FEDERAL COURT OF AUSTRALIA

 

The Australian Steel Company (Operations) Pty Ltd v Steel Foundations Ltd & Anor [2003] FCA 374

Practice and procedure – application for summary judgment – arguable defence – whether partial failure to depose to belief that no defence to the claim

 

Practice and procedure –application for the transfer of proceedings to the Queensland District Registry – whether transfer appropriate in the circumstances of the case

INTELLECTUAL PROPERTY – claimthat threats of infringement proceedings unjustifiable – cross-claim for infringement and breach of a distribution agreement on foot

Trade Marks Act 1995 (Cth), ss 120, 129, 130

Patents Act 1990 (Cth), ss 128, 130

Designs Act 1906 (Cth),ss 32C, 32D, 32E

Federal Court of Australia Act 1976 (Cth), s 48

Federal Court Rules 1979(Cth),O 1, r 4; O 10, r 1; O 20 r 1

Harry Smith Car Sales Pty Ltd v Claycom Vegetable Supply Co Pty Ltd (1978) 29 ACTR 21 referred

Long Leys Co Pty Ltd v Silkdale(1991) 5 BPR 11,512 referred

Muntz v Elkington (1891) 17 VLR 23 referred

Fancourt v Mercantile Credits Limited (1983) 154 CLR 87 applied

Webster v Lampard (1993) 177 CLR 598 applied

Express Newspapers plc v News (UK) Ltd [1990] 3 All ER 376 referred

Geoffrey Inc v Luik (1997) 38 IPR 555 referred

Sydney Cellulose Pty Ltd v Ceil Comfort Home Insulation Pty Ltd (2001) 53 IPR 379 applied

Catnic Components Ltd v Hill & Smith Ltd [1982] RPC 183 referred

Shell Company of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407 referred

Irving’s Yeast-Vite Ltd v Horsenail (1934) 51 RPC 110 referred

Johnson & Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326 referred

Bhogal v Punjab National Bank [1988] 2 All ER 296 referred

Cycles & Wheelman Pty Ltd v Beltech Corporation Ltd (1988) 80 ALR 279 referred

National Mutual Holdings Pty Ltd v The Sentry Corporation (1988) 19 FCR 155 applied

Lean v Tumut River Orchard Management Ltd [2003] FCA 269 referred

WG & B Manufacturing Pty Ltd v Telsa Farad Pty Ltd [1999] FCA 859 referred

The Australian Steel Company (Operations) Pty Ltd v Steel Foundations Limited & Anor

V 506 OF 2002

 

KENNY J

29 APRIL 2003

MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 506 OF 2002

 

BETWEEN:	THE AUSTRALIAN STEEL COMPANY (OPERATIONS) PTY LTD ACN 064 933 955 Applicant
AND:	STEEL FOUNDATIONS LIMITED ACN 064 933 599 First Respondent   STEEL FOUNDATIONS CONTRACTING PTY LTD ACN 069 670 417 Second Respondent
JUDGE:	KENNY J
DATE OF ORDER:	29 APRIL 2003
WHERE MADE:	MELBOURNE

 

THE COURT ORDERS THAT:

 

1.        The motion, notice of which is dated 3 October 2002, be dismissed.

2.        The respondents have leave to amend their cross-claim dated 4 October 2002 in accordance with par 72 of the reasons for interlocutory judgment delivered 29 April 2003.

3.        Proceeding V506 of 2002 be transferred to the Queensland District Registry of the Federal Court of Australia.

4.        The costs of the motion, notice of which is dated 3 October 2002, and of the motion, notice of which is dated 18 September 2002, be the parties’ costs in the cause.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 506 OF 2002

 

BETWEEN:	THE AUSTRALIAN STEEL COMPANY (OPERATIONS) PTY LTD ACN 064 933 955 Applicant
AND:	STEEL FOUNDATIONS LIMITED ACN 064 933 599 First Respondent   STEEL FOUNDATIONS CONTRACTING PTY LTD ACN 069 670 417 Second Respondent

 

JUDGE:	KENNY J
DATE:	29 APRIL 2003
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

the applications

1                     By an application dated 5 August 2002 and an amended statement of claim dated 11 September 2002, the applicant, The Australian Steel Company (Operations) Pty Ltd (“TASCO”), seeks declarations, pursuant to s 129 of the Trade Marks Act 1995 (Cth), s 128 of the Patents Act 1990 (Cth) and s 32C of the Designs Act 1906 (Cth), that the threats made by the respondents to commence infringement proceedings against it are unjustifiable (or groundless).

2                     There are two applications that must now be determined. First, upon a notice of motion dated 18 September 2002, the respondents, Steel Foundations Limited (“SFL”) and Steel Foundations Contracting Pty Ltd (“SFC”), seek the transfer of the proceedings to the Queensland District Registry of this Court (“the respondents’ motion”). Secondly, upon a notice of motion dated 3 October 2002, TASCO seeks summary judgment in its favour pursuant to O 20 r 1 of the Federal Court Rules (“the Rules”) (“TASCO’s motion”). An application for judgment in default of defence was not pursued at the hearing.

background

3                     TASCO is part of the Smorgon Steel Group (“the Group”) and operates the “Reinforcing and Steel Products Division” (“the Division”) of the Group, including a trading business called “Smorgon Reinforcing”. This business has two brands, namely, “Smorgon ARC” and “Welded Mesh”.

4                     According to an affidavit sworn on 18 September 2002 by Warren Peter Brockwell, managing director and secretary of SFL, SFL is involved in the business of developing and supplying screw piling technology for the domestic, commercial and civil construction industries. Screw piling (also called screw piering) is a method of using steel foundations to support structures built above the ground. SFC, a wholly-owned subsidiary of SFL, is mainly in the business of installing and supplying products manufactured by SFL. Mr Brockwell is also the secretary of SFC.

5                     It is common ground that, on 15 September 1999, TASCO, SFL and SFC entered into an agreement (“the distribution agreement”) in relation to the supply and distribution of a residential housing foundation system. The system involved the use of screw piers, and was known as the Slabmaster system. It is also common ground that the parties agreed to terminate the distribution agreement with effect from 1 August 2002, although they are in dispute about the consequences of this agreed termination.

6                     In an affidavit affirmed on 1 October 2002 (on behalf of TASCO), James Patrick Gerstkamp, who was National Product Manager for Smorgon Reinforcing, said that “[p]ursuant to the [d]istribution [a]greement, [TASCO] was responsible for all sales, marketing and distribution of the Slabmaster system, while SFL provided training, manufacturing, installation and engineering services”. In an affidavit sworn on 10 October 2002, however, Kym Anthony Plotkin, a director of SFL and SFC and, since 1 July 2001, Marketing and Business Development Manager for SFL, disputed the accuracy of this description of the parties’ respective roles. For present purposes, it is sufficient to note the disagreement, without attempting to resolve it.

7                     In a cross-claim dated 4 October 2002, SFL and SFC themselves seek injunctions, an account of profits or damages for patent, design and trade mark infringements and other relief against TASCO and another company, Evolution Professional Engineers Pty Ltd (“EPE”). According to the second affidavit of Mr Gerstkamp (affirmed on 4 October 2002):

[TASCO] has entered into an agreement with [EPE] whereby [EPE] will develop, manufacture and install [TASCO’s] new slab foundation system which involves the use of screw piers and steel reinforcement sheets … and [TASCO] will promote and distribute it.

TASCO has referred to this slab foundation system as the Smorgon Slab System.

8                     In his earlier affidavit of 1 October 2002, Mr Gerstkamp said that EPE was manufacturing screw piers for the Smorgon Slab System at premises in Queensland, whilst the steel reinforcing sheets were being manufactured at TASCO’s facility at Sunshine in Victoria. According to Mr Brockwell, a director of EPE (by the name of Paul Camilleri) had been an employee of SFL until 3 July 2001, when he was “sacked … on the grounds of dishonesty”.

