FEDERAL COURT OF AUSTRALIA

Motorola Solutions, Inc. v Hytera Communications Corporation Ltd (Defence Amendment) [2020] FCA 280

ORDERS

THE COURT ORDERS THAT:

1.    The parties bring in a minute of order to give effect to these reasons within 14 days.

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

REASONS FOR JUDGMENT

PERRAM J:

introduction

A potted summary of the present dispute

1    This case concerns allegations by the Applicant (‘Motorola’) that the Respondents (‘Hytera’) have infringed three of its patents by, inter alia, selling and distributing in Australia two way radio handsets and base stations containing particular firmware and by infringing its copyright in certain computer code (‘the Motorola Works’) in most, but not all, of those devices. There are 59 individual product lines involved in the patent infringement allegations, most of which are handsets with a smaller number of base stations and repeaters also included. A subset of 50 of those devices is involved in the copyright allegations.

2    Hytera now applies for leave under r 16.53 of the Federal Court Rules 2011 (Cth) (‘FCR’) to file and serve a Fifth Further Amended Defence (‘5FAD’). The application is supported by two affidavits of Ms Katrina May Crooks affirmed on 22 January 2020 and 6 February 2020. The application is opposed by Motorola which relies upon an affidavit of its solicitor, Ms Sue Maree Gilchrist, affirmed on 29 January 2020 (incidentally, the twenty-first of hers filed in this proceeding). The proposed 5FAD was attached to Hytera’s interlocutory application for leave to amend filed on 23 January 2020, but an updated version was annexed to Ms Crooks’ affidavit of 6 February 2020.

3    The trial of this action is presently part heard. On 16 August 2019, the parties concluded their submissions on most of Motorola’s patent infringement allegations following a trial of 13 days’ duration which had commenced on 22 July 2019. Some months before that trial was to commence, on 29 November 2018, however, Motorola applied to amend its case to include the copyright allegations. I acceded to that application on 13 December 2018 and made orders granting leave on 18 December 2018: Motorola Solutions, Inc. v Hytera Communications Corporation Ltd (No 6) [2018] FCA 2017 (‘Motorola (No 6)’). Pursuant to that leave Motorola filed its amended pleading on 19 December 2018.

4    The 50 Hytera devices the subject of the copyright suit listed at §31D of the Second Further Amended Statement of Claim (‘2FASOC’) are, as I have said, a subset of the 59 devices the subject of the patent suit listed at 2FASOC §§7(a)-(ggg). In each case, it is alleged that the relevant Hytera device embodies either a reproduction in material form of the whole or a substantial part of one or more of the Motorola Works or an adaptation of the same. Both of those alleged sets of acts are acts which are comprised in the copyright in the Motorola Works under s 31(1) of the Copyright Act 1968 (Cth) (‘the Act’) and the doing of such an act without the licence of the owner is an infringement of that copyright: s 36. Motorola also alleges that Hytera has infringed the same copyrights by selling, distributing and publicly exhibiting the Hytera devices. These acts too, if established, will be infringements: ss 37 and 38.

5    The infringement allegations will require for their resolution the positing of two questions: (a) whether the Hytera devices do embody software which is objectively similar to the whole or a substantial part of one of more of the Motorola Works; and, (b) whether there is a causal connection between the Hytera firmware and the Motorola Works: SW Hart & Co Pty Ltd v Edwards Hot Water Systems [1985] HCA 59; 159 CLR 466 at 462; CA Inc v ISI Pty Ltd [2012] FCA 35; 201 FCR 23 at 54 [175]. There are several ways a causal connection may be established but at the forefront of Motorola’s allegations is the contention that three of its former employees departed its employ for positions with Hytera and that they improperly took with them the Motorola Works which were then copied by Hytera as firmware for its devices when it knew that the code was Motorola’s. The causal connection it therefore will seek to prove is one of copying.

6    The raising by Motorola of these copyright infringement allegations imperilled the trial dates which had been set for the patent infringement allegations because the preparation of the former could not sensibly be accommodated within the time then remaining before the trial of the latter. Further, accommodating the amendments would have extended the duration of the trial beyond a length which the Court could then accommodate. Consequently, I determined that I would try the copyright infringement case over three weeks commencing on Monday 4 May 2020: Motorola (No 6) at [5]-[9]. In the meantime, the patent infringement allegations would proceed to trial in July and August 2019 as originally scheduled. This solution was not perfect but was the best which could be achieved in the circumstances.

7    The allegation that Hytera knowingly copied the Motorola Works grounds a contention by Motorola, pursued both as part of the patent and copyright cases, that it is entitled to aggravated damages to reflect the alleged flagrancy of Hytera’s conduct. To that extent at least the two cases overlap. I excised therefore the issue of flagrancy from the patent phase of the trial and deferred it to the subsequent copyright phase. This bifurcation of the trial into two phases did not result from an order for the determination of some issues in advance of others pursuant to FCR 30.01 and instead the patent and copyright phases are all part of the same trial. The procedural consequence of this is that the Court is part heard on the trial and I have not reserved judgment on the patent phase. The completion of the patent phase is, therefore, a practical rather than legal state of affairs.

