FEDERAL COURT OF AUSTRALIA

Neobev Pty Ltd v Bacchus Distillery Pty Ltd (Administrators Appointed) (No 4) [2014] FCA 21

THE COURT DECLARES THAT:

1.    Mr Max Scott is the sole inventor of the invention which is the subject of Australian Standard Patent 2006201593 (“593 Patent”) and Australian Standard Patent Application 2011201999 (“999 Application”).

2.    (a)    The Applicant/First Cross Respondent (Neobev Pty Ltd (ACN 165 795 746) (“Neobev”)) is, and has since 13 September 2013 been, the beneficial co-owner of the 593 Patent and the invention which is the subject of that patent; and

(b)    The Respondent/Cross Claimant (Bacchus Distillery Pty Ltd (Administrators Appointed) (ACN 065 961 711) (“Bacchus”)) holds the ownership of the 593 Patent, and the invention the subject of that patent, on trust for itself and Neobev as co-owners in equity.

3.    The licence with respect to the Confidential Information and Copyright Works defined in the Amended Statement of Claim (“Confidential Information and Copyright Works”) to use the same for the purpose of manufacturing cream liqueur products using the emulsifiers supplied by or on behalf of Max Scott Consulting Pty Ltd and Mr Max Scott was not terminated by reason of the fact that Bacchus was placed into administration on 9 September 2013.

THE COURT ORDERS THAT:

1.    The Commissioner of Patents rectify the Register of Patents in relation to the 593 Patent so as to name Mr Max Scott as the sole inventor of the 593 Patent.

2.    A copy of these orders be served on the Commissioner of Patents within fourteen days of this order.

3.    Bacchus, whether by itself, its officers, employees or agents or otherwise howsoever, be restrained from promoting for sale, selling or otherwise disposing of the Confidential Information or Copyright Works without Neobev’s consent.

4.    All questions of costs be reserved to a date to be fixed.

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

REASONS FOR JUDGMENT

1    On 23 January 2014, I heard submissions from the parties on the final orders to be made in this proceeding in light of the reasons I delivered on 16 January 2014 (Neobev Pty Ltd v Bacchus Distillery Pty Ltd (Administrators Appointed) (No 3) [2014] FCA 4). Each party put forward a draft set of orders containing the orders which it sought. At the hearing, Bacchus Distillery Pty Ltd (Administrators Appointed) (“Bacchus”) also sought to tender an affidavit sworn by one of its administrators, Mr Bruno Secatore, on 22 January 2014. Neobev Pty Ltd (“Neobev”) objected to the receipt of that affidavit into evidence.

2    In relation to the issue of inventorship, which I dealt with in paragraphs 106-110 of my reasons, the appropriate orders are a declaration that Mr Max Scott is the sole inventor of the invention which is the subject of Australian Standard Patent 2006201593 (“593 Patent”) and Australian Standard Patent Application 2011201999 (“999 Application”), and an order under s 192 of the Patents Act 1990 (Cth) (“the Act”) that the Commissioner of Patents rectify the Register of Patents in relation to the 593 Patent so as to name Mr Max Scott as the sole inventor of the 593 Patent. A copy of the orders are to be served on the Commissioner of Patents within fourteen days. Paragraphs 6 to 8 of Mr Secatore’s affidavit will not be received because the points Mr Secatore makes in those paragraphs are no more than submissions which are, in any event, made in Bacchus’ written submissions.

3    In relation to the ownership of the 593 Patent, which I dealt with in paragraphs 111-118 of my reasons, the appropriate order is a declaration in the terms sought by Neobev, that is to say, a declaration that:

1.1    the Applicant/First Cross-respondent (Neobev) is, and has since 13 September 2013 been, the beneficial co-owner of Australian Standard Patent 2006201593 (593 Patent) and the invention the subject of that patent; and

1.2    the Respondent/Cross-claimant (Bacchus) holds the ownership of 593 Patent and the invention the subject of that patent on trust for itself and Neobev as co-owners in equity.

4    Bacchus’ proposed declaration, which, on one reading of it, is restricted to the position on 7 February 2005, is not appropriate. Events after 7 February 2005, such as Bacchus’ argument as to estoppel by conduct (see paragraph 116 of my reasons) and the assignment to Neobev, were part of the proceeding before me. Nor do I see any reason to include in the declaration a reference to a contemporaneous assignment to Bacchus as the declaration sought is sufficient to dispose of the issue between the parties. Paragraphs 9 and 10 of Mr Secatore’s affidavit will not be received as the points he makes in those paragraphs are no more than submissions which are, in any event, made in Bacchus’ written submissions.

5    I turn now to what I think was the principal issue between the parties in relation to the final orders to be made. Neobev submitted that, pursuant to s 192 of the Act, the Register of Patents should be rectified to record it as a co-owner of the 593 Patent.