9                     By a letter dated 24 June 2002, the legal representatives of SFL and SFC wrote to TASCO’s general manager in Queensland, alleging that TASCO’s entry into this arrangement with EPE for the manufacture and supply of “similar products to the screw piers and Slabmaster system” was “in breach of [its] obligations … under the [d]istribution [a]greement and at law”. The letter referred to “patents, trademarks, and designs for [their] products”. They addressed two subsequent letters dated 27 June 2002 and 30 July 2002 to TASCO’s lawyers in Melbourne, as TASCO had requested. The threats that initiated the proceedings are allegedly contained in these letters.

the pleadings

10                  As already noted, in addition to purely formal matters, SFL and SFC admit the making of the distribution agreement and some pertinent terms, two variations of the termination date of the agreement (31 July 2002 and 18 July 2002), TASCO’s marketing and manufacture of the Smorgon Slab System, and the contents of the three letters referred to above. By their defence and cross-claim, SFL and SFC allege, however, that TASCO is in breach of cl 14.1 (no use of the intellectual property of SFL and SFC) and cl 7.6 (maintenance of confidentiality) of the distribution agreement, which, so they say, give rise to continuing obligations. It is also alleged that TASCO and/or EPE infringed:

(1)     SFL’s Slabmaster Patent “in circumstances where the Smorgon Slab System was and continues to be constructed in accordance with the essential integers of the invention described in the complete specifications of the Slabmaster Patent and claimed in the claiming clauses thereof”;

(2)     SFL’s monopoly in Designs 123789, 125519 (as corrected by Mr Plotkin’s affidavit of 10 October 2002), 139118, 140419, 140377 and 141231 (“the Designs”), by “EPE applying the Designs, or an obvious imitation thereof, to screw piles developed, manufactured or installed by [EPE] as part of the Smorgon Slab System; and “TASCO selling or offering for sale as part of the Smorgon Slab System, screw pile products to which designs not substantially different from the Designs had been applied”;

(3)     SFL’s Slabmaster Trademark, by TASCO’s use of the word “Slabmaster” on its website; and

(4)     SFL’s copyright in the Works comprising plans, diagrams, drawings and tables relating to the invention the subject of the Slabmaster Patent, the Slabmaster Trademark and the Designs, by TASCO and/or EPE causing substantial portions of the Technical Standard and Slabmaster Drawings to be reproduced without SFL’s consent.

It is on these bases that SFL and SFC have cross-claimed against TASCO and EPE.

tasco’s motion

11                  I deal first with TASCO’s motion. TASCO has moved for orders under O 20, r 1 of the Rules. Order 20, rule 1 of the Rules provides:

(1)      Where, in relation to the whole or any part of the applicant’s claim for relief, there is evidence of the facts on which the claim or part is based, and:

(a) there is evidence given by the applicant or by some responsible person that, in the belief of the person giving the evidence, the respondent has no defence to the claim or part; or

(b) the respondent’s defence discloses no answer to the applicant’s claim or part;

(c)

[repealed]

 

the applicant may move on notice for such judgment for the applicant on that claim or part and the Court may pronounce such judgment and make such orders as the nature of the case requires.

(2)      Where the Court pronounces judgment against a party under this rule, and that party claims relief against the party obtaining the judgment, the Court may stay execution on, or other enforcement of, the judgment until the determination of the claim by the party against whom the judgment is directed to be entered.

(3)      The Court in any application under this rule may give such directions, whether for amendment of the pleadings or otherwise, as may be thought fit.

A. Evidence of the facts on which TASCO’s claims for relief are based

12                  Is there evidence of the facts on which TASCO’s claims for relief are based? No order can be made in the absence of this evidence. As already noted, TASCO’s claims depend on s 129 of the Trade Marks Act 1995 (Cth), s 128 of the Patents Act 1990 (Cth) and s 32C of the Designs Act 1906 (Cth).

13                  Section 128 of the Patents Act 1990 is concerned with “unjustifiable threats” of proceeding for infringement of a patent. Subsection 128(1) provides:

Where a person, by means of circulars, advertisements or otherwise, threatens a person with infringement proceedings, or other similar proceedings, a person aggrieved may apply to a prescribed court, or to another court having jurisdiction to hear and determine the application, for:

(a) a declaration that the threats are unjustifiable; and

(b) an injunction against the continuance of the threats; and

(c) the recovery of any damages sustained by the applicant as a result of the threats.

By virtue of s 129 of the Patents Act 1990, if a s 128 application relates to threats in respect of a standard patent (as in this case), the court may grant the applicant the relief sought unless the respondent satisfies the court that the acts about which the threats were made infringed, or would infringe “a claim that is not shown by the applicant to be invalid”. Further, s 130 specifically provides that:

(1) The respondent in proceedings under section 128 may apply, by way of counter-claim, for relief to which the respondent would be entitled in separate proceedings for an infringement by the applicant of the patent to which the threats relate.

(2)      … .

(3)      The provisions of this Act relating to infringement proceedings apply, with the necessary changes, to a counter-claim.

(4) … .

14                  Section 32C of the Designs Act 1906 concerns unjustifiable threats of an action or proceeding for the infringement of the monopoly in a registered design. This provision is relevantly the same as s 128 of the Patents Act 1990. Section 32D provides that the court may grant the application under s 32C unless the respondent satisfies the court that the relevant design is registered and the acts about which the threats were made infringed, or would infringe, the monopoly in the design. Section 32E is in similar terms to s 130 of the Patents Act 1990.

15                  The terms of s 129 of the Trade Marks Act 1995 differ from s 128 of the Patents Act 1990 and s 32C of the Designs Act 1906, although not in any way that is presently material. Section 129 provides that a person aggrieved by another’s threat to bring an action on the ground of infringement of a registered mark may bring an action against the person making the threat, in order to obtain a declaration (that the defendant has no grounds for making the threat), injunctive relief, and damages. Subsection 129(4) specifically provides that the court may not find in favour of the plaintiff if the defendant satisfies the court that the mark is registered, and the impugned acts (the subject of the threat) constitute an infringement of the mark. In addition, subs 129(5) states that:

An action may not be brought, or (if brought) may not proceed, under this section if the registered owner of the trade mark, or an authorised user of the trade mark having power to bring an action for infringement of the trade mark, with due diligence, begins and pursues an action against the threatened person for infringement of the trade mark.

Section 130 of the Trade Marks Act 1995 further provides that:

If the defendant in an action under section 129 would be entitled to bring against the plaintiff an action for infringement of the registered trade mark (infringement action):

(a)               the defendant may file in the court a counterclaim against the plaintiff for any relief to which the defendant would be entitled in the infringement action; and

(b)               the provisions of this Act applicable to infringement actions apply in relation to the counterclaim as if it were an infringement action brought by the defendant against the plaintiff.

16                  It will be apparent from the foregoing outline of these legislative provisions that a person in TASCO’s position must first establish the making of threats to institute the relevant infringement proceedings before any entitlement to the relief referred to in the provisions can arise. As already noted, these threats, as pleaded in par 11 of the amended statement of claim, were said to be contained in the respondents’ solicitors’ letters of 24 June 2002, 27 June 2002 and 30 July 2002 (discussed above). These letters were exhibited as “JPG9” to Mr Gerstkamp’s first affidavit affirmed on 1 October 2002.

17                  On the hearing of TASCO’s motion, counsel for the respondents submitted that, having regard to the terms of the letter of 30 July 2002, there was no threat for the purposes of the relevant legislation. There is some force in this submission. The 30 July 2002 letter sought delivery up of certain items pursuant to cl 7.6 of the distribution agreement and, pursuant to cl 7.8, confirmation that no “improper or wrongful use or infringement of [the respondents’] intellectual property rights have come to the attention of TASCO’s senior management”. The letter also sought “a list of improvements (if any) and the intellectual property said to have been brought into existence by TASCO in that regard” which, so the letter said, would assist the respondents in deciding “whether to exercise their option to purchase any intellectual property rights of TASCO relating to improvements in the Slabmaster system”. In answer to TASCO’s claim that it was “entitled to sell a system the same or similar to the system [the respondents] presently own”, the letter simply drew TASCO’s attention “to a patent they hold over the Slabmaster system”, noting that “[a]ny suggestion that [TASCO] is entitled to replicate that system merely because it has become public knowledge would … not be maintainable”. There is no reference to the institution of infringement proceedings in this letter. Read on its own, the letter contains no threat.

18                  The letter of 24 June 2002 did, however, specifically threaten litigation. After referring to cl 14 of the distribution agreement and TASCO’s alleged arrangement with Paul Camilleri of EPE, the 24 June 2002 letter claimed that “[s]uch conduct is clearly unlawful and in breach of your obligations to [the respondents] under the [d]istribution [a]greement and at law”: see also [9] above. The letter affirmed that the respondents’ “products and systems are protected by registered patents, designs and trademarks, and any attempt by your company and/or Camilleri to copy those products, designs or systems in the manufacture and installation of any competing product, will constitute infringement of [the respondents’] intellectual property”. The letter concluded that the respondents would apply to the court for relief unless they received a satisfactory answer. The 27 June 2002 letter augmented the claims that had been made three days before. If the three letters are read as a whole, then the basis for TASCO’s claim that these letters threatened it with relevant infringement proceedings is clear enough. It suffices to say, without resolving the question conclusively, that there is evidence before the court of the threats on which TASCO’s claim for relief depends.

