FEDERAL COURT OF AUSTRALIA

MMD Design and Consultancy Limited v Camco Engineering Pty Ltd [2019] FCA 1803

ORDERS

THE COURT ORDERS THAT:

1.    The parties file, within 14 days, draft short minutes containing any agreed orders proposed by the parties to give effect to the reasons of O’Bryan J published on 7 November 2019 or, in the absence of agreement, each of the parties file draft short minutes containing the orders proposed by that party and accompanying submissions in support of no more than 2 pages in length.

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

REASONS FOR JUDGMENT

O’BRYAN J:

Introduction

1    By originating application filed on 28 May 2019, the prospective applicants, MMD Design and Consultancy Limited (MMD UK) and MMD Australia Pty Ltd (MMD Australia) (collectively referred to herein as MMD), sought an order for preliminary discovery under rule 7.23 of the Federal Court Rules 2011 (Cth) (Rules) from the prospective respondent, Camco Engineering Pty Ltd (Camco). In general terms, MMD seeks preliminary discovery of engineering drawings prepared by Camco in the course of repairing, since 1 January 2016, the “tooth” component of mineral breakers used:

(a)    at the Solomon Hub iron ore mine site operated by Fortescue Metals Group (FMG) in the Hamersley Range in Western Australia;

(b)    at the BHP Yandi mine in the Pilbara region of Western Australia; and

(c)    at any other location or mine site.

2    MMD seeks the preliminary discovery in order to determine whether, by repairing the “tooth” component of mineral breakers used at those sites, Camco has infringed an Australian patent held by MMD UK and which is licensed exclusively to MMD Australia.

3    The application is opposed by Camco.

4    The application was listed for hearing on 3 October 2019 and the parties filed affidavit evidence in respect of that application. Responding to matters raised by the affidavit evidence, MMD applied at the hearing of the application for leave to amend its originating application so as to narrow the categories of documents sought by way of discovery. I gave that leave at the hearing.

5    As is usual for an interlocutory application of this kind, at the hearing of the application the affidavits filed by the parties were read without objection and the deponents were not cross-examined. Evidence was given on behalf of MMD by Mr Lee Hillyer, the Managing Director of MMD Australia, Mr Scott Vilé, a principal and patent attorney in the firm Wrays, the Australian patent attorneys and lawyers for MMD, and Mr David King, a principal and lawyer of Wrays. Evidence was given on behalf of Camco by Mr Bruce Cameron, the Managing Director of Camco, and Mr Mark Pullen, a principal and patent attorney in the firm Watermark Intellectual Property Pty Ltd, the patent attorneys and lawyers for Camco.

6    While the parties are in dispute as to the underlying issue, that being the possibility that Camco has infringed MMD’s patent, there is only limited controversy in the factual background to the present application.

7    At the conclusion of the hearing, I gave the parties leave to file further short submissions with respect to the categories of documents to be discovered and appropriate confidentiality orders, on the assumption that I was satisfied that preliminary discovery should be given.

8    For the reasons that follow, I am satisfied that it is appropriate to make an order that Camco give discovery of certain categories of documents, subject to a confidentiality regime.

Factual Background

9    The MMD group of companies conducts business in the design, manufacture and supply of mineral processing solutions and associated machinery serving the mining, quarrying and recycling industries. MMD UK is the member of the MMD group of companies responsible for the administration of the intellectual property of the group and is the registered proprietor of patents, trademarks and registered designs worldwide relating to MMD’s business. It grants other members of the MMD group the right to use its intellectual property rights and has granted MMD Australia the right to use those rights in Australia.