The rewriting of the code

8    In April 2019, a few months after Motorola amended its pleadings to allege copyright infringement, Hytera began to rewrite the firmware in the 50 devices the subject of the allegations. It has approached this task by examining the allegations of copyright infringement which are made against it and then responsively either deleting individual files from the firmware or, in many cases, rewriting the files in such a way that Hytera can submit that they no longer infringe the copyright in the Motorola Works. To ease the passage of its proposed amendments, Hytera has already filed all of its evidence about this rewritten firmware. It did this in December 2019. That evidence does not disclose how Hytera rewrote the files from a software engineering perspective but it does confirm that the rewritten firmware is causally connected to the current firmware at least in the sense that the latter is the stepping off point from which the former has been crafted.

9    Motorola is critical of this approach and suggests that a surer way of arriving at non-infringing code would be to begin from scratch using software engineers who could be shown never to have been exposed either to the current Hytera firmware or the Motorola Works. Motorola referred to this kind of process as the use of a ‘clean room’. It has flagged its concern that the rewriting of the firmware in this fashion may result in the current firmware being merely cosmetically altered so that the appearance, but not the reality, of infringement is diminished. In argument, an example of a novel being rewritten in a different prose style but with the underlying story unaltered was proffered by way of analogy.

10    The fact that the rewritten firmware has been drafted, through an unexplained process, from the current allegedly infringing firmware may tend to suggest that it would be relatively straightforward in any new case concerning the question of whether the rewritten firmware infringes the copyright in the Motorola Works for Motorola to demonstrate requirement (b) above, that is to say, the requirement that there be a causal connection between the copyright work and the allegedly infringing work. As will be seen, it seems that Hytera is for certain limited purposes prepared to concede this.

Hytera’s application to file a Fifth Further Amended Defence

11    The central issue now sought to be raised by Hytera in the proposed 5FAD is whether, as a further answer to infringement and Motorola’s claims for relief, its rewritten firmware infringes the copyright in the Motorola Works. Motorola does not presently allege that it does and it is not therefore at once apparent why this defence would assist Hytera in resisting the allegation that its current firmware infringes the copyright in the Motorola Works.

12    To explain Hytera’s answer to that problem it is necessary first to grasp some detail. On 22 November 2019 Hytera began to sell in Australia four of the 50 devices with the rewritten firmware: 5FAD §31D(b)(i). It does not say, however, that it has presently stopped selling any existing stock of those four devices on which the original firmware remains installed. Nor does it say that it has installed the rewritten firmware on any of the other 46 devices the subject of Motorola’s copyright allegations. Hytera does say, however, that it intends that by April 2020 it will have completed the process of installing the rewritten firmware in a further 30 of the devices and that Hytera will then only be selling, distributing or exhibiting to the public those 34 devices containing the rewritten firmware. This means that in relation to those 34 devices it is its intention that from April 2020 it will not be selling them with the current firmware.

13    In relation to the eight devices which are subscriber units in the PD5 family, and a further eight of the repeater units in issue, which together comprise the remaining 16 of the 50 devices, it is apparently not a question of installing the rewritten firmware but instead of rewriting some new firmware specific to those devices. Hytera also intends to do this by April 2020.

14    Hytera accepts Motorola cannot be expected to meet a case about the rewritten firmware for the PD5 family and remaining eight repeaters by May 2020, but it says that Motorola can meet a case in relation to the other 30 devices which will have on them the same rewritten firmware as the four devices reprogrammed in November 2019.

15    I would not presently be disposed to permit Hytera’s amendments in their current form. At §35 of Motorola’s 2FASOC it is alleged that the Hytera devices the subject of the copyright suit infringe the copyright in the Motorola Works by embodying the whole or a substantial part of them. This allegation is denied at §31D of Hytera’s current defence, the Fourth Further Amended Defence. The amendments now proposed to §31D do not alter that position but now seek to subscribe two new particulars to it. Particular (a) is of no moment for present purposes and merely denies infringement. But proposed particular (b) is as follows:

(b)    Further and in the alternative:

 (i)    On around 22 November 2019, Hytera commenced selling, in Australia, Hytera Devices as identified in sub-paragraphs 7(a), 7(b), 7(q) and 7(w) of the statement of claim (each a Copyright Hytera Device), comprising the Re-written Hytera Firmware.

 (ii)    The respondents intend that by (and after) April 2020, to the extent that the second respondent does any of the acts pleaded in paragraph 31E of this fifth further amended defence in relation to any of the Copyright Hytera Devices, the firmware for those devices will comprise:

     1.    the Re-written Hytera Firmware; or

2.    in the case of the repeater devices listed at paragraphs 7(r)-(u) and (aaa)-(ddd) of the statement of claim, alternative re-written firmware that is specific to repeater devices; or

3.    in the case of the subscriber unit devices in the PD5 family listed at paragraphs 7(f), (g), (bb), (cc) and (mm)-(pp) of the statement of claim, alternative re-written firmware that is specific to the PD5 series of devices.

 (iii)    None of the Accused Hytera Files are included in:

1.    the Re-Written Hytera Firmware or the source code from which it is compiled; or

2.    the firmware referred to in paragraphs 31D(b)(ii)(2) and (3) above or the source code from which it is compiled.

