FEDERAL COURT OF AUSTRALIA

Upaid Systems Ltd v Telstra Corporation Limited [2013] FCA 1441

THE COURT ORDERS THAT:

1.    The amended particulars of infringement filed on 8 November 2013 be struck out.

2.    The applicant file further amended particulars of infringement by 4.00 pm on 28 February 2014.

3.    The applicant pay the respondent’s costs of the interlocutory application filed on 16 October 2013.

4.    The proceeding be listed for directions at 9.30 am on 17 March 2014.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    The present application concerns a dispute about the adequacy of particulars given in a patent infringement proceeding commenced by Upaid Systems Ltd (Upaid) against Telstra Corporation Limited (Telstra).

Background

2    Upaid is the patentee of Patent No. 2008203853 entitled “Convergent communications platform and method for mobile and electronic commerce in a heterogeneous network environment” (the 853 patent) and Patent No. 770646 entitled “Communication services” (the 646 patent).

3    The invention claimed in the 853 patent is defined by 53 claims. Upaid alleges that Telstra has infringed each claim. The invention claimed in the 646 patent is defined by 100 claims, including nine omnibus claims (the omnibus claims). Upaid alleges that Telstra has infringed 53 claims. Thus, in total, Upaid advances 106 claims in its case on infringement. It is not clear to me why Upaid has considered it necessary to advance such a large number of claims in respect of each patent in order to seek effective relief for infringement.

4    Upaid’s amended statement of claim filed on 8 November 2013 (the statement of claim) is pleaded in a conventional way with reference to separately filed particulars of infringement. These are found in amended particulars of infringement, also filed on 8 November 2013 (the statement of particulars). The statement of particulars comprises seven numbered paragraphs, each with subjoined particulars. The first to fifth numbered paragraphs of the statement of particulars relate to Telstra’s alleged infringement of the 853 patent. The sixth and seventh numbered paragraphs relate to Telstra’s alleged infringement of the 646 patent.

5    By its originating application filed on 21 August 2013, Upaid seeks, amongst other relief, injunctions restraining the acts referred to in the first to seventh numbered paragraphs of the statement of particulars.

6    Correspondence has passed between the solicitors for the parties on the question of particulars. It is only necessary to refer to Upaid’s solicitors’ letter dated 20 September 2013 (the September letter). The September letter constitutes Upaid’s response to certain questions raised by Telstra’s solicitors. Importantly, it contains, with respect to the first to sixth numbered paragraphs of the statement of particulars, a non-limiting example of alleged infringement of identified claims.

7    Telstra contends that Upaid’s claim as particularised, including by reference to the September letter, is a broad ambulatory one that does not sufficiently inform Telstra of the case it has to meet. It submits that, despite requesting focused particulars of Upaid’s claim, correspondence between the parties has done little to identify the scope of that claim. More particularly, it submits that it is unable to identify comprehensively the services whose provision is said to infringe the claims identified in the statement of particulars. It therefore seeks orders that the originating application, statement of claim, and statement of particulars be struck out. Alternatively, it seeks orders that further and better particulars of infringement be provided.

8    The genesis of the present dispute lies in the inherent elasticity of the notion of a “type of infringement”. Upaid appears to have adopted a broader understanding than Telstra of the notion of a “type of infringement”.

The patents in suit

The 853 patent

9    The complete specification of the 853 patent describes the field of the invention as follows:

The present invention relates to a convergent communications system for providing services to individual and corporate customers worldwide. More specifically, the invention relates to a convergent communications system that provides mobile commerce, electronic commerce and communication services through existing communication switches without specific hardware located at those switches. This system supports the use of pre-paid and post-paid accounts across heterogeneous networks to provide a large range of advanced communication services regardless of a customer’s location.

10    Examples of convergence are discussed at [0096] of the complete specification (amongst other paragraphs):

Examples of convergence are to combine a variety of technologies and media together to provide a richer level of service. For example, converged communications can combine: different media, like voice, data, messaging; mobile, fixed or satellite voice, data, messaging offered by different service providers; mobile, fixed or satellite voice, data, messaging media offered by different service providers; mobile, fixed or satellite voice, data, messaging media offered by same service provider; and mobile, fixed or satellite voice, data, messaging offered by different service providers. Converged commerce includes combining telephone, internet, e-commerce or m-commerce. Converged service includes combining communications and commerce services. Converged billing can include such features as offering a single, integrated bill for all communications services, and charges for content or goods that are delivered. Converged commerce can also refer to integrating all charges for a transaction into one transaction and cost that includes such items as surcharges, taxes, telecommunications fees, etc. Converged service can also refer to offering a single help operator that can access, view and modify a customer’s account, even if the account does not reside on a local network.

11    Paragraph 1 of the statement of particulars addresses the use by Telstra of a convergent communications method or system as claimed in claim 1 and other claims of the 853 patent; paragraph 2 addresses the use by Telstra of a convergent communications method or system as claimed in claim 2 and other claims; paragraph 3 addresses, amongst other things, the supply by Telstra of mobile devices as claimed in claim 15 and other claims; paragraph 4 addresses, amongst other things, the supply by Telstra of mobile devices as claimed in claim 16 and other claims; and paragraph 5 addresses, amongst other things, the authorisation by Telstra of its customers’ use of mobile devices as claimed in claim 15 and other claims.

12    Claim 1 provides:

A convergent communications method employing a rule set, comprising:

    determining, for an authorized user, at least one payment rule applicable at that time for authorizing a transaction and resultant settling of an account of the authorized user in response to an instruction received via at least one communication network;

    applying the at least one payment rule for authorizing the transaction;

    charging the account, according to the at least one payment rule, in real time if the transaction is authorized; and

    settling charges to the account by one of a plurality of transaction providers in accordance with at least one settlement rule, said charging and settling performed utilizing at least one financial network, separate from the at least one communication network.