10    Relevantly, MMD UK is the owner of Australian patent number 2004289510 (the 510 patent) and has granted MMD Australia the exclusive right to use that patent in Australia. The 510 patent relates to a method of constructing a drum assembly for a mineral breaker and to the drum assembly per se, and particularly to the tooth construction on the drum assembly. Mineral breakers (also known as “sizers”) are used in the mining sector to break up large rocks that have been retrieved from the ground into smaller pieces as part of the process of extracting the minerals in those rocks. The type of mineral breaker with which the 510 patent is concerned has a number of rotating drum assemblies (also referred to as shaft assemblies). The drum assemblies are affixed to a drive shaft which rotates the drum assemblies. The drum assemblies have a number of “teeth” affixed to the assembly that make contact with the rocks as the drum assembly is rotated. A drum assembly with affixed teeth typically utilises a tooth constructed of a support body (or “horn”) to which is affixed one or more covers (also called “shells” or “caps”) and a tip (or “pick”) at the front of the tooth. The teeth, like other components of a mineral breaker, wear down and crack after prolonged use and require repair.

11    The central matter in dispute between the parties, for the purposes of this application, concerns the tooth construction on the drum assembly. The 510 patent describes this aspect of the invention, the subject of the patent, in the following terms:

In order to enable each tooth to withstand the breaking forces without snapping it is desirable to construct each tooth so as to have a core formed of a ductile metal which is covered with a tooth shell of a wear resistant material, which in itself can be relatively brittle. In order to be capable of breaking particularly hard minerals, such as for example granite, it is necessary to be able to transmit, from the drive shaft, relatively large forces. These large forces, in turn, exacerbate the securance of a tooth shell on the tooth core or horn and also require the core or horn construction to be robust enough to transmit the relatively high forces required.

According to one aspect of the present invention there is provided a tooth construction for a mineral breaker, the tooth construction including a tooth shaped support body covered by a shell which defines the outer shape of the tooth construction, the shell being composed of a plurality of covers which are fixedly secured to one another and/or to the support body by welding to define a unitary tooth construction the support body having a front face and an opposed rear face and the plurality of covers including at least a front cover weldingly secured to and seated in face to face contact with the front face of the support body and a separate rear cover weldingly secured to and seated in face to face contact with the rear face of the support body.

12    Claim 1 of the 510 patent is in the following terms:

A tooth construction for a mineral breaker, the tooth construction including a tooth shaped support body covered by a shell which defines the outer shape of the tooth construction, the shell being composed of a plurality of covers which are fixedly secured to one another and/or to the support body by welding to define a unitary tooth construction the support body having a front face and an opposed rear face and the plurality of covers including at least a front cover which is weldingly secured to and seated in face to face contact with the front face of the support body and a separate rear cover which is weldingly secured to and seated in face to face contact with the rear face of the support body.

13    MMD has supplied its mineral breakers to mining companies located in Western Australia including FMG, BHP and South32. MMD also supplies repair and maintenance services for mineral breakers to mining companies.

14    Camco is an Australian mechanical engineering business which provides engineering services to the resources and power generation sectors from its Perth based workshops in Canningvale and Belmont. One of the services Camco offers is to repair parts of mineral breakers for mining companies. As part of its business, Camco has provided repair and maintenance services to mining companies that use MMD’s mineral breakers.

15    In the period from about March 2012 until November 2015, MMD Australia provided Camco with confidential information concerning MMD’s mineral breakers pursuant to an agreement dated 26 March 2012 entered into by MMD Australia and Camco. MMD Australia provided that information to better enable Camco to provide repair and maintenance services in respect of MMD’s mineral breakers. The evidence before me, although imprecise, indicates that, during the course of the confidentiality agreement, MMD Australia provided Camco with certain technical information and drawings relating to MMD’s mineral breakers.

16    By its letter dated 4 November 2015 to MMD Australia, Camco terminated the confidentiality agreement. The letter stated:

Camco intends to continue providing a comprehensive repair and maintenance service to our customers including the refurbishment of sizers irrespective of the original equipment manufacturer. This will include in some cases the reverse engineering, modification and improvement of components required to repair equipment. We are taking steps to ensure that the work Camco will undertake will not in any way breach the terms of the Confidentiality Agreement or MMD’s intellectual property rights.

If you have any reason to believe Camco may be in danger of breaching the Confidentiality Agreement or infringing MMD’s intellectual property rights, please provide me with details of your concerns as soon as possible.

