Reasons of the Primary Judge
3 The application before the primary judge was brought by Aristocrat against four prospective respondents, seeking preliminary discovery pursuant to r 7.23 of the Federal Court Rules 2011 (Cth). Aristocrat is engaged in the design and supply of electronic gaming machines (EGMs) and games played on EGMs. Aristocrat holds all the intellectual property rights in the Lightning Link and Dragon Link Games which were designed by High Roller Gaming Pty Ltd (HRG) for Aristocrat. Those games were launched in 2014 and 2016 respectively, and Aristocrat describes them as its best performing games since the time of their launch: [2].
4 L&W competes with Aristocrat in the supply of EGMs and games played on EGMs. The third prospective respondent (Ms Charles) and the fourth prospective respondent (Mr Sefton) previously worked for Aristocrat and now work for L&W: [3]. The evidence showed that Ms Charles and Mr Sefton were directly involved during the period of their employment by Aristocrat (and, in the case of Ms Charles, HRG) in the development of Aristocrat's Lightning Link and Dragon Link Games. Ms Charles was involved in the design of the mathematics underlying the games and Mr Sefton, a graphics designer, was involved in the design of artwork associated with the games: [5]. Ms Charles was directly involved in the design and development of L&W's Dragon Train game, which was launched in August 2023: [7].
5 The primary judge referred to evidence which suggested that Ms Charles may have used confidential information obtained by her during the course of her work with Aristocrat and HRG in developing Lightning Link and Dragon Link while working on the design of L&W's Dragon Train. In particular, there was evidence that suggested that Ms Charles may have made use of a confidential spreadsheet and other confidential information created by her or other employees of Aristocrat or HRG in the course of developing Lightning Link and Dragon Link. There was also evidence that Mr Sefton was, while working for L&W, in possession of artwork which he created while working for Aristocrat: [8].
6 Aristocrat contended that it has reasonable grounds to believe that it may have a right to obtain relief in the Court from each of the prospective respondents for the following causes of action:
(a) breach of confidence and breach of contract for misuse of Aristocrat's confidential information (including the maths documents and source code that underpinned Lightning Link and Dragon Link) in the development of Dragon Train;
(b) infringement of copyright in respect of pay tables, reel strips, waiting tables, underlying maths spreadsheets, game specifications, underlying source code, original artwork or cinematograph films for Dragon Link and Lightning Link;
(c) passing off by way of misrepresenting that Dragon Train is part of the Dragon Link family of games or is a game associated with Dragon Link; and
(d) making misleading or deceptive representations to customers or potential customers about the features of Dragon Train relative to Dragon Link.
Aristocrat contended that, having made reasonable enquiries, it did not have sufficient information to decide whether to start a proceeding in the Court for relief in respect of those causes of action: [9].
7 The primary judge set out the terms of r 7.23 at [11] as follows:
(1) A prospective applicant may apply to the Court for an order under subrule (2) if the prospective applicant:
(a) reasonably believes that the prospective applicant may have the right to obtain relief in the Court from a prospective respondent whose description has been ascertained; and
(b) after making reasonable inquiries, does not have sufficient information to decide whether to start a proceeding in the Court to obtain that relief; and
(c) reasonably believes that:
(i) the prospective respondent has or is likely to have or has had or is likely to have had in the prospective respondent's control documents directly relevant to the question whether the prospective applicant has a right to obtain the relief; and
(ii) inspection of the documents by the prospective applicant would assist in making the decision.
(2) If the Court is satisfied about matters mentioned in subrule (1), the Court may order the prospective respondent to give discovery to the prospective applicant of the documents of the kind mentioned in subparagraph (1)(c)(i).
8 The primary judge then referred at [12] to the judgment of Lindgren J in relation to O 15A, r 6 of the former Federal Court Rules in Alphapharm Pty Ltd v Eli Lilly Australia Pty Ltd [1996] FCA 391 at pp 29-33, which provides much-cited authority that the then para (b) (requiring that it be shown that the applicant for preliminary discovery lacks "sufficient information to enable a decision to be made whether to commence a proceeding") was an objective matter, and importantly that para (b):
contemplates that after making all reasonable inquiries, the applicant has come up against a problem, namely, that it is lacking a piece of information or pieces of information reasonably necessary to enable it to decide whether to commence a proceeding.
