Vehicle Monitoring Systems Pty Limited v SARB Management Group Pty Ltd trading as Database Consultants Australia

The explanation for the delay and the conduct of the parties 38 On the one hand, SARB submits that by reason of VMS's own conduct, it was not possible for it to identify with precision the basis for the lack of entitlement ground and, therefore, to apply for leave to amend its pleadings until it was given the opportunity to examine Mr Crowhurst who attended the Court pursuant to a subpoena. On the other hand, VMS submits that SARB could have taken action earlier than it did and that its delay is a reason not to grant leave to amend. 39 A summary of the events leading up to the present application is as follows. 40 In January 2020, SARB became aware that Mr Crowhurst was able to provide information and contemporaneous documents relevant to the validity of the patents. SARB raised the issue with VMS in a letter dated 27 February 2020. SARB said: 5 An additional matter has come to our attention in the preparation of our client's Cross-Claim. We consider that our client may have the right to claim that your client was not entitled to the grant of the First and Second Patent (as defined in the Statement of Claim). 6 In order to determine whether our client has a proper basis to make this claim, we require access to certain documents currently in the possession of Peter Crowhurst. These documents relate to Mr Crowhurst's involvement in the development of the alleged invention the subject of the First and Second Patents (Documents). 7 We have requested that Mr Crowhurst provide us with copies of the Documents for our inspection. Mr Crowhurst has informed us that he [sic] unable to do so, as he is bound by the terms of a non-disclosure agreement between himself and your client (and/or a related entity of your client), with which we have not been provided, but which we are informed has no expiry date. 8 In the interest of the efficient conduct of the proceeding, and pursuant to the parties' overarching obligations under section 37M of the Federal Court of Australia Act 1976 (Cth), we request that VMS consent to Mr Crowhurst providing the Documents to us. To the extent any of the Documents remain confidential, access to the Documents can be given pursuant to a confidentiality regime which limits access to external legal representatives only. We enclose a proposed confidentiality undertaking for your client's consideration, which mirrors the terms of the confidentiality undertaking we have proposed above. 41 Thereafter, correspondence passed between the solicitors for the parties. I do not need to summarise that correspondence. On 13 March 2020, the solicitors for VMS wrote to the solicitors for SARB and said (inter alia): Your letter dated 27 February 2020 states that the Documents (as defined in that letter) are requested in order to determine whether your client has a proper basis to bring a claim that our client was not entitled to the grant of the First and Second Patents. The letter further states that if, following a review of the Documents, your client determines that it has a proper basis to make an entitlement claim, it will seek to amend its cross-claim accordingly. It is clear that the Documents (which have still not been identified with satisfactory precision) are sought for the purpose of enabling your client to formulate a case, rather than to aid a case that has been articulated on the pleadings. Seeking documents for the purpose of assisting your client to determine whether there may be facts on the basis of which a cross-claim can be brought is fishing and does not constitute a legitimate forensic purpose as required in relation to any subpoena issued pursuant to Division 24.2 of the Federal Court Rules 2011 (Cth) - see, for example, the Full Court's decision in Christian v Société des Produits Nestlé SA and others (No 2) [2015] FCAFC 153 at [57] to [60]. 42 On 17 March 2020, SARB issued a subpoena to produce documents directed to Mr Crowhurst and seeking the production of documents described as follows: 1 Documents, both hard copy and electronic, in the possession, power or control of Peter Crowhurst evidencing or recording his involvement in the development of the alleged inventions the subject of Australian Patent No. 2005243110 titled "Method, apparatus and system for parking overstay detection" and Australian Patent No. 2011204924 titled "Method, apparatus and system for parking overstay detection" (the Patents). Copies of the Patents are attached to this subpoena. 