19                  Is there evidence before the court of facts that support its claim that these threats were unjustifiable in the case of patent or design infringement, or groundless in the case of trade mark infringement? In this case, there was such evidence before the court.

(i) Patent infringement

20                  As the defence and cross-claim (filed after TASCO’s motion) makes clear, there is only one patent in issue in the current dispute. This is the Slabmaster Patent 706192 (“the patent”). At the hearing of TASCO’s motion, TASCO submitted that the terms of the patent made it clear that a wetting of the soil was an essential integer of the process described in the patent. Since TASCO’s Smorgon Slab System did not involve any form of soil wetting, then, so TASCO contended, this system could not infringe the patent. In support of this submission, TASCO relied on the terms of the patent and the affidavits of Mr Gerstkamp and Gregory Joseph Noonan. Mr Noonan is an experienced patent attorney and currently a senior partner in the firm Freehills Carter Smith Beadle.

21                  In his affidavit sworn on 7 October 2002, Mr Noonan deposed as follows:

16. The Slabmaster Patent contains two principal independent claims (and a drawings omnibus claim and several dependent claims). The first independent claim (Claim 1) defines a method of construction for a building slab. The second independent claim (Claim 2) defines a method of constructing a floor of a building.

17. Claim 1 of the Slabmaster Patent is said to include the following steps:

(a)    wetting soil, over which the slab is to be formed, to cause the soil to at least substantially achieve its maximum expansion;

(b) driving a plurality [of] screw piers into the soil in a predetermined array; and

(c) pouring the slab supported on the array of screw piers.

18. Claim 2 of the Slabmaster Patent is said to include the following steps:

(a) wetting soil, over which the floor is to be constructed, to cause the soil to at least substantially achieve its maximum expansion;

(b) driving a plurality of screw piers into the soil in a predetermined array; and

(c) constructing the floor, supported on the array of screw piers.

19. The Slabmaster Patent does not contain any claims directed to screw piers and thus provides no protection for screw piers themselves.

20. It is clear that pre-wetting the soil to cause the soil to at least substantially achieve its maximum expansion is an essential element of both of the independent method claims 1 and 2 in the patent. Therefore, there would be no infringement of the Slabmaster Patent if a method of constructing a building slab or a floor of a building did not include the step of wetting soil to cause soil expansion prior to forming the slab or floor, as defined in sub-paragraph (a) in each of paragraphs 17 and 18 above. This step is an essential element of both of independent method claims 1 and 2 in the patent.

22                  In his affidavit affirmed on 4 October 2002, Mr Gerstkamp specifically deposed that “the installation of the Smorgon Slab System does not and will not involve the use of any form of wetting of the soil, regardless of the reactive qualities of the soil”. Upon this basis, Mr Noonan expressed the view that, “in the absence of wetting the soil, the ‘Smorgon Slab System’ cannot infringe the Slabmaster Patent because the method of constructing the building slab or the floor of a building does not include the step of ‘wetting soil, over which the slab [or floor] is to be formed, to cause the soil to at least substantially achieve its maximum expansion’”.

23                  Counsel for TASCO contended, in effect, that, if the court had regard to the terms of the patent as well as this evidence, then it was plain beyond argument that any opinion other than Mr Noonan’s was unsustainable. There was, he submitted, no need for “an expert familiar with the processes [described in the patent] to determine whether … wetting of the soil is an essential part of the process”. For the reasons stated below, I reject this proposition. I accept, however, that there is evidence before the court that supports TASCO’s claim for relief in connection with any threatened patent infringement proceeding.

(ii) Design Infringement

24                  SFL is, it seems, the owner of around twenty currently registered designs. The respondents have cross-claimed in relation to the alleged infringement of six of those designs (see [10] above). After the hearing of TASCO’s motion, the respondents were afforded an opportunity to inspect TASCO’s screw pier. As a result of this inspection, they have maintained their design infringement claim only in respect of three of the Designs, namely, 123789, 125591 and 140377 (see below).

25                  A photograph of TASCO’s screw pier was exhibited as “JPG2” to the affidavit of Mr Gerstkamp affirmed on 4 October 2002, and a screw pier was tended in evidence at the hearing of TASCO’s motion. In affidavits sworn on 7 October 2002, 10 October 2002 and 1 November 2002, Mr Noonan gave his opinion on the matter of design infringement. In his affidavit of 7 October 2002, Mr Noonan expressed the opinion, based on the photograph depicted in “JPG2” of Mr Gerstkamp’s 4 October 2002 affidavit, that TASCO’s screw pier did not infringe any of the designs registered in SFL’s name and that “[c]onsequently, [he did] not believe there [were] any reasonable grounds to allege such an infringement”. In connection with design 123789, 140377 and 125519, he deposed as follows:

• design 123789 was directed to and depicted screw piers “but at least two of their tips, helix and coupling end are significantly different in shape and appearance from” TASCO’s screw pier;
• design 140377 (in relation to the point attack bit) was directed to and depicted components of the screw pier but was “significantly different from the corresponding components” of TASCO’s pier; and
• design 125519 was not infringed by TASCO’s pier since TASCO’s pier lacks coupling features at both ends.

26                  In his affidavit of 10 October 2002, Mr Noonan stated that, after inspecting one of TASCO’s screw piers, he held the same opinions as expressed in his earlier affidavit. In his third affidavit of 1 November 2002 (by way of reply to an affidavit sworn by James Grant Adams, patent attorney, on 28 October 2002) Mr Noonan took issue with Mr Adams’ design infringement analysis and conclusions. It is unnecessary to set out in detail the points of disagreement. It suffices to note that Mr Noonan maintained that nothing presented by Mr Adams (or by the respondents elsewhere) supported Mr Adams’ view that “there is a possibility that design nos. 125519, 123789 and 144037 [sic] might be infringed by the Applicant’s EPE screw pier”.

27                  In light of Mr Noonan’s affidavit of 1 November 2002, Ms Taliadoros, solicitor for TASCO, filed an affidavit sworn on 4 November 2002. In that affidavit, Ms Taliadoros sought summary judgment in TASCO’s favour in connection with any threatened design infringement proceedings in respect of (i) designs 139118, 140419 and 141231 (being designs that, in Mr Adams’ opinion, are not infringed by TASCO’s screw pier); (ii) the designs mentioned in par 4 of Mr Noonan’s third affidavit (the designs that are not mentioned by Mr Adams in his affidavit of 28 October 2002); and (iii) designs 125519, 123789 and 144037 [sic] (the designs that the respondents contend and TASCO denies are infringed by TASCO’s screw pier).

(iii) Trade Mark Infringement

28                  SFL is the registered owner of trade mark 680162 (“the Slabmaster trade mark”). By their cross-claim the respondents allege that TASCO has, without SFL’s consent, used the word “Slabmaster” on its website. By way of particulars, the respondents say that TASCO has used the word “Slabmaster” on its website as part of a promotional activity “between 1 August 2002 and the present date”. They plead that the word “Slabmaster” is substantially identical with, or deceptively similar to the Slabmaster trade mark and was displayed “in connection with the marketing and sale of both metallic and non-metallic building products”. Accordingly, so the respondents plead, TASCO has infringed the Slabmaster trade mark.

29                  TASCO now admits that it used the Slabmaster name on its website from 1 August 2002. It contends, however, that the use was not intentional since it had requested the name to be removed from its website and, in any event, merely historical. In affidavits sworn on 4 October 2002 and 7 October 2002, Shaun Daniel McVicar, a solicitor for TASCO, deposed to searches using the Australian Trade Mark Office Searching Service. According to Mr Gerstkamp’s affidavit of 4 October 2002, TASCO first used the trade mark “Slabmaster” in discharging its responsibility for sales and marketing of the Slabmaster system under the distribution agreement. He deposed that this use ended on 1 August 2002, when the distribution agreement terminated.

30                  In his third affidavit of 4 October 2002, Mr Gerstkamp also affirmed that TASCO operated a website, containing, amongst other things, details of TASCO’s current products and projects, as well as “archive sections”, “allow[ing] users of the site access to historical material”. His evidence was that, during the currency of the distribution agreement, the website contained numerous web pages referring to the Slabmaster system. Before the distribution agreement terminated, however, Mr Gerstkamp said that he had requested TASCO’s website developer, Yulan International Pty Ltd (“Yulan”) to update the website “by removing all references to the Slabmaster product”. He said that “[a]s a result of the making of the request … I understood all references to the Slabmaster system would be removed” from the website by 31 July 2002.

