FEDERAL COURT OF AUSTRALIA

Upaid Systems Ltd v Telstra Corporation Limited [2016] FCAFC 158

ORDERS

THE COURT ORDERS THAT:

1.    The applicant have leave to appeal in respect of order 2 of the orders of Yates J made on 11 March 2016, but otherwise its application for leave to appeal be dismissed.

2.    The appeal be allowed and order 2 of the 11 March 2016 orders be set aside.

3.    That part of the respondent’s interlocutory application filed on 29 October 2014 seeking summary dismissal be dismissed.

4.    The parties’ costs of the application for leave to appeal and the appeal be treated as their costs in the cause in the principal proceeding.

5.    The applicant have leave to file and serve further and better particulars of its infringement case in relation to the 853 patent, the scope of such leave to be determined by the primary judge.

6.    There be referred to the primary judge for his further consideration:

(a)    the scope of any order permitting the applicant to file and serve further and better particulars of its infringement case in relation to the 853 patent; and

(b)    any outstanding question of costs in relation to the respondent’s interlocutory application filed on 29 October 2014.

7.    Liberty to apply.

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

REASONS FOR JUDGMENT

THE COURT:

1    The applicant, Upaid Systems Ltd (Upaid), is the holder of two Australian standard patents No. 2008203853 (the 853 patent) and No. 770646 (the 646 patent). The 853 patent concerns an invention that has been described as a “Convergent communications platform and method for mobile and electronic commerce in a heterogeneous network environment”. The 646 patent is for an invention more simply titled “Communication services”.

2    Upaid has brought proceedings against the respondent, Telstra Corporation Limited (Telstra), for infringement of claims of the 853 patent and the 646 patent.

3    In the principal proceedings, prolonged interlocutory processes have taken place between the parties concerning the form of Upaid’s pleadings, particularly deficiencies in the manner of its particularisation of the alleged acts of infringement of Telstra.

4    On 11 March 2016, the primary judge on the application of Telstra made orders, inter alia, in the following terms:

1.    Pursuant to r 16.21 of the Federal Court Rules 2011 (the Rules), paragraph 1 (and all related subparagraphs) and paragraph 19 (and all related subparagraphs) of the consolidated particulars of infringement filed by the applicant on 5 November 2014 be struck out.

2.    Pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth) (the Act) and r 26.01 of the Rules, judgment be given for the respondent in respect of the applicant’s claim for infringement of claim 1 of Patent No. 2008203853.

5    Upaid’s present application before us seeks leave to appeal from these orders, save that the challenge to order 1 is confined to paragraph 1 (and all related paragraphs) of the consolidated particulars of infringement filed by Upaid on 5 November 2014. The leave to appeal application and the appeal, if leave is granted, have been heard together. For the reasons that follow, we would grant leave to appeal and allow the appeal in respect of order 2 only; we would otherwise dismiss the application for leave to appeal in respect of order 1.

Background

6    The primary judge has set out in his reasons (Upaid Systems Ltd v Telstra Corporation Limited (No 3) (2016) 118 IPR 16; [2016] FCA 227) a chronological history of the procedural steps in this matter that it is unnecessary to repeat (see at [2] to [24]).

7    It suffices to say that the orders the subject of the present leave application were made by the primary judge on Telstra’s application filed on 29 October 2014 (as subsequently amended) seeking to strike out Upaid’s further amended statement of claim and consolidated particulars of infringement and seeking summary dismissal of the infringement claims concerning both the 853 patent and the 646 patent.

8    His Honour ordered that paragraphs 1 and 19 (and related subparagraphs) of the consolidated particulars of infringement be struck out, but foreshadowed that he would give leave to Upaid to file further particulars of infringement concerning the 646 patent. In relation to the summary dismissal application, his Honour only summarily dismissed Upaid’s claim for infringement of claim 1 of the 853 patent.

9    The present challenge before us concerns the 853 patent only. The 646 patent can be put to one side. Upaid contends that his Honour was in error in ordering summary dismissal of the infringement case concerning claim 1 of the 853 patent. It was further contended that his Honour was in error in not giving leave to Upaid to file and serve further and better particulars of its infringement case concerning the 853 patent as he had foreshadowed for the 646 patent.

10    Before discussing these questions, it is appropriate to set out some aspects of the specification of the 853 patent.

11    The field of the invention is described in [0002] in the following terms:

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.

12    His Honour discussed the 853 patent at [28] to [34] of his reasons. At [31] and [32], his Honour discussed the problems said to be addressed by the invention in the following terms:

The complete specification discusses post-paid and pre-paid telephone access accounts. It describes a post-paid account as one established on the basis of a customer’s creditworthiness. It says that, because of arrangements between operators of different telephone networks, post-paid account users are able to make long distance telephone calls or access their home network when roaming in a visiting network. The operator of the home network stands as payment guarantor for the calls made by its customers in the visiting network. Visiting networks provide a facility for making and receiving calls to the home network subscribers and collect, process and forward the usage data to the caller’s home network for payment. The home network then pays the visiting network. However, the periodical billing of post-paid customers and the collection of money from those customers, involves delays. It is in this way that the home network stands as payment guarantor to the visiting network for calls made by its customers.

The complete specification says that, due to this problem, the home network is able to offer roaming only to its post-paid customers whose creditworthiness is established. With the increase in the pre-paid subscriber base, network operators worldwide want to offer roaming services to their pre-paid customers as well. But, due to the inherent nature of non-real-time processing of call usage for roaming customers, operators are not in a position to offer true pre-paid roaming to their customers.

13    The invention is summarised in the specification at [0048] to [0092]. At [0093] there is a brief description of various drawings. At [0094] to [00286] there is a detailed description of various embodiments. Thereafter claims 1 to 53 are set out. It is only necessary to set out claim 1 which is in the following terms:

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.

14    In order to appreciate the context of some of the terms of the integers of claim 1, reference can be made to earlier paragraphs of the specification.

15    In relation to the concepts of networks and convergence, [0095] to [0098] set out the following:

[0095]    Examples of heterogeneous networks are networks consisting of dissimilar or diverse technology components or constituents combined. For example, a heterogeneous network can have: different telecommunication standards, like GSM and CDMA; different versions of the same telecom standard, like GSM 900 and 1900; different switching environments, like NOKIA and ERICSSON; intelligent network (IN) or non-IN; different signalling, like ISDN and SS7; different operating systems, like UNIX and MICROSOFT WINDOWS NT; different flavors of the same operating system, like SOLARIS (SUN) and AIX (IBM); different versions of the same operating system, like 2.0 and 2.1; different server hardware, like IBM and COMPAQ; same operators, but different network types, like KDDI CMDA and PDC in Japan; same operator, but different network, like VODAFONE in different countries.