43 VMS replied by stating that it would apply to set aside the subpoena and it duly did so. For the purposes of the argument as to whether the subpoena should be set aside, SARB relied upon an affidavit of a solicitor at its solicitor's firm, Mr Harrison Ottaway. Mr Ottaway said the following (inter alia): 5 On 24 January 2020, I had a telephone conference with Mr Crowhurst and Helen Macpherson, a partner at NRFA. During the telephone conference, Mr Crowhurst said words to the effect that: (a) he had worked with Fraser Welch and Paul Rolfe to develop a parking overstay detection system; (b) the purpose of the parking overstay detection system was to determine whether vehicles had overstayed parking limits and communicate this to parking enforcement officers; (c) Mr Welch subsequently applied for a patent in respect of the parking overstay detection system he had worked with Mr Welch to develop; (d) he was not named as an inventor on the patent application (and nor was Mr Rolfe); (e) he believed that he should have been named as an inventor, based on his involvement in the development of the parking overstay detection system; (f) he had not assigned his rights in the parking overstay detection system to Mr Welch or to the Applicant (or to anyone else); and (g) he had contemporaneous documents including design notes recording his involvement in the development of the parking overstay detection system. 6 During the course of 17 February 2020, I recall that I spoke with Mr Crowhurst by telephone on approximately three occasions. During those telephone discussions, Mr Crowhurst said words to the effect that: (a) he had collected contemporaneous design files, notes, invoices and other documents relating to his involvement in the development of the parking overstay detection system referred to in paragraph 5(a); (b) he was concerned that some of the documents referred to in the preceding sub-paragraph might be subject to a non-disclosure agreement between him and the Applicant (or a related entity of the Applicant), which had no expiry date. As a result, he was not able to provide me with these documents; and (c) he requested that SARB issue a subpoena to him in respect of the documents. 44 On 7 April 2020, a judge of this Court heard VMS's application to set aside the subpoena and his Honour decided that the subpoena should be set aside (Vehicle Monitoring Systems Pty Limited v SARB Management Group Pty Ltd trading as Database Consultants Australia (No 3) [2020] FCA 471). In the course of his reasons, his Honour said the following: 11 The applicant submits that the subpoena should be set aside because it has been issued for an improper purpose. The documents sought do not have an apparent relevance to the issues raised in the pleadings and the cross-claimant's purpose in seeking its issue was to enable it to engage in a "fishing" exercise to see whether, in substance, it does have a case that the applicant is not entitled to the two patents. The applicant argues that the subpoena is an impermissible attempt to seek preliminary discovery from a non-party. 12 I accept those submissions. The question of apparent relevance is determined principally by recourse to the pleadings, not by whether the party issuing the subpoena is presently in possession of some evidence supporting it: Bailey v Beagle Management Pty Ltd [2001] FCA 60; 105 FCR 136 at [28]; Wong v Sklavos [2014] FCAFC 120; 319 ALR 378 at [12]. There is no issue before the Court concerning the applicant's entitlement to the patents. Raising a potential issue in correspondence between the parties, such as here, does not mean that the issue is a justiciable one that would support the issue of a subpoena seeking documents directed to that issue. 13 I would add that the somewhat skeletal information provided in Mr Ottaway's affidavit does not, in any event, rise above a statement that Mr Crowhurst worked with the two other gentlemen to develop a parking overstay detection system and a mere assertion that he, Mr Crowhurst, believes that he should have been named as an inventor. Those facts alone provide little support to challenge a patentee's entitlement to a patent. I also note that the 110 patent was granted on 13 March 2008. There is no evidence before me that Mr Crowhurst has raised the issue of entitlement before now. 14 In the absence of some articulated claim on the pleadings, I do not see how the subpoena can be used for the purpose for which the cross-claimant seeks to use it. In my view, it constitutes an abuse of the Court's process. 15 The applicant raised an argument to the effect that Mr Ottaway's affidavit did not address the requirement of s 138(4) of the Act that a patent should not be revoked on entitlement grounds unless, in all the circumstances, it is just and equitable to do so. It is not necessary for me to address that submission. 45 On 9 April 2020, the solicitors for VMS wrote to Mr Crowhurst advising him that the subpoena had been set aside and that there was no need for him to produce any documents in response to the subpoena. In addition, the solicitors said the following: Further, on 3 April 2020 we were served with a copy of the affidavit of Harrison Ottaway, a solicitor in the employ of Norton Rose Fulbright Australia. The affidavit contained evidence of telephone conversations you had with Mr Ottaway on 24 January 2020 and 17 February 2020, including in relation to the existence of a non-disclosure agreement between you and our client. For clarity, our client objects to you providing any information or documents to Norton Rose Fulbright Australia (or to any other person) relating to the parking overstay detection system. 