31                  Mr Gerstkamp admitted, however, that up until 3 October 2002, some references to the Slabmaster system remained. According to his account, as at 29 August 2002, one web page

contained details of the design and benefits of the Respondent’s Slabmaster system in the context of a case study of the use of the Respondent’s system by Forrester Constructions Pty Ltd, a major commercial builder in Queensland. When the web page was first prepared the case study would have been recent. However at the time it was accessed, being extracted from archives, it was very much an historical document. The web page did not constitute active promotion or marketing of the Respondent’s Slabmaster system, but was primarily an (historical) editorial on a project which had used the Respondent’s system during the term of the Distribution Agreement.

Mr Gerstkamp said that, on 3 September 2002, he again asked Yulan to remove Slabmaster references from the website and Yulan informed him by email the next day that this had been done. On 3 October 2002, he repeated his request when he was informed that a reference to the Slabmaster system remained on the website. Later on 3 October 2002, a representative of Yulan told him that the relevant web page was no longer available on the website, a fact that Mr Gerstkamp said he confirmed by his own website search.

32                  Mr McVicar’s affidavit of 7 October 2002 supported Mr Gerstkamp’s account. He too stated that he was unable to access the relevant webpage on 4 October 2002, after he received the respondents’ defence and cross-claim, and that searches on that day for the word “Slabmaster” failed to reveal any reference or use to it on TASCO’s website. He also commented:

[T]he reference which one appeared is, in fact, an historical reference to the Respondents’ Slabmaster products and is not a reference to the Applicant’s Smorgon Slab System. Therefore it appears it was not an infringing use of the trade mark but was an historical reference only and in any event all such historical references have been deleted from the Applicant’s website for some time.

33                  In an affidavit sworn on 1 November 2002, Anthony David Woodward, who is employed by TASCO’s solicitors as a business analyst, deposed that the web page, which had contained the Slabmaster reference, is no longer directly accessible from the internet. His evidence was that a search engine, such as that operated by Yahoo, stores a “database” of web pages compiled by electronically scanning copies of web pages into the search engine’s own server. Once copied in this way, the web page can be accessed directly from the search engine server without any need for a link to the original web page. Web pages that are copied into search engine servers remain on the server until they are removed by the search engine operator, regardless of whether the web page is still accessible at its original website location. His evidence was to the effect that a search using the Yahoo search engine may have afforded access to a web page copied by Yahoo and not yet removed by its automated maintenance processes, despite the fact that the web page was not accessible at the original web site. Mr Woodward deposed that the page was unavailable when he attempted to access it directly on 31 October 2002.

B. Another matter for TASCO to show

34                  An application for summary judgment under O 20, r 1 of the Rules may rely on either par (a) or (b) of subrule 1(1). The respondents had not in fact served a defence at the time TASCO’s notice of motion was filed. Counsel for TASCO did not submit at the hearing that the respondents’ defence disclosed no answer to TASCO’s claim, as subrule 1(1)(b) would require, and I do not understand TASCO to rely on subrule 1(1)(b). TASCO must be taken to rely on subrule 1(1)(a). In order to succeed under O 20, r 1(1)(a), there must be evidence given by the applicant, or some responsible person that, in the belief of the person giving the evidence, the respondent has no defence to the claim.

35                  In his affidavit of 7 October 2002, Mr McVicar deposed that “in my opinion” the respondents have no defence to TASCO’s application, and “in his view” there are no grounds for the respondents’ defence in relation to “unjustified threats of proceedings” of patent or design infringement. In relation to any threatened trade mark infringement proceedings, he deposed that he believed that there are no grounds for the respondents to allege that TASCO’s “Smorgon slab system” trademark was substantially identical, or deceptively similar to registered trade mark 608162. This latter statement is, so it seems, irrelevant, having regard to how the respondents have put their case. Further, statements of opinion or view, as opposed to statements of belief, that the respondents have no defence would not appear to come within the wording of par (a) of subrule 1(1).

36                  In Harry Smith Car Sales Pty Ltd v Claycom Vegetable Supply Co Pty Ltd (1978) 29 ACTR 21, at 23, Blackburn CJ held that an affidavit that swears an opinion, as opposed to a belief, that there is no defence to an action did not comply with O 15, r 1(1) of the Rules of the Supreme Court of the Australian Capital Territory, permitting a plaintiff in an action to apply for liberty to sign final judgment against a defendant in the absence of the delivery of a defence. His Honour stated, at 23:

There is one further remark to be made about this application. The affidavit of the director of the plaintiff includes the words ‘in my opinion the defendant has no defence to this action’. This does not comply with O 15, r 1(1), which requires a statement of belief that there is no defence to the action. The difference is important. The rule requires a form of words which unequivocally implies an actual belief by the deponent in the truth of every fact required to establish the plaintiff’s claim, and in the absence of any fact which could ground a defence in fact or in law. Such a form of words affords a proper basis for cross-examination. A statement of opinion, on the other hand, is neither unequivocal nor, strictly speaking, relevant.

37                  Sheller JA (with whom Priestly and Meagher JJA agreed) cited Harry Smith with approval, and adopted the same approach as Blackburn CJ, in Long Leys Co Pty Ltd v Silkdale Pty Ltd (1991) 5 BPR 11,512, at 11,516 (in connection with an equivalent summary judgment provision in the NSW Supreme Court Rules).

38                  In Muntz v Elkington (1891) 17 VLR 23, Webb J held, at 24, that, on an application for final judgment, an affidavit in support “must strictly comply with the provisions of the rule”: see also Symon & Co v Palmer’s Stores (1903) Ltd [1912] 1 KB 259, at 263-7 per Vaughan Williams LJ. Bearing in mind the effect of a successful summary judgment application, there is, it seems to me, good reason to require that the applicant for summary judgment in this court comply strictly with the O 20, rule 1.

39                  If Mr McVicar’s statements of opinions and views are not, strictly speaking, relevant on TASCO’s motion, the statements of belief contained in Mr Noonan’s affidavit of 7 October 2002 may be. In this affidavit, Mr Noonan deposed that he does:

not believe there are any reasonable grounds to allege such [a patent] infringement and consequently the threats of infringement and the threats of commencing proceedings for infringement the subject of the proceedings herein, are unjustified.

 

He deposed to his having the same state of mind in relation to design infringement issues. The respondents’ counsel did not submit that TASCO had failed to comply with par (a) of subrule 1(1) and, in the absence of argument, I accept that Mr Noonan’s statements of belief amount to compliance with it.

40                  Save for Mr McVicar’s statement of belief mentioned above, no other deponent apparently addressed par (a) of O 20, r 1(1) in relation to the trade marks issues.

41                  There are other considerations, however, that lead me to refuse TASCO’s application for summary judgment.

C. Discretionary matters

42                  Even where there is evidence of the facts on which the claim is based and evidence as required by par (a) of O 20, r 1(1), the court must nonetheless determine whether, as a matter of discretion, it should grant the application for summary judgment.

43                  It must be borne in mind that, as the High Court of Australia said in Fancourt v Mercantile Credits Limited (1983) 154 CLR 87, at 99:

The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried … .

To similar effect, see also Webster v Lampard (1993) 177 CLR 598 (“Webster v Lampard”), at 602-3 per Mason CJ, Deane and Dawson JJ.

44                  Is there in this case an issue that ought to be tried? If the material before the court discloses that there is an arguable defence, then the case should go to trial, and the application under O 20, r 1(1) fail. This will be so if, for example, there are unresolved matters of fact that might provide a defence, or the material for a defence: see, for example, Express Newspapers plc v News (UK) Ltd [1990] 3 All ER 376, at 379 per Browne-Wilkinson V-C; Webster v Lampard, at 611-2; and Geoffrey Inc v Luik (1997) 38 IPR 555 (“Geoffrey Inc v Luik”) at 557 per RD Nicholson J.

45                  Is an arguable defence disclosed on the material before the court? In written submissions, counsel for the respondents noted that the case apparently raised three issues. They were as follows.

(1) Is the pre-wetting of the soil an essential integer of the Slabmaster patent, with the consequence that there is no real question to be tried regarding infringement of the Slabmaster patent?

(2) Does the Smorgon Slab System (or at least the screw piers used with it) so differ from the respondents’ registered designs that there is no real question to be tried regarding infringement?

(3) Is the use of SFL’s trade mark “Slabmaster” by TASCO such that there is no real question to be tried?

(i) The Slabmaster patent

46                  The respondents’ case is that the Smorgon Slab System is constructed in accordance with the essential integers of the patented invention, and that any threat of infringement proceedings was justifiable. This is because the pre-wetting of the soil is not, so they say, an essential integer. At issue is the interpretation of the patent.

