FEDERAL COURT OF AUSTRALIA

Vehicle Monitoring Systems Pty Limited v SARB Management Group Pty Ltd

trading as Database Consultants Australia (No 4) [2020] FCA 819

ORDERS

THE COURT ORDERS THAT:

1.    Subject to them each signing a confidentiality undertaking in the form agreed on 4 March 2020, and each acknowledging that he submits to the jurisdiction of this Court, and of any other court exercising jurisdiction in New South Wales, for the purpose of proceedings against them or either of them in relation to the performance of their obligations under the confidentiality undertakings, including enforcement thereof, Robert Rothkopf and Nick Gardner of Balance Capital LLC be permitted access to, and use of, for the purposes of this proceeding only, and in accordance with the confidentiality undertakings, the redacted information contained in the verified product and method description served by the first respondent on 24 April 2020.

2.    Subject to these orders, and Orders 1 and 2 made on 3 June 2020, the amended interlocutory application dated 29 May 2020 (the interlocutory application) be dismissed.

3.    The applicant pay the second respondent’s costs of and incidental to the interlocutory application.

4.    As between the applicant and the first respondent, each bear its own costs of and incidental to the interlocutory application.

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

REASONS FOR JUDGMENT

YATES J:

1    The applicant, Vehicle Monitoring Systems Pty Limited (VMS), moves on an amended interlocutory application dated 29 May 2020 (the interlocutory application), seeking orders for non-standard discovery against the first respondent, SARB Management Group Pty Ltd (SARB), and the second respondent, the City of Melbourne (Melbourne), in patent infringement proceedings. The application concerns three categories of documents. VMS also seeks orders providing for access, by certain individuals, to other documents, provided pursuant to the Court’s case management orders, that are claimed to contain confidential information.

2    It is necessary to detail some background matters which provide the context in which the interlocutory application is brought.

3    On 14 February 2020, following a case management hearing held on 4 February 2020, I made an order that SARB provide a product and method description in respect of its PinForce Sensors, Systems and Methods, pursuant to paras 6.14 – 6.15 of the Intellectual Property Practice Note (IP – 1) (the product and method description).

4    On 4 March 2020, SARB provided the product and method description in unverified form. It made a claim of confidentiality in respect of that document. The product and method description contains an annexure (Annexure A) which sets out certain information in relation to SARB’s supply of PinForce Sensors and Systems, including the clients to whom PinForce Sensors and Systems were supplied, the date of use of those sensors and systems, and the number of sensors supplied and in operation. On 10 March 2020, SARB provided VMS with a redacted, non-confidential version of the product and method description. Much of the information in Annexure A was redacted.

5    On 6 April 2020, I made an order that SARB provide VMS with a verified copy of the product and method description, incorporating certain amendments which SARB had made in response to queries raised by VMS. On 24 April 2020, SARB provided the verified version. On 27 April 2020, SARB provided VMS with a redacted, non-confidential version of the document.

6    On 6 April 2020, I also made orders providing for VMS and SARB to exchange position statements on infringement in respect of the PinForce Sensors, Systems and Methods, pursuant to paras 6.12 – 6.13 of IP – 1. On 14 April 2020, VMS provided its position statement (VMS’s position statement). On 24 April 2020, SARB provided its responsive position statement (SARB’s position statement). SARB has claimed confidentiality in respect of each statement.

Discovery

The first category of documents

7    The first category of documents is:

A copy of the functional specification(s) and communication protocol(s) for each of the First PinForce Sensor, First PinForce System, First PinForce Method, Second PinForce Sensor, Second PinForce System, Second PinForce Method, Third PinForce Sensor, Third PinForce System and Third PinForce Method, referred to in the amended statement of claim filed by VMS and the amended defence filed by SARB.