[0096]    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.

[0097]    A convergent interface can consist of a number of required and optional parameters, which can be configured to integrate with third party system, by analyzing the input/output parameters that the third party component(s) require, mapping the third party components to the exemplary convergent communications platform component parameters and configuring the components to resolve any conflicts. If a third party system cannot provide some optional parameters, the exemplary convergent communications platform can create dummy parameters to ensure a correct mapping.

[0098]    Examples of a platform include a system that provides a base for additional endeavors. For example, a communications platform such as a telephone system allows for data to flow across it for communication in many ways. Similarly, a convergent communications platform can allow a variety of technologies to merge, allowing for enhanced mobile commerce, electronic commerce and customer care.

16    But otherwise there is little discussion of what is precisely meant by a “network” in terms of its technical or conceptual boundaries.

17    In terms of the reference to “rule set” and rules, there is a discussion in the specification at, inter alia, [0083] to [0092]. There are no definitions of “rule set”, “payment rule” or “settlement rule” although the concepts are discussed and examples given. It is appropriate to set out some relevant paragraphs:

[0085]    A third category of rules used in the convergent communications system and method is debiting rules where a user requests and is required to pay in advance for a mobile commerce, communication or other electronic commerce transaction from various service providers through a convergent communications system and method in a heterogeneous network environment. Various exemplary embodiments of the invention provide various service providers to set up various methods for debiting either a service provider or customer's account. For example, a telephone services provider may provide for one payment to its own account, one payment to a roaming network provider's account and a third payment to a long distance provider’s account.

[0086]    Aspects of the invention as described above can be attained by a convergent communications method employing a rule set, having several functions, including 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 to a plurality of transaction providers in accordance with at least one settlement rule said charging and settling performed utilizing at least on financial network, separate from at least one communication network.

[…]

[0088]    For the above system and method, various aspects may include where the applying is performed utilizing a plurality of rules for authorizing the transaction, the charging is performed utilizing a plurality of payment rules for charging an account and the settling is performed utilizing a plurality of settlement rules, or where the charging is performed utilizing a plurality of payment rules for charging an account and the settling is performed utilizing a plurality of settlement rules. Other aspects may include where the settlement occurs at least one of immediately, after 3 days, at the end of a calendar month, at regularly spaced intervals and as a series of partial payments and where the applying the at least one payment rule for authorizing the transaction includes authorizing the transaction using at least one of a user PIN, manual entry, a user pass phrase and confirming user identity through biometric means.

[0089] For the above system and method, various aspects may include determining the at least one payment rule, and resultant application in real time as a result of a transaction authorization request according to an algorithm using data relating to historical events, which are considered to have relevance to the transaction authorization request. Other aspects may include where the historical events are an authorized user's previous purchases or actual outcomes of historical risk assessments or where such historical data available changes with each billing period. Other aspects may include where the transaction is requested and connection to the plurality of transaction providers is across heterogeneous networks.

[…]

[0091]    Aspects of the invention as described above further can be attained by a convergent communications system employing a rule set and coupled to at least one communication network and at least one financial network separate from the at least one communication network comprising a rule determiner that determines, for an authorized user, at least one payment rule, applicable at that time for authorizing a transaction and charging an account of the authorized user, a processor that applies the at least one payment rule for authorizing the transaction, an account charger that charges the account, according to the at least one payment rule for charging the account, in real time if the transaction is authorized and a settler that settles the charges in real time to at least one of a plurality of transaction providers in accordance with at least one settlement rule.

[0092]    Aspects of the invention as described above further can be attained by a convergent communications system employing a rule set coupled to at least one communication network and at least one financial network separate form [sic] the at least one communication network, having a determiner that determines in real time a plurality of rules for authorizing, charging and settling a transaction at a current time, an authorizer that authorizes the transaction if a current status of an authorized user’s account or the authorized user meets at least a first rule among the plurality of rules for authorizing the transaction at the current time, an account charger that charges the authorized user's account in real time and credits at least one transaction provider account and a settler that settles the transaction according to at least a second rule among a plurality of rules for settling the transaction.

A further aspect of the invention is a convergent communications system employing a rule set comprising: receiving a request for at least one transaction via at least one communication network; determining at least one transaction rule currently applicable to an authorized user as a result of the request; applying the at least one transaction rule to determine whether the at least on transaction is authorized to be provided by one of a plurality of transaction providers; generating in real time, according to the at least one transaction rule if the transaction is authorized, a charge to an account of the user utilizing at least one financial network, separate from the at least one communication network; and settling, in accordance with at least one settlement rule, the charge by one of a plurality of transaction providers utilizing the at least one financial network.

As used herein, except where the context requires otherwise the term “comprise” and variations of the term, such as “comprising”, “comprises” and “comprised”, are not intended to exclude other components, integers or steps.

18    There are other references to settlement rules. For example, [0060] provides:

Settlement rules also should allow configuration for various situations such as: (1) settlement in real time, (2) settlement with a time delay (e.g., after 2 days or 30 days, etc), (3) settlement based on confirmation of certain condition (e.g., a courier is paid only when the goods are delivered, whereas an insurance agency is paid before shipment of goods), (4) settlement based on a business relationship between the parties (e.g., a courier agency offers discounts based on volumes – that means the settlement process would take into account several deliveries rather than just one delivery), and (5) settlement based on performance (e.g., a portal is paid a small value each time an advertisement is delivered to the roaming subscriber and it gets paid a larger value if the roaming subscriber actually purchases the goods/services). Settlements should also take into account a roaming contract between participating networks (e.g., roaming surcharge). Settlements should also take into account any regulatory requirements (e.g., appropriation of taxes and settlement with government agencies).

19    Relevantly to claim 1, the expressions “rule set”, “payment rule”, “settlement rule”, “financial network”, “separate from”, “communication network”, “charges”, “charging” and “settling” have not been defined in the specification.

the primary judge’s reasons

20    In relation to his Honour’s summary dismissal determination concerning claim 1 of the 853 patent, his Honour considered six types of infringement alleged by Upaid, which had been particularised in the consolidated particulars of infringement. In relation to Telstra’s services, these six types were described by his Honour in his reasons as:

(a)    Post-paid Service Plans (Digital Purchase) (Type 1 infringement);

(b)    Pre-paid Service Plans (Digital Purchase) (Type 2 infringement);

(c)    Post-paid Bill Payment (Type 3 infringement);

(d)    Pre-paid Service Plans (Recharge) (Type 4 infringement);

(e)    International Roaming: Post-paid Service Plans (Digital Purchase) (Type 5 infringement); and

(f)    International Roaming: Pre-paid Service Plans (Digital Purchase) (Type 6 infringement).

