GE BetzDearborn Canada Company v Memcor Australia Pty Ltd [2013] FCA 78

FEDERAL COURT OF AUSTRALIA

Citation:		GE BetzDearborn Canada Company v Memcor Australia Pty Ltd [2013] FCA 78

Parties:		GE BETZDEARBORN CANADA COMPANY v MEMCOR AUSTRALIA PTY LTD

File number(s):		NSD 491 of 2010

Judge:		JAGOT J

Date of judgment:		7 February 2013

Catchwords:		INTELLECTUAL PROPERTY – application for joinder – application for service outside jurisdiction – whether prima facie case established – discretionary considerations

Legislation:		Federal Court Rules 2011 (Cth)

Cases cited:		ACCC v Yellow Page Marketing BV [2010] FCA 1218 Australian Broadcasting Corporation v Lenah Game Meats (2001) 208 CLR 199; [2001] HCA 63 Bayer Pharma Aktiengesellschaft v Genentech, Inc [2012] FCA 1467 Caterpillar Inc v John Deere Limited (1999) 44 IPR 472; [1999] FCA 517

Date of hearing:	7 February 2013

Place:	Sydney

Division:	GENERAL DIVISION

Category:	Catchwords

Number of paragraphs:	37

Counsel for the Appellant:	D Shavin QC with C Dimitriadis

Solicitor for the Appellant:	Corrs Chambers Westgarth

Counsel for the Respondent:	C L Chochrane

Solicitor for the Respondent:	Allens Linklaters

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 491 of 2010

BETWEEN:

GE BETZDEARBORN CANADA COMPANY

Appellant

AND:

MEMCOR AUSTRALIA PTY LTD

Respondent

JUDGE:	JAGOT J
DATE OF ORDER:	7 FEBRUARY 2013
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. Siemens Industry, Inc be joined as the third respondent in this proceeding.

2. The applicant be given leave to file a third amended application, third amended statement of claim and third amended particulars of infringement in the form annexed to the applicant’s interlocutory application amended 14 December 2012.

3. The applicant be given leave to serve the third amended application, third amended statement of claim and third amended particulars of infringement out of the jurisdiction on Siemens Industry, Inc at the offices of its registered agent, The Corporation Trust Company, at Corporation Trust Centre, 1209 Orange Street, Wilmington, Delaware, United States of America.

4. Orders 3, 4, and 5 of the Orders of the Court dated 30 November 2012 in this matter be vacated.

5. The first and second respondents/cross claimant(s) file and serve any defence to the third amended statement of claim and any amended cross-claim by 15 February 2013.

6. The applicant file and serve any Reply and any defence to amended cross-claim by 22 February 2013.

7. The first and second respondents/cross claimant(s) file and serve any reply to defence to amended cross-claim by 1 March 2013.

8. The first and second respondents pay the applicant’s costs of and incidental to the interlocutory application, as agreed or taxed.

9. The matter be listed for further directions on 12 March 2013 at 9:30am.

10. Liberty to restore on 48 hours’ notice.

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

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 491 of 2010

BETWEEN:

GE BETZDEARBORN CANADA COMPANY

Appellant

AND:

MEMCOR AUSTRALIA PTY LTD

Respondent

JUDGE:	JAGOT J
DATE:	7 FEBRUARY 2013
PLACE:	SYDNEY

REASONS FOR JUDGMENT

The application

1 This is an interlocutory application filed on 14 December 2012 in which the applicant seeks joinder of a third respondent, Siemens Industry Inc (‘SII’); leave to file a third amended application, statement of claim and further amended particulars of infringement; as well as leave to serve the relevant documents on SII outside the jurisdiction, specifically the office of its registered agent in the United States of America.

2 The amendments proposed in the third amended application, statement of claim and particulars of infringement are amendments which, in substance, specify the claims against SII. In other words, the leave which is sought to file the amended pleadings is consequential upon any joinder of SII and the grant of leave to serve SII outside the jurisdiction.

The rules

3 The relevant provisions of the Federal Court Rules 2011 (Cth) (Federal Court Rules) which are engaged by the present application are as follows.

4 In relation to the joinder application, r 9.05(1) provides relevantly that:

(1) A party may apply to the Court for an order that a person be joined as a party to the proceeding if the person:

…

(b) is a person:

…

(ii) whose joinder is necessary to ensure that each issue in dispute in the proceeding is able to be heard and finally determined; or

(iii) who should be joined as a party in order to enable determination of a related dispute and, as a result, avoid multiplicity of proceedings.