17    On 6 January 2017, Watermark, acting as lawyers for Camco, provided to MMD Australia’s then lawyers a list of documents still in Camco’s possession which potentially contained confidential information belonging to MMD Australia that had been received by Camco pursuant to the confidentiality agreement. The list comprised emails sent by MMD Australia to Camco and other documents which potentially contained technical information relating to MMD’s mineral breakers. Watermark advised that the emails also contained information relating to the business of Camco and that, while Camco needed to retain a copy of the emails as a record of its business dealings, Camco intended to restrict access to those emails. Watermark also advised that the documents in the list had been quarantined by Camco and that, prior to their destruction, Camco had to ensure that none were required for warranty or compliance purposes. The evidence did not reveal the content of the technical information in the emails and documents but I infer from the business dealings between MMD and Camco that it is likely that Camco had access to MMD’s drawings of its drum assemblies, including the tooth construction.

18    Mr Hillyer deposed that, in or about August 2017, he had discussions with an employee of FMG, Mr Simon Strickland, as to whether MMD Australia could improve the life-span of the mineral breakers used at FMG’s Solomon Hub mine site. During those discussions, Mr Strickland told Mr Hillyer that, at that time, Camco was repairing the mineral breakers at FMG’s Solomon Hub mine site. Mr Hillyer also deposed that other employees of FMG had told him that Camco had repaired mineral breakers at FMG’s Solomon Hub mine site.

19    On 28 August 2017, Mr Hillyer received an email from Mr Strickland attaching photographs of MMD’s mineral breakers at FMG’s Solomon Hub mine site which were being repaired by Camco (the Strickland photographs). On the basis of the Strickland photographs, Mr Hillyer thought it was possible that Camco was repairing the mineral breakers in a way that might infringe MMD’s patents. Following internal discussions held within the MMD group, in January 2018 Mr Hillyer met with Mr Scott Vilé to discuss the possibility that Camco was infringing MMD’s 510 patent by repairing MMD’s mineral breakers at FMG’s Solomon Hub mine site.

20    Subsequently, on 22 January 2018, Mr Hillyer received photographs from an anonymous source of what he understood to be FMG mineral breakers being repaired at Camco’s workshop (the anonymous photographs). Mr Hillyer deposed that, to his knowledge, only three mine sites in Western Australia used mineral breakers like those shown in the anonymous photographs. Those mine sites are FMG’s Solomon Hub mine site, BHP’s Yandi mine site and Rio Tinto’s Mesa A mine site. Mr Hillyer gave evidence that he believed the mineral breakers shown in the anonymous photographs came from either FMG’s mine site or BHP’s mine site because MMD repairs the mineral breakers at Rio Tinto’s mine site. Mr Hillyer sent a copy of the anonymous photographs to Mr Vilé of Wrays.

21    Mr Vilé deposed that he examined the anonymous photographs in order to ascertain if they disclosed infringements of the 510 patent. Mr Vilé reached the view that the mineral breakers depicted in the anonymous photographs represented a tooth construction that was likely to infringe many of the claims of the 510 patent. He could not however be certain, from his examination of the anonymous photographs, whether they infringed all of the claims.

22    In July 2018, Mr Vilé wrote to Camco, raising the possibility that Camco, through its repair of mineral breakers, might be infringing MMD’s intellectual property rights.

23    In August 2018, Mr Pullen of Watermark replied to Mr Vilé, denying there had been any breach of MMD’s patent rights.

24    Subsequently, in September and October 2018, Mr King of Wrays wrote to Mr Pullen raising the possibility that Camco was infringing the 510 patent by repairing MMD’s mineral breakers at FMG’s Solomon Hub mine site and South32’s Worsley Alumina mine site near Boddington. In order to avoid an application for preliminary discovery, Mr King proposed a meeting between MMD and Camco at which Camco would make available for inspection and discussion all design drawings of parts manufactured and/or supplied to customers of Camco, particularly FMG, BHP and South32.