21    For present purposes, two preliminary points can be made. First, on the summary dismissal application before his Honour, little distinction was made between domestic services and international roaming services. Accordingly, Types 1 and 5 infringements can be treated together; likewise Types 2 and 6 infringements can be treated together. Second, although Upaid initially sought leave to appeal in respect of his Honour’s findings concerning the Type 3 infringement and the Type 4 infringement, such a challenge is no longer pressed.

22    On the summary dismissal application, his Honour considered evidence adduced by Telstra (see at [44] to [82] of his reasons) and evidence adduced by Upaid (see at [83] to [94]).

23    Relevantly to claim 1 of the 853 patent, Telstra’s evidence described the process of purchasing a premium MOG subscription using an internet browser on a Telstra mobile device. At the relevant time, MOG was a subscription music service offered by Telstra that permitted customers of Telstra to stream music on various devices such as a mobile phone or to download music. Telstra discontinued this offer on 31 August 2015. There was a distinction in how the MOG subscription was paid for, which depended upon whether a customer was under a pre-paid service plan or a post-paid service plan. We will elaborate on this later, but it is appropriate to say something further concerning why the focus and the evidence concerned the MOG subscription.

24    The consolidated particulars of infringement referred to various types of infringement. Paragraphs 1.1 to 1.11 (with additional particulars) referred to post-paid service plans, with members of the public subscribing to such plans and thereby being authorised by Telstra to use its communications network. As authorised users, they were able through such a network to purchase or receive the supply of products, including from third party providers. Such products could be non-communication services, for example, MOG. MOG was a product generated and provided by a third party provider. An authorised user contracted with the third party provider of MOG and separately with Telstra in relation to the supply of MOG. But any obligation of the authorised user to pay for the MOG subscription was done through contractual mechanisms with Telstra. Under separate arrangements in relation to MOG, Telstra paid a different amount/fee to the third party provider. Paragraphs 1.12 to 1.22 (with additional particulars) referred to pre-paid service plans which similarly allowed authorised users to purchase or receive the supply of products including from third party providers. The difference between the pre-paid service plan and the post-paid service plan related to the mechanism of debiting and payment by the authorised user depending upon which plan they were under. The mechanisms differed for both communication services and non-communication services such as MOG.

25    The consolidated particulars were framed such that paragraphs 1.1 to 1.22 referred to “products” as a generic term, with further detail given in Schedule 1, including Parts B1 and B2. MOG was identified in Part B2 which listed “third party services”. We will put to one side the mixing of descriptions between a “product” and a “service”.

26    His Honour treated MOG (with the pre-paid service plan or the post-paid service plan) as an instantiation of some of the alleged generic types of infringement rather than as a separate type of infringement (cf rule 34.42(3)(b) of the Federal Court Rules 2011). That is, for the purposes of various types of infringement, his Honour considered that it did not matter what third party product/service was supplied to and acquired by the customer. Having found that it was appropriate to summarily dismiss the infringement case for claim 1 of the 853 patent in relation to MOG, his Honour extrapolated this finding to all other products listed in Part B of Schedule 1.

27    Upaid has contended before us that his Honour was in error in such an extrapolation. It contends that his Honour’s summary dismissal should have been confined to the MOG product only. It also asserts that it was denied procedural fairness in this respect and has sought leave to adduce “fresh” evidence before us to support this argument. We have granted such leave, if it was necessary, but we have been unpersuaded by these criticisms. In any event, we do not need to decide this ground given that we propose to set aside the summary dismissal order, whether applying to the MOG product only or more generally.

28    It is appropriate to now set out some aspects of his Honour’s reasons.

29    In relation to MOG subscriptions, his Honour said at [46] to [48] and [53] to [55]:

MOG is a subscription music service offered by Telstra. For a monthly subscription price, customers are able to stream music on certain devices. They are also able to download music to their devices for off-line playback. MOG is available as a basic subscription or a premium subscription. There are a number of differences between them. For example, the premium subscription permits streaming and downloading to mobile devices using the MOG “app” whereas the basic subscription does not.

The BigPond Music platform is responsible for creating and administering MOG subscriptions and BigPond Music user profiles associated with MOG subscriptions, as described below. The BigPond Music platform communicates with the MOG platform, which is responsible for delivering the MOG service to subscribers. For example, when a customer wishes to use the MOG service to stream music, the BigPond platform only permits the MOG platform to provide the service if the customer has an active MOG subscription.

The BigPond Music platform also communicates with Telstra’s billing systems when a customer uses the BigPond platform to purchase a MOG subscription using an existing Telstra account. As described further below, existing Telstra mobile accounts may be used to purchase a MOG subscription. By way of background, the following paragraphs describe the process of establishing Telstra mobile accounts, which may be either pre-paid or post-paid.

[…]

A customer can purchase a premium MOG subscription using an internet browser on a mobile device by navigating to the website www.bigpondmusic.com and clicking on the link for the premium MOG subscription. The price of the subscription is advertised on the web page, such that the customer is able to identify the price prior to requesting the subscription. Presently, a customer may choose to receive a 14 day trial, or skip the trial and purchase the subscription straight away. The latter alternative is discussed in this section of my reasons.

The customer must first establish a BigPond Music account. It is a profile for the use of the BigPond Music service, and includes the customer’s name, personal details and other aspects relating to the customer’s use of the MOG service. The BigPond Music account is not a billing account. It is not charged or billed and payments are not made to it. The Telstra accounts which are used in these processes are described in more detail below.

Once the customer has established a BigPond Music account, he or she is presented with three options for paying for the MOG subscription, namely: “Pay with my Telstra Mobile” (which can be pre-paid or post-paid), “Pay using a new credit card” or “Add to my BigPond Broadband Bill”. A BigPond Broadband account is associated with a broadband internet service, and is a different account from a Telstra mobile account, which is associated with a pre-paid or post-paid service plan. The following sections describe the process of paying with a Telstra mobile account (pre-paid and post-paid) and paying with a credit card.