13    Claim 2 provides:

The convergent communications method of claim 1, further comprising:

    determining that the authorized user does not have sufficient value in an authorized user account to charge for the transaction; and

    recharging the authorized user account after completing a recharge routine comprising

            determining a recharge user account to transfer funds from, and

        authorizing the transfer by at least one of referring to a pre-authorized transfer and requesting authorization from the authorized user.

14    Claim 15 provides:

A user input device for accessing an account in a convergent communications system, comprising:

    a transmitter that transmits to the convergent communications system via at least one communication network, identification of an authorized user account and a request for a transaction by an account manager, the account manager including:

            a determiner that determines, for an authorized user, at least one payment rule applicable at that time for authorizing a transaction and charging an account;

            a processor that applies the at least one payment rule for authorizing the transaction;

            an account charger that credits the account, according to the at least one payment rule, in real time if the transaction is authorized, and

            a settler that settles real time charges to a plurality of transaction providers in accordance with at least one settlement rule; and

            a receiver that receives via at least one financial network in addition to the at least one communication network, at least one of a confirmation of authorized user account charge or a notification of settlement.

15    Claim 16 provides:

The user input device of claim 15, wherein the account manager further comprises:

    a determiner that determines the authorized user does not have sufficient value in an authorized user account to charge for the transaction; and

    a recharger that recharges the authorized user account after completing a recharge routine comprising:

            determining a recharge user account to transfer funds from,

and authorizing the transfer by at least one of referring to a pre-authorized transfer and requesting authorization from the authorized user.

16    It can be seen that claim 1 claims a convergent communications method employing a rule set having specific but nevertheless broadly described characteristics. Claim 15 claims a user input device for accessing an account in a convergent communications system. Although claims 1 and 15 use similar language directed to similar concepts (recognising, of course, that claim 1 is directed to a method and claim 15 is directed to a device), there are nonetheless some obvious differences in language. One difference is that the method of claim 1 employs a rule set which includes at least one rule for charging the account of an authorised user. On the other hand, the device of claim 15 is characterised by an account manager that includes an account charger that credits an authorised user’s account. In oral submissions, Telstra focused on this difference in language between claims 1 and 15, as well as other differences in language, to illustrate and to emphasise that there seem to be differences in the features of the invention as claimed in the respective claims of the patent, such that the particulars given in respect of one claim may not be adequate particulars in respect of another claim.

The 646 patent

17    The complete specification of the 646 patent describes the field of the invention as follows:

The present invention relates to communication systems for providing services to individual and corporate subscribers worldwide. More specifically, the invention relates to an advanced intelligent communication system that provides subscriber-requested services through existing communication switches even in those circumstances in which the hardware communication switch is not configured to provide such services. The system supports the use of personal identification number (PIN) access cards for use in fixed and mobile markets from any communication device located anywhere in the world and provides flexible call processing and switching services that deliver enhanced computer telephony capabilities, utilizing standard communication equipment and operating systems.

18    Advanced communication services are exemplified as call forwarding, call conferencing, and voicemail services.

19    The complete specification describes the following prior art deficiencies:

… because such services are dependent on telephone carrier equipment, and because not all telephone switches can presently support all available advanced communication services, many subscribers are still unable to take advantage of these services at their home or at their place of business. Furthermore, even though a subscriber may have such services available at his or her normal place for communication, the services may be unavailable should the user attempt access through another person’s communication device, a personal computer, a portable telephone, or a public phone. In other words, access to such services is extremely limited – restricted by the equipment in use, the equipment offered by the telephone carrier, and the prior sign-up by the particular subscriber.

20    The complete specification continues:

Specialized equipment and proprietary software are conventionally used to provide various advanced services on a telephone system, such as abbreviated dialing, password service, automatic alarm, multiline hunting, call forwarding (busy, no reply, unconditional, and selective), call accept (selective), call back, distinctive ringing, network voice mail, and interception service. When an analog telephone switch is used in the communication network, as is the case in many remote areas, few of these advanced services are available to the customer. Similarly, if a basic digital switch is used, some of the advanced services described above may not be available depending on the software of the digital switch.

21    The complete specification describes other deficiencies in the prior art systems. It then says:

The preferred embodiments of the present invention overcome the problems associated with existing mechanisms for delivering advanced communication services to customers, with or without use of PIN access cards by providing an easily implemented, cost-effective, “open standards” telephony solution that provides value-added services, such as voice mail, to people and businesses regardless of the sophistication of the switch to which they are connected, at a minimal cost to a local telephone company, service provider, or the subscribing consumer.

22    The description of the preferred embodiments is detailed. One embodiment is described by reference to Figure 1. Figure 1 is a block diagram showing an embodiment of the invention that includes an advanced intelligent network platform executing proprietary software called CallManager and NetManager. The written description of this embodiment ranges over 10 pages. It includes many features.

23    Paragraph 6 of the statement of particulars addresses the use by Telstra of a communication method or telephony platform as claimed in claim 1 and other claims, and paragraph 7 addresses the use by Telstra of methods, platforms or systems as claimed in claim 92 and the other omnibus claims.

24    Claim 1 of the 646 patent provides:

A communication method using an enhanced services platform for providing pre-paid services and commercial transactions via a plurality of networks, comprising:

            accepting, via the enhanced services platform, a request from an authenticated user for providing at least one of a communication service, a commercial transaction and user account information, the request originating from any one of a plurality of networks of different types;

            verifying, via the enhanced services platform, that the authenticated user is authorized to receive the at least one of the communication service, the commercial transaction, and the user account information, and that an account associated with the authenticated user has a sufficient amount available for payment of the at least one of the communication service and the commercial transaction;

            providing, via the enhanced services platform, the at least one of the communication service, the commercial transaction and the user account information based upon said accepting and verifying;

            charging, via the enhanced services platform, an authorized account associated with the authenticated user for providing the at least one of the communication service and the commercial transaction, said charging including using rating engines for dynamically calculating usage charges associated with at least the communication service; and

            processing, via the enhanced services platform, real-time settlement data for the at least one of the communication service and commercial transaction.