(iv)    Insofar as the firmware for any of the Copyright Hytera Devices comprises the Re-written Hytera Firmware or the firmware referred to in paragraphs 31D(b)(ii)(2) and (3) above, that device does not embody a reproduction in a material form of the whole or a substantial part, or an adaptation of the whole or a substantial part of any of the Motorola Works.

16    It will be seen that Hytera alleges that it has begun to sell in Australia the four devices with the rewritten firmware. As already noted, it does not say in particular (b)(i) that it has stopped selling the four devices with the current firmware which Motorola alleges infringes its copyright and it is consistent with the proposition that not all of the existing stock has been updated. In particular (b)(ii) it sets out its intention to roll out the rewritten firmware for 34 devices and to rewrite separate firmware for the PD5 family subscriber units and the remaining repeater devices.

17    An obvious problem with §31D of the proposed 5FAD is that, as Motorola points out, the fact that Hytera has rewritten its firmware for some of the devices has no legal relevance to Motorola’s allegations of infringement which concern the current firmware. Another problem I raised with Hytera was that the para (b) particulars are not actually particulars but are instead allegations of material fact which would need to be pleaded in their own right: FCR 16.02(1)(d). These issues may be put to one side, however, because as will be seen they are peripheral to Hytera’s central purposes and, with some modest redrafting, could readily be surmounted.

the relevance of the rewritten code

18    Hytera’s central purposes are three. It wishes to contend that whether the rewritten firmware infringes the copyright in the Motorola Works is relevant to three issues:

(1)    The aggravated damages issue: Hytera submits that Motorola’s entitlement to aggravated damages is regulated by s 115(4) of the Act and that subpara 115(4)(b)(ib) requires the Court to have regard to ‘the conduct of the defendant after the act constituting the infringement or, if relevant, after the defendant was informed that the defendant had allegedly infringed the plaintiff’s copyright’. It further says in any case that the fact of the rewrite would fall within ‘all other relevant matters’ under subpara 115(4)(b)(v). It says that it is entitled to prove in response to Motorola’s allegations of infringement that it has rewritten its firmware and, further, that the firmware so rewritten does not infringe the copyright in the Motorola Works. This will reduce, so the argument runs, the perceived flagrancy of its alleged conduct.

(2)    The delay issue: Hytera has already alleged that Motorola delayed in notifying Hytera of the conduct of its three former employees and that this has caused it prejudice. It now wishes to add to the allegations of prejudice the proposition that if it had been notified earlier of the employees’ conduct it would have commenced rewriting the firmware at an earlier date. This is said to reduce any entitlement Motorola has to injunctive relief (§36(c)) and to reduce its entitlement to monetary relief (§36(c)).

(3)    The injunction issue: At §36(c) of the 5FAD Hytera now seeks to add a contention that Motorola should be denied an injunction restraining it from infringing the copyright in the Motorola Works because the rewritten firmware embodied in the devices does not infringe that copyright and that by April 2020 it will not be selling any devices containing the allegedly infringing firmware. Any injunction must therefore be tailored so as not to restrain Hytera from using its rewritten firmware in its devices since, on Hytera’s argument, it will not infringe. A related argument appears at §31J of the proposed 5FAD where it is suggested that an injunction should be refused because the rewrite removes any threat of infringement.

The aggravated damages issue

19    I accept Hytera’s submission that, in principle, such a defence to Motorola’s claim for aggravated damages is legally available to it. Indeed, I did not apprehend Motorola to dispute this. However, Motorola flagged that it was prepared for the purposes of its aggravated damages claim to concede at trial that Hytera had rewritten the firmware for the devices and that the rewritten firmware did not infringe Motorola’s copyright. Consequently, it submitted that there would be no need to explore whether the rewritten firmware infringed its copyright since that would not be in issue.

20    I accept this argument. Although procedural arrangements of this kind need to be approached with some caution and certainly need to be documented with clarity to avoid future disagreement, in principle, I accept that what Motorola proposes has the procedural effect for which it contends. With that concession in place, Hytera will have no need to raise the question of whether the rewritten firmware infringes the copyright in §§31D(b) or 35B(d). Following the hearing Motorola provided a written statement of the concession it was willing to make.

The delay defence issue

21    Hytera submitted that if it had been afforded the opportunity to commence rewriting its firmware at an earlier time this would have meant that any period of infringement by it resulting from the firmware presently embodied in its devices would have been correspondingly reduced. In turn, this would have reduced any monetary exposure it had to Motorola whether by way of damages for infringement or by way of an account of profits. Hytera therefore contends by its delay defence that Motorola’s entitlement to monetary relief needs to be adjusted to reflect what it says should have happened in the counterfactual. Motorola’s delay has therefore occasioned Hytera prejudice and that provides the Court with a legitimate basis upon which it can refuse Motorola’s application for an injunction, that remedy being discretionary.

22    I accept the adequacy of the legal structure of Hytera’s delay defence. The next step which it articulated on the present application was that to make good that defence this made it necessary for it to prove that the rewritten firmware did not infringe Motorola’s copyright. I do not accept this submission, however, as it impermissibly conflates the hypothetical rewritten firmware which its delay defence implies (i.e. the non-infringing rewritten firmware that Hytera would have written had it been notified at an earlier time of the conduct of Motorola’s former employees) with the actual rewritten firmware that it has been rolling out (perhaps infringing, perhaps not). It is the former which is material to the inquiry generated by Hytera’s delay defence and not the latter.

