Consideration
24 The evidence establishes plainly that the respondent is the Australian sales arm of ZTE Corporation. Indeed, in oral submissions, counsel for the respondent properly described it as such. Although it would seem that the respondent's activities are limited to the marketing and sale of such products, it can be seen that those activities are carried on for ZTE Corporation's benefit, with ZTE Corporation, by virtue of its shareholding, having the entire economic interest in those activities. As an "arm", the respondent is part of ZTE Corporation's "body". It is in precisely such circumstances that it is appropriate to make an order in the nature of a Sabre order. The purposes intended to be served by orders for discovery ought not be frustrated because relevant documents are, or may be, held by a member of a group of companies other than the member who is a litigant: Zapf at [14].
25 In Prysmian, a Sabre order was refused on the basis that it could not be found, on the facts of the case, that there was a real likelihood that documents would be produced, even though the party to the proceeding against whom the order was sought to be made and the corporation to whom the proposed request was sought to be directed, were related corporations. The respondent relied on Prysmian to submit that corporate structure or corporate relationships alone are not sufficient to justify the making of a Sabre order. I do not think that the decision in Prysmian stands for such a broad and unqualified proposition. Plainly, each case must stand or fall on its own facts, including the particular corporate structure involved. In my view, the facts of the present case are plainly distinguishable from those in Prysmian, particularly when it is understood that, here, an aspect of the respondent's corporate relationship with ZTE Corporation is that it is ZTE Corporation's Australian sales arm.
26 Although, in the present case, ZTE Corporation has declined to comply with the applicant's informal request made through the respondent for the production of documents, I do not think that this circumstance is of any significant weight. Indeed, it must be a background circumstance common to most, if not all, applications for Sabre orders. Were it otherwise, there would be no need to apply for the order.
27 ZTE Corporation's response, as communicated through the respondent to the applicant's solicitors on 15 April 2014, was a bare refusal with no explanation provided. In the course of the respondent's submissions it was suggested, based on Mr Zhang's evidence, that "ZTE Corporation, like telecommunications companies generally, is very protective of technical and functional information relating to its products". This may be so, but the particular circumstances under which disclosure is sought should not be ignored. The Court is in control of its own process and proceedings and may make orders, in an appropriate case, limiting access to documents and information provided as part of the discovery process.
28 In Sabre, Lockhart J at 432-433 said:
Those documents should be produced by the applicant to the Court. The Court will then hear argument from the parties as to appropriate terms of inspection of the documents by or on behalf of the respondents. As at present advised I would need to be persuaded that inspection of the documents should not be confined to counsel and solicitors for the respondents and independent experts retained by them. Because of the highly sensitive nature of the material which the documents would contain it is important that their secrecy be preserved in the interests of Joico and the applicant.
29 In my view, production to the Court, as on subpoena, is the appropriate course to adopt when documents are produced in response to a request made under a Sabre order, unless, exceptionally, the non-party complying with the request consents to some informal mode of production.
30 It must also be recognised that such production is an incident of discovery given in the proceeding. So viewed, information obtained on discovery is subject to an implied obligation against disclosure and use outside the confines of the proceeding: for a discussion of the relevant principles, see Forty Two International Pty Limited v Barnes [2010] FCA 397 at [66]-[75]. If there were any doubt about that matter, an express undertaking as to non-disclosure and non-use outside the proceeding could be required as a condition for making the order.
31 Further, it does not follow that, simply because documents are produced on discovery, the information in them will become, or need be, evidence in the proceeding itself. The principles of case management lend themselves to putting in place regimes whereby the need to adduce evidence of the contents of documents can be avoided, given other procedures that may be available to secure the acceptance of certain facts for the purposes of an otherwise contested hearing. But in any event, in an appropriate case, the Court has power, in the proper administration of justice, to make orders concerning the non-publication of evidence: s 37AF of the Federal Court of Australia Act 1976 (Cth).
32 It seems to me that these considerations alter the landscape in which ZTE Corporation's initial refusal to the applicant's informal request was made. Given this altered landscape, I am not persuaded that an appropriate Sabre order, if made, would lack utility for the reason that it would be met, inevitably, with a refusal. I am far from convinced that, inevitably, ZTE Corporation would refuse to comply with a request for documents made by the respondent under order of the Court. When faced with a request made by an order of this Court, ZTE Corporation would appreciate the matters to which I have referred at [26]-[30] above. It would also have an understanding that the Court has considered that such an order against the respondent - its own Australian sales arm - is appropriate and necessary in the interests of justice, in a case in which it is alleged that its (ZTE Corporation's) products infringe the applicant's Australian patent rights.
33 In this connection, I should add that the applicant has made clear that, in the event that such a request were to be met with a refusal, it would invite the Court to draw an inference, adverse to the respondent's interests, on the question of infringement. I do not propose to discuss the merits of that contention now, other than to note that ZTE Corporation is on clear notice that the applicant may adopt that course at the final hearing of the matter in the event that ZTE Corporation refuses to produce the relevant documents: see, in that connection, the observations in Gambro 61 IPR 442 at [429].