25    On 22 October 2018, Mr Pullen replied to Mr King’s letters, denying that Camco had infringed any of the claims in the 510 patent. The focus of Mr Pullen’s letter and the subsequent communications between the parties was claim 1 of the 510 patent, and specifically the integer of claim 1 that required the tooth construction to have a separate rear cover weldingly secured to the rear face of the support body and seated in face to face contact with the rear face of the support body. Mr Pullen stated that Camco had found that the rear plate of the tooth construction did not need to be in face to face contact with and welded to the rear face of the support body. Mr Pullen also stated that Camco had not repaired or supplied a breaker drum assembly incorporating a tooth construction having the features of claim 1.

26    Further communications continued between Mr King and Mr Pullen. Mr King continued to propose a meeting between MMD and Camco at which MMD could inspect and discuss relevant documents belonging to Camco that would clarify whether or not it was infringing the 510 patent.

27    A without prejudice meeting was held between MMD and Camco at Camco’s office on 18 December 2018. Although the meeting was said to be without prejudice, each of the parties adduced evidence about the meeting without objection. At that meeting, Camco did not allow MMD to inspect any drawings prepared and used for the purposes of repair work undertaken by Camco. Instead, Camco prepared, for the purposes of the meeting, two drawings which it claimed were accurate representations of the tooth construction fitted to all breaker drum assemblies repaired by Camco since 1 January 2016 where such repairs involved the utilisation of a welded tooth construction. Camco also presented a physical model, which it had produced for the purposes of the meeting, of the tooth construction it used. Camco asserted that the model used the same Camco tooth components as used in the breaker drum assembly repairs undertaken at FMG’s Solomon Hub mine site since 1 January 2016. At the meeting, Camco asserted that, in the tooth constructions in its repair work, there was no face to face contact between the front and rear covers of the tooth with the respective front and rear faces of the support body and nor had the rear cover been weldingly secured to the rear face of the support body. On that basis, Camco asserted that it had not infringed the 510 patent.

28    Correspondence between the parties continued into 2019. In short, MMD’s lawyers maintained their request to inspect the drawings used by Camco in undertaking repairs of breaker drum assemblies at FMG’s Solomon Hub mine site, BHP’s Yandi mine site and South32’s Worsley Alumina mine site. Those requests were refused.

29    Mr Hillyer deposed that, based on the information currently available to MMD, it believes that the way Camco has repaired MMD’s mineral breakers may have infringed the 510 patent but that MMD needs more information to determine whether that is the case. Mr Hillyer also deposed that it is standard industry practice to keep drawings and other documents relating to the repair of mineral breakers. For that reason, MMD believes that Camco is likely to have drawings and other documents that will provide more information about the construction used by Camco in the repair of MMD’s mineral breakers. MMD believes that those drawings and documents will allow MMD to determine whether Camco has infringed the 510 patent.

Relevant principles

30    Rule 7.23 of the Rules provides as follows:

(1)    A prospective applicant may apply to the Court for an order under subrule (2) if the prospective applicant:

(a)    reasonably believes that the prospective applicant may have the right to obtain relief in the Court from a prospective respondent whose description has been ascertained; and

(b)    after making reasonable enquiries, does not have sufficient information to decide whether to start a proceeding in the Court to obtain that relief; and

(c)    reasonably believes that:

(i)    the prospective respondent has or is likely to have or has had or is likely to have had in the prospective respondent’s control documents directly relevant to the question whether the prospective applicant has a right to obtain the relief; and

(ii)    inspection of the documents by the prospective applicant would assist in making the decision.

(2)    If the Court is satisfied about the matters mentioned in subrule (1), the Court may order the prospective respondent to give discovery to the prospective applicant of the documents of the kind mentioned in subparagraph (1)(c)(i).