23    Furthermore, the hypothesis upon which the former inquiry rests is that what Hytera would have done would have resulted in non-infringing firmware. It will be necessary in the pursuit of that contention, in due course, to demonstrate by evidence what steps it would have taken to rewrite its firmware and, more particularly, both how it would have gone about the process of programming this hypothetical non-infringing firmware and at what time this process would have culminated. Whether, in that circumstance, the actual rewritten firmware which Hytera now wishes to plead by way of defence infringes the copyright in Motorola’s firmware or not is irrelevant.

24    There is a residual possibility nevertheless that my reasoning in that regard is wrong. To meet that all too frequent exigency Motorola also proffered a similar undertaking to that which it proffers in relation to the aggravated damages issues. If for some reason it should turn out to be relevant to how Hytera would have approached the task of rewriting its firmware in the hypothetical universe where Motorola had informed it earlier of the conduct of its former employees, Motorola agrees that it will accept for that purpose that the actually rewritten firmware does not infringe its copyright. It is content to do so, as Mr Moore SC submitted, because Motorola is confident that this is an unlikely outcome and it is happy to run the risk that my conclusion is wrong.

25    Motorola therefore submits that even if the question of whether the rewritten firmware infringes the copyright in the Motorola Works really is relevant to an issue then this does not matter because of its undertaking. I accept this submission.

26    There is a footnote to these conclusions. As I have already noted, Hytera’s rewritten firmware does not extend to the PD5 family of subscriber units or the remaining eight repeater devices and it accepts that Motorola cannot be expected to meet a case about them by May 2020. However, after Motorola indicated that it undertook not to submit in relation to the issues of relief and its delay defence that the rewritten firmware did infringe its copyright, Hytera submitted that any such undertaking should, fairly, extend to the position of the 16 PD5 and repeater devices. Motorola’s response to this was that it should not since, on Hytera’s primary application, those devices were not within its proposed defences.

27    The burden of Hytera’s submission is, I think, that the effect of Motorola’s undertaking is to render irrelevant the question of whether the rewritten firmware infringes the copyright for the purposes of those two defences. Once that is accepted there is no reason the delay and aggravated damages defences cannot be resolved in the hearing in May 2020. If Motorola is entitled to treat these 16 devices differently then this may appear to mean that, if and when Hytera eventually rewrites their firmware for those devices, then it will be able to contend that that rewritten firmware does infringe its copyright.

28    But for what purpose would it make such a submission? It could only be in answer to two points. First, a submission that aggravated damages should not be awarded or, at least, should be reduced in relation to any infringement of Motorola’s copyright by those devices prior to their reprogramming because they were subsequently and actually reprogrammed in a way which does not infringe Motorola’s copyright (i.e. conduct of the kind referred to in s 115(4)(b)(ib)). Secondly, that the delay defence should be upheld in relation to the devices because had Motorola notified Hytera of the conduct of its former employees earlier then Hytera would have rewritten the firmware at an earlier date and that the question of whether the actually rewritten firmware did infringe Motorola’s copyright would be relevant to that inquiry.

29    However, the first of these contentions cannot presently be raised in Hytera’s defence because the fact is that the 16 devices have not yet been reprogrammed and the second is beside the point because the copyright infringement issue under the delay issue concerns not the actual rewritten firmware but the hypothetical and earlier rewritten firmware. Consequently, until such time as Hytera puts some lead in its saddle bags by actually rewriting the firmware for the 16 devices the occasion to consider this issue is not yet ripe and I will not bind Motorola as to how it will meet such a rewrite whilst it remains ignorant of what the rewrite is.

30    In those circumstances, Hytera’s aggravated damages and delay defences do not require that it should be permitted to bring into the May 2020 hearing the question of whether the rewritten firmware infringes Motorola’s copyright.

The injunction issue

31    Hytera submitted that the ambit of the injunctive relief sought by Motorola was impacted upon by whether the rewritten firmware infringed Motorola’s copyright. The injunction claimed by Motorola is in the nature of a general injunction. Prayer 2 of its Further Amended Originating Application seeks an order permanently restraining Hytera, inter alia, ‘from infringing the Patents’, that is to say, the injunction is couched in terms of enforcing the statutory monopoly.

32    Hytera’s basic submission was that such an injunction would be inappropriate where it had reprogrammed the devices with non-infringing firmware and it should be at liberty in resisting the grant of the general injunction sought in Prayer 2 to demonstrate not only that it had reprogrammed its devices but also that the rewritten firmware did not infringe Motorola’s copyright. Instead, Hytera submitted that any injunction should be confined to particular source code or firmware versions, which necessitated proof that the rewritten code did not infringe.

33    Generally speaking, in cases such as the present an injunction in general terms is thought to be ‘conventional’ but it is not inevitably required: Calidad Pty Ltd v Seiko Epson Corporation (No 2) [2019] FCAFC 168; 147 IPR 386 (‘Calidad’) at 395-397 [43]-[49]. I accept that if Hytera demonstrated that the rewritten firmware did not infringe Motorola’s copyright then it would have a legitimate argument for excising from the scope of any injunction the devices containing the rewritten and, on this hypothesis, non-infringing firmware. I do not decide that it would succeed in that endeavour, only that the argument is sufficiently respectable not to be denied its day in court.