25    Claim 92 provides:

A communication method using an enhanced services platform for providing pre-paid services substantially as hereinbefore described with reference to the accompanying drawings.

particulars

The requirement for particulars

26    Rule 34.42(3) of the Federal Court Rules 2011 (Cth) relevantly provides that, in a proceeding for infringement of a standard patent, the statement of claim must include particulars of the alleged infringements that specify which of the claims of the complete specification are alleged to be infringed and give “at least one instance of each type of infringement alleged”. The requirement for such particulars has found expression in Rules of Court both here and in the United Kingdom for many years.

27    The expression “type of infringement” refers to the nature and quality of the act said to be an infringement: see Salopian Engineers Limited v. The Salop Trailer Company Limited. (1954) 71 RPC 223 at 224 (line 29) to 225 (line 9) and, as the rule makes clear, the pleader must give at least one instance of each type of infringement. One function of such particulars is to point out to the alleged infringer the specific acts relied upon, so as to prevent surprise at trial: Aktiengesellschaft FÜr Autogene Aluminium Schweissung v. London Aluminium Company, Limited. [1919] 2 Ch 67 (the Swiss Aluminium case) at 74 and 78. Importantly, however, such particulars define the scope of the proceeding, including the scope of discovery. The particulars also feed into the form of relief to be granted if infringement is established, particularly in relation to the holding of an inquiry as to damages or in the giving an account of profits.

28    In Nokia Corporation v Liu (2009) 179 FCR 422 (a case dealing with trade mark infringement where the same kind of rule applies: see, now, r 34.48), the Full Court (at [35]) observed:

Establishing the manner of infringement (though not necessarily all the instances of such infringement) will, in turn contrive both the type of act(s) prohibited by such injunctive relief as may be granted and/or the scope of any order made as to the assessment of damages (or an accounting for profits made) on account of such past act(s).

29    The Full Court later explained (at [37]) that the requirement to particularise (and, indeed, prove) an instance of each type of infringement, as opposed to all instances of each type of infringement, is one of expediency that is related to the common practice of splitting trials in intellectual property cases into (a) the determination of liability for infringement and, if appropriate, the grant of injunctive relief, and (b) the award of relief by way of damages or an account of profits. In this connection, the Full Court referred to the following observations of Harman LJ in National Broach and Machine Co. v. Churchill Gear Machines Ltd. [1965] 1 WLR 1199 at 1204-1205:

... It is only in patent actions that the rules … specifically direct that instances only shall be given, but a similar practice prevails in trade mark and passing-off actions where, in my experience, the scope of the inquiry as to damages corresponds to that of the injunction granted – see A. G. Spalding & Brothers v. A. W. Gamage Ltd. [(1913) 30 RPC 388 at 400] – and it seems to me that it would unduly lengthen the trial of this kind of action for a plaintiff to be obliged to give in advance details of every instance of wrongful dealing on which he intends to rely on the inquiry. …

30    In Belegging-en Exploitatiemaatschappij Lavender B.V. v. Witten Industrial Diamonds Limited [1979] FSR 59, Buckley LJ, after referring to the discussion in the Swiss Aluminium case of the function of particulars in patent infringement cases, said (at 63-64):

… The Rules referred to require that the plaintiff shall particularise at least one specific example of each type of infringement alleged. This seems to me to be clearly directed to restricting discovery and trial to the specific instances so particularised. If a plaintiff can establish one such instance, he has established infringement of the kind of which that instance is an example and will be entitled to relief accordingly, which will or can include an enquiry in how many other instances the defendants have been guilty of that kind of infringement. The Rule is directed to avoiding the expense in money and time of preparing to examine and examining at the trial a large number of instances of infringement all of one kind. The plaintiff can particularise instances of as many different kinds of infringements as he chooses and is not confined to one instance only of any of those kinds of infringement, but for the purposes of discovery by the defendant and evidence at the trial he will be restricted to those specific instances of which he has given particulars. The particulars must, moreover, I think, specify which claim or claims of the patent is alleged to have been infringed by each of the instances particularised, that being the type of infringement exemplified by that instance. If this be the right view of the policy and effect of the Rules, the plaintiff should not be permitted either in the preliminary stages of the action or at the trial to travel outside the ambit of the particular instances of infringement which he has particularised.

31    His Lordship then remarked (at 64) that the plaintiffs in that case had particularised only one instance of infringement. His Lordship said:

… As the pleadings stand this will consequently be the only alleged infringement which the plaintiffs will be entitled to seek to prove at the trial. If on analysis it is found as pleaded not to constitute an infringement, the pleadings disclose no cause of action in infringement.

32    It can be seen from these cases that a type of infringement is not the same thing as the infringement of a particular claim. Rule 34.42(3) itself plainly distinguishes between the particularisation of claims alleged to be infringed and, in relation to those claims, the type or types of infringement alleged. A claim may be infringed by specific acts that can be characterised according to type. There may be more than one type of infringement of a single claim.

33    The rule also distinguishes between a type of infringement and instances of that type. If, for example, specific acts constitute an infringement, it is only necessary for the applicant to particularise and prove one instance, not repeated instances, of those acts in order to establish liability for infringement by reference to those acts. However, in an inquiry as to damages, or on the giving of an account of profits, the applicant can rely on the other occasions or instances when those acts occurred in order to obtain pecuniary relief referable to all such acts.

34    It is also important to distinguish between what might be described as a mere example of infringement and the instantiation of a type of infringement. Rule 34.42(3) is concerned with the latter. It is not enough for an applicant to give only an example of infringement – unless, of course, the applicant is content that relief for infringement be confined to further instances of the very same infringing conduct. The risk thus falls on the applicant to ensure that the scope of its intended case has been particularised according to the rule.