30    In relation to pre-paid accounts, his Honour said at [49] and [50] and [56] to [61]:

Establishing a pre-paid Telstra mobile account

For a pre-paid account, the customer pays before acquiring a product or service. A pre-paid mobile account is typically established by purchasing a pre-paid mobile device and a pre-paid sim starter pack which includes an amount of credit in a pre-paid account for purchasing certain products or services for use on a mobile device and signing up for a pre-paid service plan on specified terms and conditions. The customer tops up the credit in the account from time to time.

After a pre-paid service is purchased, the customer’s account is activated. Typically, if a pre-paid mobile package is purchased in a Telstra store, the Telstra staff member will activate the account. When this is done, an account is created in Telstra’s “Apollo” billing system. The Apollo system is the billing system used within Telstra for pre-paid mobile accounts. This system records account balances, credits and debits.

[…]

Pay with my Telstra Mobile – pre-paid

The customer inserts his or her mobile number in the field provided on the web page. If the request is not made from the mobile device itself, a further verification is required using an SMS message sent to the device. A web service layer referred to as “SDF” verifies that the mobile number is a valid Telstra mobile number and, if so, executes an “ad hoc” charge. If not, an error message is returned to the customer via the Bigpond Music web page. The amount of the charge is specified by reference to a list of product prices stored by SDF referred to as the “gate log”. These prices have been previously specified for the products by the responsible group within Telstra and recorded by the appropriate platform. In the case of MOG, the price of $11.99 for the premium subscription service is a fixed price specified and advertised by the BigPond Music group and recorded in the BigPond Music platform.

SDF communicates the MOG product request and charge of $11.99 to another web service layer known as “ESS”. ESS is a gateway layer. It identifies the Telstra mobile account associated with the mobile number and determines the appropriate billing system for that account. As stated above, various billing systems are used which are applicable to different types of Telstra accounts.

When ESS has determined the appropriate customer account and billing system, it communicates the product request and charge to a system referred to as “ONDB” for authorisation and posting to Apollo.

ONDB checks whether there is a bar on the relevant type of product. It also checks with Apollo whether the customer has sufficient balance in his or her account for the transaction. Apollo sends back a message to ONDB indicating whether the balance is sufficient. If it is not, an error message is generated, and the customer is prompted to recharge his or her pre-paid account if desired.

If the balance is sufficient, Apollo records the charge as a debit on the customer’s account and the account balance is reduced accordingly, in accordance with the terms and conditions specified in the customer’s pre-paid mobile plan.

Apollo provides a confirmation to ONDB that the debit has been made, and this confirmation is communicated to the BigPond Music platform via ESS and SDF. The BigPond Music platform creates a record of the customer’s subscription and records that it is active. When a customer attempts to stream music through the MOG service, the MOG platform is permitted by the BigPond Music platform to provide the service if the subscription is active.

31    In relation to post-paid accounts, his Honour said at [51], [52], [62] to [65] and [68]:

Establishing a post-paid Telstra mobile account

For a post-paid account, the customer pays after acquiring a product or service. The customer selects a plan on specified terms and conditions under which the customer is billed periodically (typically monthly) for mobile products and services acquired in the preceding period.

As described above in relation to pre-paid mobile accounts, the user’s account is activated. When this is done, an account is created in the particular Telstra billing system which is used for post-paid accounts. For consumers, this is the “Kenan” system, and for business customers this is the “Mica” system. The “Flexcab” system is also used for customers with a single bill arrangement. These systems record account balances, credits and debits, and generate monthly bills.

[…]

Pay with my Telstra mobile—post-paid

In the case of purchasing a MOG subscription using a post-paid mobile account, SDF, ESS and ONDB perform the same functions as for pre-paid accounts described above. The product request and charge is then passed on to the applicable billing system for post-paid accounts, namely Kenan, Mica or Flexcab.

Kenan / Mica / Flexcab receives the charge from ONDB and records the charge as a debit against the customer’s post-paid account.

Once the debit has been recorded, Kenan / Mica / Flexcab provides a confirmation to ONDB that the debit has been made, and this confirmation is communicated to the BigPond Music platform via ESS and SDF. The BigPond Music platform creates a record of the customer’s subscription and records that it is active.

The MOG subscription continues on a monthly basis unless cancelled by the customer. On the monthly anniversary of the subscription date, the BigPond Music platform generates a charge and the process described above for pre-paid and post-paid mobile accounts is repeated.

[…]

In the case of a pre-paid mobile account, the processes described above do not involve any interrogation or recording of the manner in which the customer supplied the credit available in the Telstra pre-paid account. In the case of a post-paid mobile account, the processes described above do not interrogate or record the manner in which the customer will ultimately pay his or her bill.

32    From [109] to [153] of his Honour’s reasons, his Honour set out Upaid’s case as then particularised. He then turned to address Telstra’s objections to the particularised case and the question of summary dismissal. Relevant to the questions before us is what his Honour addressed as “Objection 4” dealing with the “charging” and “settling” steps. It will be recalled that claim 1 of the 853 patent requires a “charging” step and a “settling” step. His Honour dealt with this in relation to both the post-paid service plan and the pre-paid service plan.

33    In relation to the post-paid service plan, Telstra argued that there was no “settling” step. His Honour agreed with Telstra’s contention.

34    His Honour at [213] and [214] set out his construction of “charging” and settling”:

The word “charging” when used in the integer of “charging the account” (here, the user’s account with Telstra) should be taken as possessing the meaning of “charge” in the sense of “to hold liable for payment; enter as a debit against” or “to list or record as a debt or obligation; enter as a debit”: Macquarie Dictionary (6th ed, 2013) at 255 (meanings 12 and 13). No other meaning is reasonably suggested by the complete specification. Paragraph 1.9 of the particulars recognises this meaning by stating with respect to the “charging” step that “Telstra has recorded the price for the acquisition of the selected product as a debit against the users’ Telstra accounts”.

Correspondingly, the word “settling” when used in the integer of “settling charges to the account” should be taken as possessing the meaning of “settle” in the sense of “to pay (a bill, account due, or the like)”: Macquarie Dictionary (6th ed, 2013) at 1339-1340 (meaning 3). Once again, no other meaning is reasonably suggested by the complete specification.