34    Motorola made two points against this. First, even as it had been rewriting the firmware in the devices (other than the PD5 devices and remaining repeaters) Hytera was continuing at least to sell the devices with the current firmware in Australia from existing stock. A similar point may have been made in relation to continuing imports which I take to be a reference to the devices on which the current firmware was installed having already entered the supply chain. For present purposes, however, they may be put aside and attention focussed on the existing stock. Motorola submitted that whatever the position with the devices loaded with the rewritten firmware might be, the fact was that it was still entitled to an injunction in relation to the existing stock and it noted, in particular, that despite its contention that the rewritten firmware did not infringe the copyright in the Motorola Works, Hytera had not undertaken to cease selling these stocks.

35    I accept that Hytera seemingly continues to sell (and maybe also to import) devices with the current rather than rewritten firmware. However, I do not think that fact meets Hytera’s point which is that whatever form the injunction takes it should not extend so far as to prevent it from selling the devices with the rewritten firmware because it does not infringe Motorola’s copyright. If Hytera’s main point is correct, Motorola’s argument would simply lead to an injunction perhaps in general form but with a carve out in relation to the devices containing the rewritten firmware. Put more formally, Motorola’s first responsive submission does not meet the pith of Hytera’s point which is that it should be permitted to defend its devices installed with rewritten firmware from an injunction in a general form by proving that the rewritten firmware does not infringe the copyright. In that context, whether it is still distributing its devices with the current firmware in them is not to the point. There is also the point that Hytera will seek to prove that it will no longer be selling any stock with the current firmware from April 2020 although the presently speculative nature of this contention makes it difficult to assess.

36    Motorola’s second point accepted that in principle Hytera was entitled to prove that the devices with rewritten firmware did not infringe its copyright and thereby to seek to circumscribe the width of any injunction. However, Motorola now submitted that if Hytera were permitted to raise that defence it would lead to the adjournment of the May 2020 hearing dates to a hearing in May 2021 (being the first time I could hear a trial of this size).

37    In assessing this question it seems to me that there are three inquiries:

(1)    If the question of whether the rewritten firmware infringes the copyright in the Motorola Works is permitted to be raised as part of the injunction debate, what impact will this have on the trial dates in May 2020 and, in particular, will this require the adjournment of the trial to May 2021 or can it be accommodated in the current hearing? If it cannot be accommodated in the current hearing, are there other ways it might be accommodated?

(2)    Did Hytera act reasonably in bringing the amendment application (or in foreshadowing it at the time that it did)?

(3)    If it cannot be incorporated in the current hearing, what is required by the dictates of s 37M of the Federal Court of Australia Act 1976 (Cth) (‘the Federal Court Act’), being that the overarching purpose of the civil practice and procedure provisions is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible?

Accommodating the rewritten firmware in May 2020 (or beyond)

38    I am satisfied that if the question of whether the rewritten firmware infringes the copyright in the Motorola Works is now raised, then Motorola cannot be expected to meet that case in time for the May 2020 trial dates. It is useful to begin with the evidence of Ms Gilchrist. Ms Gilchrist explained at para 48 of her affidavit of 29 January 2020 that Motorola would need to complete a number of steps if it were to meet Hytera’s contention that the rewritten firmware did not infringe its copyright. These included:

(1)    It would need to seek discovery in relation to the process by which Hytera had rewritten the firmware including the engineers involved. As a starting point, it would be necessary to know whether the rewrite of the firmware had taken place in a clean room.

(2)    Although Hytera has filed all of its evidence on the rewritten firmware Motorola would then need, with the benefit of that evidence, to consider whether the rewritten firmware reproduced a substantial part of the Motorola firmware. This would require it to be identified, analysed and compared to the Motorola Works and this would necessitate its inspection by several experts. Given the somewhat draconian confidentiality arrangements surrounding the Hytera code—in Sydney it exists only on a single stand-alone computer access requests in relation to which must be made five days in advance—it could be assumed that this would be cumbersome. There is also apparently a similar facility available in Washington, DC. I do not think that this option would be any less cumbersome. Ms Gilchrist also said that its expert, Professor Wicker, had been engaged in the parallel proceeding before the United States District Court for the Northern District of Illinois, Eastern Division where he was giving evidence and that Motorola had not yet had an opportunity to examine the rewritten code.

(3)    Given how difficult had been the process of getting to trial the copyright infringement case in relation to the current firmware, it was not plausible that essentially the same exercise could now be carried out in the three months remaining before the trial on the rewritten firmware. Related to this was Ms Gilchrist’s complaint that, even if the relevant rewrites had all occurred by April 2020, this would come some weeks after the current deadline for Motorola’s reply evidence in March 2020.