31    Rule 7.23 was recently considered by the Full Court of the Federal Court, coincidentally in a patent context, in Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd (2017) 257 FCR 62. The Full Court reaffirmed a number of well-established principles, including that the rule is to be beneficially construed so as to give it the fullest scope that its language will reasonably allow (at [4] per Allsop CJ and at [172(a)] per Nicholas J). The rule requires that the prospective applicant reasonably believes that he or she may have a right to obtain relief in the Court; but the rule does not require that the prospective applicant reasonably believes that he or she actually has the right to obtain relief (at [8] per Allsop CJ and at [108] per Perram J). As Perram J observed:

FCR 7.23(1) is not about giving preliminary discovery to those who believe they do have a case. Its wording unequivocally shows that it is about those who do not know that they have a case but believe that they may. In terms, it authorises what traditionally have been referred to as fishing expeditions; that is to say, evidentiary adventures in which the goal is not to find proof of a case already known to exist, but instead to ascertain whether a case exists at all.

32    In assessing the reasonableness of the belief, it is only necessary to show that the belief is founded on considerations or views reasonably open, even if contested as incorrect by others (at [69] per Allsop CJ and at [121] per Perram J). In contrast, a belief that is based on considerations or views that are unreasonable, untenable, irrational or baseless would not be reasonable (at [69] per Allsop CJ).

33    If the conditions stipulated in subrule 7.23(1) are satisfied, subrule 7.23(2) gives the Court a discretion to order the prospective respondent to give discovery of the documents of the kind mentioned in subparagraph 7.23(1)(c)(i). Recognising the intrusive nature of the order, the discretion ought to be exercised to require discovery of information that is necessary, but no more than that which is necessary, to overcome the insufficiency of information possessed by the prospective applicant, to enable a decision to be made whether to start a proceeding: Glencore International AG v Selwyn Mines Limited (2005) 223 ALR 238 at [13], citing Alphapharm Pty Ltd v Eli Lilly Australia Pty Ltd [1996] FCA 391 at 26-27. In an appropriate case, such as an alleged patent infringement, the Court may make an order for preliminary discovery subject to an undertaking with respect to the confidentiality of the discovered information: see for example SmithKline Beecham Plc v Alphapharm Pty Ltd [2001] FCA 271 (SmithKline Beecham) at [31].

Is subrule 7.23(1) satisfied?

34    Camco submitted that MMD has not established that either paragraph (a) or (b) of subrule 7.23(1) is satisfied. Camco does not contest paragraph (c).

Paragraph (a)

35    As noted above, paragraph (a) requires MMD to establish that it reasonably believes that it may have the right to obtain relief in the Court from Camco. Camco conceded that MMD subjectively believes that it may have a right to relief for infringement of the 510 patent; it contested, though, that MMD had established that that belief was objectively reasonable.

36    Camco submitted that Mr Hillyer’s belief was based on the Strickland and anonymous photographs. However, the evidence does not establish that the mineral breakers depicted in those photographs were repaired by Camco. In the absence of such evidence, Camco submitted that there was no reasonable basis to Mr Hillyer’s belief that Camco may have infringed the 510 patent.

37    In my view, the evidence adduced by MMD on this application is sufficient to establish that Mr Hillyer has a reasonable belief that Camco may have infringed the 510 patent.

38    First, MMD has supplied mineral breakers to the mine sites of FMG, BHP and South32.

39    Second, between 2012 and 2015, Camco provided repair and maintenance services in respect of the mineral breakers at those mine sites. In doing so, it had access to MMD’s confidential information in the nature of engineering drawings pursuant to the confidentiality agreement between MMD Australia and Camco.

40    Third, from 2016 and following the termination of the confidentiality agreement, Camco has continued to provide repair and maintenance services in respect of MMD’s mineral breakers at those mine sites. Such services include the supply of the tooth construction, or the shell for the teeth, for the mineral breakers. If Camco’s tooth construction incorporates the essential features of claim 1 of the 510 patent, Camco would infringe that patent.