35    He then said at [217] to [220] in relation to the post-paid service plan:

With regard to the purchase of a product using a user’s post-paid Telstra account, it is not in dispute that a “charge” is made to the user’s Telstra account. With regard to the “settling” step, Upaid accepts, as I have noted, that there is no “settling” as particularised. Its case advanced in submissions is that, after the balance of the user’s post-paid account is debited, the user no longer has an outstanding obligation to pay Telstra for the purchase of the product. Upaid argues that, after Telstra has debited the user’s Telstra account for the purchase of the product, the user’s Telstra account is “thereby settled”. It says that this can be seen from the user’s perspective when the user checks the “recent activity” with respect to his or her account history. Upaid says that the user’s Telstra account records the purchase of the subscription as an event that is “separate to the depletion of the user’s other available balances on that post-paid account”.

With respect, this submission is nonsensical. I accept Telstra’s submission that this argument conflates the distinct and separate steps of “charging” and “settling” that are required by claim 1. Upaid’s argument is also obviously wrong because the user has not paid Telstra for the product and is still required to discharge his or her indebtedness to Telstra for the purchase. Indeed, it is also Upaid’s particularised case that the user is contractually obliged to pay Telstra for the amount “charged”: para 1.9 of the particulars. Moreover, the recording with respect to “recent activity” to which Upaid refers is simply a recording of the total estimated charges before discounts and plan allowances for the purchase. It has nothing to do with “settling” the user’s Telstra account for the purchase of the product.

I should mention in this regard that Dr Nicholls gave evidence, by reference to one of the discovered documents, that, once a MOG subscription is charged to a customer’s account, Telstra considers that the amount charged is part of its revenue “and so the transaction between the customer and Telstra is complete”. Accepting for the sake of argument that Telstra considers the amount charged as part of its revenue, this says nothing about the “settling” step required by claim 1 of the 853 patent.

Thus, in respect of the first way in which Upaid now advances its case for this alleged type of infringement, there is no “settling” step as particularised. Moreover, there is no separate “settling” step as required by the claimed method. The “charging” and “settling” steps now relied on are, as a matter of substance, one and the same step. Absent separate “charging” and “settling” steps, there can be no infringement of the claimed method. Therefore, this case on infringement, as advanced in submissions, is not tenable.

36    In relation to the pre-paid service plan, his Honour dealt with this at [254] to [264].

37    At [257] to [258], his Honour set out Upaid’s contentions in the following terms:

… Upaid submits that “charging the [user’s Telstra] account” according to the payment rule takes place because Telstra debits the user’s Telstra account upon the acquisition of the relevant product. Upaid submits that “settling charges to the account” takes place because, after the debit is made, the user no longer has an outstanding obligation to pay Telstra for the purchase of that product and “the charges to the user’s account are thereby settled”. Upaid submits that the fact that the obligation has been satisfied is recorded in the user’s Telstra account.

In this connection, Upaid points to the fact that when the product is purchased, the service summary for the pre-paid plan shows the new credit balance, and the user’s usage history, separately accessed, shows the purchase price that has been debited to the pre-paid account. Upaid argues that this shows that “the balance of the account is depleted as a result of the charging” and that “the depletion is attributed to the fact that the charge for [the product] has been settled to the user’s account”. Upaid also points to the fact that Telstra treats the amount of the transaction as part of its revenue and records the transaction on its general ledger.

38    His Honour concluded that there were not two steps of “charging” and “settling”, but only one step. At [261] to [263], his Honour said:

This alleged type of infringement is not tenable.

First, with regard to the purchase of a product using the user’s pre-paid Telstra account, Upaid has abandoned the case it has particularised concerning the “settling” step. It is implicit in this abandonment that Upaid accepts that its particularised case in this regard is not tenable. The different case it has advanced in submissions cannot be maintained because that case simply does not distinguish between the “charging” step and the “settling” step. Indeed, as a matter of substance, this alleged type of infringement treats the separate and discrete “charging” and “settling” steps as one and the same. In para 1.20 of the particulars, Telstra has particularised the “charging” step as debiting the user’s Telstra account and/or decrementing the account. This application of the payment rule is reflected in Upaid’s submission that, by making the debit to the user’s Telstra account (the “charging” step), the charge to the user’s Telstra account has “thereby” been settled. There is no “settling” step that is distinct and separate from the “charging” step. Absent separate “charging” and “settling” steps, there can be no infringement of the claimed method. Therefore, this case on infringement, as advanced in submissions, is not tenable.

Upaid’s argument is not assisted by its reliance on the user’s service summary and usage history which, together, show a charge and balance on the pre-paid account. This does not manifest “charging” the account according to a payment rule and “settling charges to the account” by a separate settlement rule. Indeed, Upaid’s argument is circular: the balance of the account is depleted as a result of the charging and the depletion is attributed to the fact of charging. Once again, this is nothing more than an application of the “charging” step as particularised.

39    His Honour then concluded at [483] to [486]:

With regard to the Type 1 infringement, I have found that Upaid’s particularised case:

•    is not, in a number of fundamental respects, the case that Upaid has advanced in submissions: Objections 1-6;

•    is, in certain respects, unclear: Objection 1;

•    is, in certain respects, deficient in terms of the particulars that have been given: Objection 2; and

•    is not tenable as an infringement of claim 1: Objections 3-6.

I have also found that the case that Upaid has advanced in submissions (effectively in substitution for its particularised case) is not tenable as an infringement of claim 1, substantially on the basis of Objection 4 and the consequences that my findings in relation to that objection have for the other objections that have been made concerning the “charging” and “settling” steps.

With regard to the Type 2 infringement, I have found that Upaid’s particularised case:

•    is not, in a number of fundamental respects, the case that Upaid has advanced in submissions: Objections 1-6;

•    is, in certain respects, unclear: Objection 1;

•    is, in certain respects, deficient in terms of the particulars that have been given: Objection 2; and

•    is not tenable as an infringement of claim 1: Objections 3-6.

I have also found that the case that Upaid has advanced in submissions (effectively in substitution for its particularised case) is not tenable as an infringement of claim 1, substantially on the basis of Objection 4 and the consequences that my findings in relation to that objection have for other objections that have been made concerning the “charging” and “settling” steps.

40    On the question of summary dismissal, his Honour said at [515] and [516]:

My conclusions in respect of Upaid’s particularised case regarding infringement of claim 1 of the 853 patent, as summarised at [483]-[489] above, lead me to further conclude that the particulars in para 1 (and all related subparagraphs) should be struck out. Although I have indicated that, in some respects, certain defects and deficiencies in the particulars might be overcome by further amendment, there are fundamental aspects of the particularised case for each alleged type of infringement which render Upaid’s case untenable as an infringement of claim 1 of the 853 patent. I am satisfied that Upaid has no reasonable prospect of successfully prosecuting its particularised case concerning the infringement of claim 1 of the 853 patent. Further, where, in submissions, Upaid has advanced what is, in reality, a substitute case for its particularised case, I am satisfied, for the reasons I have given, that Upaid has no reasonable prospect of successfully prosecuting that alternative case.