39    In response to these points, Ms Crooks pointed out that Professor Wicker had already had access to the rewritten firmware for the purposes of the US proceedings. However, I do not see how that helps unless one also knows the purpose for which Professor Wicker has been examining the rewritten firmware. In particular, I would need to know whether he was looking at the rewritten firmware from the perspective of asking whether, as a matter of Australian law, it involved a substantial reproduction of the Motorola Works (which seems unlikely). The parties provided me with the questions which have been prepared for the jury’s consideration in the US proceeding. These suggested that the jury will be asked whether the two sets of code are so similar that a reasonable person would conclude that Hytera took ‘protected expression’ from Motorola’s work and whether the similarities between the two sets of code can be explained only by copying rather than by coincidence. I do not think it safe to proceed on the basis that in tailoring his evidence to those questions Professor Wicker will necessarily have been traversing identical issues to those which arise under Australian law. Granted Professor Wicker will certainly have been around the block with the Hytera firmware and Motorola Works, I nevertheless do not accept that what lies ahead of him is the cakewalk which Hytera’s submissions imply.

40    Then there is the point, made by Ms Gilchrist, that whatever precisely it might be that Professor Wicker has been doing in the US proceeding for Motorola’s US attorneys, is not known to its Australian attorneys by reason of a Protective Order made by the US Court which places considerable obstacles in the way of the flow of that kind of information to Australia. Hytera submitted that it would now consent to a liberalisation of that regime and this could speed up the process. I accept this contention.

41    Hytera submitted that the difficulties facing Motorola could be reduced because it was prepared to concede for trial purposes that the rewritten firmware was causally connected to the Motorola Works. Thus it would only be necessary for Motorola to meet Hytera’s case that the rewritten firmware was not objectively similar to the Motorola Works noting that it delivered all of its evidence on that issue in December 2019 even before the amendment application was filed. It also made the point that Motorola has had the benefit of this evidence for two months now.

42    Hytera then submitted that all that Motorola would therefore need to do to meet the case was to examine the two sets of code and to determine whether they were objectively similar. This was further said to be a manageable task because, as Motorola has already analysed the original code, this would be a matter of considering only the edits and deletions. There was no need for Motorola to examine how the rewritten firmware had been composed because, in light of its concession, it would not matter. Thus discovery would be unnecessary. Further, the task of examining the two sets of code for objective similarity could easily be accommodated by the May 2020 hearing. In that regard, Hytera submitted that its own expert Mr Brown had conducted that very exercise in a month in circumstances where he too was beset with other obligations.

43    I do not accept either of these submissions. The two inquiries into objective similarity and causal connection are not hermetically sealed from each other. It has been held by this Court that objectively similarity, substantiality and infringement ‘are not wholly self-contained, but mutually inform and overlap each other’: Seafolly Pty Limited v Fewstone Pty Ltd [2014] FCA 321; 313 ALR 41 at 83 [284]. Furthermore, I am far from convinced of the correctness of Hytera’s submission that it is simply a question of looking at the two sets of code to see if they are objectively similar, let alone only the rewritten portions. The law surrounding infringement of copyright in computer programs is yet nascent in Australia. Professor Ricketson, in The Law of Intellectual Property: Copyright, Design and Confidential Information, has observed that traditional copyright principles should apply to the question of whether there has been a reproduction of a program or a substantial part of it. And if so, the structure, sequence and organisation of the code may well be relevant to that enterprise (as it is, for example, in the case of a literary work). Thus (at [9.255]):

As with the words and paragraphs of a written text, it is not necessary that the exact code of the program should be reproduced. It should be enough if these more structural elements are taken, although this question has not yet received specific consideration by Australian courts.

44    In other jurisdictions it has been accepted that consideration is not limited to the text of the code: John Richardson Computers Ltd v Flanders (1993) 26 IPR 367 at 392. As Motorola submitted, this is consistent with approach taken to artistic works in Elwood Clothing Pty Ltd v Cotton On Clothing Pty Ltd [2008] FCAFC 197; 172 FCR 580 at 587 [35] and to literary works other than computer programs in Designers Guild Ltd v Russell Williams (Textiles) Ltd [2001] 1 All ER 700 at 706 per Lord Hoffmann. Plainly, this issue cannot be resolved on an interlocutory application. There is a very real risk that when Motorola seeks discovery in relation to the rewriting process the Court will be bound to accede to it since the issue is, at the very least, arguable.

45    Thus whilst it would appear that Hytera’s evidence from its expert, Mr Brown, concerning the objective similarity of the two sets of code has been conducted on a textual basis I do not see that Motorola should be limited in that way. And, whilst it is true that Mr Brown concluded his task in a month, this was because of the textual approach he took. To conduct the kind of analysis that Motorola has in mind, and which it is entitled to pursue, will be a very much more complex endeavour taking many months.

46    Nor do I accept that it is to the point that Motorola has had Hytera’s evidence for two months. That evidence currently does not relate to an issue in the case. Both parties are busy attending to the needs of the May 2020 hearing. I do not think that Motorola was obliged to start working on Hytera’s evidence on the rewritten firmware just because Hytera had flagged that it would seek, controversially, to bring that issue into the May 2020 hearing.

47    Having observed the very complex way in which the present copyright case has come to trial with all of the various procedural challenges which have been encountered along the way, I am confident that Ms Gilchrist is correct and there is no possibility that a case about whether the rewritten code infringes the copyright in the Motorola firmware can be accommodated by the May 2020 hearing. Indeed, I have real doubts it could be prepared by the end of this year.