41    Fourth, there is a reasonable basis for Mr Hillyer to believe that the Strickland photographs depict MMD’s mineral breakers that have been repaired by Camco. The photographs came from Mr Strickland of FMG and depict mineral breakers in use at FMG’s mine site. Mr Hillyer identified the mineral breakers as having been supplied by MMD. The evidence established that Camco repairs MMD breakers at the FMG mine site. Mr Cameron’s evidence about the Strickland photographs was coy. He deposed that he cannot tell from the photographs whether the breaker installation or any parts thereof was repaired by Camco. He also deposed that the Strickland photographs do not depict Camco’s workshops and therefore he did not believe that the photographs depict a mineral breaker which was being repaired by Camco (I interpolate, at the time the photograph was taken). I regard it as significant, though, that Mr Cameron did not say that the Strickland photographs do not depict a breaker installation that had been repaired by Camco. It is apparent from Mr Cameron’s affidavit that he left that possibility open.

42    Fifth, there is a reasonable basis for Mr Hillyer to believe that the anonymous photographs depict mineral breakers being repaired in Camco’s workshop. Mr Hillyer deposed that the walls of the building shown in the anonymous photographs look like the interior walls of Camco’s workshop which Mr Hillyer has visited and photographed. Again, Mr Cameron’s evidence was that he could not tell from the anonymous photographs whether they were taken at any of Camco’s workshops or whether the mineral breakers belonged to FMG. I again regard it as significant that Mr Cameron was unable to rule out the possibility that the anonymous photographs were taken at Camco’s workshop and that they depict mineral breakers belonging to FMG.

43    Sixth, MMD’s patent attorney, Mr Vilé, deposed that, in his opinion, the mineral breakers depicted in the anonymous photographs represented a tooth construction that was likely to infringe claim 1 of the 510 patent (amongst other claims).

44    On the basis of the foregoing evidence, I consider that there is a reasonable possibility that the Strickland and anonymous photographs depict MMD’s mineral breakers that were repaired by Camco.

45    Camco, and its patent attorney Mr Pullen, dispute that Camco has infringed claim 1 of the 510 patent. As outlined earlier, each of Mr Cameron and Mr Pullen deposed that Camco’s tooth construction for mineral breakers used at each of the FMG, BHP and South32 mine sites has a rear cover which is not weldingly secured to and seated in face to face contact with the rear face of the support body. At the without prejudice meeting between the parties in December 2018, Camco displayed a drawing and model of its tooth construction which purported to depict that separation between the rear cover and support body.

46    The question of possible infringement of the 510 patent is the issue in dispute between the parties. An application for preliminary discovery is not the occasion for a mini trial on that issue. MMD need only prove that it has a reasonable belief of possible infringement; it is not required to establish a reasonable basis for a belief that Camco has infringed the 510 patent. The evidence adduced by MMD on this application satisfies me that Mr Hillyer has a reasonable basis for his belief that Camco may have infringed the 510 patent.

Paragraph (b)

47    MMD must also establish that, after making reasonable enquiries, it does not have sufficient information to decide whether to start a proceeding in the Court to obtain relief.

48    Camco accepted that, in order to have sufficient information to decide whether to start a proceeding, MMD needs to know whether the tooth construction used by Camco bears all of the essential features of claim 1 of the 510 patent. Camco submitted, however, that the evidence MMD needs is not solely in Camco’s control. It argued that the alleged infringement is constituted by the use of Camco’s tooth construction in repairing mining equipment and the primary evidence of infringement is the repaired equipment itself, which is largely to be found on the mine sites. On that basis, Camco submitted that reasonable enquiries should include enquiries with the mining companies FMG, BHP and South32 to inspect their mineral breakers. It is common ground that MMD has not made such enquiries.

49    I do not accept that it would be reasonable for MMD to make such enquiries of FMG, BHP or South32. Mr Vilé deposed that, once a tooth construction is secured to the drum assembly, inspection of the tooth construction will not allow the inspector to determine how the tooth construction is assembled on the drum. In particular, the inspector will not be able to determine whether the rear or front covers of the tooth construction are in face to face contact with the support body without cutting the tooth constructions away from the support body (which would destroy the tooth construction). It is not reasonable to expect MMD to ask FMG, BHP or South32 to allow it to undertake destructive testing of their mineral breakers, nor could it be reasonably expected that FMG, BHP or South32 would agree to such a request.