I conclude, therefore, that Upaid’s case for infringement of claim 1 of the 853 patent should also be dismissed under s 31A of the Act and r 26.01 of the Rules.

Leave to appeal

41    The relevant two-pronged test for the grant of leave to appeal is not in doubt. We need only discuss the first limb, namely, whether the primary judge’s decision is attended with sufficient doubt as to its correctness such as to warrant its reconsideration. As to the second limb, it is not in doubt that in relation to the summary dismissal determination, substantial injustice is likely to result if leave to appeal were to be refused, supposing the primary judge’s decision to be wrong.

42    Given that the leave application and the appeal, if leave be granted, have been heard together with the appeal to be determined instanter, it is convenient to proceed directly to discuss the asserted errors said to have been made by the primary judge on the summary determination question. It is unnecessary to separately discuss in detail whether his Honour made any error in striking out relevant aspects of the consolidated particulars of infringement. We would refuse leave to appeal on that question. We say this because no significant prejudice flows to Upaid by leaving the strike out order in place. If we set aside his Honour’s summary determination, then undoubtedly a further opportunity should be given to Upaid to further particularise its infringement case in respect of claim 1 of the 853 patent. On such a premise, we would grant leave accordingly with the scope to be determined by the primary judge. Alternatively, if we were not to set aside his Honour’s summary determination, then the question of further particularisation of the infringement case in respect of claim 1 of the 853 patent becomes irrelevant. Finally, we also note that in any event Upaid abandoned major aspects of its then particularised case before the trial judge. Accordingly, it is difficult to identify any error in striking out the relevant particulars.

43    It is appropriate then to discuss the summary determination question.

Summary determination

Relevant principles

44    The primary judge made an order for summary dismissal invoking s 31A of the Federal Court of Australia Act 1976 (Cth) and r 26.01 of the Federal Court Rules 2011. It is not necessary to separately discuss r 26.01. Subsections 31A(2) and 31A(3) provide as follows:

Summary judgment

(1)    […]

(2)    The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:

(a)    the first party is defending the proceeding or that part of the proceeding; and

(b)    the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.

(3)    For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:

(a)    hopeless; or

(b)    bound to fail;

for it to have no reasonable prospect of success.

[…]

45    His Honour discussed the parties’ submissions concerning the question of “reasonable prospect of success” and his own conclusions at [496] to [516]. The relevant principles were not in doubt. A number of propositions may be stated.

46    First, a proceeding or claim need not be “hopeless” or “bound to fail” for it to have no reasonable prospect of success (s 31A(3)).

47    Second, s 31A(2) may justify summary dismissal where, inter alia, there is unanswerable or unanswered evidence of a fact fatal to the pleaded case or any permissible modification (Spencer v Commonwealth of Australia (2010) 241 CLR 118 at [22] per French CJ and Gummow J).

48    Third, the exercise of power under s 31A(2) should be used with caution, particularly where complex questions of fact or law are involved. The present case concerns questions of construction of claim 1 of the 853 patent which are legal questions although to some extent informed by factual considerations.

49    Fourth, as was said in Spencer at [59] per Hayne, Crennan, Kiefel and Bell JJ:

In many cases where a plaintiff has no reasonable prospect of prosecuting a proceeding, the proceeding could be described (with or without the addition of intensifying epithets like “clearly”, “manifestly” or “obviously”) as “frivolous”, “untenable”, “groundless” or “faulty”. But none of those expressions (alone or in combination) should be understood as providing a sufficient chart of the metes and bounds of the power given by s 31A. Nor can the content of the word “reasonable”, in the phrase “no reasonable prospect”, be sufficiently, let alone completely, illuminated by drawing some contrast with what would be a “frivolous”, “untenable”, “groundless” or “faulty” claim.

50    Fifth, the fact that one is dealing with a patent infringement claim does not make it immune from a summary dismissal order. But where the technology is complex or the Court is not able to confidently construe the relevant claim, then summary determination may not be appropriate.

51    In Virgin Atlantic Airways Ltd v Delta Air Lines Inc [2011] RPC 18; [2011] EWCA Civ 162 at [13] and [14], Jacob LJ observed:

… Whilst the general rules as to summary judgment apply equally to patent cases as to other types of case, there can be difficulties, particularly in cases where the technology is complex. If it is, the court may not be able, on a summary application, to form a confident view about the claim or its construction, particularly about the understanding of the skilled man. On the other hand in a case such as the present, where the technology is relatively simple to understand, there is really no good reason why summary procedure cannot be invoked. No one should assume that summary judgment is not for patent disputes. It all depends on the nature of the dispute.

That can cut both ways, of course. If the court is able to grasp the case well enough to resolve the point, then it can and should do so – whether in favour of the patentee or the alleged infringer.

52    These observations were approved of by Floyd LJ in Nampak Plastics Europe Ltd v Alpla UK Ltd [2015] FSR 11; [2014] EWCA Civ 1293 at [7], who also made the following further observations at [9] to [11]:

It is clear that the fact that a dispute involves the resolution of an issue of construction of a patent does not automatically render it unsuitable for summary judgment. However it is necessary to proceed with caution given that the court is not being called upon, when construing a patent, to decide what the words of the patent mean to it, but what they would have been understood to mean by the person skilled in the art: see per Lord Hoffmann in Kirin-Amgen Inc v Hoechst Marion Roussel Ltd [2004] UKHL 46; [2005] RPC 169 at [32]-[33]. Such an exercise is dependent upon the identity of the person skilled in the art and the knowledge and assumptions which one attributes to him or her.

That said, it remains the law that expert evidence is not admitted as to the meaning of ordinary English words which have no special or technical meaning in the art. Once equipped with evidence as to the knowledge and assumptions of the person skilled in the art, the determination of the meaning which the words used in a patent claim would convey to one skilled in the art is for the court.

It follows from what I have said that, on a summary judgment application such as this, it is necessary for a party who claims that the court is inadequately equipped to decide an issue of construction to identify, perhaps in only quite general terms, the nature of the evidence of the common general knowledge which he proposes to adduce, and to be in a position to explain why that evidence might reasonably be expected to have an impact on the issue of construction. If that party is not able to do so, it is open to the court to conclude that he is simply hoping that “something may turn up” and that his defence does not have the necessary “reality” to avoid summary judgment under Pt 24.