48    This case has so far involved 24 separate case management hearings before me, three case management hearings before Registrars of this Court, seven substantive hearings for the determination of 13 interlocutory applications, and eight separate judgments—and that is not to mention the complexities thrown up by the parallel proceedings in the US. It has also already involved a 13-day hearing of the patent claims. The litigation is being conducted in the form of total war although, I should say for the benefit of those acting for both parties, also with a commendable degree of courtesy and civility.

49    The effect of permitting Hytera to raise in its defence to the general form of Motorola’s injunction the fact that its rewritten firmware does not infringe Motorola’s copyright will lead therefore to the inevitable adjournment of the trial.

50    Hytera submitted that if that were the Court’s view, the trial could perhaps proceed in May 2020 on some issues—probably the question of whether the current firmware infringed—and there could be a subsequent hearing on the position of the rewritten firmware (including by extending the hearing). I do not accept this. The case about the rewritten firmware is effectively a wholly new case involving different computer code. There is no reason to think this fresh case would take any less time than the current copyright infringement case which is set down for three weeks. Although I have small pockets of time for the balance of the year I do not have a three week period (or even a two week period) available before May 2021 so, in a sense, this proposal achieves no better outcome than the adjournment of the whole trial. It also carries with it all the difficulties and expenses of being part heard. Nor is the extra week I could give to the matter at the end of the hearing sufficient.

Hytera’s conduct in bringing this application

51    Motorola first raised its copyright infringement case on 29 November 2018. It now appears that Hytera began rewriting its firmware in April 2019 but it says that it was not until September 2019 that it became aware of all of the various ways in which Motorola alleged that the current code infringed. This occurred when Motorola served its Amended Copyright Particulars. Hytera said that what it had done for the rewritten code was to delete some of the files and to rewrite those identified in the particulars. It says that it was entitled to wait until Motorola told it how its code infringed to begin the process of rewriting in earnest.

52    Hytera did not raise the defence based on the non-infringing nature of the rewritten firmware until 16 December 2019 when it articulated the current proposed form of its defence (a number of other amendments were also involved but they are not material for present purposes). An amendment application was not made until 23 January 2020 but this reflected a regime whereby the parties were seeking to deal with the amendments in a consensual way. I take the relevant date to be 16 December 2019 and not 23 January 2020. It foreshadowed such a case at a case management hearing on 11 October 2019 and signalled that it would be filing evidence about the rewritten firmware and would at some point seek to amend to raise the significance of that evidence.

53    The relevant candidate delays are therefore as follows:

(1)    between 29 November 2018 when Motorola first articulated its copyright case and April 2019 when Hytera began to rewrite its firmware;

(2)    between April 2019 when the rewrite commenced and 11 October 2019 at which time the issue was flagged, noting that Motorola delivered the final version of its Amended Copyright Particulars in September 2019; and

(3)    between 11 October 2019 and 16 December 2019 when it was formally articulated.

54    The delay in (1) is unexplained but I would infer in Hytera’s favour that it was not at once obliged to start rewriting the firmware and that a period of reflection should be afforded to it. Perhaps it should have started in February 2019 instead. However, on the view I take of the matter had it done so it would have been in the same position it is now. I do not think that an extra two months would have averted the problem which has arisen. Put another way, if Hytera had commenced rewriting the firmware in February, the amendment application might have been filed in November. Had the application been made at that time, it is my view that Motorola would still have required an adjournment of the trial dates. Assuming that Hytera should have begun a little earlier, that default is not materially connected to the current procedural imbroglio.

55    As I have said, Motorola was critical of (2). It says that there was no reason for Hytera to wait for its Amended Copyright Particulars and that seeking to amend its code merely by deleting some files and rewriting others was not an adequate way of seeking to produce non-infringing firmware. That is a substantive question which I do not think I can resolve in the present application. Many attempts to refashion works so that they no longer infringe have failed but some have succeeded. I cannot decide such a question in an application such as the present. I propose therefore to assume in its favour that Hytera acted reasonably in going down that path. This has the consequence that I do not think I can be critical of the fact that the point was only formulated on 16 December 2019. I therefore accept for the purposes of this application that Hytera’s conduct has been reasonable. But that conclusion rests on my assumption in Hytera’s favour that, contrary to Motorola’s contention, Hytera has not approached the process of rewriting its firmware incorrectly or inadequately.

56    As to (3), this conduct appears to have been reasonable and did not involve undue delay.

The dictates of s 37M of the Federal Court Act

57    In my opinion, the overarching purpose of the civil procedure provisions (and therefore s 37M of the Federal Court Act) requires that the application be refused. The problem at hand is how Hytera can protect its rewritten firmware from the blandishments of an injunction in general form if Motorola is successful. If Hytera is correct and the rewritten firmware does not infringe then it need not be concerned about such an injunction. If Motorola seeks to enforce any general injunction against Hytera then it will be open to Hytera at that time to prove that the rewritten firmware does not infringe. Any such case could be organised in an orderly fashion.