35    In drafting particulars of infringement, the identification of the acts sufficient to constitute a type of infringement may well involve difficult questions of characterisation. There may be certain acts that, when viewed in the context of a particular claim, are substantively the same as other acts. In such cases, a type of infringement might be capable of being characterised so as to cover all such acts. If so, the particulars should make this clear. Moreover, it will be incumbent on the applicant, when seeking relief, to establish the necessary equivalence between the various acts that are said to fall within the same type of infringement. To this extent, it may be necessary for findings of fact to be made in the course of an inquiry or account. There may be disputes about whether certain acts truly conform to the particularised type of infringement on which the applicant relies.

36    There are cases in which it would appear that an inquiry as to damages has proceeded on a basis wider than the types of infringement that have been particularised. Some of these cases were referred to by Foster J in Bitech Engineering v Garth Living Pty Ltd (ACN 111 145 432) and Another (2011) 279 ALR 121 at [41]-[43].

37    In Unilin Beheer BV v Berry Floor NV and Others [2008] 1 All ER 156, Jacob LJ remarked (at [49]) that, in an inquiry as to damages or on the giving of an account of profits, the patentee is allowed to claim relief for types of alleged infringement not ruled on by the trial court. His Lordship said that this saves the formal issuance of proceedings in respect of these and is permitted as a matter of convenience. In that connection, his Lordship cited General Tire & Rubber Company v. Firestone Tyre & Rubber Company Limited and Others [1975] RPC 203 at 207.

38    In General Tire, detailed questions of infringement and the findings on those questions were confined, at trial, to a particular type of tread stock known by the number J 11 T. The inquiry, however, extended over a wider field covering an apparently large number of different tread stocks. The inquiry was described by the trial judge, Graham J, as “long, detailed and difficult” (at 207). A number of technical considerations were involved in deciding each question of infringement. The report of the case reveals that the inquiry continued for some weeks. The rationale for permitting an inquiry of that kind is not clear on the face of the report.

39    In Richard M, Burkill G, Birss C, and Campbell D, Terrell on the Law of Patents (17th ed, Sweet & Maxwell, 2011) at [19-56], the authors, when dealing with types of infringement not fully determined at trial, state:

Where certain of the types of alleged infringement were not exemplified in the particulars of infringements and so were not the subject of any express findings it was ordered that this question should be determined as a preliminary issue in the inquiry.

40    The only authority cited by the authors for that proposition is Cleveland Graphite Bronze Coy. Ld. and Another v. Glacier Metal Coy. Ld. (1951) 68 RPC 181. When regard is had to the report of that decision, it can be seen that there was no discussion of any principles that underlie and would justify such an approach. Indeed, one is left with the impression that the decision represents no more than an ad hoc approach suited to the case then at hand, rather than a statement of general approach.

41    In MMI Research Limited v Cellxion Limited [2009] EWHC 1938, Floyd J was asked to consider, after judgment in a patent infringement suit, whether a particular device, not dealt with at trial, infringed the patent. His Lordship found that it did. Subsequently, his Lordship was asked to consider whether a further variant of the device also infringed the patent. He considered that question, on the basis that the parties had agreed that it would be desirable for him to do so. In that connection, his Lordship also appears to have been persuaded by the fact that, as the device had been sold, “the issue would have to be determined in the enquiry as to damages in any event”. However, his Lordship did remark (at [7]):

I should only add that I should not be regarded as giving my seal of approval to this piecemeal approach to the consideration of alternative versions of the alleged infringing device. Parties who wish the court to consider such variants should do [sic] at the trial of the action, particularly where, as here, they are on the market and being sold. It is obviously in the interests of the efficient management of litigation that, so far as reasonably practical, all the issues between the parties are determined at a single hearing … If parties do not reveal alternative embodiments until after the trial, this objective is frustrated.

42    In my respectful view, it is a curious outcome that types of infringement not particularised in particulars of infringement and not covered by findings at a hearing on liability should be the subject of yet another hearing to determine liability in respect of those additional alleged infringements. Such an outcome brings into question the utility of r 34.42(3) and like rules. Moreover, such a course is fraught with danger after the question of liability for infringement of the particularised types of infringement has been determined conclusively. A judgment on liability for infringement results in a res judicata: see Poulton v. Adjustable Cover and Boiler Block Company. [1908] 2 Ch 430; Coflexip SA v Stolt Offshore MS Ltd (No. 2) [2004] FSR 708; Unilin at [49]; however, see now Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2013] 4 All ER 715, in which the Supreme Court in the United Kingdom has recently held, contrary to these cited cases, that, where judgment has been given in a United Kingdom court that a United Kingdom or European patent is valid and infringed, and the patent is subsequently retrospectively revoked or amended by a United Kingdom court or the European Patent Office, the defendant is entitled to rely on the revocation or amendment on an inquiry as to damages. The present application is not the occasion on which to embark on a detailed consideration of the consequences and implications in Australian patent infringement proceedings of an order binding parties per rem judicatam. It is sufficient to record that to allow parties to embark on what is in effect a new and additional trial to determine liability in respect of types of alleged infringement not previously brought forward in the proceeding is to open up, at the very least, the prospect of the parties seeking to agitate different questions of claim construction and, perhaps relatedly, new questions of claim validity calling into question the correctness of the judgment already given. This is undesirable.

43    Further in this connection, this Court must adhere to the prescriptions of s 37M of the Federal Court of Australia Act 1976 (Cth). That provision requires the Court to ensure that its Rules of Court are applied in the way that best promotes the just resolution of disputes according to law as quickly, inexpensively, and efficiently as possible. With that in mind, I do not think that, in the general run of case, a situation should be allowed to develop where there is a risk that a hearing on liability is seen as little more than a staging post on the way to yet another hearing to determine new substantive questions of infringement beyond the type or types of infringement particularised and already ruled on. I certainly do not propose to give aid to such a situation developing in the present case. To countenance such a course would hardly promote the just resolution of the question of infringement as quickly, inexpensively, and efficiently as possible.