50    In the circumstances, it is reasonable for MMD to make enquiries of Camco. The enquiry that has been made is to inspect drawings prepared for the tooth construction used by Camco in repairing mineral breakers at the FMG, BHP and other mine sites. Camco does not dispute that it has such engineering drawings that it has used in the course of work performed for its customers.

51    Camco further submitted that MMD already has sufficient information to decide whether to start a proceeding. It argued that the drawings and model shown to MMD at the without prejudice meeting in December 2018 revealed the construction technique used by Camco in all of the repair work that it has undertaken at the FMG, BHP and South32 sites. On the basis of that information, Camco submitted that MMD can decide whether it considers Camco has infringed the patent.

52    In my view, the information that has been provided by Camco to MMD is not sufficient for MMD to make a decision whether to start a proceeding. The information provided by Camco is secondary, not primary, information. The primary information is the engineering drawings used in the course of repairing the mineral breakers. The secondary information that has been provided by Camco to date may or may not be a reliable representation of the primary information. It is not a sufficient basis on which MMD can determine whether there has in fact been an infringement of its patent.

Exercise of discretion under subrule 7.23(2)

53    Camco further submitted that the Court should not make an order under subrule 7.23(2) of the Rules because such an order is unnecessary. It submitted that it has offered MMD the opportunity to have its tooth construction inspected by a mutually agreed qualified independent person. Camco says that such an inspection would provide MMD with the information it requires to determine whether it should seek relief, but MMD has consistently failed to take up that opportunity. Camco has proposed that course in order to protect the confidentiality of its engineering drawings which contain technical information that is confidential to Camco. To the extent the drawings contain such confidential information, Camco understandably does not wish to provide that information to its competitor, MMD.

54    The evidence before the Court concerning Camco’s offer to MMD was very limited. Counsel for Camco conceded that the offer had been made in verbal discussions between Camco and MMD. In his evidence, Mr Cameron referred to an invitation that Camco had given to MMD to identify an independent third party to inspect Camco’s tooth construction used at BHP’s Yandi mine site. However, Mr Vilé explained in his evidence that it would not be possible for a third party to determine whether the patent had been infringed by merely inspecting mineral breakers installed at the FMG, BHP or South32 mine sites. It would be necessary to undertake destructive testing which is unlikely to be acceptable to those companies.

55    At the hearing of MMD’s application, Camco did not proffer any form of undertaking or order that might obviate the need for an order for preliminary discovery.

56    Camco further submitted that, if an order for preliminary discovery were to be made, the order should be cast in a manner that would protect Camco’s confidential information. Camco submitted that the order should be confined to the discovery of documents necessary to allow MMD to decide whether it should commence proceedings. Further, Camco proposed that the order be limited such that:

(a)    inspection of the discovered documents be limited to independent experts and MMD’s professional advisors;

(b)    the documents to be discovered be limited to engineering documents created for the repair or refurbishment of equipment that involves the fabrication of a welded tooth construction for a mineral breaker as that expression is used in the 510 patent; and

(c)    Camco be permitted to redact welding, materials and irrelevant dimensional details from discovered documents prior to inspection.

57    As noted earlier, at the conclusion of the hearing I gave Camco leave to file further short submissions with respect to the categories of documents to be discovered and appropriate confidentiality orders, on the assumption that I was satisfied that preliminary discovery should be given, and I gave MMD leave to reply to Camco’s submissions and propose alternative orders.

