FEDERAL COURT OF AUSTRALIA

Polaris Communications Pty Ltd v Dynamic Hearing Pty Ltd [2007] FCA 627

POLARIS COMMUNICATIONS PTY LTD (ACN 006 102 601) v DYNAMIC HEARING PTY LTD (ACN 098 878 212) AND PLANTRONICS PTY LTD (ACN 080 486 193)

VID 676 OF 2006

SUNDBERG J

3 MAY 2007

MELBOURNE

THE COURT ORDERS THAT:

1.                  The applicant file and serve its amended application and statement of claim by 21 May 2007.

2.                  The respondents file and serve their amended defences by 11 June 2007.

3.                  The applicant file and serve any reply by 25 June 2007.

4.                  The applicant and its legal advisers be released from all confidentiality undertakings provided by them with respect to the first respondent’s documents 1, 3 to 12, 14, 15 (but not including the parts headed “Background/Aims” and “Significance”), 18, 19, 20 and 24 referred to in its Lists of Documents sworn 10 May 2006 and 29 September 2006 (the confidential documents).

5.                  The first respondent be permitted to redact parts of the confidential documents to correspond with the redaction made by the second respondent and referred to in the orders herein dated 29 August 2006.

6.                  The applicant’s legal advisers be permitted to disclose the confidential documents and all other documents discovered by the respondents in this proceeding to the applicant and any other person retained by the applicant for the sole purpose of the conduct of the proceeding.

7.                  The issue of liability be heard and determined prior to the issue of quantum.

8.                  The orders made herein on 24 November 2006 be vacated.

9.                  The directions hearing scheduled for 28 May 2007 be vacated and the proceeding be relisted for directions on 24 August 2007.

10.              The motion notice of which was filed on 5 April 2007 be otherwise dismissed.

11.              The costs of and consequential on the amendment of the application and statement of claim be paid by the applicant.

12.              Otherwise the costs of the motion be reserved.

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

REASONS FOR JUDGMENT

1                     Polaris’ notice of motion raises seven issues.

Leave to amend

2                     Polaris wishes to amend its Application and Statement of Claim. The principal amendments introduce pars 10A to 10H into the Statement of Claim. These plead additional representations – the unsuitability representations (pars 10A to 10E) and the test set up representations (pars 10F and 10G). Plantronics opposes the grant of leave to amend the Statement of Claim and points to various alleged defects in the draft amended pleading. Dynamic largely accepts that Polaris can plead its new case, though it too criticises the form of the amendments in at least one respect. No separate submissions were made about the desired amendments to the Application.

3                     In my view Polaris should have leave. I agree that the drafting of the amendments is capable of improvement. But the defects pointed to are not substantive, and Polaris’ counsel has indicated that they will be remedied in the final document. As has frequently been pointed out, parties should generally be permitted to amend their pleadings in order to ensure that all issues are properly tried and determined. See for example, Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146. This is the first time Polaris has sought to amend, and the application for leave is being made prior to the completion of any of the evidence. There is no prejudice to the respondents resulting from the amendments that cannot be compensated for by an appropriate costs order.

Discovery

4                     Polaris’ motion seeks orders for further discovery incident upon the amendment. However, as I understood the course of argument, it was agreed that the Court did not need to make such orders because the parties would comply with their continuing obligation to make discovery. The proper course is for the amendments to be made, amended defences to be filed, and outstanding discovery to be then dealt with.

Liability and quantum

5                     Polaris seeks an order that liability be determined separately from quantum. The respondents oppose this course. In my view Polaris should have the order it seeks. To date the conduct of the proceeding has focused solely on issues of liability. No discovery has been provided relating to the respondents’ distribution of the comparison report. The lay and expert evidence that will be required to determine the issue of liability will be quite different from that required to determine the quantum of damages. There is no overlap of the kind referred to in Novartis AG v FH Faulding & Co Ltd (2004) 62 IPR 530 at [15]. Obviously there will be a saving of costs relating to quantum if Polaris fails on liability. Further, damage is not a component part of any cause of action pleaded. The issues of liability and quantum are distinct. The first deals with the content of the comparison report. The second with the consequences of its distribution. Finally, I accept Polaris’ submission that any enquiry as to damages will be best undertaken following the grant of an injunction restraining further publication, since this will provide an “end point” for the damages assessment.

Experimental evidence

6                     Polaris sought directions under Order 58 rule 31 of the Federal Court Rules in relation to the conduct of an experiment and experimental proof to be tendered as evidence. Polaris’ counsel reluctantly came to accept the respondents’ submission that Order 58 rule 31 was available only in intellectual property proceedings as defined. It was agreed that this was not such a proceeding. Counsel then invited the Court to give directions for experimental proof in exercise of its “ordinary” jurisdiction to control the conduct of litigation. The form of such an order was not explored, and the respondents did not join issue on this fall back position. In the circumstances, I do not pursue it.

Production of Soundshield device

7                     The notice of motion seeks an order that the respondents deliver to Polaris the Soundshield device used by Dynamic in the test reported in the comparison document. This was pursued only against Dynamic. It appears from Polaris’ written submissions in response that at the time the notice was filed, it was Polaris’ understanding that the device was in Dynamic’s possession. Dynamic says that it is no longer in its possession, though it once was. Polaris does not now seek an order for production. Rather it asserts that the circumstances of Dynamic’s loss of possession should be disclosed in a list of documents. Although the notice of motion does not refer to the ADRO device, Polaris makes the same submission in relation to it. In the circumstances I do not need to pursue this issue.