47                  Before turning to the counsels’ respective submissions on the patent, I adopt the following observations of Conti J in Sydney Cellulose Pty Ltd v Ceil Comfort Home Insulation Pty Ltd (2001) 53 IPR 359 (“Sydney Cellulose”). At 374-6, his Honour said:

As is usually the case in relation to patent infringement proceedings, issues as to the correct interpretation of the subject patent are at the centre of the matters in dispute between the parties. There has been much judicial discussion in the United Kingdom and Australia of the principles of interpretation of patents and the same have been carefully and conveniently digested by Sheppard J in [Décor Corp Pty Ltd v Dart Industries Inc (1988) 13 IPR 385, at 397-400]. It suffices to extract his Honour’s summary of the authorities at 400 as follows:

(1) The claims define the invention which is the subject of the patent. These must be construed according to their terms upon ordinary principles. Any purely verbal or grammatical question that can be answered according to ordinary rule for the construction of written documents is to be resolved accordingly.

(2) It is not legitimate to confine the scope of the claim by reference to limitations which may be found in the body of the specification but are not expressly or by proper inference reproduced in the claims themselves. To put it another way, it is not legitimate to narrow or expand the boundaries of monopoly as fixed by the words of a claim by adding to those words glosses drawn from other parts of the specification.

(3) Nevertheless, in approaching the task of construction, one must read the specification as a whole.

(4) In some cases the meaning of the words used in the claims may be qualified or defined by what is said in the body of the specification.

(5) If a claim be clear, it is not to be made obscure because obscurities can be found in particular sentences in other parts of the document. But if an expression is not clear or is ambiguous, it is permissible to resort to the body of the specification to define or clarify the meaning of words used in the claim.

(6) A patent specification should be given a purposive construction rather than a purely literal one.

(7) In construing the specification, the court is not construing a written instrument operating inter partes, but a public instrument which must define a monopoly in such a way that it is not reasonably capable of being misunderstood.

(8) The body, apart from the preamble, is there to instruct those skilled in the art concerned in the carrying out of the invention; provided it is comprehensible to, and does not mislead, a skilled reader, the language used is seldom of importance.

(9) Nevertheless, the claims, since they define the monopoly, will be scrutinised with as much care as is used in construing other documents defining a legal right.

(10) If it is impossible to ascertain what the invention is from a fair reading of the specification as a whole, it will be invalid. But the specification must be construed in the light of the common knowledge in the art before the priority date.’

In the context of the foregoing summary of principles applicable to the construction of patents, it is next appropriate to refer to authorities governing the kind of infringement issues arising in the present proceedings. The first of such principles, apart from that relating to onus of proof …, is that the applicants’ process of using and applying its [product] must be such that it takes ‘each and every one of the essential integers’ of the respondents’ patent rights: Rodi & Wienenberger AG v Henry Showell Ltd [1969] RPC 367 at 391. It does not follow however from that principle that protection will not be given to a patentee or a licensee simply because the alleged article of infringement is not identical in every respect with the invention described in the patent: see Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1985) 10 FCR 567 at 573; 6 IPR 394 at 399 per Wilcox J. It is enough that the infringing article comprises the ‘substance’, or what may otherwise be described as the ‘pith and marrow’ of the invention. In those circumstances, the party alleged to have infringed the patent in question will not be able to avoid the implications of infringement by implementing immaterial alterations to the patented methodology which in reality constitute little or no effect upon the manner in which the invention works, for example, by omitting an inessential part or step described in patent claim: see Populin v HB Nominees Pty Ltd (1982) 41 ALR 471 at 475 per Bowen CJ, Deane and Ellicott JJ.

What is regarded as the classic expression of the so-called ‘pith and marrow’ test is to be found in the judgment of James LJ in Clark v Adie (1875) LR 10 Ch App 667 at 675 where his Lordship said:

The patent is for the entire combination, but there is, or may be, an essence or substance of the invention underlying the mere accident of form; and that invention, like every other invention, may be pirated by a theft in a disguised or mutilated form, and it will be in every case a question of fact whether the alleged piracy is the same in substance and effect, or is a substantially new or different combination.

Adherence to the principle so enunciated in Clark is to be found in the judgment of Dixon J (as he then was) in Radiation Ltd v Galliers & Klaerr Pty Ltd (1938) 60 CLR 36 at 51, where his Honour said:

But, on a question of infringement, the issue is not whether the words of the claim can be applied with verbal accuracy or felicity to the article or device alleged to infringe. It is whether the substantial idea disclosed by the specification and made the subject of a definite claim has been taken and embodied in the infringing thing.

The modern approach of the courts is to emphasise that the ‘substantial idea’ or the ‘pith and marrow’ of a patented invention shall not be treated as infringed where it is clear, from the words used in the claim set out in the patent, that a relevant integer has been ‘deliberately left outside the claim’: see Minnesota Mining & Manufacturing Co v Beiersdorf (Australia) Ltd (1980) 144 CLR 253; 1A IPR 231 per Aickin J, (with whom Barwick CJ, Stephen, Mason & Wilson JJ agreed), where at CLR 286; IPR 251 his Honour said as follows:

Notwithstanding the undoubted fact that the doctrine of Clark v Adie concerning the taking of the pith and substance of an invention, but nonetheless staying outside the express words of the claim, is less often applicable at the present time than it was at the time of that decision, it remains the law that a defendant may not take the substance of an invention unless the wording of the claims makes it clear that the relevant area has been deliberately left outside the claim.

On the other hand, strict compliance may not be taken to have been intended by the patentee, in circumstances where some variant to the literal description could have a material effect upon the way a patented invention was intended to work. In Catnic Components Ltd v Hill & Smith Ltd [1982] RPC 183 at 243 Lord Diplock observed in the following frequently cited passage:

A patent specification should be given a purposive construction rather than a purely literal one derived from applying to it the kind of meticulous verbal analysis in which lawyers are too often tempted by their training to indulge. The question in each case is: whether persons with practical knowledge and experience of the kind of work in which the invention was intended to be used, would understand that strict compliance with a particular descriptive word or phrase appearing in a claim was intended by the patentee to be an essential requirement of the invention so that any variant would fall outside the monopoly claimed, even though it could have no material effect upon the way the invention worked.

The question, of course, does not arise where the variant would in fact have a material effect upon the way the invention worked. Nor does it arise unless at the date of publication of the specification it would be obvious to the informed reader that this was so. Where it is not obvious, in the light of then-existing knowledge, the reader is entitled to assume that the patentee thought at the time of the specification that he had good reason for limiting his monopoly so strictly and had intended to do so, even though subsequent work by him or others in the field of the invention might show the limitation to have been unnecessary. It is to be answered in the negative only when it would be apparent to any reader skilled in the art that a particular descriptive word or phrase used in a claim cannot have been intended by a patentee, who was also skilled in the art, to exclude minor variants which, to the knowledge of both him and the readers to whom the patent was addressed, could have no material effect upon the way in which the invention worked.

48                  Counsel for the respondents submitted that, in interpreting the Slabmaster patent, the remarks of Lord Diplock in Catnic (quoted above) were especially apposite. The question was, so counsel said, whether a person with practical knowledge and experience of the work for which the invention was intended to be used would understand that strict compliance with the wetting of the soil was intended by the patentee to be an essential requirement of the invention. He contended that there were a number of matters that indicated that such a person would understand that wetting was not an essential requirement.

49                  First, TASCO’s premise that the patent dealt only with slabs built on reactive sites, was, so he said, incorrect. He submitted that a skilled person, who was familiar with the relevant work at the relevant time, would realise that the invention was suitable for use for both reactive and non-reactive soils. There was some support for this position in the patent specifications. Further, the respondents’ counsel submitted that the claims were capable of more than one interpretation and that, in the case of claims 3, 4 and 10, it was unclear whether or not soil wetting was required.

50                  Secondly, the respondents’ counsel submitted that the evidence showed that the pre-wetting of the soil was not a necessary step for the installation or implementation of the Slabmaster system. The evidence showed, so he said, that the wetting of the soil was not a step in the procedures undertaken by SFL in discharging its responsibilities under the distribution agreement. Nor did SFL currently use the procedure.

