FEDERAL COURT OF AUSTRALIA

Career Step, LLC v TalentMed Pty Ltd [2017] FCA 492

ORDERS

THE COURT ORDERS THAT:

1.    The respondents provide a computer expert nominated by the applicant, that expert being Mr Nigel Carson, with access to the respondents’ computers (including, as may be required, providing or inputting passwords) that store the content of the TalentMed Course (including every version of the TalentMed Course, and drafts of the TalentMed Course (TalentMed Course Materials)), by 26 May 2017.

2.    The respondents direct Mr Carson to the appropriate places where the TalentMed Course Materials are stored.

3.    The respondents permit Mr Carson to take copies of any material, data or information stored on the respondents’ computers recording the TalentMed Course Materials, on condition that:

(i)    Mr Carson provide the respondents with the copies taken of the TalentMed Course Materials for the purpose of any claim by the respondents that the documents are subject to legal professional privilege or contain confidential information of the respondents or do not constitute TalentMed Course Materials;

(ii)    the respondents complete their review within four business days of being provided with a copy of the TalentMed Course Materials;

(iii)    upon completion of their review, the respondents identify any items subject to a claim made by the respondents under (i) above;

(iv)    save for any document subject to a claim as referred to in (iii), Mr Carson may deliver to the applicant a copy of the TalentMed Course Materials, access to those materials being limited to:

(a)    the applicant’s legal representatives in these proceedings; and

(b)    the eight representatives of the applicant listed in attachment A of annexure A to the orders made on 15 May 2017 who have undertaken to keep the course materials confidential on the terms of the undertaking at annexure A to those orders,

which copy the applicant may use only for the purpose of these proceedings.

REASONS FOR JUDGMENT

ROBERTSON J:

1    These proceedings were commenced on 18 April 2017. The applicant claims, amongst other things, that the respondents have infringed its copyright in the Medical Transcription and Medical Transcription Editor course materials provided by the applicant to the first respondent pursuant to an Academic Partner Agreement dated 1 September 2006 by, amongst other things, reproducing or authorising the reproduction of the whole or a substantial part of the literary works contained in those materials, without the licence of the applicant. The applicant also claims that the first respondent breached the terms of the agreement by using the course materials otherwise than for the “sales and marketing” of the applicant’s course, without the prior written consent of the applicant.

2    The applicant also claimed interlocutory relief to restrain the respondents from infringing the applicant’s copyright in the materials.

3    The proceeding has been set down for an early final hearing, commencing on 26 June 2017, insofar as it raises the copyright and associated contractual claims.

4    The parties have been able to agree on an interim regime. Many other timetabling matters have also been agreed or decided by me.

5    Under earlier orders made on 8 May 2017, the parties have given each other access to their respective course materials. By order made today the respondents are to provide to the applicant not only a paper copy of the disputed course materials but also online access to the disputed course materials, pursuant to an agreed confidentiality regime.

6    Two interlocutory issues require my decision.

7    The applicant seeks an order under r 14.01 of the Federal Court Rules 2011 (Cth) in effect requiring the respondents to provide a computer expert, nominated by the applicant, with access to the respondents’ computers that store the content of the TalentMed Course, including every version of that course, and drafts of that course, permitting the computer expert to take copies of any material, data or information stored on the respondents’ computers recording the course materials.

8    Rule 14.01 provides:

14.01    Order for inspection etc of property

(1)    A party may apply to the Court for an order:

(a)    for any of the following:

(i)    inspection of any property;

(ii)    taking a sample of any property;

(iii)    making an observation of any property;

(iv)    trying an experiment on or with any property;

(v)    observation of a process;

(vi)    copying, transcription or production of a document or other material, data or information (however stored or recorded); or

(b)    authorising a person to enter land, or do any other act or thing, for the purpose of gaining access to the property.

(2)    An application under subrule (1) must be accompanied by an affidavit stating the following:

(a)    the property to be inspected, sampled, observed or subject to experiment;

(b)    the process to be observed;

(c)    the document, material, data or information to be copied or transcribed;

(d)    why the order is necessary;

(e)    the access required for entry on to the land or for doing any other act or thing.

(3)    In this rule:

property includes land, a document or any other thing, whether or not the land, document or other thing is in the possession, custody or power of a party to the proceeding.

9    The affidavit relied on for this purpose was (certain paragraphs of) the affidavit sworn on 15 April 2017 by Mr Ryan Ewer, the Chief Marketing Officer of the applicant. The respondents relied on certain paragraphs of affidavits of Mr Arkell, the third respondent, affirmed 4 May and 22 May 2017.

