given to joining any such appeal to the current proceedings if and when the temporary stay is lifted;
(d) seeking to resolve the parties' dispute by allowing the applications before IP Australia to progress to finalisation is also commensurate with the importance and complexity of the matters in dispute; and
(e) it appears that IP Australia's consideration of the revocation request is at least as well advanced - if not more advanced - than that aspect of the Court proceedings. The examination process is not as far advanced because of the bar imposed by s 63(3), but it is significant to note that if that bar were lifted the examination by IP Australia would be subject to the time periods stipulated in reg 5.04 of the Designs Regulations 2004 (the Regulations).
35 Fourthly, I have taken into account the various matters raised by the applicant in opposition to the relevant interlocutory applications. One matter which is particularly significant and has troubled me relates to the different procedures available in Court proceedings compared with those in IP Australia. As the applicant points out, the rules of evidence do not apply in IP Australia and there is a risk that hearsay evidence (such as an alleged Skype communication involving Mr William Ke, a witness for the respondents who is based in China) may be relied upon in any administrative determination by the Registrar. As noted above, the applicant alleges that the probity of some of the respondents' evidence is questionable and that it will not have an opportunity in IP Australia properly to test that evidence, including by cross-examining Mr Ke. The applicant says that these procedural differences create a "grave injustice" for it. This submission is not without some force, but I believe it is outweighed by the other considerations set out above. Moreover, while it is true that the applicant will not have an opportunity to cross-examine Mr Ke in the IP Australia proceedings, it should be noted that the Registrar is subject to an express statutory obligation under s 52(6) of the Act to provide procedural fairness. The Registrar is also statutorily obliged to conduct an examination in accordance with the procedures set out in the Regulations (see s 65(3) of the Act and reg 5.03 of the Regulations). There is no reason to believe that the applicant will not have an opportunity to put to the Registrar whatever it wishes to say about the probative value of any of the information supplied to IP Australia by the respondents in support of either of their applications. The weight to be given to that evidence will be a matter for the Registrar to determine. As noted above, the applicant also has a right of appeal under s 52(7) of the Act.
36 Finally, I should state that I do not accept the applicant's submission that the applications made to IP Australia by the respondents constitute an abuse of process or are oppressive or vexatious. It is understandable that the respondents would prefer to avoid if they can costly litigation in seeking to resolve their dispute with the applicant. The Act itself expressly contemplates the possibility of parallel proceedings in a court and in IP Australia and, while giving general primacy to court proceedings, provision is made for the court to adjust that primacy in an appropriate case. That is what I believe should occur here.
37 For all these reasons I consider that this is an appropriate case in which:
(a) an order should be made under s 63(3) of the Act that the Registrar of Designs should examine the design as requested by the first respondent in its application dated 6 December 2012. In my view, however, it is inappropriate to make any of the other transfer orders sought by the first respondent in its interlocutory application filed on 1 May 2013 (see [13] above). I accept the applicant's submission that there is a real doubt as to whether the Court has the power to in effect transfer all or a substantial part of the proceedings for determination by IP Australia. But for reasons given above, I consider that this is an appropriate case in which to make an order as is expressly contemplated by s 63(3) of the Act; and
(b) the Court proceedings should be stayed pending finalisation by the Registrar of Designs of both the application dated 8 August 2012 requesting revocation on grounds relating to "entitled persons" and the application dated 6 December 2012 requesting an examination of the relevant registered design.
38 As the first respondent has not sought costs in respect of either of its two relevant interlocutory applications, I will make no order as to costs. It is appropriate, however, that the parties have liberty to apply on the giving of 72 hours notice. Orders will be made accordingly.
I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Griffiths.