51                  In support of these submissions, the respondents’ counsel referred to the affidavit of Paul Francis Wallis, a geotechnical engineer employed by a subsidiary of SFL. In his affidavit of 10 October 2002, Mr Wallis deposed that the Slabmaster system overcame practical problems relating to slab construction in residential buildings. Mr Wallis explained the desirability of using suspended slabs and stated that the Slabmaster system devised “a way for a suspended slab to be used in a cost effective way in residential applications and, importantly, in a proper engineering sense”. This was, according to Mr Wallis, by combining “several important steps in a way which was new and original”. He set out these steps in his affidavit, at par 15(a) to (h) of his 10 October 2002 affidavit. Mr Wallis continued:

21. Mr Noonan’s claim that the pre-wetting of soil to cause the soil to at least substantially achieve its maximum expansion is an essential element of both the independent method claims 1 and 2 in the Slabmaster Patent … is incorrect.

22. Pre-wetting of soil is not a necessary step for the installation or implementation of the Slabmaster system. Although the Slabmaster Patent refers to the pre-wetting of soil, such reference is an inessential part or step which is not used (in any circumstances). At least since I commenced for SFL in 2000 pre-wetting of soil has not been used. … .

23. The wetting of soil in reactive clay sites was not a step in the standard procedures prepared by SFL for the ARC Slabmaster System. These standard procedures were provided to ARC in accordance with the Distribution Agreement relating to the Slabmaster system. … .

24. To my knowledge, the procedures … are the same as the procedures which have always been used regarding ARC Slabmaster. … .

25. In summary, the wetting of soil is not essential to the Slabmaster System as a whole, nor has it been used since I have been employed [by a subsidiary of SFL]. The wetting of soil does not comprise the substance of the invention of Slabmaster.

52                  Mr Wallis also referred to Mr Gerstkamp’s affidavit of 4 October 2002, rejecting as incorrect any implication that “when soil is reactive an extra step involving the wetting of soil was a necessary element of the Slabmaster System”. Mr Wallis deposed that the construction process undertaken for the Smorgon Slab System and summarised in Exhibit “JPG4” to Mr Gerstkamp’s affidavit of 4 October 2002 “is identical in all significant ways to the process which is undertaken for the Slabmaster system. … [T]he essential elements in both systems … appear to be identical.”

53                  Mr Plotkin’s affidavit of 10 October 2002 corroborated the account given by Mr Wallis. Mr Plotkin deposed that soil wetting was “not an element which is used at all in the Slabmaster system either on problem sites or otherwise”. His evidence was that the features and benefits claimed for the Smorgon Slab System “appear[ed] to be the same as the features and benefits held by the Slabmaster System”, and that the Smorgon Slab System utilised an identical construction process to that used in the Slabmaster system.

54                  Counsel for the respondents submitted that this evidence (especially that the practice of wetting was not employed) raised the possibility that a person with knowledge and experience of the work in which the invention was to be used might well say that the wetting of the soil was not an essential integer of the invention.

55                  Referring to the observations of Conti J in Sydney Cellulose, at 375, the respondents’ counsel submitted that, by omitting the requirement of the wetting of the soil, TASCO was arguably instituting an immaterial alteration to the Slabmaster patent, which had no effect on the “substance” of the patent. That is, TASCO had merely omitted an inessential step described in a patent claim. He submitted that there was, therefore, an arguable defence, namely, that the threats were justified on the basis that there was an arguable infringement of the Slabmaster patent, and that there was a real question to be tried on the cross-claim.

56                  Counsel for TASCO maintained, on the other hand, that the invention the subject of the Slabmaster Patent was designed to deal with reactive soils. There was, indeed, also some evidence for this in the patent specifications. TASCO’s counsel also emphasised that the wetting of the soil was referred to throughout the specifications and expressly mentioned in a number of claims. He submitted that, even though not expressly mentioned, the wetting of the soil was an essential part of every claim. The respondents’ evidence that they did not wet the soil under the Slabmaster system was, he submitted, irrelevant since soil wetting was an essential integer of the patented invention.

57                  It is not, I think, possible for me to decide whether or not the wetting of the soil was an essential integer of the invention in the absence of evidence of a person with the appropriate knowledge and skill. There are, therefore, arguable issues to be tried, including matters of fact to be resolved. It would be inappropriate, in this circumstance, to prevent the case from going to trial.

(ii) The respondents’ registered designs

58                  Issues concerning the respondents’ designs were considered in a number of affidavits relied upon by the respondents, including the 10 October 2002 affidavits of Messrs Plotkin, Adams and Wallis. It suffices to refer, however, to the affidavit of Mr Adams of 28 October 2002, which was sworn by him after inspecting TASCO’s pier pursuant to the court’s order of 11 October 2002. Mr Adams deposed that TASCO’s screw pier did not infringe the respondents’ registered designs 139118, 140419 and 141231, which had been nominated in the respondents’ defence and cross-claim. He did not express this view in connection with the other three designs referred to in the respondents’ pleading.

59                  Mr Adams said that the similarity between the respondents’ design 140377 and the point attack bit adopted by TASCO’s screw pier was “sufficient to raise the possibility that the point attack bit adopted by [TASCO’s] screw pier is a fraudulent imitation” of design 140377. Mr Adams deposed that the point attack bit adopted by TASCO’s screw pier “appears to have been copied from the SFL registered design and then altered in a slight and immaterial fashion so as to disguise it from being a direct copy of the SFL registered design”. Mr Adams believed that it would be necessary to investigate the facts and circumstances surrounding the design and development of the point attack component of TASCO’s pier in order to determine conclusively whether TASCO’s pier infringed SFL’s registered design 140377.

60                  In relation to designs 123789 and 125519, which dealt with the design of a “screw pier and associated point attack bit”, Mr Adams deposed that, notwithstanding that the end of TASCO’s screw pier differed from the point attack component referred to in SFL’s two designs, TASCO’s “screw pier may well infringe those registered designs at a point in its production prior to the final crimping of the point attack bit”. Mr Adams stated that, although there was a hole at the end of the pier in the two SFL designs and there was no hole at the end of TASCO’s screw pier, the existence of the hole was of little significance to the design. He also observed that, at least at one point in the production process for a screw pier, TASCO’s screw pier “would appear almost identical to the SFL screw pier” in designs 123789 and 125519. Again, he believed that it would be necessary to make a further investigation of TASCO’s manufacturing process and the manner in which the pier was developed and designed, in order to determine conclusively whether TASCO’s screw pier infringed SFL’s designs 123789 and 125519.

61                  In these circumstances, a number of factual issues may arise in connection with the matter of design infringement. There is at least an arguable defence to TASCO’s application, namely, that any threats of design infringement proceedings were justifiable on the basis that there is an arguable infringement of three of SFL’s designs. There is a question to be tried on the cross-claim in relation to these designs. It would be inappropriate, therefore, to grant TASCO’s application for summary judgment on this part of its application.

(iii) Slabmaster Trade Mark

62                  In his affidavit of 10 October 2002, Mr Plotkin deposed that a printout of a web page, which, according to Mr Gerstkamp, had been available on 29 August 2002, included diagrams that were prepared by SFL and text that had been taken from its promotional material. In an affidavit of the same date, David Christopher Brown, the respondents’ solicitor, deposed that he had conducted an internet search on 7 October 2002 and had obtained access to a web page that contained reference to “Slabmaster” (“the web page”). He was unable to access the page in a search conducted on 10 October 2002. In an affidavit of 29 October 2002, Mr Brown deposed to a search that he had conducted that day using the Yahoo search engine. He said that, when he clicked on the search result, the web page was displayed. As already noted, in an affidavit filed in support of TASCO’s motion, Mr Woodward had sought to explain this 29 October 2002 result.

63                  At the outset, I note that the respondents do not allege in their defence and cross-claim that TASCO’s trade mark in respect of the Smorgon Slab System infringes one of their trade marks. This led TASCO to submit (in written submissions filed after the hearing of its motion) that the respondents had no arguable defence because:

[The] threats were not that the applicant would infringe any of the trade marks owned by the respondents … by referring to the Slabmaster system, or that that applicant would in some general way infringe the Respondent’s Trade Mark, but were clearly and expressly to the effect that in manufacturing and selling a competing system the applicant would infringe inter alia the Respondent’s Trade Mark, and that consequently proceedings would be commenced.

That is, TASCO contended that the respondents did not address its statement of claim because they did not allege an infringement of the kind that they had originally said would be the subject of proceedings.

64                  In response to this submission, the respondents replied:

It is the Respondents’ case that the alleged threats made by the Respondents related to (inter alia) the Applicant’s marketing of a competing system (namely the Smorgon Slab System) using the term ‘Slabmaster’ … . There is no complaint by the Respondents about the use of the term ‘Smorgon Slab System’ as infringing the Respondents’ trademark.

The infringing use of the term ‘Slabmaster’ was made on the Applicant’s website … .

By using the term ‘Slabmaster’ on its website the Applicant has:

(a) promoted its expertise and experience in the construction of suspended slab systems using the ‘Slabmaster’ system; and

(b) marketed the only system offered by them, namely the Smorgon Slab System.