8    When SARB provided the verified product and method description, it did not annex or otherwise provide primary technical documents to support the description. In terms of the order made, there was no requirement for it to do so. At the case management hearing held on 4 February 2020, VMS argued that the product and method description should annex such documents. At the time, I was not persuaded that I should require SARB to provide technical documents as part of the product and method description. That said, I did not rule out the possibility that discovery might be required to be given of such documents. I was of the view that the better case management decision was to await the provision of the product and method description, and then, in light of the description given, determine what, if any, discovery should be given of technical documents. Thus, to this extent, VMS’s present application for discovery in respect of this category of documents re-visits the question first raised on 4 February 2020, which now falls to be considered in light of the verified product and method description that has been given.

9    VMS seeks the first category of documents because, it says, the product and method description is a narrative that summarises how the PinForce Sensors, Systems and Methods work. It wishes to have the opportunity to assess and test the completeness and accuracy of that summary. It also wishes to consider whether to cross-examine the officer at SARB who verified the description.

10    Further, it believes that discovery of this category of documents may well further narrow the issues currently in dispute between the parties on the question of infringement, on the basis that if it can be satisfied that, in respect of some of the claims in suit, the PinForce Sensors, Systems and Methods operate as described in the verified product and method description, it will not press its case for infringement of those claims. VMS illustrated this by reference to the verified product and method description given with respect to the operation of the Third PinForce Sensors, Systems and Methods, in particular as to how parking overstay is determined. It argued that, in its own position statement, it had made clear that it required technical information, beyond that already provided by SARB in the verified product and method description, in order to satisfy itself in this regard.

11    Mr Spirovski, VMS’s expert, was asked to identify the documents he would need to independently assess whether the Sensors, Systems and Methods operate in the manner described by SARB in the verified product and method description, including in particular: how communications occur between the sensor, the TMT and the handheld device; what component of the system determines vehicle overstay; and how overstay is determined. The first category of documents represents Mr Spirovski’s response. Mr Spirovski said that, based on his experience as a qualified electrical engineer, the documents comprising the first category are very likely to exist, and are unlikely to be extensive or difficult to collate or produce.

12    SARB has not contradicted this view. However, it resists production of the documents. SARB’s primary objection is that it has provided the verified product and method description, which accommodates queries that have been raised by VMS. It argues that there is no extant complaint that, as a description, it is insufficient, still less inaccurate. Indeed, in its particulars sub-joined to paras 10 and 11 of the amended statement of claim, VMS calls in aid the unverified product and method description, which SARB provided on 4 March 2020, to support its allegations of infringement. Further, SARB submits that the issues in dispute between itself and VMS on this score are, largely, matters of claim construction, not disputes about how, in particular, the Third PinForce Sensors, Systems and Methods work, or other factual propositions that require verification.

13    SARB also submits that to require it to produce the first category of documents now, is not only inconsistent with the basis on which the order for the provision of the product and method statement was made, but contrary to the spirit of IP – 1.

14    I do not accept SARB’s submissions. At the case management hearing on 4 February 2020, I expressly acknowledged, and left open, the possibility that VMS might seek discovery of technical documents. Further, I do not accept that requiring SARB to give discovery of the first category of documents is inconsistent with IP – 1.

15    In this connection, para 6.14 of IP – 1 provides:

Further, where infringement is in issue, the parties should consider whether the alleged infringing party should provide a product description, or method or process description, in respect of the accused product or the accused method or process, so as to avoid the need for experiments or other scientific or technical investigations and/or to obviate or minimise the scope of any application for discovery.

16    This paragraph does not stipulate that a product and method description will be, in all cases, a complete substitute for discovery.

17    The discovery that is sought by reference to this category of documents is limited, and VMS has made clear that the provision of the documents, taken with the verified product and method description, will enable it, without more, to reach a decision whether to continue to pursue a case on infringement in respect of a large number of claims currently in suit (namely, claims 1 – 4, 6 – 8, 10 – 19, 24 and 26 of Patent No. 2005243110 and all claims of Patent No. 2011204924). There is no suggestion that it would be oppressive for SARB to give discovery of the documents or that discovery cannot be given within a short timeframe.