46 On the following day, VMS's solicitors wrote to SARB's solicitors advising them that they had put Mr Crowhurst on notice that VMS objected to him releasing to SARB's solicitors any information or documents relating to the parking overstay detection system. They asked that SARB take no further steps to solicit such information from Mr Crowhurst. They advised that if any such information was obtained, then VMS would seek to restrain SARB from using that information knowing that such information was confidential. 47 Mr Crowhurst was examined by SARB on 25 November 2020. That came about in the following circumstances. SARB claimed that Mr Crowhurst had information relevant to their existing pleas of insufficiency and lack of best method. He would not speak to SARB because of the confidentiality obligations he owed to VMS. He could be subpoenaed to attend at trial, but that had the potential to disrupt the trial because the parties will not have advance notice of what he is going to say as it will be the case with other witnesses who have either provided affidavits or will do so. 48 On 13 November 2020, the Court made the following orders, relevantly: 1 Pursuant to sections 23, 37P(2) and (3) of the Federal Court of Australia Act 1976 (Cth) (the Act) Mr Peter Crowhurst be deposed on oath or affirmation by counsel for the First Respondent before Justice Besanko on 25 November 2020 at 10.30 am (AEDT) (Oral Examination). 2 The First Respondent be granted leave to, and must, issue to Mr Crowhurst a subpoena to attend to give evidence for the purposes of Order 1 above, returnable on the date specified in Order 1 above. 3 At the Oral Examination, there be no cross-examination. 4 The evidence at the Oral Examination be recorded in a transcript in accordance with the usual processes of the Federal Court of Australia. 5 Objections to evidence be permitted to be made by the Applicant and recorded on the transcript, and determined by the Court as it deems fit. 6 The transcript of the Oral Examination may be tendered at the hearing in this proceeding in March 2021, subject to: (a) Mr Crowhurst being available for cross-examination if required by the Applicant; (b) any rulings as to objections made by Justice Besanko; and (c) appropriate confidentiality orders being made over information contained in the transcript. 49 VMS made two submissions in writing which relate to SARB's conduct. 50 First, it claims that the delay in seeking leave to amend to raise the lack of entitlement plea was due to SARB's forensic choices. It was open to VMS to subpoena Mr Crowhurst to produce documents relating to the existing pleas of insufficiency and lack of best method which were pleaded in the original statement of cross-claim. SARB took no steps to issue such a subpoena and has never explained its forensic decision not to do so. In the alternative, SARB could have applied to the Court for an order for discovery from Mr Crowhurst in relation to the pleas of insufficiency and lack of best method or any other documents relevant to an issue raised on the pleadings or in the affidavits. It could have done that under the rule providing for discovery from a non-party (r 20.23 of the Federal Court Rules 2011 (Cth)). SARB has never explained why it did not make an application for discovery from a non-party. 51 VMS seeks to have the correspondence characterised as it notifying SARB of the confidentiality obligations owed by Mr Crowhurst to it, and a reminder to Mr Crowhurst of his confidentiality obligations and the maintenance by it, as it was entitled to do, of confidentiality in the relevant information. 52 Secondly, VMS submits that SARB had abused the Court's processes to fish for a case of a lack of entitlement and that that is a relevant matter to the exercise of the Court's discretion. In oral submissions, counsel for VMS made it clear that that submission, which had been made in writing, was limited to SARB's unsuccessful pursuit of a subpoena directed to Mr Crowhurst requiring the production of documents. Counsel for VMS made it clear that VMS was not suggesting that the questions put to Mr Crowhurst in respect of the pleas of insufficiency and lack of best method were simply a device to discover evidence in respect of an unpleaded allegation of a lack of entitlement. Subject to that clarification, VMS maintained a submission, as I understood it, that the Court's compulsory processes had been used to identify claimed evidence in support of an unpleaded allegation which now constituted its proposed plea of a lack of entitlement. 53 In my opinion, VMS was entitled to maintain the position it did with respect to Mr Crowhurst's confidentiality obligations. On the other hand, there were other options available to SARB and that is a factor in favour of refusing leave to amend. However, ultimately that factor does not outweigh the factors in favour of a grant of leave to amend.

At a glance

Court

Decision date

Before

Source

Judgment (7 paragraphs)

Parties

Legislation Cited (5)

Cases Cited (11)

Cited By (3)