Confidentiality undertakings

8                     Confidentiality undertakings were given by Polaris in August 2006 when pre‑issue discovery was given by consent to Dynamic and Plantronics. Plantronics has waived the bulk of its claims to confidentiality, but has redacted client identification information. Polaris does not contest the redaction, at least in relation to the liability aspects of the case. Dynamic continues to assert confidentiality in relation to documents 1, 3 to 12, 14, 15, 18, 19, 20 and 24 in the Lists of Documents sworn on 10 May and 29 September 2006 (the confidential documents).

9                     In her affidavit Polaris’ solicitor has explained why Polaris needs unfettered access to the confidential documents. She expresses the opinion, having examined them, that they do not appear to disclose trade secrets or other commercially sensitive information the disclosure of which to Polaris for the purposes of the litigation could prejudice Dynamic. As to the Ethics Committee documents (15, 18, 19 and 24) the solicitor deposes as follows:

“my review of the documents indicates that much of the information contained in them is now publicly available or available to Polaris through discovery. For example, the general background to and aims of Dynamic is published on its website and the hypothesis and aims of the proposed research contained in document 15 are similar to those contained in the earlier versions of the comparison report which have been discovered in the proceeding. Further, Dynamic evidently did not consider that the information in document 15 contained any commercial or patentable information at the time that the document was submitted, as it did not submit that information separately and mark the document ‘Commercial in confidence’ as it was invited to do. Finally, the information disclosed is for research that had a proposed commencement date of July 2003 and a proposed date of completion of December 2005. Thus if any of the information was commercially sensitive at the time the document was prepared it is likely that this is no longer the case.”

10                  Dynamic filed no affidavit in response to the motion. Its written Outline of Submissions does not mention Polaris’ claim to be released from confidentiality. Its counsel’s oral submissions did not directly deal with the confidential documents. However, when addressing the question of further discovery, reference was made to additional Ethics Committee documents listed in the addendum to the “Further Discovery” heading of his written submissions. The relevant part of the addendum lists twenty documents, including documents 15, 18 and 19. As to the list as a whole, counsel said:

“They relate to other areas of enquiry which do have a certain degree of commercial value to them. Now that value does tend to lessen over time, seeing that we are now in 2007, but there are elements of the proposals and the reports that go to the Ethics Committee that do not relate to anything to do with SoundShield and in these circumstances my client wishes to reserve its position with respect to maintaining issues of privilege because they are commercially sensitive and they would give a commercial advantage to a competitor to know what my client is working on or considering to do.”

11                  I have inspected the confidential documents. Documents 3, 10, 11 and 12 have been discovered by Plantronics. They have been released from confidentiality by orders made by consent on 29 August 2006 except in so far as they disclose client names. Dynamic did not oppose Plantronics’ release of its documents from confidentiality. Indeed it consented to its doing so. In those circumstances, together with the fact that Dynamic has not filed any material in opposition to the release sought, Polaris should be released from its undertaking in relation to these documents.

12                  Document 5 is a document recording a telephone enquiry received by Dynamic from Mr Dillon of the National Acoustic Laboratories in relation  to the test results. The content of the document is plainly relevant to Polaris’ claim. I cannot see anything in it that justifies a confidentiality claim. The release should apply to it.

13                  Document 20 is the version of the Telstra specification used by Dynamic (TT4). It is one of the industry standards. It is described on its cover as an “Uncontrolled Document”. There is nothing in the document that justifies a claim by Dynamic to confidentiality. The release should apply to it.

14                  Document 15 is one of the Ethics Committee documents. It is a letter from Dynamic to the Committee enclosing an application for approval of a research project entitled “Investigations with digital signal processing strategies in audio applications for normally hearing listeners and individuals using hearing aids”. Parts 1 and 2 of this document (“Background/Aims” and “Significance”) are accepted by Polaris as confidential. This meets Dynamic’s concern expressed in the passage quoted at [10]. The balance of the document (experimental protocols, risks/safeguards, external support, potential conflict of interest) is not confidential.

15                  Document 18, another Ethics Committee document, is a letter from Dynamic to the Committee enclosing an annual progress report for the research project. This consists of a half page progress report, expressed in general terms. Unaided by any submissions from Dynamic as to the confidentiality of this particular document (cf the passage quoted at [10]), I conclude that it is not confidential. The document also contains a list of publications by Dynamic: three public presentations to professional bodies in the United States and one in an American Journal of Audiology. These are not confidential.

16                  Document 19 contains notes of a phone call made by Peter Blamey of Dynamic to Kerryn Baker of the Committee. It records Ms Baker informing Professor Blamey that Polaris had made an enquiry of her as to information she told Polaris was confidential and would not be disclosed to it. However, the document does not itself contain any confidential information.

17                  Document 24 is a letter of 21 June 2006 from Professor Blamey to Ms Baker enclosing the annual progress report on the project. However the report is not part of the document. All the reader derives from the document is that progress has been very good, and there have been four unidentified presentations since the last approval. None of this is confidential.

ORDERS

18                  Polaris should have orders to the effect of those sought in pars 1 to 3, 7 to 9, 10 and 14 to 17 of Polaris’ proposed orders. Otherwise the motion is dismissed.

Associate:

Dated:         3 May 2007