The applicant relies on each of those subclauses.

5 The applicant also relies on r 9.02, which provides:

An application may be made by 2 or more persons, or against 2 or more persons, if:

(a) a separate proceeding could be made by or against each person in which the same question of law or fact might arise for decision; and

(b) all rights to relief claimed in the proceeding (whether joint, several or alternative) arise out of the same transaction or event or series of transactions or events.

6 In addition, rr 10.42 and 10.43 are relevant to the application for leave to serve SII outside the jurisdiction.

7 Under rr 10.43 service of an originating application on a person in a foreign country is effective only if, relevantly, the court has given leave under r 10.43 (2) before the application is served. Rule 10.43(2) provides that a party may apply to the court for leave to serve an originating application on a person in a foreign country in accordance with a convention, the Hague Convention or the law of the foreign country. Particularly relevant is r 10.43(4). It provides that:

(4) For subrule (2), the party must satisfy the Court that:

(a) the Court has jurisdiction in the proceeding; and

(b) the proceeding is of a kind mentioned in rule 10.42; and

8 It is convenient to say at the outset that what might be described as the formal requirements of each of these rules is satisfied in the present case. The evidence establishes that the proceeding is of a kind mentioned in r 10.42 and the court does have jurisdiction in the proceeding. Otherwise, the real issue under that rule is whether there has been established a prima facie case for all or any of the relief claimed in the proceeding. A subsidiary but no less important issue is that of the residual discretion which is vested in the court as to whether or not there should be joinder and service outside the jurisdiction, given the current state of the proceeding; the length and complexity which will be added to the proceedings by reason of joinder and service of SII outside the jurisdiction, and the willingness of SII to proffer certain undertakings to which I shall return.

Evidence

9 It is appropriate to move to the question of the evidence on which the applicant relies. It consists of an affidavit of Mr Matthew Swinn, who is the solicitor with the carriage of the matter on behalf of the applicant, as well as an affidavit from Mr Paul Davis, who is a patent attorney. At the outset of this matter it was indicated by the respondents that they proposed to make a series of objections to the applicant’s evidence and those objections have been recorded in a document, which I have taken into evidence as Exhibit 1 in the proceedings. I informed the respondents that I did not propose to hear objections on evidence in circumstances of an interlocutory application and submissions to the effect that no weight should be given to evidence could be made in any event. I have now had the opportunity to consider the evidence and have heard what has been said by the respondents about why some of that evidence should or should not have been admitted or should not be given any weight.

10 I will deal first with the affidavit of Mr Davis. There is no doubt that if this were a final hearing the affidavit of Mr Davis, it seems to me, would be inadmissible unless some other basis of expertise than the fact that he is a patent attorney were established. The fact that he holds a Bachelor of Engineering in Manufacturing Systems would not be sufficient to establish that he has expertise relevant to the opinions which he expresses. Those opinions, in effect, involve analysis of the relevant devices of the respondents as against the claims of the patents in issue. He reaches the opinion, for example, that the MemPulse device incorporates each of the features of claim 1 of the so-called 364 Patent, and that another Memcor device, Memcor CS (s10T) device also incorporates each of the features of claim 1 of the 364 Patent.

11 This, however, is an interlocutory application. It seems to me that in circumstances where there is no evidence whatsoever from the respondents suggesting in any way that there is a dispute – at least for the purposes of these interlocutory proceedings – about the evidence that Mr Davis gives, it would be inappropriate to have excluded his evidence in response to any objection, had I permitted an objection to be made, or indeed to give such evidence no weight.

12 This is an interlocutory proceeding seeking orders for joinder and service outside the jurisdiction. While the significance of joinder and service outside the jurisdiction should not be underestimated it is not an application which seeks any form of determination, even on an interlocutory basis, of substantive rights or interests of any party. Taking into account that fact I can see no reason not to accept Mr Davis’s evidence at face value at least for the purposes of this application.

13 There is one other matter that should be noted in this regard. Mr Davis’s affidavit is dated 20 December 2012, was filed on 21 December 2012 and I infer was served on or about the same date. It is now 7 February 2013 and I understand – and it is not suggested otherwise – that the applicant received no notice of any objection to the affidavit material which it served in December 2012. To the contrary, the first notice that it had of any objection was the submissions filed by the respondent and which are dated 7 February 2013. The substance of the objections, moreover, would not have been apparent until the applicants received a copy of Exhibit 1, which, of course, happened only during the hearing today.