6    Part 2 of Chapter 2 of the Act deals with the ownership of patents, including co-ownership. In relation to co-ownership, one of the key concepts is that of “patentee”, which is defined in Schedule 1 to the Act as “the person for the time being entered in the Register as the grantee or proprietor of a patent”.

7    The consequences and effects of a finding that there is a trust over the 593 Patent were not the subject of evidence or detailed submissions at trial. Neobev did submit at trial that, if I was to make a finding that there was a trust, then I should go on to order that the Register of Patents be rectified to show it as a co-owner of the 593 Patent. There was some debate between myself and counsel for Neobev about what it was that Neobev contended was the error or omission in the Register that engaged s 192.

8    On the hearing relating to the making of final orders, a number of other issues were alluded to in the course of submissions on Neobev’s application to be recorded on the Register of Patents as a co-owner. Bacchus submitted that an order under s 192 would amount to an in specie distribution of the trust property, and that that should not be ordered because there are a number of prior or better claims to the trust property or the proceeds thereof. These claims were the subject of Mr Secatore’s affidavit evidence. Bacchus’ administrators also submitted that they have the right to sell the trust property and pay the liabilities they have identified out of the proceeds of sale.

9    For its part, Neobev submitted that Bacchus did not have the power to sell the trust property because, among other reasons, the agreement was that the patent was to be in the name of Bacchus, not a third party. It is also submitted that Bacchus, by its administration and its proposal to sell the 593 Patent, had shown that it was no longer an appropriate trustee and that the purpose of the trust was no longer capable of being carried out. Neobev submitted that there was really nothing standing in the way of an order for rectification and that the justice of the case required such an order.

10    The arguments outlined above were not identified in the pleadings and were not the subject of evidence at the trial. They would need to be the subject of precise identification and of evidence. They may involve a consideration of issues not yet ripe for determination and of State legislation relating to the powers of trustees and the grounds upon which they can be removed.

11    I am able to resolve Neobev’s present application on the much simpler basis that I am not prepared to make an order under s 192 because I think it would amount to, or have the effect of, an in specie distribution of the trust property, and I am not satisfied that, at this point, the trust has come to an end.

12    Mr Secatore’s affidavit was, in large measure, directed towards providing evidence in support of the reasons why the order for rectification sought by Neobev should not be made. This evidentiary material prompted Neobev’s objection to Mr Secatore’s affidavit and a submission from it that, among other things, Neobev would wish to test the material. I will not receive paragraphs 11 to 27 of Mr Secatore’s affidavit because they are irrelevant to my reasons for refusing the rectification order sought by Neobev. Whether they might be relevant to some other application made by one of the parties remains to be seen.

13    In relation to Neobev’s claim for specific performance of the Royalty Agreement, which I dealt with in paragraphs 119-135 of my reasons, I do not propose to make any order. I do not think a declaration of my reason for refusing the relief sought by Neobev in relation to the Royalty Agreement is appropriate. I will not receive paragraphs 37 and 38 of Mr Secatore’s affidavit.

14    In relation to the copyright material and confidential information, which I dealt with in paragraphs 136-142 of my reasons, Neobev sought declarations that, by the sale process, Bacchus has threatened to infringe its rights and injunctions restraining Bacchus from using or reproducing the information or works, or selling, promoting, offering for sale, or otherwise dealing with the information, without the licence or authority of Neobev.

15    Bacchus submitted that injunctions were unnecessary because the administrators understand the finding made that the licence is not capable of assignment and, in any event, there has been no finding that the licence has come to an end. Bacchus asks me to make it clear that the licence has not come to an end. It asks me to make a declaration to that effect.

16    In my reasons, I said that there was authority that the insolvency administration of a licensee did not necessarily bring a licence to an end. I did not express a final conclusion on the issue because I considered the principal issue to be whether the licence was capable of assignment. I was not aware of the two matters now raised by Bacchus, and the subject of evidence from Mr Secatore, that is to say, first, the continued use of the material and information in the orderly winding up of Bacchus’ affairs, including dealing with questions from the Australian Taxation Office and obtaining advice on the payment of excise duties, and secondly, the possibility of a deed of company arrangement and share sale pursuant to s 444GA of the Corporations Act 2001 (Cth).

17    Neobev argued that the licence came to an end by reason of Bacchus going into administration on 9 September 2013. I reject that argument and I will make a declaration that it was not the case. Bacchus threatened to sell the licence and that, I have concluded, it is not entitled to do. I will grant an injunction restraining it from selling the licence.

18    I will receive in evidence paragraphs 28 to 36 of Mr Secatore’s affidavit which deal with the copyright material and confidential information.

19    I will hear the parties on costs and I will put in place a timetable for submissions and, if necessary, evidence. I will not rule on the admissibility of paragraphs 39 to 54 of Mr Secatore’s affidavit (which deal with costs) at this stage.

Associate:

Dated:    4 February 2014