Infringement by the second respondent
118 The second respondent, Mr Ainslie, does not dispute that a person may infringe a patent and design by authorising conduct which is within the scope of the exclusive rights of the owner of the patent or design. Mr Ainslie accepted that this follows from the terms of the relevant provisions, s 13(1) of the Patents Act (which says that "a patent gives the patentee the exclusive rights, during the term of the patent, to exploit the invention and to authorise another person to exploit the invention") and s 10(1)(f) of the Designs Act (which says that the registered owner of a registered design has the exclusive right, during the term of registration of the design, to "authorise another person to do any of the things mentioned in paragraph (a), (b), (c), (d) or (e)" of s 10(1)). This is consistent with the reasoning of Black CJ and Lehane J in Bristol-Myers Squibb Co v FH Faulding & Co Ltd [2000] FCA 316; (2000) 97 FCR 524 at [97] and Bennett J in Inverness Medical Switzerland GmbH v MDS Diagnostics Pty Ltd [2010] FCA 108; (2010) 85 IPR 525 at [193]-[203]. There was also no dispute between the applicant and the second respondent that a person authorises an infringement if the person sanctions, approves or countenances the infringement in the sense described in University of New South Wales v Moorhouse [1975] HCA 26; (1975) 133 CLR 1 at 12 and 20.
119 Other applicable principles were also not in dispute. Accordingly:
(1) A person can authorise conduct that results in infringement of a patent without intending to infringe and without knowing their conduct will have that result (Inverness at [193]).
(2) Control over the conduct constituting the infringement is critical. As explained in Australian Tape Manufacturers Association Ltd v Commonwealth [1993] HCA 10; (1993) 176 CLR 480 at 498, in the context of copyright:
manufacture and sale of articles such as blank tapes or video recorders, which have lawful uses, do not constitute authorization of infringement of copyright, even if the manufacturer or vendor knows that there is a likelihood that the articles will be used for an infringing purpose such as home taping of sound recordings, so long as the manufacturer or vendor has no control over the purchaser's use of the article. It was the absence of such control in CBS. Songs Ltd [CBS Songs Ltd [1988] AC. at 1055] that constituted the critical distinction between the decision in that case and the decision in University of New South Wales v. Moorhouse, where the University had power to control what was done by way of copying and not only failed to take steps to prevent infringement but provided potential infringers with both the copyright material and the use of the University's machines by which copies of it could be made (75). Accordingly, in Moorhouse, authorization was made out.
(3) A director of a company need not be a sole director to have the requisite degree of control to authorise an infringement (see, for example, Nominet UK v Diverse Internet Pty Ltd [2004] FCAFC 1244; (2004) 63 IPR 543 and Australasian Performing Right Association Ltd v Jain (1990) 26 FCR 53).
(4) Authorisation may be inferred including by indifference to a sufficient degree, although a person does not authorise an infringement by reason of mere knowledge and a failure to act to prevent the infringement and nothing more (see, for example, Nominet at [129]).
120 Mr Ainslie noted that the evidence shows that he was appointed as a director of the first respondent on 1 February 2013, along with another director, Mr Leong. Mr Leong ceased to be a director on 1 May 2015. Mr Mo was appointed as a director on 3 December 2015. Mr Ainslie ceased to be a director on 22 June 2016. Mr Mei was appointed a director and secretary on 11 July 2016. Mr Ainslie also noted that he had admitted that, until 22 June 2016, "in conjunction with others", he was involved in management decisions on behalf of and in the management of the first respondent. Further, he admitted that "in conjunction with others" he was involved in the sales of containers 1, 2, 3 and 5 by the first respondent. It was submitted for Mr Ainslie that:
The second respondent has denied the allegation that, from at least 22 June 2016, he was involved in the day to day management and conduct of the business of the first respondent.
The words "in conjunction with others" highlighted above are not an exercise in obfuscation, but quite significant when the evidence (noted below) shows that, largely during the term of his directorship, Mr Ainslie has been a director with another person. It is therefore not established what role he personally had in relation to the company's business and operations.
…
In this case, the applicant's evidence, together with admissions, is limited to showing Mr Ainslie was, for a period, a director and with others had some involvement with the management and conduct of the company's business.