9 The primary judge referred at [13] to Lindgren J's summary of the relevant principles as having been applied by the Full Court in Hooper v Kirella Pty Ltd [1999] FCA 1584; (1999) 96 FCR 1 at [40] (Wilcox, Sackville and Katz JJ), in a passage cited with approval by the Full Court in Optiver Australia Pty Ltd v Tibra Trading Pty Ltd [2008] FCAFC 133; (2008) 169 FCR 435 at [32] (Heerey, Gyles and Middleton JJ). At [14], the primary judge said that even if the prospective applicant has sufficient information with which to plead a cause of action, it does not necessarily follow that the prospective applicant has sufficient information to decide whether to start a proceeding for relief in this Court. The primary judge said that a prospective applicant may be entitled to preliminary discovery to determine the extent of the prospective respondent's breach and the strength of any potential defences, citing St George Bank Ltd v Rabo Australia Ltd [2004] FCA 1360; (2004) 211 ALR 147 at [26(f)] (Hely J).
10 The primary judge referred at [20] to the submission made by the prospective respondents with regard to subpara (b) of r 7.23(1) to the effect that Aristocrat already has sufficient information to decide whether to start a proceeding in the Court to obtain relief. The prospective respondents submitted that what Aristocrat was really seeking to do by means of preliminary discovery was to obtain information which would allow it to fully assess the strength of its case against the prospective respondents before making any decision to commence a proceeding, and that the material sought by Aristocrat went beyond what was reasonably necessary to enable it to make such a decision. In support of that submission, the prospective respondents pointed to Aristocrat's evidence as including a document voluntarily produced to Aristocrat's solicitors by the prospective respondents' solicitors, and another spreadsheet produced by Aristocrat, and the similarities between the two as identified by an independent expert engaged by Aristocrat, Mr Ellis: [21]. The prospective respondents submitted that that material was more than adequate to enable Aristocrat to make its decision whether or not to commence a proceeding in this Court, although they made clear that they did not accept that the information in the documents had been used in the design of Dragon Train: [22]. The prospective respondents denied copying and positively asserted independent creation: [22].
11 In further support of their submissions, the prospective respondents referred to the existence of a proceeding in which Aristocrat has sued L&W in the United States District Court for Nevada (the US Proceeding), which was commenced on about 26 February 2024, some months after Aristocrat filed its originating application for preliminary discovery in this Court: [23]. The primary judge referred to the complaint in the US Proceeding as making various allegations against L&W including the following:
(a) L&W developed Dragon Train using Ms Charles's knowledge about how Dragon Link and Lightning Link work;
(b) there are similarities between Dragon Link and Dragon Train that seemingly cannot be explained by any legitimate reverse engineering;
(c) absent this misappropriation of Aristocrat's trade secrets, L&W could not have replicated the signature game play and "feel" of Dragon Link and Lightning Link to the degree it did;
(d) L&W's misappropriation of Aristocrat's trade secrets has been wilful, malicious and part of a sustained and systemic effort to "rip off" the signature elements (and "free-ride" on the commercial success) of Aristocrat's Dragon Link games;
(e) L&W's replicating of the Dragon Link Trade Dress on its own gaming machines and digital games constitutes false designation of origin, false or misleading description, and/or false or misleading representation;
(f) L&W has acquired through improper means one or more of Aristocrat's trade secrets embodied in the Dragon Link and Lightning Link games, including in so far as L&W knew or had reason to know that it had received the information from persons, including Ms Charles and/or Mr Sefton, who owed a duty to Aristocrat to maintain the secrecy of the information, to not disclose the information, and to not use it for the benefit of others; and
(g) L&W has used without authorisation one or more of Aristocrat's trade secrets to develop L&W's Dragon Train games, which L&W intentionally designed to copy and compete with Aristocrat's Dragon Link and Lightning Link games.