18    I am satisfied that the documents sought are adjectivally relevant. I am persuaded that discovery of them will facilitate the just resolution of the infringement proceeding as quickly, inexpensively and efficiently as possible. I do not accept that, in the present case, VMS is, in effect, required to accept, unreservedly and without reference to appropriate technical documents, the accuracy or completeness of the verified product and method description given, in circumstances where the description is, essentially, in narrative form and a limited number of technical documents can be provided in a timely manner, without imposing inconvenience or an undue burden on SARB.

19    Having reached this conclusion at the hearing, I made an order that SARB give discovery of the first category of documents.

The second category of documents

20    The second category of documents is:

All contracts in relation to sensors and/or systems supplied or sold by [SARB] before 9 May 2013, including for the provision of any servicing, maintenance, upgrades or other services/assistance provided on or after that date, in respect of any sensors and/or systems supplied or sold beforehand.

21    VMS submits that discovery of these documents by SARB is required because SARB pleads that all claims against it relating to the use of sensors after 15 February 2013 are statute-barred, if the sensor being used was supplied before that date. In addition, SARB contends that, under a deed of settlement entered into by VMS on 9 May 2013, VMS authorised all future uses of sensors, supplied before 9 May 2013.

22    VMS’s case is that each use of the sensors or systems by a local council on or after 15 February 2013 or 9 May 2013 is an act of infringement that was authorised by SARB on the date of the use, and that SARB is liable for each such infringing use as a joint tortfeasor on the date of the use. For this purpose, VMS relies on the ongoing relationship between SARB and each of its local council clients under contracts requiring SARB to provide service, maintenance, firmware upgrades and assistance after 15 February 2013 and 9 May 2013, in respect of sensors/systems supplied beforehand.

23    For its part, SARB submits that the information in Annexure A is sufficient to identify the dates on which SARB first supplied its sensors to each client council, and the length of this supply. It says that, to the extent that VMS requires further clarity on whether any sensors were supplied after 9 May 2013, pursuant to contracts entered into before that date, SARB will amend the annexure to identify any such sensors.

24    As to the question of any ongoing relationship between SARB and its local council clients under contracts requiring SARB to provide service, maintenance, firmware upgrades and assistance, SARB admits that it provides such service, maintenance, upgrades and assistance, where necessary, during the course of its contracts.

25    I am not persuaded that discovery of these documents is required. The question whether VMS’s claims of infringement are statute-barred or whether, by the deed of settlement entered into on 9 May 2013, VMS authorised all future uses of sensors, supplied before 9 May 2013, can be determined as a matter of principle, on the information presently at VMS’s disposal, without the need for the documents it seeks in this category. Moreover, in its amended defence filed on 24 April 2020 in response to VMS’s amended statement of claim, SARB admits the acts of authorisation that have been pleaded. As to its allegations of joint tortfeasance, this issue can be determined having regard to SARB’s admission that it provides service, maintenance, upgrades and assistance, where necessary, during the course of its contracts. VMS does not need access to the contracts themselves in order to litigate those allegations.

26    Having reached this conclusion at the hearing, I refused VMS’s application for discovery in respect of the second category of documents.

The third category of documents

27    The third category of documents is:

All documents:

a.     in the case of the First Respondent, created prior to the commencement of this proceeding and, in the case of the Second Respondent, created prior to 16 December 2015 that, respectively, evidence or record the First and Second Respondent’s knowledge of the First Patent or the Second Patent; and/or

b.     created prior to the commencement of this proceeding that evidence or record the First or Second Respondent’s knowledge that exploiting, or authorising the exploitation of, any PinForce Sensors, PinForce Systems or PinForce Methods, would infringe, or may infringe, the claims of the First Patent and/or the Second Patent.

28    As will be apparent, discovery in this category is sought against SARB and Melbourne. VMS submits that the documents are directly relevant to its claim, against each respondent, for additional damages. In Melbourne’s case, the documents are also directly relevant to its (Melbourne’s) claim of innocent infringement.