53    Generally speaking, we agree with these observations. Indeed, we would also note that the UK test of “no real prospect” of success is more stringent than the s 31A test (see Spencer at [51]) which refers to “no reasonable prospect”, thereby perhaps permitting greater ambit for summary dismissal under s 31A(2) of a patent infringement claim than under the UK analogue.

54    In the case before the primary judge, the technology was not complex. Moreover, as his Honour indicated, although construction was to proceed through the eyes of the skilled addressee, no common general knowledge was being put forward or relied upon by either party as informing the question of what was meant by ordinary English words in their context.

55    Now true it is that Upaid put before his Honour expert evidence from Dr Robert Nicholls, an engineer specialising in communications technologies, on various questions of construction including the integer of “settling charges to the account” in claim 1 of the 853 patent. But his Honour did not find this of assistance. He said at [211] and [212]:

The second matter is that Upaid’s case advanced in submissions rests on certain views expressed by Dr Nicholls concerning the construction of claim 1 of the 853 patent, particularly in relation to the integer of “settling charges to the account”. Dr Nicholls advanced the view that “settling charges to the account” describes how an end user will meet the liability to pay for the provision of services, but does not require any actual transfer of funds. Dr Nicholls argued that once an end user has selected a payment method from the available alternatives offered by the service provider, the user will have discharged his or her obligation to pay for the services and the charges are “settled as between the end user and the service provider”. Dr Nicholls said that a record of this is reflected in the customer’s account. Dr Nicholls also argued that the integer of “settling charges to the account” has a “clear meaning when read in the context of [the 853 patent] as a whole”. However, Dr Nicholls did not identify any specific text or other description to support his point of view.

The construction of the complete specification and relevant claims is a question for the Court. Although the Court must construe the complete specification and claims as the person skilled in the art would understand them, there is nothing to suggest that the integer of “settling charges to the account” has a technical meaning or that the person skilled in the art would endow them with any special meaning beyond their ordinary signification. Dr Nicholls’ evidence on this matter stands as no more than his own proffered construction of the integer, which Upaid now seeks to use argumentatively.

56    Generally, no criticism can be made of the primary judge for embarking upon the question of summary determination and the principles that he applied, although perhaps the utility of ordering summary dismissal of only a limited part of the principal proceeding may be open to debate. His Honour only ordered summary dismissal of one claim of one of the two patents in suit, leaving the other claims to go to trial.

57    We would deal with one other matter at this point. From time to time in the primary judge’s reasons when dealing with the summary dismissal question, his Honour used language more apposite to the question of striking out. But this is understandable given that his Honour was construing relevant integers of claim 1 and expert evidence on such questions was of little assistance as his Honour said. The language of “not tenable” or “untenable” should be seen in that light. Correspondingly, it may be said that if Upaid’s construction of the relevant integers (as applied to the uncontested factual matrix relating to the products/services and how they were paid for) is reasonably arguable on the face of the specification (given that on this premise expert evidence is of little assistance), then it may not be appropriate to say that the relevant claims of Upaid have no reasonable prospect of success.

Proposed grounds of appeal

58    The grounds of appeal that Upaid has propounded if leave is granted are the following:

(a)    First, it was said that his Honour was in error in finding that it was untenable for Upaid to allege and claim that both the “charging” and “settling” integers of claim 1 of the 853 patent were present in the context of a pre-paid service plan which was used to facilitate the supply and payment of MOG.

(b)    Second, it was said that his Honour was in error in finding that it was untenable for Upaid to allege and claim that the “settling” integer of claim 1 of the 853 patent was present in the context of a post-paid service plan which was used to facilitate the supply and payment of MOG.

59    We have put to one side other propounded grounds of appeal, including his Honour’s extrapolation from the MOG product to products more generally, for the reasons set out at [21], [27] and [42] above.

60    It is appropriate to discuss the above two grounds in turn.

Pre-paid service plan and MOG

61    We have set out earlier (at [34]) his Honour’s construction of “charging” when used in the integer “charging the account” (reasons at [213]) and “settling” when used in the integer “settling charges to the account” (reasons at [214]). For present purposes, we are content to adopt his Honour’s construction. His Honour also held that the “charging” and “settling” steps were required by claim 1 to be “distinct and separate steps” using “discrete rules” (reasons at [218], [220], [248], [262], [263] and [301]). We are also content to proceed on this basis, subject to clarification of what is meant by “distinct” and “separate”. Distinctiveness or separation may have physical, functional or transactional dimensions.

62    Upaid’s argument as put to his Honour was the following:

(a)    When a Telstra customer purchases a MOG subscription using their pre-paid account, an internal system known as “Apollo” records the charge as a debit on the customer’s account with the account balance reduced accordingly.

(b)    When dealing with a pre-paid account, by definition one has a credit balance. So, the debit for the MOG subscription is made against this credit balance. Upaid contends that the proper contractual analysis is that the parties have agreed that the credit available may be used for the different purpose of paying the MOG charge. It is said that the charging of the account is the recording by Telstra of the MOG fee as a debit in the customer’s account.

(c)    It is then said that the settling of this charge is the use of the pre-paid credit by the reduction in the balance of the customer’s pre-paid credit by the MOG charge.

(d)    Accordingly, on Upaid’s case on this transactional analysis there are two steps, with the “settling” step proceeding almost immediately after the “charging” step or the debiting of the pre-paid account. Upaid accepts that there are not two physically separate steps.

63    In his Honour’s reasons at [262] and [263], which we have set out above at [38], he considered such a case to be untenable on the basis that this analysis did not distinguish between the “charging” step and the “settling” step.

64    We have taken a different view to his Honour and would observe the following.

65    First, it is now accepted by Telstra that this transactional approach was put by Upaid to his Honour, albeit not then the subject of the consolidated particulars of infringement.

66    Second, albeit that there are no physically separate steps, we do not see why it cannot be argued with reasonable prospects of success (based on the proper construction of the integers of claim 1) that there are notionally two separate steps. One is a debit entry (the “charging”) and the other is a reduction in the credit balance (the “settling”), albeit that one proceeds arithmetically and almost instantaneously after the other. On any view, the debit must precede the reduction in the credit balance.