12 The primary judge referred to the prospective respondents' submission that these are the same allegations that Aristocrat relies on in this proceeding: [23]. The primary judge referred to the submission by the prospective respondents that the fact that Aristocrat was willing to file the complaint in the US Proceeding indicates that Aristocrat is already in possession of the information it reasonably requires in order to make a decision to commence a proceeding in this Court. Further, the primary judge referred to the submission by the prospective respondents that, if the Court is satisfied that the requirements of r 7.23(1) are met, then it should nevertheless, in the exercise of its discretion, decline to make any order for preliminary discovery. That submission was put on two bases: the fact that Aristocrat has already commenced a proceeding in the United States District Court based on the same factual allegations, and because L&W has already undertaken a substantial review of its records and produced several documents voluntarily.
13 At [26], the primary judge said the following, which was not the subject of any direct challenge by L&W at the hearing before me:
At the core of Aristocrat's concerns is the possibility that its confidential information or copyright works have been embodied or used in the design of Dragon Train. The material voluntarily supplied by L&W to Aristocrat suggests that this may have in fact occurred but stops well short of disclosing whether or not such material was actually used in the design of Dragon Train. In this context, the correctness of the prospective respondents' assertion that Dragon Train was not the product of copying, but of independent creation, cannot be sensibly assessed by Aristocrat without knowing more about the underlying design of Dragon Train and, in particular, the mathematical rules, formulae and models used to create or implement the game.
14 The primary judge considered that Aristocrat was entitled to preliminary discovery of such material for the purpose of assessing whether or not its confidential information may have been used in the design or implementation of Dragon Train: [27]. However, as to the source code, the primary judge said that there did not appear to be any reasonable basis to believe that either Ms Charles or Mr Sefton had copied or disclosed source code for Dragon Link or Lightning Link, and therefore declined to require the prospective respondents to produce the source code for Dragon Train: [28].
15 In relation to the US Proceeding, the primary judge did not accept the prospective respondents' submission that it showed that Aristocrat already had sufficient information with which to make its decision to commence a proceeding in this Court: [29]. The primary judge referred to the evidence as including a copy of a motion filed by L&W in the US Proceeding on or about 9 April 2024 seeking to have Aristocrat 's complaint dismissed on the basis that Aristocrat's allegations were "speculative" and "wholly insufficient to plausibly allege that any L&W Defendant knowingly used Aristocrat's trade secrets", and that "circumstantial allegations regarding product similarity, even if true, do not support a reasonable inference that L&W used Aristocrat's trade secrets to develop its Dragon Train product": [29].
16 The primary judge said that, presumably, L&W would say of similar proceedings in this Court without additional evidence that such proceedings would also be speculative and implausible and seek an order for summary dismissal on that basis: [30]. At the hearing before me, L&W accepted that that was an appropriate inference. The primary judge said that the fact that L&W is seeking summary dismissal of the US Proceeding reinforced his Honour's view that it would not be reasonable to require Aristocrat to make its decision as to whether or not to commence a similar proceeding in this Court, without first obtaining preliminary discovery: [30]. The primary judge noted that on the evidence, preliminary discovery is not available in the US. Accordingly, the primary judge said that the commencement of the US Proceeding did not, in itself, demonstrate that Aristocrat has no right to seek preliminary discovery in this jurisdiction: [30].
17 As to the prospective respondents' submissions based on the Court's general discretion, the primary judge said "there is in my view no sufficient reason shown for not making an order for preliminary discovery": [31]. The primary judge referred to the confidentiality of the material sought by Aristocrat, but noted that the Full Court had observed in Optiver at [40] that confidentiality is ordinarily protected by appropriate directions and undertakings: [31].
18 The primary judge then turned to the detailed drafting of the categories of preliminary discovery sought by Aristocrat, distinguishing between documents reasonably required to enable a prospective applicant to make its decision to commence a proceeding, on the one hand, and documents which, though not reasonably necessary for that purpose, would be good to have before commencing a proceeding, on the other hand: [32]-[38]. The primary judge noted that the parties were in substantial agreement with regard to the confidentiality regime to apply to the prospective respondents' discovery: [39]. His Honour concluded that the confidentiality regime proposed by the prospective applicant provided the prospective respondents with adequate protection in relation to such material: [39].