29    In relation to category 3(a), VMS originally sought all documents created prior to the commencement of the proceeding that evidenced or recorded the respondents’ respective knowledge of the two patents in suit. In Melbourne’s case, VMS now only seeks documents created prior to 16 December 2015 because Melbourne does not plead innocent infringement after that date.

30    Originally, VMS also sought an order that verified discovery, by reference to this category, be given within seven days after discovery is ordered. It has now sought an order that such discovery be given, by each respondent, by no later than when that respondent’s evidence in answer is filed. VMS’s changes to the orders originally sought are responsive to particular complaints raised by the respondents as to the oppressiveness of VMS’s original claims to discovery in this regard.

31    It is convenient to consider, firstly, Melbourne’s position.

32    Melbourne’s employees are responsible for maintaining their own systems for the electronic filing of documents and emails according to their individual preferences. Although Melbourne maintains a centralised document management system, and some of its employees may save electronic documents and emails to this system, there is no requirement for them to do so.

33    Melbourne backs-up its email servers on a periodic basis. Such back-ups reflect each employee’s email inbox at a particular point in time. Therefore, emails created or deleted between back-ups are not necessarily captured.

34    There is a repository of back-ups, saved to tapes. These tapes need to be “restored” using proprietary software before they can be searched. The restoration process involves restoring all employee email inboxes as they were at the point in time at which the record was captured. The restoration of each tape may take several days and must be completed by specialist IT personnel.

35    Searches may then be conducted for particular users using particular search terms. Broad-based searching across all email records of Melbourne’s employee base is not feasible.

36    There are no email inboxes or electronic back-ups of email inboxes in existence prior to 2013. The only email records that may exist prior to 2013 are emails that an employee might have retained after 2013 or elected to save to Melbourne’s document management system.

37    As to hard-copy documents, Melbourne stores some documents at an off-site, third-party storage facility, on an ad hoc basis. The records are only stored when an employee elects to archive the material. There is no centralised index. Some hard-copy documents may be located in files kept by Melbourne’s Freedom of Information Department; some hard-copy documents might be stored elsewhere on-site. The evidence before me is that it is likely that most hard-copy documents held by Melbourne, if they exist within the third category, will need to be retrieved from the third-party storage facility to which I have referred.

38    The evidence before me also indicates that Melbourne has begun the process of locating potentially relevant hard-copy and electronic records, including reconstituting back-up email records using very broad search criteria. So far it has identified approximately 31GB of raw data (in the case of electronic records) that has been provided to its solicitors. However, at the time of the hearing of the amended interlocutory application, this data, understandably, had not been processed into the solicitors’ systems or indexed for review. The evidence was that the solicitors would not be in a position to begin searching the materials for some days. The present indications are that Melbourne’s solicitors will need to review a substantial volume of documents in order for Melbourne to comply with the discovery sought by VMS, even on the more limited basis now sought.

39    Although VMS no longer seeks discovery in respect of the third category of documents before Melbourne files its evidence in answer, it argues that an order for discovery should still be made now. One reason for this is that the period between the time by which Melbourne is to file its evidence (4 September 2020) and the commencement of the trial (21 October 2020) is relatively short and VMS is concerned that it may not be sufficient for discovery to be completed. Relatedly, VMS also points to the fact that, on the evidence, Melbourne has already begun the task of collating documents for discovery, according to this category.

40    I am not persuaded that an order for discovery in relation to the third category of documents should be made against Melbourne. Insofar as VMS seek such documents to support its case for additional damages, VMS should file the evidence on which it proposes to rely in its case in chief, as it is currently particularised. This evidence, no doubt, will include evidence of two letters (20 July 2010 and 14 June 2013) referred to by VMS in the present application, but not particularised in its amended statement of claim, which, VMS says, were sent to Melbourne’s then CEO (the receipt of which, Melbourne cannot presently confirm). No discovery is required by VMS to enable it to file this evidence. Presumably, Melbourne will then respond to this evidence, and file the evidence on which it proposes to rely to establish its case on innocent infringement. As Melbourne submits, it is entirely conceivable that its evidence will address the extent of the searches it has made to locate documents concerning its knowledge of the two patents and its possible infringement thereof. It is, of course, to be borne in mind that VMS bears no onus of proof in respect of Melbourne’s asserted innocence. Once Melbourne has filed its responsive evidence on the question of additional damages, and its evidence to support its claim of innocence, the Court will be in a better position to determine whether discovery in relation to these issues is appropriate and, if so, the extent of that discovery.

