FEDERAL COURT OF AUSTRALIA

Australian Rugby Union Limited v Canterbury International (Australia) Pty Ltd (No 1) [2012] FCA 497

REASONS FOR JUDGMENT

1    The applicant (‘ARU’) is the owner of a number of trademarks associated with the playing of rugby union. The respondent (‘Canterbury’) is a manufacturer of apparel. The ARU sues Canterbury alleging that it has, inter alia, used its trademarks without permission.

2    The ARU now seeks discovery prior to the delivery of its evidence in chief. Its basic point is that it does not know the extent of Canterbury’s use of the marks or of its marketing endeavours which it says are matters peculiarly within Canterbury’s knowledge. There are related contentions too: the ARU reserves the right to elect to receive an account of profits but says that it cannot be expected to undertake such an election without access to Canterbury’s documents.

3    Canterbury submits that the question of what needs to be discovered will be much clearer after the delivery of the parties’ respective evidence. Further it says that the information which the ARU seeks may be more efficiently garnered by other means. It offers, in substance, to inform the ARU in writing of its dealings with the goods associated with the ARU’s marks between 1 January 2010 and the present. In relation to its finances it offers to interrogate its data systems to locate the relevant accounting information. In the alternate, it says that if there is to be discovery then it should be standard discovery (rather than by categories); further that any discovery should be mutual.

4    It is important that approaches to discovery not be ossified into hard and fast rules. The problem which discovery addresses – fair provision to an opposing party of information known only to the other – takes place in a domain whose extent and tenor cannot be known in advance. Consequently the mechanisms by which the fair exchange of internal information are to be achieved also cannot be rigidly predicted in advance.

5    In that last regard the near ubiquity of electronically stored data and documents has now transformed the process of discovery away from anything even vaguely analogous to the issues confronting Chancery lawyers in the nineteenth century. That transformation has been both positive and negative. It is positive because a large quantity of significant communications now take place in media which are permanent. Unguarded views are often expressed in emails, SMS or through instant messaging platforms which in earlier more languid times were reserved for a quiet word between courses at lunch. Consequently, the rise of computerised communications and with them discovery thereof has been apt, in some cases, to ensure that there are now more ‘smoking guns’ than there have been in the past.

6    On the other hand, the transformation has been negative to the extent that the price paid for it has been one of dramatic proliferation both of original communications and of individual documents. In that regard a single document can now not only exist in multiple drafts but each of those drafts may exist in multiple locations and formats.

7    The problem of proliferation can be assuaged to an extent by the utilisation of search strategies but that process assumes that the documentation has been collected into a format which can be appropriately interrogated.

8   Observations of that kind ensure that there is no one correct way to approach issues of the present kind.

9    It has been the experience of some judges of this Court that the burdens of discovery can be reduced by requiring the parties to attend to their evidence before resorting to discovery. That approach exploits the generally observed phenomenon that as a proceeding progresses trialwards the matters in dispute generally become more distilled so that by postponing discovery one also reduces it. It also has the wholesome effect of postponing the incurring of costs and thereby making settlements more likely at an earlier time. Generally these observations provide good reasons for postponing discovery until after the provision of evidence.

10    But it need not be so. Where the progress of a proceeding does not or is not expected to lead to a process of issue distillation postponing discovery may be ineffective. In such cases delaying discovery until after evidence may lead to increased expense because aspects of the evidence may have to be attended to twice; once on the first pass and again on the second. Such cases are the minority but they are not non-existent. A rigid approach forbidding discovery in every case prior to the delivery of evidence would, for that reason, be unwise.

11    The present is such a case. At the moment the ARU does not know the extent of Canterbury’s contravening conduct. I do not see that it can be expected to put its case forward unless and until what Canterbury has been doing with these products is brought into the light. Although Canterbury has made efforts to identify the impugned products I do not consider that the ARU should be required to take its word for it. In reaching that conclusion I do not disregard the likely cost of the process – some $20,000 to $30,000 – or the likely inconvenience. Nor do I disregard the alternate means which Canterbury has suggested for dealing with the profits issue.

12    In its submissions Canterbury sought to show that there were many parts of the pleading on which it could not presently be said that the ARU needed discovery. So much may be correct but the discovery sought did not go to those issues. The categories sought were set out in the application book at p 32. I will not set them out. Categories 3, 4(b) and 11 were not pressed.

13    Categories 4-8 relate directly to the issue of what Canterbury has been doing with the products and should be allowed. Category 9 relates to sales statements to be provided by the ARU to Canterbury and may be placed in the same company. Category 10 was as follows:

Documents evidencing, recording or referring to the approval of the “Playing Uniforms” and “Licensed Products” (as defined in the Agreement) by the Plaintiff pursuant to clause 10.2 of the Agreement.

14    I do not consider this is necessary. If there are such approvals no doubt Canterbury will seek to rely on them as part of its evidence.

15    Category 12 is as follows:

Any documents relating to the denial by the Respondent of the allegations at paragraphs 11 to 12F of the Statement of Claim.

16    Paragraph 11 alleges that the ARU has a goodwill in the trademarks and uniform designs. I do not consider that it needs discovery from Canterbury on that topic. Paragraphs 12A to 12F are a series of allegations that Canterbury misled the public into thinking that it was authorised by the ARU to distribute the products. I do not think discovery is necessary on this issue. Categories 4 to 7 will reveal which products Canterbury was using. It either will or will not have the right to use those products – a matter by then known to the ARU – and Canterbury’s use either will or will not convey the alleged representations. Discovery will not further assist in that regard.

17    Categories 13 to 15 (as amended orally at the hearing of the application) are as follows:

13.    Documents recording, evidencing, constituting, referring or relating to clauses 7 and 8 of the Release, including, without limitation, Documents recording, evidencing, referring or relating to their negotiation, operation, meaning and effect.

14.    Documents recording, constituting, evidencing or relating to the basis or justification for each of the invoices set out at paragraph 22 of the Defence (the Invoices).

15.    Documents recording, constituting, evidencing the standard terms and conditions of sale referred to at paragraph 23 in the context of the Invoices.

18    These could be provided after the ARU’s evidence but to avoid wasteful duplication should be produced now. I am satisfied as to their relevance.

19    I return then to categories 1-2:

1.    Any Documents said to give rise to or support the implied term alleged by the Respondent at paragraph 4A of the Defence to the ASOC.

2.    Any documents relied upon the Respondent in support of the denial of paragraphs 4(j) and 4(l) of the ASOC.

20    Paragraph 4A of the Defence alleges an implied term that it would be able to use the marks until it had exhausted its stock. It is not alleged that this is a trade term. I do not accept that discovery would advance this issue.

21    Paragraphs 4(j) and 4(l) of the Amended Statement of Claim plead terms of the agreement. I do not regard discovery as necessary to that issue which may be resolved by a request for particulars of the denial.

22    I do not think it would be useful to order that the ARU should give standard discovery at this stage. Although the notion of mutuality has its attractions it is useful to see how clarified the issues become following delivery of the parties’ evidence before embarking upon it.

23    The order I will make is that by Monday 11 June 2012 Canterbury give electronic discovery of categories 4-9, except 4(b), and 13-15 appearing at pp 32-35 of the application book save that the references to paragraph 18 and 19 in categories 14 and 15 will be replaced by references to paragraphs 22 and 23 respectively.

24    Costs will be costs in the cause.

Associate:

Dated:    15 May 2012