58    On the other hand, I do not think that I can safely assess whether Hytera could commence its own separate proceeding seeking a negative declaration of non-infringement. Such a claim might well be met with an Anshun estoppel argument: Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; 147 CLR 589. Whether that argument would be successful would turn upon whether Hytera’s conduct in raising the defence when it did in December 2019 was reasonable: cf Macquarie Bank Ltd v National Mutual Life Association of Australia Ltd (1996) 40 NSWLR 543. I have concluded that its conduct in doing so has been reasonable but only upon the assumption I make in its favour that the way it has approached the rewriting of its firmware has been reasonable. The judge hearing any Anshun estoppel argument would not necessarily have to make that assumption. Since, however, I am obliged to do so by the nature of the current material, I cannot rationally assess the outcome of that debate. I will proceed on the basis therefore that Hytera could not bring a fresh proceeding for a negative declaration.

59    The prejudice to Hytera if it be not now permitted to argue that the rewritten firmware does not infringe the copyright in the Motorola Works is therefore threefold. First, it will be exposed to the possibility that the issue may instead have to be ventilated in a contempt proceeding and the attendant possibility that this may involve it being exposed to greater liability than the present proceeding—for example, it may include the imposition of a fine. On the other hand, it would be relevant to any penalty for contempt that Hytera had sought to rewrite the firmware and had sought to include the issue in the present proceeding. Secondly, it will be unable to bring a proceeding for a negative declaration. Thirdly, the contempt case has potential reputational consequences which permitting the issue to be raised in the present case does not have.

60    On the other hand, the prejudice to Motorola if I permit the amendment is that the case will be delayed another year. Indeed, it may possibly be delayed even further if Hytera decides on the eve of the next hearing to rewrite the rewritten firmware. The logic of the current application opens up the potential vista of the never-ending rewriting of the code and corresponding perpetual adjournment of the proceeding.

61    Motorola brought its original patent case in 2017 which has been heard and articulated its copyright case at the end of 2018. Enormous efforts have been made on by both sides to meet the 2020 hearing dates and the expense will have been, I am sure, very significant. Not all of that effort will have been wasted but at least some of it will have been if the case is now adjourned. In a case such as the present, to delay Motorola’s right to have its allegations determined is a species of real prejudice. Included in that prejudice is that I am currently prevented from delivering judgment on the already completed patent infringement case until the copyright case is determined because the aggravated damages cases in both are interrelated. Thus Motorola faces the prospect of having to wait another year for a judgment on its patent claims.

62    There is also the consideration that the adjournment of a three-week period in the Court’s calendar poses efficiency risks. It is unlikely that I will be able to secure on short notice another three-week case to take the place of this one for the May 2020 dates, and the Full Court listings for that period are already settled. I may be able to use some of the hearing dates for other small cases and this may soak up part of the problem. However, it is unlikely that all of the dates could be so used. The adjournment therefore increases the risk of the inefficient use of the Court’s (public) resources. This is not a determinative matter but neither is unimportant.

63    The overarching purpose of the civil procedure provisions is the facilitation of the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible: s 37M of the Federal Court Act. These principles of course apply to an application to amend pleadings: Cement Australia Pty Ltd v Australian Competition and Consumer Commission [2010] FCAFC 101; 187 FCR 261 at 274 [43]-[44]; Tamaya Resources Limited (in liq) v Deloitte Touche Tohmatsu (A Firm) [2016] FCAFC 2 at [121].

64    The prejudice to Motorola and the prejudice to Hytera are in a sense incommensurable. However, it seems that Motorola’s entitlement to the timely resolution of its litigation is the predominant matter. If Hytera’s rewritten firmware does not infringe it will have chance to make good that proposition in a contempt action. I note that in Calidad the Full Court said at 396-397 [49]:

Where the infringer has already been found to have engaged in wrongful conduct, and is undoubtedly cognisant of the intellectual property rights in question, it is not unjust to expect that the infringer be the party at risk in respect of that person’s future conduct and acts, not the party whose known rights have already been infringed and vindicated by the court’s judgment. Thus, the imposition of an injunction in general form is not, in and of itself, an undue burden on the infringer. By the same token, the person whose intellectual property rights have been infringed should not be exposed to the risk of having to engage in continuing legal proceedings in order to vindicate, again, that person’s established rights against an established infringer. It is not, with respect, a sufficient answer to say that the rights holder might have a claim for additional damages if further infringement be found. Further, if the established infringer is in any doubt about whether that person’s future acts might infringe the intellectual property rights that have been established, or is concerned that those acts will be a matter of contention so far as the rights holder is concerned, then it is within the power of that person to seek appropriate declaratory relief.

65    I accept that there is a risk of a fine in that process which would not arise if the nature of the rewritten code was ventilated in this case, and that there are reputational consequences for a company in being found guilty of contempt (were it to be so found). But I do not think these risks outweigh the prejudice to Motorola in there being a further one-year delay. Of course, I accept that the fact Hytera has not relevantly delayed is an important discretionary consideration. But I am not bound, as I might at one time have been, to give it predominant weight. Hytera is not forever being shut out of proving that its rewritten firmware does not infringe because it can defend itself on that basis in any subsequent contempt proceeding. Accepting the unattractiveness for Hytera of proving non-infringement in the context of a civil contempt case, nevertheless, I think that weighty consideration must yield to notions of fairness to Motorola and the efficiency of the dispatch of this Court’s own calendar.

66    The amendment application will be refused with costs. I accept the form of Motorola’s proposed concession set out in its written submission which I will note in the orders. The parties should bring in orders to give effect to these reasons within 14 days.

Associate:

Dated:    6 March 2020