41    So far as SARB is concerned, VMS’s pleaded and particularised case for additional damages is that SARB has known, at all material times, that the two patents exist and that VMS is the owner thereof. Secondly, that at least since the decision in Vehicle Monitoring Systems Pty Limited v Sarb Management Group Pty Ltd (trading as Database Consultants Australia) (No 2) [2013] FCA 395, SARB has known that its conduct infringes the first and/or second patents currently in suit or, alternatively, has been recklessly indifferent to that matter. Based on its pleaded and particularised case, I am unable to see why, at the present time, discovery in relation to the third category of documents should be ordered against SARB. I assume from VMS’s particulars that its case for additional damages against SARB is based on what SARB has already accepted is the closely similar terms of the claims in suit in this proceeding, compared to the claims in suit in the earlier proceeding noted in VMS’s particulars: see, in this regard, Vehicle Monitoring Systems Pty Limited v SARB Management Group Pty Ltd trading as Database Consultants Australia [2020] FCA 6 at [22], and the Schedules referred to.

42    For these reasons, discovery in relation to the third category of documents is refused.

Access to documents

Saxon Hill

43    VMS seeks an order that Mr Hill be given access to the redacted information in Annexure A, under an agreed confidentiality undertaking.

44    Mr Hill is VMS’s Managing Director. The evidence before me is that VMS is a relatively small business, comprising 10 employees. Owing to the size of its business, it does not have in-house counsel. Mr Hill is the person responsible for making decisions with respect to the conduct of the present proceeding and, absent any in-house counsel, he is also the person who is responsible for providing instructions to VMS’s solicitors, including in relation to the potential quantum of pecuniary relief that may be awarded to VMS in the proceeding.

45    VMS submits that it is appropriate that Mr Hill be given access to the redacted information in Annexure A because it does not contain technical information but only SARB’s contentions about the number of sensors, by version type, that have been supplied by SARB to local government councils, including the dates of supply, installation and/or use. Given the state of Annexure A to the redacted product and method description, VMS’s solicitors say that they are not able to provide advice to, or obtain instructions from, VMS in relation to the unredacted contents of Annexure A and that the redacted information is essential to VMS’s ability to understand the potential quantum of its claim against each respondent, particularly having regard to SARB’s contentions that aspects of VMS’s claims are statute-barred and/or otherwise said to be precluded by the terms of the settlement deed dated 9 May 2013 between VMS and SARB. Although an order has been made separating the determination of liability for infringement from the determination of the quantum of any pecuniary relief, VMS submits that it is appropriate to grant the access it seeks now because it needs to obtain advice, and provide instructions, including about whether it should issue an offer of compromise or Calderbank letter to either or both respondents at an early stage of the proceeding. Further, the Court has ordered the parties to attend a private mediation by 13 September 2020. VMS submits that, in order for it to participate in the mediation on a properly informed basis, it will be necessary for Mr Hill to have access to, and to properly consider and analyse, the redacted information, particularly as to its consequences in terms of the potential financial remedies available to VMS.

46    The redacted information in Annexure A does not include pricing information or the terms on which SARB has contracted with its clients. Further, there is evidence before me that at least some of the redacted information in Annexure A is available in the public domain, including from some local council websites. Prior to the commencement of this proceeding, and subsequently, Mr Hill collated information in the public domain to arrive at an estimate of the number of sensors supplied by SARB according to year and local council concerned.