14 For these reasons I do accept, for the purposes at least of this interlocutory application, the opinions which Mr Davis has given. Finally on that issue, as was submitted by Mr Shavin QC on behalf of the applicant, even if that material had not been taken in as evidence it would have been open to him to put exactly the same material in the form of a submission. The same result would have been reached, because there is annexed to Mr Davis’s affidavit the primary material from which the same inference can be drawn, albeit with much more work, no doubt, on the part of the applicant in explaining it to me and much more work on my part.

15 In sufficient to say that that Mr Swinn’s affidavit annexes a large number of documents from various websites. One class of website is what may loosely be described as websites of Siemens. Insofar as it might be suggested that documents that come from a website of Siemens itself should be given no weight or would otherwise be inadmissible, I would not accept such a submission. I can see no reason why I would not look at the face of such documents and infer that all the evidentiary requirements for business records had been satisfied, such as personal knowledge of the matters set out therein. It seems to me inconceivable that there would be on websites which on their face show they had been issued by a Siemens company, information published to the world by someone who did not have personal information.

16 The real issue about the documents that come from this class is that Siemens involves a group of companies with a relatively complicated corporate structure. Issue is taken with the suggestion that statements made on behalf of one company can necessarily be taken to have anything to do with another company. In particular, the statements made by various Siemens companies cannot be seen to say anything relevant about SII, being the company who is sought to be joined in these proceedings.

17 The other classes of documents involve extracts from social networking sites for businesses purposes, such as LinkedIn. In the ordinary course I would accept that such information on a final hearing would be inadmissible. For the purposes of an interlocutory hearing the respondent has had ample opportunity to deal with the information and more to the point has, in fact, dealt with the information disclosed by the social networking sites. The respondents have put on affidavit evidence correcting errors in that information. It cannot be said, therefore, for the purpose of these proceedings that this information should be somehow disregarded. It strikes me that where such information is genuinely in dispute the respondents have taken issue with it and otherwise I infer that it is basically accurate.

18 There is a third group of documents which relate to what might be described as third party websites purporting to speak on behalf of activities of one or other Siemens companies themselves. I accept that those documents really are not entitled to too much weight, and indeed, I place no weight on them for the purposes of my determination.

19 This deals with the applicant’s evidence, insofar as there were intended to be objections made to the evidence or it was otherwise put that I should give the evidence no weight.

20 From the respondent’s point of view Mr Bruce Biltoft, the managing director of Memcor products for Siemens Ltd, has given an affidavit which, as I have said, amongst other things corrects errors from the LinkedIn and other social networking sites about various employees. There is also an affidavit from Richard Morgan who is a solicitor involved in the matter on behalf of the respondents which confirms the following: the domain name www.siemens.com, which also includes www.water.siemens.com, is owned by Siemens AG. Siemens AG is the overall parent company. The domain name www.siemens.com.au is owned by Siemens Ltd, Siemens Ltd being the Australian company and the second respondent to the proceedings as currently constituted.

Prima facie case

21 There was a debate between the parties about the meaning of a prima facie case within the scope of r 10.43(4)(c) which provides that the party, in this case the applicant, must satisfy the court that it has a prima facie case for all or any of the relief claimed in the proceeding.

22 The respondents emphasise the law in relation to prima facie case specified by the High Court in a series of cases, including most recently Australian Broadcasting Corporation v Lenah Game Meats (2001) 208 CLR 199; [2001] HCA 63 , to the effect that a prima facie case is established only if there is a probability that at the trial of the action the plaintiff will be held entitled to relief assuming the evidence remains the same. The respondents also emphasise, as is the case, that the strength of the necessary probability in question is connected with the nature of the rights asserted and the practical consequences likely to flow from the order made.

23 It seems to me that this latter proposition is the key to the difference between the competing positions of the applicant and the respondents on this issue. The applicants have correctly pointed out, in my view, that the nature of the rights sought to be asserted and the practical consequences likely to flow from the orders sought in this case is quite different from rights such as those asserted in an interlocutory injunction where it is sought to restrain or compel someone to take action. In this case all that is sought to be done is to join SII as a party to proceedings so that if a case is able to be established against them appropriate relief can be obtained.