The statement of particulars

44    The form of the statement of particulars is exemplified by the particulars given in the first numbered paragraph concerning the infringement of claim 1 and other claims of the 853 patent:

At some time prior to the issue of the Amended Application herein (on dates which Upaid is unable, prior to discovery and inspection, to more particularly specify), but after 4 September 2008 and before the date of commencement of this proceeding, Telstra has infringed or further or alternatively, threatened to infringe each of claims 1, 5, 6, 8, 9, 10, 11, 12, 13, 14, 51 and 52 of the 853 Patent by using the convergent communications method or system as claimed within the patent area (as that term is defined in the Act), without the licence or authority of Upaid.

                PARTICULARS

(a)    Telstra operates a system which enables authorised users of its 3G and NextG® networks to use a device which has been registered for use with those networks:

(i)    outside Australia in places which Telstra has advertised as being available for international roaming, either with or without a separate activation; and

(ii)    to acquire goods and services from Telstra or third party merchants through Telstra’s BigPond portal.

(b)    Telstra offers and supplies the services particularised in paragraph 1(a) above on its pre-paid and post-paid service plans for use on basic mobile phones, smartphones and tablets. Such service plans are available for purchase on Telstra’s website at www.telstra.com.au and at Telstra shops located in every State and Territory of Australia.

(c)    Telstra supplies such services to individual and corporate customers.

(d)    Upaid is unable, prior to discovery and inspection herein, to provide further details of all of Telstra’s aforesaid infringing conduct but at the trial of this proceeding will rely upon and claim relief in respect of all such conduct.

45    In my view, the above statement does not comply with the requirement of r 34.42(3). In relation to claim 1 of the 853 patent, Upaid will need to establish Telstra’s exploitation of a convergent communications method employing a rule set having the features set out in the balance of the claim. As the claim makes clear, these features include the presence of at least one communication network and at least one financial network separate from the communication network. They also include the carrying out of certain acts referable to the communication network and certain acts referable to the financial network. The statement quoted above does not descend to the particularisation of acts by Telstra that correspond to the features of claim 1. What has been provided is no more than an overarching allegation of infringement of certain claims that refers to the operation of a system which enables authorised users to carry out generally described acts. These generally described acts do not themselves engage with the specific features of the invention defined in claim 1. Indeed, taken at face value, the statement refers to acts outside the patent area that cannot constitute an infringement. Moreover, to say that a system enables users to do certain things does no more than speak of the possibility, but not the actuality, of infringement or threatened infringement.

46    Further, the assumption in the statement of particulars to discovery being given to provide further details of Telstra’s alleged infringing conduct is misplaced. Such a statement could be appropriate where, in accordance with r 34.42(3), an instance of each type of infringement alleged has been particularised. But, in truth, no such instances have been properly particularised in the statement of particulars. In this connection, this part of the statement of particulars also ignores the fact that the particulars of infringement define (and confine) the scope of discovery that usually will be permitted.

47    The other numbered paragraphs in the statement of particulars concerning infringement of the 853 patent follow a similar pattern. They simply do not descend to the particularity that is required.

48    As I have noted, the sixth and seventh numbered paragraphs of the statement of particulars purport to provide particulars of infringement in relation to the 646 patent.

49    The particulars given with respect to the infringement of claim 1 of the 646 patent are as follows:

At some time prior to the issue of the Amended Application herein (on dates which Upaid is unable, prior to discovery and inspection, to more particularly specify), but after 3 April 2000 and before the date of commencement of this proceeding, Telstra has infringed or further or alternatively, threatened to infringe each of claims 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 15, 16, 17, 21, 22, 25, 26, 28, 29, 30, 31, 34, 35, 37, 38, 39, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, 62, 63, 64 and 65 of the 646 Patent by using the communication method or the telephony platform for providing pre-paid services and commercial transactions as claimed within the patent area (as that term is defined in the Act), without the licence or authority of Upaid.

                PARTICULARS

(a)    Telstra operates a system which enables authorised users of its 3G and NextG® networks to use a device which has been registered for use with those networks:

(i)    outside Australia in places which Telstra has advertised as being available for international roaming, either with or without a separate activation;

(ii)    to acquire goods and services from Telstra or third party merchants through Telstra’s BigPond portal; and

(iii)    to use or acquire services from Telstra, including voice mail functions and caller tones.

(b)    Telstra offers and supplies the services particularised in paragraph 6(a) above on its pre-paid service plans for use on basic mobile phones, smartphones and tablets. Such service plans are available for purchase on Telstra’s website at www.telstra.com.au and at Telstra shops located in every State and Territory of Australia.

(c)    An authorised user is able to access and manage his or her account via Telstra’s system.

(d)    Telstra supplies such services to individual and corporate customers.

(e)    Upaid is unable, prior to discovery and inspection herein, to provide further details of all of Telstra’s aforesaid infringing conduct but at the trial of this proceeding will rely upon and claim relief in respect of all such conduct.

50    When regard is had to the specificity of claim 1 of the 646 patent (see [24] above), it is apparent, once again, that the statement does not descend to the particularisation of acts by Telstra that correspond to the features of the claim. The comments I have made in [45] and [46] above equally apply.

51    It is also necessary to refer to the particulars given with respect to the infringement of claim 92 and the other omnibus claims:

At some time prior to the issue of the Amended Application herein (on dates which Upaid is unable, prior to discovery and inspection, to more particularly specify), but after 3 April 2000 and before the date of commencement of this proceeding, Telstra has infringed or further or alternatively, threatened to infringe each of claims 92 to 100 of the 646 Patent by:

(a)    using a communication method;

(b)    providing pre-paid communication services;

(c)    using a telephony platform;

(d)    providing communication services;

(e)    crediting the accounts of users;

(f)    using a system; and

(g)    using a platform,

as claimed within the patent area (as that term is defined in the Act), without the licence or authority of Upaid.