47    SARB objects to Mr Hill being granted access to the redacted information. SARB says that the parking technology industry in Australia is very small and that VMS and SARB are long-standing commercial rivals, evident from the various legal disputes with which they have been involved against each other. They have competed on every significant tender released by Australian local councils for the past decade for the provision of in-ground parking detection sensors, and are likely to continue to compete for future tenders. Mr Hill is closely involved in VMS’s tenders. SARB argues that the redacted information in the verified product and method description is commercially sensitive and would give Mr Hill detail of SARB’s existing and former clients and contacts, which he could use in formulating VMS’s future marketing strategy and future tenders. SARB submits that the redacted information discloses the scale and size of its parking detection sensor business, its market penetration, and its geographical spread around Australia. It submits that it gives a clear indication of its customers’ purchasing behaviour; the number, version and age of sensors installed at particular sites; the longevity of SARB’s client relationships; and whether the relationship with a particular client is ongoing. It submits that this information could be used to identify potential clients requiring additional sensors and replacement sensors. The information could be used by VMS to inform its decisions about who to approach for future business, and how those approaches should be made. Thus, according to SARB, disclosure would cause “substantial detriment” to it and that it would “lose the benefit of its competitive advantage” against VMS.

48    VMS submits that, at the threshold, SARB has not discharged its onus of establishing that the information in question is, properly, confidential information. Although SARB has a standard contract template with its customers that includes confidentiality arrangements, which SARB requires its customers to adhere to, there is nothing in those arrangements which precludes SARB’s clients from disclosing, for example, the number of parking sensors it deploys.

49    In this connection, I note that clause 8.1 of SARB’s standard contract template provides:

The Customer agrees that the Software, Firmware and Products constitute and includes valuable trade secrets and confidential information of DCA (or its third-party suppliers, as applicable). The Customer agrees to hold all information about and relating to the Software, Firmware and Products in confidence and to take all reasonable precautions necessary to protect the confidentiality of such information. The Customer further agrees not to disclose, provide or otherwise make available such information in any form to any individual or other party other than DCA’s employees or the Customer’s own employees or subcontractor for the provision of IT services and only for the sole purpose of enjoying the rights to use the Software and/or Products as granted in this Agreement.

50    SARB’s evidence is that, even if one of its customers elects to engage it under an alternative contract, SARB ensures that a confidentiality clause, similar to that quoted, is included.

51    I do not read this clause as imposing any obligation on SARB’s clients not to disclose the number of sensors they have acquired from SARB. If, contrary to my view, the clause extends that far, then I can only say that, on the evidence before me, adherence to the clause is, in a number of cases, honoured in the breach. In any event, clause 8.4 (d) of SARB’s standard contract template expressly permits the disclosure of “confidential information” which SARB or its client is obliged by court order to disclose.

52    Be that as it may, it seems to me that the present question of access must be considered by reference to Annexure A itself. It is a table of information that has been compiled for the purpose of SARB providing, under court order, a product and method description. I am satisfied that SARB has established that the unredacted version of Annexure A is prima facie confidential information. I do not think that this conclusion is gainsaid by the fact that some of the information can be searched for in, and obtained from, public sources. If all of it can be, then VMS is not disadvantaged by being Mr Hill being denied access to Annexure A at the present time.

53    Further, I am mindful of Mr Hill’s position within VMS. Whilst I have no reason to think that Mr Hill would not honour any obligation imposed on him with regard to further disclosure of Annexure A, it is not realistic to think that, once imparted to him, the information in Annexure A can be put out of mind so far as VMS’s commercial interests are concerned.

54    There may come a time when Annexure A, or similar information, should be provided to Mr Hill. But I am not persuaded that the time has arrived. An order has been made separating the determination of liability from the assessment of pecuniary relief. The information in Annexure A is more relevant to the latter issue than the former. It may be that the step of assessing pecuniary relief is never reached.

55    The two specific reasons advanced by VMS do not compel a different view. The prospect of VMS making an offer of compromise or similar offer seems more theoretical than real at the present time. The evidence advanced in support of that reason for disclosure is not convincing.