There is no direct evidence of any personal involvement of Mr Ainslie in the alleged acts of infringement. Nor is there evidence of what his role (as distinguished from that of other directors or managers), or extent of involvement or control, was in relation to the company's business. And such evidence has not been sought by discovery or other means.
There is therefore no basis for the Court to conclude that Mr Ainslie sanctioned, approved or countenanced the alleged acts of infringement by the first respondent, and thereby authorised those infringements.
121 Otherwise, Mr Ainslie contended that other documentary evidence on which the applicant relied was inadmissible. I disagree
122 The first document is a LinkedIn profile printed on 1 February 2016 which identifies a Neil Ainslie with a photograph. The document states:
Neil Ainslie MAIP
General Manager/Director at Specialty Packaging Aust Pty Ltd
…
Previous Flight Group, SCS Plastics Pty Ltd, Marinucci Packaging Australia
…
General Manager/Director
Specialty Packaging Aust Pty Ltd
February 2013 - Present (3 years 1 month) | Underwood, Queensland
…
123 Mr Marinucci, who knew Mr Ainslie and had dealt with him when he was employed by the first respondent, was shown the document and said that this was a photograph of the second respondent. As a result, I consider that the document is admissible as an admission by Mr Ainslie that he occupied the role of general manager of the first respondent as at 1 February 2016 and had occupied the role since February 2013 (see ss 58, 81(1), 88 and 83 of the Evidence Act 1995 (Cth), as well as the reasoning in Australian Competition and Consumer Commission v Air New Zealand Limited (No 1) [2012] FCA 1355; (2012) 207 FCR 488 at [89]-[107] and Capital Securities XV Pty Ltd (formerly known as Prime Capital Securities Pty Ltd) v Calleja [2018] NSWCA 26 at [101]).
124 The second document is a page printed from the website www.specialtypackagingaust.com.au. This document includes the following information:
Specialty Packaging Aust Pty Ltd
…
Address:
Unit A, 153 North Road, Woodridge QLD 4114
Contacts:
Neil Ainslie
General Manager Aust & NZ
125 The address shown in this document, to the extent it refers to 153 North Road, Woodridge QLD 4114, reflects the registered address and principal place of business of the first respondent as shown on a company search dated 18 October 2016. Accordingly, this document (which must be inferred from its face to have been prepared and uploaded by a person with the first respondent's authority) also constitutes an admission by or on behalf of the first respondent that its general manager for Australia as at 18 October 2016 was Mr Ainslie (see ss 58, 81(1), 87(1), 88 and 183 of the Evidence Act, as well as Air New Zealand and Calleja, as referred to above). It is not, however, an admission by Mr Ainslie to that effect. This does not mean the evidence is irrelevant as against Mr Ainslie. The first respondent's admission is itself probative evidence of Mr Ainslie's role within the first respondent as at 18 October 2016.
126 To this evidence must be added Mr Marinucci's evidence. Mr Marinucci knew Mr Ainslie because Mr Ainslie had worked for a company of Mr Marinnucci's. Mr Marinucci had also dealt with Mr Ainslie when Mr Ainslie worked for the first respondent. Mr Marinucci explained that about three years ago (that is, about 2015) he had commercial dealings with the first respondent over about a six-month period. The person he dealt with at the first respondent was Mr Ainslie. Mr Ainslie described himself as the general manager of the first respondent. The first respondent provided a product to Mr Marinucci's company. This occurred after obtaining quotes including from the first respondent. Mr Marinucci dealt with Mr Ainslie alone on behalf of the first respondent. Mr Marinucci understood that another person owned the first respondent but believed Mr Ainslie to be the "go to man" for quotations. Mr Marinucci did not know whether Mr Ainslie was a sole director of the first respondent at any time or about his employment contract.
127 Mr Ainslie did not give evidence. It was submitted for Mr Ainslie that there was no reason for him to do so given that the allegations against him provided no particulars of his conduct said to constitute authorisation of the infringements, the evidence that was filed consisted of inadmissible documents, and thus there were no circumstances that gave rise to a case Mr Ainslie could reasonably be expected to answer. As a result, there was no scope for any inference that Mr Ainslie would not have been assisted by any evidence that he could have given.