24 In other words, although there will be practical consequences both for the current respondents and SII from joinder, this application does not involve an assertion of substantive rights. It is this reason, in my view, why the cases relating to joinder and service outside the jurisdiction to effect such joinder have emphasised that the requirement to demonstrate a prima facie case in this context is not particularly onerous, being the words of Bennett J in Bayer Pharma Aktiengesellschaft v Genentech, Inc [2012] FCA 1467 at [6] – [8], citing the decision of Gordon J in ACCC v Yellow Page Marketing BV [2010] FCA 1218 at [25]. That is, it is the context of such an application which ensures that the requirement to demonstrate the prima facie case is not particularly onerous.

25 In other words, if inferences are open on the material which, if they did become final findings of fact, would support the relief claimed, then that is sufficient to establish a prima facie case. Although it is true that it must be a process of reasoning which involved inference and not mere speculation, as referred to by both Bennett and Gordon JJ, the question is whether the inference is open on the documents. There does not need to be resolved a factual dispute between the parties such as, for example in this case, whether references to Siemens Water Technology can or should be understood as references to Siemens Water Technologies Corporation (SWTC). I mean by this that there are a series of documents attached to Mr Swinn’s affidavit which refer to Siemens Water Technology, but not SWTC, being the US company which merged with SII. It is said by the respondents, based on Mr Biltoft’s affidavit, that Siemens Water Technology is a term used in Australia to describe the business of the existing respondents in Australia in the area of waste and waste water. Mr Biltoft says that at no time has he understood such a reference in the Australian context to be a reference to SWTC. He said that what he understands such a reference to be in the overseas context is a reference to that part of the business of other members of the overall Siemens AG Group that is associated with providing products and services in the waste and waste water sector, not necessarily to SWTC.

26 This evidence may ultimately – if it is relied upon at a final hearing – be accepted. The point is that it is open on the face of the documents which have been tendered to infer involvement of the company, now SII, in the relevant actions. In this regard there is no dispute that on or about 1 April 2011 SII merged with another company called SWTC to form one legal entity under the name Siemens Industry Inc or SII, as a result of which all of the obligations, rights and responsibilities of SWTC were merged into SII.

27 However, this is not the only material which shows involvement of SII through the references to the earlier company, SWTC. There are other documents in relation to the relevant Memcor products, which, in fact, refer to SWTC and note that Memcor is a trademark of Siemens subsidiaries or affiliates, and in addition identify a specific employee as the relevant person for proposals, being an employee of SII.

28 This material is sufficient to enable inferences to be drawn, which in my view satisfy the requirement for a prima facie case as alleged, the prima facie case being put on three grounds, direct infringement, joint tortfeasance and authorisation.

29 As to direct infringement I consider that the correspondence from the respondent’s solicitor is evidence which would enable such an inference to be drawn. That letter of 20 October 2010 confirms that, at least for some period, risk and possession of the relevant Memcor technologies transferred to SWTC before shipments left the Memcor site in Australia. While it was pointed out that title remained in Memcor and title did not pass to SWTC until 30 days after the invoice had been provided, I accept the submissions of the applicants that it is at least open on this material to infer infringement by way of exploitation by SWTC itself of the technologies in Australia.

30 In terms of authorisation, I also accept that there is sufficient evidence to support the existence of a prima facie case. In short, as submitted by the applicants, the evidence shows that the relevant Memcor technologies have been manufactured by Memcor in Australia for the purposes of use within projects, both inside and outside of Australia, including use by SWTC. Although it is true that SWTC’s name appears only in the copyright description of the relevant documents describing the various projects it is significant in this case, as the applicant submitted, that this is not a case where the existing respondents have simply remained silent. The existing respondents, of course, are the persons who are alleged by the applicant to be party to the common design with SII. Mr Biltoft, the managing director of the second respondent and authorised to make an affidavit on behalf of the second respondent, has gone into evidence. His evidence in his affidavit is extremely confined. As the applicant said, despite having gone into evidence, there is no express denial by Mr Biltoft of any of the various inferences that are open on the material. The affidavit is extremely limited in extent and does not in any way suggest that there is no involvement of SII such as to constitute the existence of a common design with the existing respondents. It seems to me that this material of itself is sufficient to establish the prima facie case. There is other material in the affidavits which I do not think it is necessary to dwell on, including the various intellectual property rights vested in SII and the inventors involved in those patents, who include employees of both Siemens Limited and SII. The same material is relevant to the allegation that SII is a joint tortfeasor.