67    Third, an interesting debate took place before us concerning the characterisation of a debit entry on the pre-paid account. Did it reflect or constitute an underlying debt? And owed to Telstra? Could it be an expense but not a debt? Could it be a “charge” even though it was not a debt or an expense? Telstra contended before us that there was no debt (constituted by the debit entry) and accordingly that there could be no settling.

68    None of these matters were expressly addressed by his Honour in his reasons. For our part, we cannot say that Upaid’s contention that the debit reflected or constituted a debt had no reasonable prospects of success. But even if it was not a debt, it is still arguable that the debit is a charge against the pre-paid account and that the reduction in the credit balance constitutes a settlement of that charge. It is inappropriate to comment further given that we consider these matters to be triable issues.

69    In our opinion, it cannot be said that the way Upaid puts its case on this aspect has no reasonable prospects of success. But we would say, in fairness to the primary judge, that the arguments put before us on this aspect appear to have been more developed and focused than those put to his Honour.

70    Our conclusion is sufficient to set aside his Honour’s summary dismissal order in relation to claim 1 of the 853 patent. The question then arises as to whether we should substitute a modified and narrower summary dismissal order dealing with a narrower category of types of infringement. The issue that we have just discussed only deals with the Type 2 infringement and Type 6 infringement that we have referred to earlier (see at [20] above). We have yet to discuss the Type 1 infringement and the Type 5 infringement dealing with the post-paid service plans. Moreover, as we have said earlier, Upaid has abandoned its challenge concerning the Type 3 infringement and the Type 4 infringement findings made by his Honour relevant to the question of summary dismissal. We will put this question to one side for the moment and discuss the post-paid service plan (with MOG) and Types 1 and 5 infringements first.

Post-paid service plan and MOG

71    His Honour at [217] to [220], which we have set out above at [35], found against Upaid on this aspect by finding that its submission that there was a “settling” to be nonsensical.

72    Upaid submitted to us that his Honour’s robust conclusion was in error. It developed its submissions as follows.

73    Upaid pointed to the fact that Telstra’s post-paid customers enter into plans whereby the customer is billed periodically (typically, monthly) for products and services used by the customer in the preceding month. When a Telstra customer elects to use a post-paid account to purchase a MOG subscription, the $11.99 subscription fee is recorded as a debit against the customer’s account. But unlike a pre-paid account, the account balance is increased. For example, if the customer is on a plan with a $55 minimum monthly spend, the balance of the post-paid account is increased to $66.99.

74    Upaid contends that it is at least reasonably arguable that this process involves the steps of “charging the account” and “settling charges to the account”, as stipulated in the integers of claim 1 of the 853 patent. First, the customer’s Telstra account has been charged $11.99 by the entry of the debit record. So much may be accepted as at least reasonably arguable (see our earlier discussion concerning the pre-paid service plan). Second, Upaid goes on to assert that the $11.99 debt is settled by Telstra increasing the balance of the post-paid account in that amount. Upaid contends that the increase in the balance of the post-paid account represents a “settlement” as claimed, because an otherwise payable debt (the $11.99 MOG charge) is “satisfied” by credit that Telstra has extended to the customer by increasing his or her post-paid account balance. One may be forgiven for finding this to be a little counter-intuitive at first.

75    Upaid goes on to more ambitiously assert that in banking transactions, it is well understood that charges may be settled in an analogous way, and there is no reason for finding that the claim words “settling the charges” are incapable of being construed to cover settlements of this nature at trial. Upaid says that an example of this is a bank agreeing to increase a customer’s overdraft account by an amount which is equivalent to the amount that is immediately payable to the bank to satisfy an existing fixed term loan. The other debt is settled by the bank extending the overdraft account. Upaid also submits that vendor finance in real property transactions is another example where the vendor and purchaser settle the sale of the property and the vendor agrees to part of the purchase price standing as a loan repayable on terms which obviously post-date the settlement. For additional effect, Upaid cites the Oxford Dictionary of Finance and Banking (5th edition) which defines a “quasi-loan” as “an arrangement between two parties in which one party agrees to settle a financial obligation of the other party on condition that a reimbursement will follow”. In the present case, so Upaid asserts, on the example set out above, the standard monthly spend debt ($55) is extended by an amount ($11.99) which is equivalent to an amount otherwise payable to Telstra to satisfy another debt, namely, payment for the MOG subscription. It is said that the debt for payment of the MOG subscription is settled by the extension of the customer’s credit for a period of a month(s) depending on the post-paid payment terms.

76    For our part, we have significant reservations with Upaid’s contentions.

77    First, it seems to us that the true analysis is that there is a charge with a later settling when a customer pays his or her monthly bill (for present purposes that later settling is irrelevant to the claim 1 integer).

78    Second, in the present case there is no substitution of one debt for another. One debt is not being discharged by the incurring of another. The banking example and the vendor finance example given by Upaid are not relevant analogues. In the present case, it is the same debt with credit extended for the payment thereof. To extend the payment term and thereby give credit would not usually be said to be a “settling” or a “settlement”.

79    We doubt whether his Honour was in error on this aspect of the case, but we do not propose to substitute a modified form of summary dismissal order concerning this Type 1 infringement and Type 5 infringement (or indeed the Type 3 infringement and Type 4 infringement).

80    Given that significant aspects of the infringement case on claim 1 of the 853 patent will have to go to trial in any event given our view concerning the Type 2 infringement and Type 6 infringement on the pre-paid plans, there seems little utility in substituting a narrower summary dismissal order. Perhaps there might be a modest reduction in the evidence with any substitute and narrower order, but that is all. But more significant is the fact that his Honour will need to consider claim 1 of the 853 patent and its construction in any event. It would be quite unsatisfactory if his Honour’s final views on such construction questions were later found to be inconsistent with the foundation that might now support a summary dismissal order on the narrower basis concerning Types 1, 3, 4 and 5 infringements. Exercising the s 31A(2) discretion for ourselves, we do not consider it appropriate to substitute a narrower form of summary dismissal order.

CONCLUSION

81    For the foregoing reasons, we will grant leave to appeal and set aside the summary dismissal order. New particulars will now need to be filed and served by Upaid, but we will leave it to the primary judge to determine the scope of the opportunity to be afforded to Upaid.

82    On the question of the costs of the application for leave to appeal and the appeal, each party has had a measure of success. We consider that the appropriate order is that the parties’ costs before us should be treated as their costs in the cause of the principal proceeding. We will make orders accordingly, but either party will be able to seek a variation to such a costs order if they so choose.

Associate:

Dated:    22 November 2016