128 I disagree with these submissions. The applicant claimed that Mr Ainslie authorised the infringements. It filed documentary evidence that was admissible to prove Mr Ainslie's status as a director of the first respondent at all material times and sole director between 2 May and 2 December 2015. It also filed documentary evidence that constituted an admissible admission by Mr Ainslie that he was the general manager of the first respondent from February 2013 and as at 1 February 2016 and by the first respondent that Mr Ainslie was the general manager of the first respondent as at 18 October 2016. To this must be added Mr Ainslie's formal admissions that he was involved in conjunction with others in management decisions on behalf of the first respondent at all material times until 22 June 2016, was involved in conjunction with others in management decisions of the first respondent at all material times until 22 June 2016, and was involved in conjunction with others in the sale by the first respondent of containers 1, 2, 3 and 5. Further, it was apparent from the LinkedIn profile document that Mr Ainslie had worked for one of Mr Marinucci's companies and thus it was not unexpected that the applicant may cross-examine Mr Marinucci, called by the respondents, about dealings with Mr Ainslie. Mr Ainslie's decision not to give evidence was made in all of these circumstances. These circumstances, taken together, are capable of supporting an inference that Mr Ainslie had sufficient control over and involvement in the actions of the first respondent to supply all of the disputed containers to be taken to have authorised the infringements. The fact that Mr Ainslie chose not to give evidence to the contrary is a relevant factor in inferring that such evidence as he might have given would not have assisted him. It is also a relevant factor in deciding whether or not to draw the inference of authorisation which is open on the evidence (HIH Insurance Ltd and HIH Casualty and General Insurance Ltd, Re; Australian Securities and Investments Commission (ASIC) v Adler [2002] NSWSC 171; (2002) 168 FLR 253).
129 I accept the applicant's submission in these terms:
Although it is possible that shared management responsibilities may, in certain circumstances, mean that a particular director cannot be found to have authorised the company's infringing conduct, it does not automatically follow that management activities undertaken "in conjunction with others" will mean that a particular director cannot be held personally liable for authorising the company's infringing conduct.
130 Although I prefer not to speak in terms of the shifting of the onus of proof to Mr Ainslie (as the applicant's submissions did in the circumstances identified), from the whole of the evidence to which I have referred (including the admissions) I infer that Mr Ainslie did have sufficient control over the first respondent's infringing conduct to be found to have sanctioned, approved and countenanced the infringements given the time periods involved.
131 I also accept the applicant's submission as follows, which provides further support to these conclusions:
…open correspondence between the parties' solicitors before the commencement of the proceedings (ie. at a time Mr Ainslie was a director of the First Respondent) provides additional support for its submission that Mr Ainslie was a person who countenanced, sanctioned and approved the conduct of the company. At Annexure KC-24 to Ms Chrysilou's affidavit (CB Vol E, Tab E2, p77-78) is a letter dated 6 February 2016 from Griffith Hack to Chrysilou IP. Griffith Hack then represented (at least) the First Respondent. The letter includes two paragraphs in the following terms:
"We are assured by our client that there has been no supply by it since approximately November 2014 of punnet SPA-150 into the Australian marketplace. Any appearance of that punnet now in the marketplace can only be explicable on the basis that it is a use of long retained stock by a customer of our client.
As we reiterated in our letter to you of 29 July 2015, if your client requires a director of our client to attest to the accuracy of the statement contained in our letter to you of 5 March 2015 in relation to the retrieval of stocks of the relevant punnets (now including punter SPA-150) then that can be arranged."
At the time this letter was sent, Mr Ainslie was a director of the company - there was an additional director too, Pengfei Mo, who had only been appointed on 3 December 2015. Prior to 3 December 2015, as noted above, there was a period of some six months in which Mr Ainslie had been the sole director of the company. There is no suggestion in the evidence that prior to 3 December 2015 Pengfei Mo could have attested to the matters set out in the Griffith Hack letter. Only Mr Ainslie could have done so, on the evidence. An inference which may be reasonably drawn from the Griffith Hack letter and the ASIC search of the First Respondent (in particular at CB Vol E, p105) is that Mr Ainslie was the only person who could have attested to the matters set out in the Griffith Hack letter. The Court may safely conclude that this is an additional piece of evidence which supports a finding of authorisation of the company's conduct by Mr Ainslie.
132 Given these conclusions it is not necessary to consider the period during which Mr Ainslie was the first respondent's sole director separately from the periods during which he was one of two directors or the sole general manager.
133 Mr Ainslie has also infringed the patents and designs which the first respondent infringed.