                PARTICULARS

(h)    Upaid repeats the particulars under paragraph 6 above.

(i)    Telstra offers and supplies services including the PhoneAway Pre-Paid Calling Card and Telecard Travel Phonecard. Such Telecard Travel Phonecards are available for purchase by existing Telecard Travel Phonecard users on Telstra’s website at www.telstra.com.au. Such PhoneAway Pre-Paid [Calling] Cards are available for purchase on Testra’s website at www.telstra.com.au and at selected newsagents, convenience stores and Australia Post outlets in every State and Territory of Australia.

(j)    Upaid is unable, prior to discovery and inspection herein, to provide further details of all of Telstra’s aforesaid infringing conduct but at the trial of this proceeding will rely upon and claim relief in respect of all such conduct.

52     Plainly, this statement provides no real particularisation at all. It simply refers to nominated services and products supplied by Telstra without particularising how those services and products are “substantially as … described” in the complete specification of the 646 patent “with reference to the accompanying drawings”.

53    In my view, the statement of particulars is manifestly inadequate and does not conform with the pleader’s obligations under r 34.42(3).

The September letter

54    The September letter is Upaid’s response to a request for further and better particulars which was made in a letter from Telstra’s solicitors dated 3 September 2013.

55    The September letter states that Upaid does not allege that conduct outside Australia forms part of the infringing use of the method and systems claimed.

56    This disavowal of reliance on conduct outside Australia was repeated in Upaid’s written submissions in the present application:

In paragraphs 5 and 6 of the [September letter], Upaid responds to a request by Telstra that it identify what conduct outside Australia is alleged to form part of the allegedly infringing conduct. The answer to that request is clear: Upaid does not assert that any conduct outside Australia gives rise to infringement of the patents. The only conduct which is asserted by Upaid as involving infringement of the patents is conduct in Australia. Put another way, Upaid contends that Telstra’s use of a method, system and platform having the features of the asserted claims, and Telstra’s supply and authorisation of the use of user input devices having the features of the asserted claims, occur within Australia, and Upaid relies on Telstra’s conduct only to that extent.

It is also worth noting that at no stage did Telstra ever ask Upaid in correspondence whether Upaid alleged that some other party’s conduct outside Australia formed part of the alleged infringing conduct. This is a matter raised for the first time in Telstra’s submissions on the present application. It is not part of Upaid’s case. As submitted above, Upaid contends that Telstra infringes by itself using the method, system and platform, and by supplying and authorising the use of user input devices, as claimed in the patents.

57    The September letter gives an example of infringement in respect of the conduct broadly described in each numbered paragraph, other than the seventh numbered paragraph, of the statement of particulars. The example given with respect to the first numbered paragraph of the statement of particulars is:

[A]n individual customer, who has subscribed to the BigPond Mobile Broadband $40 per month plan, connects his BigPond USB 4G device to his laptop and subscribes to the MOG (http:mog.com) premium plan at the cost of $11.99 per month. The customer pays for the subscription using his Visa credit card.

(a)    the “transaction providers” (claims 1 and 51 and dependent claims): include, but are not limited to, Telstra, MOG and Visa;

(b)    the “financial network” or “financial networks” (claims 1 and 51 and dependent claims): include, but are not limited to, Telstra’s acquiring bank and Visa;

(c)    the “transaction providers … across heterogeneous networks” (claim 13): include, but are not limited to, Telstra, MOG and Visa;

(d)    the circumstances by virtue of which the “charging includes at least one of checking that a membership is current reducing or increasing a number of frequent flyer miles, increasing or decreasing a merchandizing credit and recording an agreement” (claim 14): after discovery, our client will be able to confirm whether claim 14 is infringed by reference to the example above, or whether another example of infringement will be provided;

(e)    the circumstances by virtue of which “receiving occurs during setup of the at least one transaction rule” (claim 52): include, but are not limited to, selection of the MOG premium plan;

(f)    the circumstances by virtue of which “applying occurs automatically due to the existence of the at least one transaction rule, not in response to said receiving” (claim 52): include, but are not limited to, subscription to the MOG premium plan.

58    It is apparent that this example is non-limiting. As Telstra submits, in coming up with this and other examples:

… Upaid selected a combination of services from a range of variables, with the result that, even if any of the examples in the [September] letter are found to infringe, it would not follow that other examples involving the selection of different variables also infringe the patents.

59    Telstra submits that, in devising the quoted example, Upaid selected (a) a post-paid plan (as opposed to a pre-paid plan); (b) the MOG premium plan (as opposed to “the other 70 services available”); and (c) payment by Visa card. Telstra continued:

… Upaid’s analysis also shows that this selection informed Upaid’s conclusions as to whether the method by which this service (or combination of services) is provided by Telstra amounts to an infringement of the claims of the patents. For example, the fact that the example involves payment by Visa card informs Upaid’s contention that the integer “transaction providers … across heterogeneous networks” in claim 1 is satisfied.

60    In this connection, I should record the other examples given in the September letter.

61    With respect to the alleged infringement of claim 2 of the 853 patent and its dependent claims:

[A]n individual customer, who has bought the Pre-Paid Mobile Broadband 250MB plan costing $20, connects his 4G USB device to his laptop and subscribes to the MOG premium plan at the cost of $11.99 per month. The customer pays for the subscription using his Visa credit card.

(a)    the “transaction providers” (claim 2 and dependent claims): include, but are not limited to, Telstra, MOG and Visa;

(b)    the “financial network” or “financial networks” (claim 2 and dependent claims): include, but are not limited to, Telstra’s acquiring bank and Visa.

