Herold v Seally

1. The applicants be granted leave to file an amended statement of claim in the form provided by email to the associate to Justice Bromwich on 9 August 2017.
2. The respondents pay the applicants' costs of and incidental to the application for leave to file the amended statement of claim. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

BROMWICH J: 1 This is a dispute about pleadings following my judgment in Herold v Seally (No 2) [2017] FCA 543, by which I refused both the applicants' bid for an anti-suit injunction of proceedings in the Superior Court of California and the respondents' bid for complete or partial setting aside of these proceedings. As outlined in those prior reasons, the parties to these proceedings are involved in a highly polarised dispute as to who should take the dominant credit for the development of a particular concept for driverless vehicles, and thereby be able to develop the concept commercially, principally overseas. 2 To the above overview may be added my general understanding of certain aspects of the case. Reflecting no determination or agreement as to fact, it seems on the pleadings so far that there is a live dispute between the parties as to who owns the intellectual property to use, permit the use of, or restrain the use of, a set of PowerPoint slides and Excel spreadsheets in the form of slides, by which the driverless vehicles concept was described. The two types of slides were apparently assembled as a single document, referred to by the parties as the "deck". It seems that a subset of that deck was then created using a selection of the slides to create a "pitch deck", principally for the purposes of persuading potential investors to commit funds to the development of the concept. 3 The question of who was responsible for the creation of the slides, the deck and the pitch deck is likely to be a central area of factual and legal dispute for which adjudication will ultimately be required. The first step of that process is to advance the pleadings to a close so as to enable issue to be joined for the purposes of trial. 4 The applicants seek leave to file an amended statement of claim over the objections of the respondents. Pursuant to a timetable, the parties provided written submissions outlining their competing views, to enable the application to amend to be determined in chambers on the papers. 5 There is no objection to a number of minor amendments. The respondents do, however, object to enlarging the prior filed statement of claim to include claims under the Australian Consumer Law (ACL), legislated in Schedule 2 to the Competition and Consumer Act 2010 (Cth). Those enlarged claims are directed to the respondents' conduct through their solicitors in making assertions in a letter sent on 16 September 2016 to the applicants that the applicants were infringing the first respondent's copyright in the deck or, alternatively, the pitch deck, by using either in the course of the second applicant's business. Reliance is also placed on asserted threats of copyright breaches said to have been made separately against unknown other persons. 6 Relevantly and in summary, the applicants seek to allege that the following representations in the letter of 16 September 2016 are misleading or deceptive, occurring within trade or commerce so as to engage the ACL: (1) a representation that the applicants did not own copyright in the deck or the pitch deck or, alternatively, did not have a licence to carry out acts otherwise constituting a breach of copyright (this second aspect is not so clearly pleaded); (2) a representation that any confidential information in the deck or pitch deck is not the property of the applicants or, alternatively, that any confidential information in those parts of the deck or pitch deck contributed to or created by the first applicant is not the property of the applicants; and (3) further and in the alternative, a representation that the applicants do not have an unlimited licence to use any confidential information contained in the deck or pitch deck for the development of autonomous transport systems. 7 The respondents object to the above proposed enlargements of the statement of claim on the basis that they are vexatious, embarrassing and oppressive and liable to be struck out. This is said to be so for the following reasons: (1) Insofar as it is alleged that the respondents have misleadingly represented "that the applicants do not own the copyright in the deck or the pitch deck", the proposed pleading does not disclose the material facts which support the applicants' contrary claim to ownership of the copyright in the whole of the deck. It is noted that, pursuant to s 35 of the Copyright Act 1968 (Cth), ownership depends on authorship, or creation by an employee in the course of employment, or agreement, or assignment. In this regard, it is said that the pleading does not disclose a proper basis for the first applicant's claim of ownership of the "whole deck" in circumstances where he has admitted that he is not the author of many of the slides. For this reason, the pleading is said not to disclose any proper basis for the alleged misrepresentation. (2) Insofar as the applicants' reject the representation that they do not have a licence to use the confidential information in the pitch deck, the proposed pleading does not plead the fact of a licence or the basis for a licence, joint ownership alone not being sufficient for that purpose. (3) Insofar as the misleading and deceptive representations are said to have occurred in "trade or commerce" within the scope of the ACL, the proposed pleading does not refer to conduct within Australia and provides no proper basis for that contention. 8 In response, the applicants characterise the respondents' objections as no more than an objection to their ability to prove the matters sought to be pleaded. It is pointed out that the representations sought to be alleged arise from the letter sent by the respondents' solicitors and, as such, do not invite consideration of copyright law. It is asserted that the respondents' objections depend upon the false premise that proving the representations are false [or at least misleading or deceptive] depends upon demonstrating that the applicants were the sole owners of copyright in materials constituting the deck or pitch deck, whereas all that is needed to be shown, in effect, is that the applicants were at least joint or part copyright holders, which is pleaded elsewhere in the statement of claim. To establish that position, it is said, would be enough to demonstrate as false the representation in the letter of 16 September 2016 that the applicants do not own the copyright in the deck or the pitch deck. 9 As to the licence aspect of the proposed pleadings, the applicants assert that the representations in the 16 September 2016 letter can be shown to be false if it is established that the applicants did have a continuing licence to use the information developed by collaboration. 10 As to the trade or commerce aspect of the proposed pleadings, it is asserted that the relevant conduct did take place in Australia, and that the presently filed evidence makes no reference to relevant conduct occurring overseas. 11 Overall, the applicants submit that the conduct complained of in making the relevant representations consisted of an attempt by the respondents to prevent the second applicant from proceeding to develop autonomous transport systems. 12 After carefully reading the proposed pleadings and, in particular, those objected to in the context of the balance, I am of the view that, while perhaps not ideal in form, the pleadings upon which the applicants seek to rely do not suffer from the fatal defects asserted by the respondents. When an allegation of misleading or deceptive conduct is sought to be pleaded, the moving party does not have to go so far as to plead a contrary, alternative position, as though relief to that end were being sought. In the present case, the impugned parts of the applicants' proposed pleading attack what the first respondent is said to have represented was the legal and factual position, and only seek to plead to the contrary to the extent of showing that this is not so. In those circumstances, it is sufficient for the pleading to state what was said or done, and why it is alleged to be misleading or deceptive and in trade or commerce. That may then be responded to in the usual way. Without making premature determinations of fact or law, the applicants proposed pleading goes far enough in all the circumstances. If, in the final analysis, the proven facts do not rise to the level pleaded, then the claim will fail.