10    The applicant also seeks an order in the following terms:

The Respondents give verified discovery by 13 June 2013 of documents within the Respondents’ possession or control that fall within the following categories:

(a)    communications between the Respondents (including between staff and contractors of the First Respondent); and

(b)    communications between the Respondents (including staff and contractors of the First Respondent) and third parties,

in relation to [evidencing or referring] to the development of the TalentMed Course Materials.

The words in square brackets were the response of counsel for the applicant to my observation in the course of argument that the words “in relation to” appeared too broad.

11    Given the short period before the final hearing of the identified issues (see [3] above), I do not consider that the applicant’s application for these orders is generally premature. I do however take into account in relation to the application for discovery that the respondents have not yet filed a defence: under orders I have made today they are to do so by 12 noon on 25 May 2017. In this respect, see r 20.13 of the Federal Court Rules.

12    Dealing first with the application for discovery, I am not persuaded that an order for discovery in the terms sought by the applicant should be made. I take into account the imminence of the respondents’ defence and I also take into account the width of the order sought. I refuse that application but without prejudice to the applicant, if so advised, renewing that application in respect of documents directly relevant to an issue raised by the pleadings, once the defence has been filed and served. Without deciding the issue, my present inclination would be to consider that “documents relating to [referring to] the development” of the respondents’ materials would be too broad. More precise thought needs to be given not only to “referring to” but more particularly to “development”.

13    Turning to the application under r 14.01, although I regard the facts in Cadence Australia Pty Ltd v Chew [2008] NSWSC 1074 as distinguishable, with respect I regard as useful the reference by Hamilton J to the purpose of the corresponding rule of the Uniform Civil Procedure Rules 2005, that purpose being “enabling the proper determination of any matter in question in any proceedings.” In terms of the Federal Court Rules, regard must be had to s 37M of the Federal Court of Australia Act 1976 (Cth).

14    I was also referred to the judgment of Greenwood J in Norm Engineering Pty Ltd v Digga Australia Pty Ltd [2005] FCA 1378. That judgment concerned an ex parte application. Having referred, at [13] and following to the strength of the case, his Honour said, at [21]: “Any question of whether an order should be made is to be assessed against the balancing factors designed to protect the interests of the respondent, the extent of inspection to be allowed, the strength of the applicant’s case and the utility and contribution the order might make, in a balanced way to the resolution of the issues in the matter.” See also at [25] and following dealing with how the discretion should be exercised in those circumstances under the then Rules. At [32] his Honour concluded:

It seems to me that the interests of the proceeding are served by enabling a step to take place which will be productive of the preservation of evidence and the inspection of any bucket of the applicant upon the respondent’s premises so as to enable a proper determination of one of the matters in question in the proceeding, namely, reproduction in a material form.

15    The respondents before me submitted that the evidence did not establish that such an invasive order was necessary and that the applicant had not shown that other processes of the Court, such as discovery, were inappropriate. Further, the respondents’ computers contained confidential and commercially valuable information as to the first respondent’s business and finance arrangements. The applicant and the first respondent are competitors, it was submitted. I accept that they are or may become competitors in Australia. The respondents also submitted that the proposed inspection order was unnecessary to facilitate proof of the applicant’s claim. A comparison of Version 1 and Version 2 of the first respondent’s course materials and the applicant’s materials ought to be sufficient to determine the copyright and breach of contract claims, it was submitted. The hardcopy materials had been made available to the applicant and eight named individuals under the Court’s orders made on 8 May and 15 May 2017.

16    In my opinion, on an interlocutory basis, there is sufficient strength in the applicant’s case to establish that factor. As to the utility and contribution that the order might make, I take into account that the disputed materials relate to an online course conducted by the first respondent; there is, arguably, no clear dividing line between Version 1 and Version 2 and the two versions are, arguably, not discrete. The most important consideration I take into account is that not only is the disputed material online but it is subject to revision at any time. Given, at least, the contract claim, I do not accept the respondents’ submission that inspection is unnecessary because an objective comparison of the materials is all that is required. I also take into account that under the proposed order, the expert is not to be engaged to compare the materials but to take copies of material recording the TalentMed Course Materials. I also consider that there is sufficient protection of the position of the respondents in the orders proposed by the applicant. Taking into account the factors identified by Greenwood J, I consider that the order proposed has utility and may well contribute to the resolution of the issues in the matter.

17    I will therefore make order 4 in the short minutes handed up. The parties have liberty to apply if there is any dispute about whether the computer expert nominated by the applicant, Mr Carson, ought to give a copy of the TalentMed Course Materials to the applicant or whether Mr Carson is undertaking an activity in accordance with the orders of the Court or in relation to any claim by the respondents that the documents are subject to legal professional privilege or contain confidential information of the respondents or do not constitute TalentMed Course Materials.

Associate:

Dated:    23 May 2017