62    With respect to the alleged infringement of claims 30, 33, 49, and 53, and their dependent claims:

[A]n individual customer who is using a Telstra Pre-paid mobile service has registered at My PrePaid Online for a balance based recharge.

(a)    the “transaction providers” (claims 30 and dependent claims and claim 53): include, but are not limited to, Telstra, Telstra’s acquiring bank, Visa and the customer’s issuing bank;

(b)    the “financial network” or “financial networks” (claims 30 and 33 and dependent claims, and claim 53): include, but are not limited to, Telstra’s acquiring bank, Visa and the customer’s issuing bank;

(c)    the “settler” (claims 30 and 33 and dependent claims): software and/or hardware forming part of Telstra’s system which performs reconciliation and settlement functions;

(d)     the “transaction providers … across heterogeneous networks” (claim 49): include, but are not limited to, Telstra, Telstra’s acquiring bank, Visa and the customer’s issuing bank;

(e)    the circumstances by which the “settler … settles charges in real time to … transaction providers” (claim 30 and dependent claims): the software and/or hardware confirms the charge with the customer’s bank such that the payment obligation is assumed in real time by that bank and the customer’s pre-paid account is credited with the recharge amount;

(f)    the circumstances by virtue of which “the account charger charges by at least one of checking that a membership is current, reducing or increasing a number of frequent flyer miles, increasing or decreasing a merchandizing credit and recording an agreement” (claim 50): after discovery, our client will be able to confirm whether claim 50 is infringed by reference to the example above, or whether another example of infringement will be provided.

63    With respect to the alleged infringement of claim 15 and other claims:

[A]n individual customer, who has bought a Telstra 4G tablet and subscribed to the 1GB plan, connects his BigPond USB 4G device to his tablet and subscribes to the MOG premium plan at the cost of $11.99 per month. The customer pays for the subscription using his Visa credit card.

(a)    the “settler” (claim 15 and dependent claims): software and/or hardware forming part of Telstra’s system which performs reconciliation and settlement functions;

(b)    the “transaction providers” (claim 15 and dependent claims): include, but are not limited to, Telstra, MOG and Visa;

(c)    the “financial network” or “financial networks” (claim 15 and dependent claims): include, but are not limited to Telstra’s acquiring bank, the customer’s issuing bank and Visa;

(d)    the “transaction providers … across heterogeneous networks” (claim 28): include, but are not limited to, Telstra, MOG and Visa;

(e)    the circumstances by virtue of which the “settler … settles charges in real time to … transaction providers” (claim 15 and dependent claims): the software and/or hardware confirms the charge with Visa, Visa assumes the payment obligation in real time and the subscription proceeds;

(f)    the circumstances by virtue of which the “receiver … receives … at least one of a confirmation of authorised user account charge or notification of settlement”: include, but are not limited to, subscription to the MOG premium plan. The receiver does not necessarily have to be part of the user input device;

(g)    the circumstances by virtue of which … “the account charger charges by at least one of checking that a membership is current, reducing or increasing a number of frequent flyer miles, increasing or decreasing a merchandizing credit and recording an agreement” (claim 29): after discovery, our client will be able to confirm whether claim 29 is infringed by reference to the example above, or whether another example of infringement will be provided.

64     With respect to the alleged infringement of claim 16 and other claims:

[A]n individual customer, with a Telstra pre-paid subscription, downloads the Telstra “24 x 7” application and then uses it to recharge his Telstra pre-paid account using his Visa card.

(a)    the circumstances by which the “receiver … receives … at least one of a confirmation of authorised user account charge or notification of settlement” (claim 15 and dependent claims): in this case the receiver may be the Telstra “24 x 7” application or the Telstra account manager, which confirms customer recharge upon transaction confirmation from Visa. The receiver does not necessarily have to be part of the user input device;

(b)    the circumstances by virtue of which the “settler … settles charges in real time to … transaction providers” (claim 15 and dependent claims): the settlement handshake between Telstra and Visa.

65    With respect to the alleged infringement of claim 1 and other claims of the 646 patent:

[A]n individual customer, on a pre-paid service, is overseas. When he is overseas he subscribes to a caller tone.

(a)    the circumstances by virtue of which there is “processing … real-time settlement data for the at least one of the communication service and commercial transaction” (claims 1, 51 and 54): include, but are not limited to, Transferred Account Procedure (TAP) records, Enhanced Data Rates (EDR), Call Detail Records (CDR) and roaming fraud control data;

(b)    the circumstances by virtue of which there is “charging … using rating engines for dynamically calculating usage charges” (claims 1, 34, 50 and 54): include, but are not limited to, dynamically calculating roaming data usage;

(c)    the circumstances by virtue of which there is “receiving from a user a personal identification number” and “authenticating the personal identification number” (claims 11 and 25): include, but are not limited to a subscriber’s Identity information such as Mobile Subscriber Integrated Services Digital Network (MSISDN) number and International Mobile Subscriber Identity (IMSI);

(d)    the circumstances by virtue of which there is “providing … the at least one of the communication service, the commercial transaction and the user account information to the authorised user via … the Internet” (claims 11, 25 and 34): include, but are not limited to, subscribing to a caller tone while roaming;

(e)    the circumstances by virtue of which there is “sending a request message to the user at a receiver that the account needs additional funds” and “receiving a response message from the user using the receiver requesting additional funds to be added to the account in accordance with the request message” (claims 56, 62 and 65): include, but are not limited to, Telstra prepaid low credit alert, recharge via Credit ME2U.

66    In the September letter, Upaid did not provide an example of the infringement of the omnibus claims of the 646 patent. It referred to Telstra’s request as raising “a matter of claim construction”.

67    Telstra submits that the giving of these examples illustrates that there are multiple potentially infringing methods, rather than a single method by which different services (or a different combination of services) are provided. The method by which Telstra provides a service or combination of services differs according to the features of the service or combination of services being provided. Telstra also submits that, where Upaid identified “transaction providers” and a “financial network” as including Telstra’s acquiring bank and Visa (and, in some cases, the customer’s issuing bank), it is clear that the acts of third parties are relied on. Telstra submits that Upaid should give particulars of the legal basis for attributing liability to Telstra in respect of third party acts. I accept those submissions.