56    So far as mediation is concerned, SARB has acknowledged that it is cognisant of the type of information that it will need to provide VMS before the mediation, and has indicated that sufficient information will be provided in a timely manner.

Robert Rothkopf and Nick Gardner

57    Mr Rothkopf is the Managing Partner of Balance Legal Capital LLP (Balance). Balance is a litigation funding firm based in London. Balance funds VMS in this proceeding. Mr Gardner is a Senior Adviser at Balance, and a specialist in intellectual property litigation.

58    The evidence before me is that key decisions, including the decision whether to fund the litigation and on what terms, and whether to resolve the dispute and on what terms, are made by Balance through an Investment Committee, comprising five senior representatives. Once approval is given by the Investment Committee to fund litigation, a partner is assigned to monitor the investment with assistance from another member of the team, being another partner, investment manager or associate. The team assigned to monitor an investment must provide regular reports to the Investment Committee regarding material developments and upcoming steps in the litigation, together with budget updates necessary to approve funding payments. Key issues and case management decisions are brought to the Investment Committee for consideration.

59    Under confidentiality arrangements currently in place between VMS and SARB, Simon Burnett, who is the Partner at Balance who has been assigned the task of monitoring the present litigation for Balance, and is also a member of the Investment Committee, has been given access to the redacted information in the verified product and method description. He now believes that it is necessary for two additional representatives at Balance—namely, Mr Rothkopf and Mr Gardner—to have access to the redacted information.

60    VMS seeks that access. It submits that the redacted information contained in the verified product and method description comprises the type of information that is ordinarily required to be included in reports to the Investment Committee, so that the committee can determine whether the investment continues to meet Balance’s investment criteria and to ensure that Balance is able to discharge its risk management duties to investors in the fund. VMS also submits that it is information that will assist Balance in considering whether an early resolution of the proceeding, in whole or in part, is warranted or advisable. Mr Burnett does not have authority to make case management decisions in relation to the potential settlement of the proceeding without consulting other members of the Investment Committee.

61    In support of this application, VMS has adduced evidence that, prior to his involvement with Balance, Mr Rothkopf was a lawyer at Herbert Smith Freehills for seven years, working as a trainee for two years, and practising as a solicitor for five years. He is admitted to practice as a solicitor in England and Wales, and holds a current practising certificate for those jurisdictions. He has previously been required to give confidentiality undertakings, including of the type agreed to in this proceeding.

62    VMS has also adduced evidence that Mr Gardner practised as a solicitor at Herbert Smith Freehills in London for over 25 years, where he was the worldwide head of the intellectual property group. It is understood by VMS that Mr Gardner currently practises as a consultant, independent adjudicator (appointed by the World Intellectual Property Organisation), and mediator. He is the Chair of the independent panel of experts appointed by Nominet (the organisation responsible for all United Kingdom domain names). He has also previously been required to give confidentiality undertakings, including of the type agreed to in this proceeding.

63    SARB objects to Mr Rothkopf and Mr Gardner being given access to the redacted information in the verified product and method description. The reason is that such access is unnecessary, particularly when Mr Burnett already has full access to SARB’s confidential information. SARB submits that Mr Rothkopf and Mr Gardner already have access to the redacted verified product and method description and SARB’s redacted position statement. SARB submits that, taken with SARB’s amended defence, Mr Rothkopf and Mr Gardner already have access to “a clear and detailed breakdown of SARB’s non-infringement position for each disputed integer” of the claims in suit. SARB submits, further, that it is extremely concerned that disclosure of its confidential information to multiple persons will increase the risk of unauthorised disclosure, accidental or otherwise, of the information within Balance more broadly or externally. Thus, it submits, it is wrong to assume that the extended access that is now sought will not prejudice it.

64    In its written submissions, SARB also submitted:

Balance is not a party to these proceedings, or an independent adviser to VMS bound by ethical obligations; it is an independent, London-based company seeking to profit from the proceeds of this litigation as the funder for VMS. Balance is only interested in the subject matter of the proceedings as a result of VMS’s choice to seek funding to pursue a claim against SARB. Its interests must be subservient to those of the parties to the litigation and the administration of justice.