It is submitted that the real question to be tried is whether the use of the term ‘Slabmaster’ on the website is deceptive or confusing to members of the public in circumstances where the only product offered for sale by the Applicant is a similarly named ‘Smorgon Slab System’. This in turn justifies any threat made by the Respondents regarding use of the trademark.

65                  For present purposes, the threats, if threats they were, were general and capable of covering the matters now advanced by the respondents. (It was, after all, TASCO’s choice to seek summary judgment before the respondents filed their defence and cross-claim.)

66                  Does this aspect of the case raise a triable issue? As TASCO’s written submissions point out, not every use of a trade mark that is identical with or deceptively similar to a registered trade mark constitutes an infringing use “as a trademark” for the purpose of s 120(1) of the Trade Marks Act 1995: see The Shell Company of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407, at 422 per Kitto J (with whom Dixon CJ, McTiernan, Taylor and Owen JJ agreed). The use of a mark is not an infringing use if the mark is not used to indicate the origin of the goods or services in question: see, e.g., Irving’s Yeast-Vite Ltd v Horsenail (1934) 51 RPC 110, at 116-7 per Lord Tomlin (Lord Atkin and Lord Russell of Killowen concurring) and Johnson & Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326, at 347 per Gummow J.

67                  TASCO submitted that:

[I]n the context of the apparently accidental publication of the Respondent’s Trade Mark on the relevant web page after 2 July 2002, it is clear the word Slabmaster had not been used as a trade mark, that is to say, so as to indicate the commercial origin of the Slabmaster system. The reference to Slabmaster is an historical one which, as previously submitted, documents the use by the applicant of the respondents’ Slabmaster system during the term of the Distribution Agreement. The fact that the page may have appeared other than in the ‘Archive’ section, … does not alter that conclusion.

TASCO further submitted that its use of the “Slabmaster” trade mark was not “in the course of trade”. It reiterated that the use was “as an historical reference” to TASCO’s former distribution of the Slabmaster system, and not as a form of active marketing or selling of a system. Accordingly, TASCO submitted that there was no arguable issue to be tried in relation to the trade mark infringement and that it should have judgment in respect of the threats against it.

68                  As already noted, the respondents have put in issue TASCO’s characterisation of its use of the “Slabmaster” trademark. In addition, they submitted:

[T]he use of that trademark on the Applicant’s web site is … not on its face an ‘historical reference’, as distinct from an active form of marketing or selling. It is the Respondents’ case that the Applicant used the web site to solicit trade, which is a necessary part of ‘selling’ and thus ‘in the course of trade’ … . The use of the term ‘Slabmaster’ was for the purpose of soliciting trade in the Applicant’s product if, for no other reason, such trade being solicited by way of a type of testimonial.

…

Whether the material was located in the archive section of the website is not determinative of its nature. It was and still is accessible externally and directly from search engines … . A reader of that material might be completely unaware it was merely historical material as claimed.

In any event, … the web site is still accessible, if not through the Smorgon website itself, then by typing ‘Slabmaster’ into a search engine. Accordingly, despite claims to the contrary, the infringing use of the trademark continues.

69                  These submissions expose an arguable defence to TASCO’s allegation that any threat of trade mark infringement proceedings was groundless. In my opinion, the respondents have shown enough to raise a triable issue. It may be too that, having regard to the respondents’ defence and cross-claim, the combination of ss 129(5) and 130 of the Trade Marks Act 1995 precludes summary judgment in TASCO’s favour. As previously noted, another obstacle in TASCO’s path is that it has not strictly complied with the requirements of par (a) of O 20, r 1(1) of the Rules in connection with this aspect of its case: see [34]-[41] above.

70                  It may be recalled that, according to the authorities, the correctness of factual assertions in an affidavit in opposition to an application for summary judgment are not to be decided upon the application unless the assertions are shown to be manifestly false, either because of their inherent implausibility or their inconsistency with the contemporary documents or other compelling evidence: see, e.g., Bhogal v Punjab National Bank [1988] 2 All ER 296, at 303 per Bingham LJ and Geoffrey Inc v Luick at 557 per RD Nicholson J. Bearing in mind these authorities and the matters mentioned above, I would not grant TASCO summary judgment on the trade mark infringement aspect of its case. There is, I think, a question to be tried as to whether there were grounds for any alleged threat made by the respondents regarding TASCO’s use of the Slabmaster trade mark.

71                  Before passing to the respondents’ motion, I deal with TASCO’s contention that it should have judgment for at least part of the proceeding. The respondents’ letters of 24 and 27 June and 30 July 2002 referred to its property rights in “patents, trademarks, and designs”. TASCO has contended that the letters contained threats of patent and design infringement proceedings that were plainly too broad and, therefore, unjustifiable. First, notwithstanding that the letters mentioned “patents”, the respondents ultimately alleged infringement of one patent only (see above). Secondly, by their cross-claim, the respondents claimed infringement of a mere 6 out of about 20 designs registered in SFL’s name, and they now claim infringement in respect of only 3 of these 6. Bearing this in mind, TASCO claims that it should have summary judgment on part of the threats of patent and design infringement proceedings.

72                  The letters of 24 and 27 June and 30 July 2002 were very general in terms. In his affidavit of 10 October 2002, the respondents’ solicitor, Mr Brown, sought to explain this generality and the reference to “patents” in the plural. I do not consider that much turns on this aspect of the letters. The tenor of the correspondence was plain enough. None of the letters asserted the infringement of any specific patent or design. As it turns out, the respondents have pressed a patent infringement claim by their cross-claim; and, as I have stated, I would not order summary judgment in respect of any threat of patent infringement proceedings involving it. Similarly, there should be no summary judgment on matters involving designs to which the respondents never referred. Nor should there be summary judgment on the claims involving the 3 designs that, it seems, are no longer in issue. The respondents’ Mr Adams has inspected TASCO’s screw pier and, in consequence, no longer regards the screw pier as infringing 3 of the designs mentioned in the cross-claim. It does not follow from this, however, that any threats of infringement proceedings involving these 3 designs were unjustifiable at the time they were made and before the screws had been inspected. No doubt the respondents will seek to amend their cross-claim to take account of the results of the inspection, and they should be permitted to do so.

the respondents’ motion

73                  The respondents make application for the transfer of this proceeding to the Queensland District Registry of the Federal Court. The court has power to direct, at any stage of a proceeding, that the proceeding or a part of the proceeding be conducted or continued at a place specified, subject to such conditions as the court imposes: Federal Court of Australia Act 1976 (Cth) (“the FCA”), s 48. Further, pursuant to O 10, r 1(2)(f) of the Rules, the court may direct that a proceeding be transferred “to a place at which there is a Registry other than the then proper place”. TASCO instituted this proceeding in this Registry on 5 August 2002. Accordingly, the proper place in relation to the proceeding is currently the Victoria District Registry: see O 1, r 4 of the Rules.

74                  Where a party applies to the court for the transfer of a proceeding, the party bears no onus of proof in a strict sense (although it is for the applicant on the motion to satisfy the court that the proceeding should be transferred: see Cycles & Wheelman Pty Ltd v Beltech Corporation Ltd (1988) 80 ALR 279, at 281 per Gummow J). As the Full Court observed in National Mutual Holdings Pty Ltd v The Sentry Corporation (1988) 19 FCR 155 (“Sentry”), at 162:

The Court must … be satisfied, after considering all relevant matters, that there is sound reason to direct that the proceeding be conducted or continued elsewhere. Its starting point is that the proceeding has been commenced at a particular place. Why should it be changed? On the one hand, if the party who commenced the proceeding chose that place capriciously the Court would be justified in giving no weight to the choice of place. At the other end of the scale, a proceeding may have continued for some time at the place of commencement with many steps having been taken there, for example, filing of pleadings and affidavits, discovery and inspection. Due weight should be given by the Court to such matters before directing that the proceeding should continue at a different place.

The present case is at neither end of the scale. TASCO has not chosen this Registry capriciously and the parties have not yet taken many steps in the proceedings.

75                  In deciding whether one Registry is more appropriate than another for the conduct of the case, the court must consider the relevant circumstances. The court may consider the residence of the parties and witnesses, the expense to the parties, the place where the cause of action arose and other pertinent factors. As the Full Court observed in Sentry, at 162, the balance of convenience will be a relevant but not necessarily determinative consideration. The Court said, at 162:

The balance of convenience is important, but its weight must vary from case to case. Ultimately the test is: where can the case be conducted or continued most suitably bearing in mind the interests of all the parties, the ends of justice in the determination of issues between them, and the most efficient administration of the Court. It cannot and should not, in our opinion, be defined more closely or precisely.