68    While it may be that each of the given examples is an example of infringement of one or other patent, and also stands as an instance of a type of infringement referable to the identified claims of the relevant patent, it is not at all clear that Upaid has provided an instance of each type of infringement on which it seeks to rely in respect of those claims. The terms in which each example is given suggest that Upaid seeks to rely on other types of infringement that have not been particularised. The difficulty may be illustrated by reference to Upaid’s example quoted in [57] above. Adopting, with some modification, Telstra’s written submissions:

    what plans other than the BigPond Mobile Broadband $40 per month plan (a post-paid plan);

    what devices other than the BigPond USB 4G device;

    what services other than the MOG premium plan (including whether those services include third party services); and

    what payment methods other than Visa credit card,

when combined, amount to a service the provision of which by Telstra is alleged to infringe claims 1, 5, 6, 8, 9, 10, 11, 12, 13, 14, 51, and 52 of the 853 patent?

69    In its written submissions, Telstra raises similar questions with respect to the other examples given.

70    Upaid submits:

… The very considerable burden that would be imposed on Upaid by an unnecessary task is a very significant matter, particularly where the exercise will only serve to obscure the actual issues in dispute between the parties and where the Court has a discretion whether to order further particulars (or order strike out) and the circumstances in which particulars will be required are circumscribed by the rules …

It will not assist the efficient conduct of the proceeding for Upaid to be required to list, for example, every payment method in addition to Visa that could conceivably come within the reference to “transaction providers” in claim 1 of the 853 Patent, let alone to do so as part of a multitude of combinations with the other variables proposed.

71    Compliance with the requirements of r 34.42(3) is not an unnecessary task. In my view, such compliance will serve to clarify the issues that are likely to be in dispute in the present case. It may be, for example, that the features of each Telstra plan are not substantially different in ways that are relevant to the particular way in which a particular claim might be infringed. However, the fact that Upaid has identified different plans in different examples suggests that such material differences do exist and that, for this reason, there has been a need for it to distinguish one plan from others. If there are such material differences in the features of the plans, different combinations, incorporating as their distinguishing feature a particular plan, may still infringe a particular claim, albeit in a different way. In that case, the different combinations will constitute different types of infringement.

72    Similarly, it may be that payment using a Visa credit card is, for the purposes of the claims of the 853 patent, indistinguishable as a matter of substance from payment using other credit cards. If that is alleged, the particulars should make this clear. But if, in use, different credit cards have different features that are materially relevant to the particular way in which a particular claim might be infringed then this would mark a different type or, indeed, different types of infringement, depending on the credit card that is used.

73    The same observations apply to Upaid’s exemplification of a particular device and a particular service when providing its example of infringement of claim 1 and other claims of the 853 patent. Similar considerations apply in relation to the other examples it has given.

74    Upaid’s obligation is not merely to provide examples of infringement but to particularise an instance of each type of infringement alleged. The present indications are that it has not done so.

75    In the September letter and in its written submissions in this application, Upaid argues that it is not possible for it to provide, prior to discovery, “an exhaustive list of products or services” the provision of which by Telstra infringes the patents when it uses its “system, platform, method or devices”. I have touched on this in [46] above. Upaid must be taken to know how, on its case, Telstra has infringed each of the claims that Upaid has asserted. I accept that discovery might be necessary in due course to enable Upaid to identify all instances of a given type of infringement particularised. However, assertion aside, Upaid has adduced no evidence that it is not in a position to provide particulars of an instance of each type of infringement it alleges. Indeed, there is evidence before me that information is publicly available that would enable it to do so.

76    In respect of the omnibus claims of the 646 patent, Upaid must provide particulars of the features of the methods, platforms, and systems described in the complete specification with reference to the accompanying drawings that Upaid alleges that Telstra has exploited. This is not simply a matter of construction of the omnibus claims. It requires an identification of the combination or combinations which it is said that Telstra has infringed. In the case of the omnibus claims, this must necessarily be done by reference to the text and the accompanying drawings of the complete specification.

77    Further, as I have noted, if the alleged infringements rely on the acts of third parties that are to be attributed to Telstra, it will be necessary for Upaid to particularise the basis on which it alleges that those acts are attributable to Telstra.

disposition

78     I have found that the statement of particulars is inadequate and should be struck out. I am not satisfied that, by the September letter, Upaid has provided adequate particulars. In particular, it is not clear to me that Upaid has provided particulars of an instance of each type of infringement on which it would seek to rely. It certainly has not provided adequate particulars in relation to the alleged infringement of the omnibus claims of the 646 patent.

79    In my view, this is not an appropriate case in which Upaid’s application or the statement of claim should also be struck out. Instead, I will order Upaid to file further amended particulars of infringement by no later than 4.00 pm on 28 February 2014. The proceeding will be listed for further directions at 9.30 am on 17 March 2014.

80    Upaid is to pay Telstra’s costs of the interlocutory application.

81    Finally, I have noted that Upaid has advanced a large number of claims in its case on infringement. The prosecution of a proceeding for infringement of patent claims that, in the circumstances, are shown to be truly superfluous to achieving effective relief, adds unnecessarily to the complexity and cost of the proceeding, and leads to delay. Conduct of that kind may well attract special costs orders. For example, in such circumstances, a successful applicant might not be entitled to all its costs. Indeed, it may be required to bear another party’s costs. There may be, of course, sound legal reasons why, in the present case, Upaid has chosen to sue on such a large number of claims. I am unable to tell at the present time. It is appropriate that I should raise this matter now for Upaid’s reconsideration when providing its further amended particulars of infringement.

Associate:

Dated:    23 December 2013