58    On 7 October 2019, Camco filed a proposed order in the following form:

The Prospective Respondent is to give discovery of tooth construction drawings showing:

(a)    a front perspective view,

(b)    a rear perspective view,

(c)     a vertical sectional view, and

(d)    a horizontal sectional view

of:

(i)     front cover relative to the front face of the tooth shaped support body (horn), and

(ii)    rear cover relative to the rear face of the tooth shaped support body (horn),

of any welded tooth constructions of a breaker drum assembly overhauled by the Prospective Respondent since 1 January 2016 for:

A.     the Solomon Hub iron ore mine site operated by Fortescue Metals Group in the Hamersley Ranges in Western Australia,

B.    the BHP Yandi mine in the Pilbara region of Western Australia, and

C.     any other location or mine site in Australia,

subject to an agreed confidentiality regime between the parties that limits disclosure of the drawings and any technical information contained in them to the Prospective Applicant’s external Australian solicitor, patent attorney and counsel.

59    On 9 October 2019, MMD filed a submission stating that the drawings which would be discovered by Camco under its proposed form of order would not provide MMD with sufficient information to determine whether or not Camco’s welded tooth construction infringes the 510 patent. MMD submitted that it is necessary to see the front and rear covers in the context of the entire design of Camco’s tooth construction, and not only relative to the front and rear faces of the support body. Camco’s proposed order focuses on the front and rear covers, but reasonable minds may differ with respect to the identity of those covers and also as to the definition of the front and rear faces of the support body. MMD further submitted that it is not clear whether the drawings which would be discovered by Camco under its proposed form of order would include welding information.

60    At Camco’s request, I granted it leave to file a short rejoinder to MMD’s submission, which it did on 14 October 2019. Camco submitted that the drawings which would be discovered by Camco under its proposed form of order would be drawings of the whole of Camco’s tooth construction (including the support body), including welding information. Camco filed a revised form of order to clarify the inclusion of the assembled tooth construction and the welding information.

61    In my view, the form of order proposed by Camco is unduly limited and is likely to prolong disputation between the parties. While the scope of discovery should be limited to the production of documents that are necessary to enable a decision to be made whether to start a proceeding, I accept MMD’s submission that the question whether Camco’s design infringes the 510 patent may be open to debate and it is necessary for all relevant drawings of the tooth construction to be inspected. In my view, concerns about confidentiality can be addressed by limiting discovery, at least in the first instance, to independent experts and MMD’s professional advisors.

62    In my view, it is appropriate to make an order for discovery in the following form (which is an amalgamation of the order sought by MMD’s amended application and Camco’s proposed order):

The Prospective Respondent is to give discovery of drawings of any welded tooth constructions for a mineral breaker overhauled, repaired or replaced by the Prospective Respondent since 1 January 2016 for:

A.     the Solomon Hub iron ore mine site operated by Fortescue Metals Group in the Hamersley Ranges in Western Australia;

B.    the BHP Yandi mine in the Pilbara region of Western Australia; and

C.     any other location or mine site in Australia,

63    I also consider it appropriate that an order be made that, until further order, inspection of the discovered documents be limited to MMD’s external Australian solicitor, patent attorney and counsel and upon them executing a confidentiality undertaking in favour of Camco in a form agreed between the parties or, failing agreement, determined by the Court. If MMD subsequently considers it necessary to consult with any other external expert, it can apply to the Court for an extension of the orders for inspection to such a person.

Conclusion

64    In conclusion, I am satisfied that the conditions set out in subrule 7.23(1) of the Rules have been met. I am further satisfied that it is appropriate in the exercise of my discretion under subrule 7.23(2) to order Camco to give preliminary discovery to MMD of the documents described in paragraph 62 above. Inspection of discovered documents will be limited in the first instance to MMD’s external Australian solicitor, patent attorney and counsel, who will have a right to inspect the documents under a confidentiality regime.

65    With respect to the costs of the application, I propose to make an order in the same form as that made by Finkelstein J in SmithKline Beecham at [32]. If MMD commences an action for patent infringement against Camco within a period of six months from the date of the order for discovery, the costs of the application for preliminary discovery will be at the discretion of the Court in that proceeding. If no such action is brought within that period, then MMD should pay the costs of Camco on this application.

66    I will direct the parties to propose a form of orders giving effect to these reasons within 14 days.

Associate:

Dated:    7 November 2019