65    A further matter of concern to SARB is the fact that, despite the matters advanced with respect to Mr Rothkopf’s and Mr Gardner’s professional standing, neither practises law nor resides in Australia and, as overseas residents, their professional conduct is beyond the control of this Court.

66    In oral submissions, SARB also submitted that there is an evidential gap in VMS’s evidence in support of its application for disclosure of the redacted information to Mr Rothkopf and Mr Gardner—namely that VMS has not adduced the funding agreement it has with Balance. Thus, SARB submits, there is no evidence before the Court of any contractual obligation on VMS’s part to provide any of the information that is sought to Balance to enable it to make funding decisions with respect to the litigation.

67    I do not find the latter contention to be persuasive. By already permitting access to confidential information by Mr Burnett, SARB has acknowledged and accepted that this information is required by Balance in order to discharge its responsibilities. Thus, the failure to adduce, as evidence in the present application, Balance’s funding agreement with VMS, cannot sensibly be regarded as a bar to permitting disclosure of the relevant information to Mr Rothkopf and Mr Gardner, if that is otherwise appropriate.

68    Further, I am not persuaded that, having already agreed to disclosure of its confidential information to Mr Burnett, SARB’s concerns about further disclosure to Mr Rothkopf and Mr Gardner are justified, in circumstances where both are prepared to enter into confidentiality undertakings already agreed to by SARB as appropriate to protect its position. I have no reason to think that Mr Rothkopf or Mr Gardner would not comply with those undertakings.

69    That said, I appreciate that Mr Rothkopf and Mr Gardner are resident outside Australia and there may be difficulties in proceeding against them should, contrary to my expectation, they not comply with the undertakings. It is for this reason that, during the course of the hearing, I suggested that this concern could be overcome by an express acknowledgement, in the undertakings, that each submits to the jurisdiction of the Court in proceedings brought against them in relation to the enforcement of their obligations under the undertakings. I was informed by counsel for VMS that, if access be permitted to the redacted information, Mr Rothkopf and Mr Gardner would give undertakings acknowledging that they submit to the jurisdiction of the Court in this regard.

70    In all the circumstances I am persuaded that it is appropriate to permit the extended access that VMS seeks on behalf of Mr Rothkopf and Mr Gardner. That access should be on the condition I have noted, save that I think the submission to jurisdiction should extend to other courts exercising jurisdiction in New South Wales.

71    Before departing from this aspect of the application, I note that, in its evidence in support of the present application, VMS’s solicitor, Mr Piesiewicz, expressed the assumption that if Mr Rothkopf and Mr Gardner are permitted access to the redacted information in the verified product and method description, they would also be permitted access to SARB’s position statements (in respect of which SARB also claims confidentiality) and that, for that reason, VMS does not seek a separate order permitting Mr Rothkopf and Mr Gardner access to the position statements. This assumption was not explored during the course of the hearing and VMS’s amended interlocutory application only seeks extended access in relation to the verified product and method description. Out of abundant caution, I will only permit the further access that VMS specifically seeks. If it be the case that extended access to SARB’s position statements is required, then I hope that common sense will prevail between the parties so that the question of that access can be resolved by agreement.

Disposition

72    As I have stated, discovery in respect of the first category of documents has been ordered; discovery in respect of the second category has been refused. Discovery in respect of the third category of documents should also be refused, for the reasons I have given.

73    The application for disclosure to Mr Hill of Annexure A to the verified product and method description will be refused. However, access to the verified product and method description will be extended to Mr Rothkopf and Mr Gardner on the basis I have stated.

74    As to the costs of and incidental to the interlocutory application, VMS should pay Melbourne’s costs. Melbourne has succeeded in resisting the application and there is no reason why costs should not follow the event. As between VMS and SARB, there has been mixed success. Each should bear its own costs of and incidental to the interlocutory application.

Associate:

Dated:    12 June 2020