34 It is also possible that such a refusal may result - I say no more than that - in adverse costs consequences for the party subject to the order, especially if it be found that, in circumstances where, for example, a refusal to produce documents has been taken purely for forensic advantage, additional costs have been unnecessarily incurred in proving matters that could have been readily established by the reasonable production of documents or other information on a reasonable request having been made.
35 For these reasons, I am persuaded that it is appropriate to make an order in the nature of a Sabre order in the present case. I now turn to consider the question of the form of the order that should be made.
36 The first matter is whether the order should be made in terms that the respondent take "all reasonable steps available to it" to obtain the relevant documents or whether the orders should be more confined to stipulate that the documents be sought by making a written request. In Sabre, the order was to "make such requests and do such things as may reasonably be necessary to obtain" the relevant documents. In Zapf, the order was to "take all reasonable steps available to [the party]" to obtain the relevant documents. A similar form of order was made in Gambro [2002] FCA 581.
37 In SPI, Edmonds J declined to make a Sabre order on a number of grounds, one of which was that no attempt had been made by the party seeking the order to establish, by evidence, that there was a real likelihood that documents would be produced pursuant to the request. In that case, the order sought would have required every ministry, agency and instrumentality of the Russian Federation to undertake searches for documents in numerous, broadly-defined categories. Although it was not necessary for Edmonds J to deal with the matter, his Honour observed that the form of the order there sought was inappropriate because it omitted the requirement that the party subject to the order take all "reasonable" steps available to it to obtain the documents. His Honour acknowledged that this was the usual form of the order. However, his Honour observed (at [33]):
… I agree … that it would be preferable for any such order to set out explicitly the steps which, if taken, would satisfy the order. This is particularly so given the potentially broad range of documents the subject of the order and the broad range of ministries, agencies and instrumentalities that may be subject to it.
38 It can be seen that these observations were made in the context of a very particular case. The particular circumstances in which Edmonds J was asked to make a Sabre order are not present here. Moreover, in the present case, there is no question that ZTE Corporation does possess documents falling within the categories sought. I can see no reason to depart from the usual form of order in the present case, requiring the respondent to take all reasonable steps available to it to obtain the relevant documents.
39 The second matter concerns the scope of the request. I am not persuaded that the request should be directed to the source code in relation to the User Devices, the Infrastructure Products and the Mobile Switching Centre (see paragraph (d) of each of Categories 1, 2 and 3). As I have noted, discovery of the source code in that regard was not part of the order made against the respondent on 25 February 2014. Indeed, it was not part of the applicant's request for discovery. There was good reason for the applicant not seeking an order extending to the source code itself. As the applicant itself realised, it is at least possible that not all elements of the source code would be required for the purpose of the applicant's case on infringement. As I have noted, there has been no change to that position. The only reason advanced by the applicant for including the source code in the categories of documents now sought as part of a Sabre order is expediency. In my view, that is not an appropriate basis, at least in the present case, on which the order should be sought.
40 The request for the production of documents directed to the overall functional and architectural design of the devices and products (see paragraph (a) of each of Categories 1, 2 and 3) stands in a different position. Such documents appear to be closely allied to the class of documents sought in paragraph (b) of the each category. As I have noted, paragraph (a) has been sought in each case to overcome a perceived or possible deficiency in the wording of paragraph (b) in each case. I am persuaded that the order should include paragraph (a) for each category sought. It may be, as counsel for the applicant submitted, that such a document may assist in identifying what elements of the source code may be relevant to the applicant's case on infringement.
41 The third matter concerns whether it is appropriate to require the respondent to discover documents in respect of all communications between itself and ZTE Corporation concerning the production of documents by ZTE Corporation. I am not persuaded that discovery of that kind is warranted in the present case at the present time. The focus should be compliance with the order that is to be made.
42 In Zapf, Branson J made an order, ancillary to a Sabre order, that the respondent, by a director with personal knowledge of the facts, file and serve an affidavit deposing to "the efforts it has made to obtain the documents or copies of the documents, including details of each of its requests to any company person or entity, and the responses thereto". It is apparent that, in making such an order, Branson J was directing attention to the efforts made to obtain documents consequent to the making of the Sabre order itself. In my respectful view, there is much to commend such a step. It reinforces in the mind of the party subject to the order the importance with which the Court views compliance with its order.
43 Although, in the present case, the respondent did not seek an affidavit of the kind referred to, the possibility that an affidavit might be required was raised in the course of argument. I invited the respondent's counsel to address me on that matter. It is fair to say that the respondent resisted the requirement for an affidavit, although it raised no objection to giving discovery of its request made pursuant to the Court's order and any response by ZTE Corporation thereto. Indeed, it has at all times accepted that it would be appropriate for it to give that discovery. Nevertheless, the course adopted by Branson J in Zapf, with regard to filing an affidavit, should be adopted in the present case.