76                  In the present case, TASCO is a company incorporated in Victoria. It has a fully paid issued share capital of $30,000,100. Its registered office and principal places of business are in Victoria, and its directors and company secretary reside in Melbourne (although it also operates from premises in New South Wales).

77                  TASCO’s “Smorgon Reinforcing” (see [3] above) has an Australia-wide business that delivers about 60% of the reinforced steel products required by the Australian construction industry. It employs about 1,300 people throughout the country. Its national office (comprising its Chief Executive Officer, the National Finance Department, the National Marketing Department, the National Human Resources Department, and some other administrative support) is in Victoria. It also has state offices in Victoria, Queensland, New South Wales, South Australia and Western Australia. These offices employ State Managers, State Sales Managers, sales representatives and account managers as well as other personnel. The State Managers and State Sales Managers make the day-to-day operational decisions for the State in which the product is supplied. They report on key matters to the national office in Victoria. The business also has manufacturing plants in Melbourne, Brisbane, Sydney and Perth as well as 59 service centres throughout Australia. There are 12 such centres in Victoria and 17 in Queensland.

78                  SFL was incorporated in New South Wales in 1994, with an issued share capital of $3,716,005. Its registered office and principal place of business is in Queensland, although it has regional offices in Sydney and Melbourne. All 6 of its directors reside in Queensland, and the company employs 43 people. SFC is incorporated in Queensland, with a fully paid issued share capital of $100. Its registered office and principal place of business are also in Queensland. It has no employees. People engaged in SFC’s activities are employed by SFL.

79                  Plainly enough, whilst TASCO is based in Melbourne, it has a national business. The respondents, on the other hand, are based in Queensland, although SFL has a regional office in Melbourne. If these were the only factors falling for consideration, the case for transfer would not be made out.

80                  As already stated, the evidence shows that the letters, in which the threats of infringement proceedings were allegedly made, were written by the respondents’ solicitors in Queensland, first, to TASCO’s manager in Brisbane and then to TASCO’s lawyers in Melbourne. Little turns on this.

81                  The subjects of the respondents’ cross-claim, filed in the same matter as the principal application (V 506 of 2002) are, first, the alleged infringements of the respondents’ intellectual property rights (as outlined above) and secondly, the alleged breaches of the distribution agreement, pursuant to which the respondents granted TASCO the exclusive right to sell the Slabmaster system. The distribution agreement provided, in cl 14, that, for a period of two years after the termination of the agreement, TASCO would not use any of the respondents’ intellectual property relating to the Slabmaster system, without first obtaining their written consent. There was also provision for the protection of confidential information (cl 7.6). The respondents allege breaches of these provisions.

82                  At the centre of the respondents’ claims are the Slabmaster system and the Smorgon Slab System. The evidence is that, during the currency of the distribution agreement, the Slabmaster system was sold principally in Queensland. Mr Plotkin deposed that, for the period July 1999 to June 2002, the total volume of sales for the Slabmaster system was about $4,109,268, of which $4,071,618 was attributable to installations in Queensland or through Queensland builders. Day-to-day issues concerning the supply of the Slabmaster system were, therefore, principally dealt with in Queensland, although TASCO referred major issues to its national office in Victoria.

83                 The evidence is also that the Smorgon Slab System has been sold primarily to one builder, who has utilised the system at residential sites in Queensland and northern New South Wales, although, according to Mr Gerstkamp, from early this year, the Smorgon Slab System is also to be marketed and distributed in Victoria, New South Wales and South Australia.

84                 EPE, the second respondent by cross-claim, has its registered office and principal place of business in Queensland. Mr Camilleri, a director of EPE, also resides in Queensland. According to Mr Brockwell, EPE has manufactured the Smorgon Slab System (or a critical part of it) in Queensland.

85                 Having regard to the patented invention and the nature of the Smorgon Slab System, site inspections by experts and, possibly, the court may prove necessary. On the evidence before the court, these can clearly be undertaken in Queensland (though it may subsequently turn out that they could also be undertaken elsewhere). Further, as already noted, in connection with the design infringement, Mr Adams has deposed that it would be necessary to make a further investigation of TASCO’s manufacturing process and the manner in which the pier was developed and designed, in order to determine conclusively whether TASCO’s screw pier infringed SFL’s designs. Given that these matters principally concern the design and manufacture of the screw piers, they would appear to be matters best examined in Queensland.

86                  In written submissions, TASCO contended that:

[M]ost of the relevant records in [its] possession … are in Melbourne, many of the witnesses to be called by [it] reside [in] Melbourne and [its] legal advisors … who have been involved in the matter since prior to the commencement of this proceeding, reside in Melbourne.

Equally plainly, the respondents’ legal advisers and records are in Queensland.

87                  Additionally, the respondents pointed out that, pursuant to cl 20 of the distribution agreement, the agreement is “deemed to be entered into in … Queensland and … governed by … the laws of … Queensland”. This alone is not an especially significant factor: cf Lean v Tumut River Orchard Management Ltd [2003] FCA 269 at [32] per Carr J. Whilst TASCO conceded that its former national product manager for Slabmaster (Ms Erin Heath) had worked at its Brisbane office and that she had been responsible for the dealings between the parties until May 20001, it also referred to the fact that, as from this date, Mr Gerstkamp in Melbourne had replaced her. I accept, however, that, both in its beginnings and in its day-to-day operation, the distribution agreement has more connection with Queensland than with Victoria.

88                  The respondents also submitted that the critical documents on the cross-claim would include documents concerned with the design, manufacture, and supervision of the construction of the Smorgon Slab System by EPE and TASCO, which one would expect to be produced by EPE in Queensland. This may well turn out to be true, although I leave this consideration to one side since I have not had the benefit of any submissions from EPE.

89                  The location of witnesses is also relevant to matters of cost and convenience. Plainly enough, the respondents’ witnesses are likely to come from Queensland and TASCO’s, from Victoria and, possibly, Queensland. Expert witnesses could come from anywhere.

90                  The respondents also submitted that I should bear in mind the comparative financial capacities of SFL (and its subsidiary) and TASCO. The evidence before me indicates that the respondents have a smaller capacity than TASCO to bear the costs of conducting out-of-state litigation. Although the question of the parties’ expenses is plainly relevant, the matter of comparative financial capacity has not proved significant in my consideration of the respondents’ motion.

91                  Leaving aside then the relative financial capacities and certain matters concerning EPE (referred to above) but bearing in mind the parties’ interests generally, as well as the interests of justice and the interests of court administration, I am of the view that this case can be conducted most suitably in the Queensland Registry of the Court. Bearing in mind the considerations outlined above, the matters at the heart of this proceeding (including the issues of patent and design infringements and distribution agreement breaches) are better heard in Queensland than in Victoria.

92                  It would not be appropriate to separate the various claims and cross-claims in this proceeding in order that part be retained and heard in Victoria and part be transferred to and heard in (or simply heard in Queensland), as counsel for TASCO suggested at one stage should be done. The respondents’ motion seeks the transfer of the whole of proceeding V 506 of 2002 from the Victorian to the Queensland Registry. This presently includes both the principal application and the cross-claim. Plainly enough, the matters raised by the principal application and cross-claim are intertwined. Further, it would not be appropriate in this case to postpone the question of transfer, although this course may well be appropriate in other cases where a question of transfer is raised early in the proceeding: cf WG & B Manufacturing Pty Ltd v Telsa Farad Pty Ltd [1999] FCA 859 at [11] per Finkelstein J. I am of the view that the proper place for this proceeding is the Queensland Registry and that the proceeding should be transferred there now for appropriate interlocutory management. This is consistent with the case management system adopted in the court.

orders to be made

93                  Accordingly, the orders I propose to make are:

1.             The motion, notice of which is dated 3 October 2002, be dismissed.

2.             The respondents have leave to amend their cross-claim dated 4 October 2002 in accordance with par 72 of these reasons for interlocutory judgment.

3.             Proceeding V 506 of 2002 be transferred to the Queensland District Registry of the Federal Court of Australia.

94                  I shall afford the parties an opportunity to make short submissions on the question of costs.

I certify that the preceding ninety-four (94) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny.

Associate:

Dated: 29 April 2003

Counsel for the Applicant:	Mr J W Kewley
Solicitor for the Applicant:	Freehills
Counsel for the Respondent:	Mr D J Campbell
Solicitor for the Respondent:	Adamson Bernays Kyle & Jones
Date of Hearing:	11 October 2002
Date of Judgment:	29 April 2003