31 As such, I accept the applicant’s submission that there is a prima facie case for the relief which is sought. Otherwise, the relevant requirements of the rules, as I have said, are satisfied. These are proceedings of a kind mentioned in r 10.42. The court does have jurisdiction. There is a relevant affidavit, being the affidavit of Mr Swinn, which addresses the matters required by r 10.43(3). The relevant question that remains accordingly is one of discretion.

32 In terms of discretion, the first observation I make is that despite the fact that these proceedings have been on foot for some time they are, regrettably or otherwise, not that far advanced. Much time was taken up – not inappropriately in the circumstances – to ensure that when the proceedings did come on for hearing all relevant patents could be included. This is now the case. The proceedings have not dealt procedurally or otherwise with the two additional patents, which have been included and in respect of which discovery and other directions are likely to be made. Accordingly, despite the passage of time, in a procedural sense these proceedings are at a relatively early stage.

33 In terms of the discretionary considerations to which the respondents referred, I accept that the prospect of an account of profits and/or a claim for damages, assuming that the latter might be available against SII, is contingent in that it is dependent upon the applicant succeeding in establishing both infringement and successfully defending the allegations of invalidity. It is also speculative, at least in the sense that the applicants may elect to claim damages rather than an account of profits. I recognise that the applicant says that there is a legal issue, which may mean that even if it does not elect to claim an account of profits, it would still be entitled to claim damages. Leaving that aside, there is an element which is both contingent and speculative in respect of the claims – at least for pecuniary relief – against SII.

34 However, I do not think that I can take the approach advocated by the respondents, as set out in the first instance decision in Caterpillar Inc v John Deere Limited (1999) 44 IPR 472; 1999 [FCA] 517 at [26]. In short, this decision was overturned on appeal and the Full Court in that case reached a different view of the relevant discretion. Each case, of course, turns on its own facts, but in discretionary terms there is a prima facie case established here, so that if it is the case that the applicant succeeds in its claims, the only way in which the applicant can possibly obtain the whole of the pecuniary relief that the applicant seeks is by a claim against SII. It cannot seek the whole of that pecuniary relief against the existing respondents. Once this is appreciated, it becomes apparent that the additional complexity, length and cost that I accept will be incurred as a result of joinder of SII cannot outweigh the right of the applicant to seek this relief, a prima facie case for such relief having been established.

35 I will also deal with the issue of the undertakings which have been proposed by SII, which are set out in the affidavit of Mr Morgan. In particular, an undertaking is proposed that if the applicant is successful in proving infringement of the three patents by the two existing respondents, SII will not, either on its own or by its agents, servants or contractors, exploit those patents in Australia or authorise, induce, procure or join in a common design to exploit those patents in Australia.

36 I find persuasive the submissions made by the applicant as to why the proposed undertakings are insufficient. First, as the applicant said, assume that the undertaking is given and is enforceable as a contract between the applicant and SII under the law of the United States or Canada or elsewhere. Because there would have been no factual finding of the existence of any common design involving SII, in order to enforce the agreement, the applicant would have to prove for the first time the existence of such a common design. Moreover, the applicant would have to prove primary infringement. In these circumstances, SII would not be bound by any factual finding that might have been made about infringement in these proceedings. There could be no issue estoppel or res judicata as against SII. Moreover, the undertaking is a form of restraint on SII, but in no way deals with the question of pecuniary relief, which is what the applicant seeks in these proceedings. As such, the proposed undertakings do not make unnecessary the application for joinder of SII. Whatever might be the appropriate procedural directions to be made once SII is joined is a matter for future consideration and cannot be determined in the context of the current interlocutory application.

37 Weighing up all of the discretionary factors, including the impact that the joinder will have on the existing respondents, I cannot see any reason which would weigh against joinder. In terms of SII itself, there is no evidence of prejudice. In terms of the existing respondents, there will be, presumably, the issues of increased cost and time, but they are, first, unavoidable and, second, hopefully able to be managed in the most effective way possible. They are not sufficient in any event to preclude the applicant from seeking relief for a properly formulated claim, which has a genuine basis and which, on the evidence, meets the required standard of not only an arguable case, but a prima facie case. So for these reasons, I am going to make the following orders: