Federal Court of Australia
Aristocrat Technologies Australia Pty Ltd v Light & Wonder, Inc. [2024] FCA 439
ORDERS
DATE OF ORDER: |
THE COURT ORDERS THAT:
1. The prospective respondents give discovery of the following documents pursuant to r 7.23 of the Federal Court Rules 2011 (Cth) (“the FCR”):
1.1 Any documents that constitute or record any mathematical rules, formulae or models (including any associated pay tables, reel strips and weighting tables) used to create or implement Dragon Train Chi Lin Wins and Dragon Train Forever Emperor or any of their features.
1.2 Any documents or material related to Dragon Link, Lightning Link or other Aristocrat games copied, transferred, removed or exported in physical or electronic form from Aristocrat or HRG or retained by:
(a) Ms Charles after leaving her employment by Aristocrat; and
(b) Mr Sefton after leaving his employment by Aristocrat.
1.3 Any documents created on or after Ms Charles or Mr Sefton commenced providing any services to L&W (whichever is the earlier) by Ms Charles or Mr Sefton referring to Dragon Link, Lightning Link or any features of Dragon Link or Lightning Link.
1.4 Any photographs or video files saved at the following file path: M:\Gaming\syd-common\Lloyd Sefton\by game, as referred to in part in an electronic message exchange between Emma Charles and Yuri Leontiev dated 14 September 2022 and produced to Aristocrat by L&W on 3 November 2023 (see Affidavit of John Dominic Lee dated 20 December 2023 at Confidential Annexure JDL-4 [7]), evidencing or recording Dragon Link and/or Lightning Link in operation.
In this order these definitions apply:
L&W means Light & Wonder, Inc. (ARBN 666 710 836) and LNW Gaming ANZ Pty Ltd t/a Light and Wonder (ACN 001 660 537).
Aristocrat means Aristocrat Technologies Australia Pty Limited (ACN 001 660 715), and includes any abbreviations of that name such as “Acrat”.
document has the same meaning as in the Evidence Act 1995 (Cth) and includes without limitation any written documents, drafts, notes, correspondence, invoices, financial records, emails, email attachments, text messages, electronic files and other electronic records of any kind.
Dragon Link means any form of electronic game or gaming machine called “Dragon Link” or any other abbreviations of that game such as “DL” and includes each of the themed games, and any abbreviations of the themed games, known as ‘Silk Road’, ‘Golden Gong’, ‘Peace & Long Life’, ‘Genghis Khan’, ‘Golden Century’, ‘Spring Festival’, ‘Prosperous’, ‘Autumn Moon’, ‘Peacock Princess’ and ‘Panda Magic’.
Dragon Train means any form of electronic game or gaming machine under the name “Dragon Train” or any other abbreviations of that game such as “DT” or “DTX” and includes each of the themed games, and any abbreviations of the themed games, known as ‘Khutulun Battle Princess’, ‘Forever Emperor’, ‘Chi Lin Wins’ and ‘Sun Shots’.
Feature means any additional free game, free spin of certain reels, metamorphosis of the basic game rules or secondary choice necessary to complete a game (except gamble), as defined in the Standard (see Affidavit of Marc David Foodman of 20 December 2023, at Exhibit MDF-1 p130 and Affidavit of Matthew William Deitz of 21 March 2024 at [18]) and includes features such as the Hold & Spin feature.
Lightning Link means any form of electronic game or gaming machine called “Lightning Link” or any other abbreviations of that game such as “LL” and includes each of the themed games, and any abbreviations of the themed games, known as ‘Magic Pearl’, ‘Sahara Gold’, ‘Happy Lantern’, ‘High Stakes’, ‘Best Bet’, ‘Moon Race’, ‘Heart Throb’, ‘Tiki Fire’, ‘Bengal Treasures’ and ‘Wild Chuco’.
Ms Charles means Emma Charles.
Mr Sefton means Lloyd Sefton.
2. Discovery pursuant to order 1 be given in accordance with r 7.25 of the FCR within 28 days or such further period as the Court may allow. Rule 20.18 of the FCR applies to such discovery.
3. The prospective respondents must produce for inspection documents in their control (or the control of any of them) discovered to the prospective applicant pursuant to order 1 subject to order 4 hereof.
4. Documents produced by the prospective respondents pursuant to these orders which are designated by the prospective respondents as “Confidential” (including the contents thereof and information derived or notes taken or reports or other documents generated therefrom) (Confidential Materials):
(a) may only be inspected by or disclosed to:
(i) the external Australian solicitors of record and Australian counsel for the prospective applicant who have first signed an undertaking substantively in the form of Annexure A to this order;
(ii) the administrative, secretarial and litigation support staff of the external Australian solicitors of record and Australian counsel for the prospective applicant to the extent reasonably required in relation to this proceeding (or any substantive proceedings in Australia commenced on the basis of production of documents in this proceeding), provided that those staff have first been made aware of the confidential nature of those documents and the terms of this order;
(iii) any independent experts retained by the prospective applicant in this proceeding (or any substantive proceedings in Australia commenced on the basis of production of documents in this proceeding), provided that:
A. the solicitors for the prospective applicant have first provided the solicitors for the prospective respondents with the name, current position, qualifications and employment history (with a curriculum vitae) of the proposed expert;
B. the prospective respondents have consented to the disclosure of the documents produced pursuant to this order to that expert (such consent not to be unreasonably withheld); and
C. the expert has, prior to disclosure, signed an undertaking substantively in the form of Annexure A to this order and that signed undertaking has been provided to the solicitors for the prospective respondents;
(iv) the Court and its staff and stenographic and video recorders and reporters, provided that reasonable steps have been taken on behalf of the prospective applicant to mark and identify the Confidential Materials as confidential; or
(v) any other person approved in writing by the prospective respondents, or as the Court may order, in each case provided that person has first signed an undertaking substantively in the form of Annexure A to this order;
(b) will not be included in any non-confidential part of any pleading, affidavit or written submissions and will not be open for public inspection, disclosed in open Court or disclosed in an open part of any Court transcript; and
(c) may only be used by or on behalf of the prospective applicant for the purposes of this proceeding (or any substantive proceedings in Australia commenced on the basis of production of documents in this proceeding), including any appeals.
5. The prospective applicant pay the prospective respondents’ costs of the preliminary discovery application unless the prospective applicant commences a substantive proceeding against the prospective respondents in this Court within 60 days of the prospective respondents complying with these orders in which event the costs of the preliminary discovery application shall be costs in the substantive proceeding.
6. Liberty to apply on 3 days’ notice.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Annexure A
CONFIDENTIALITY UNDERTAKING
I, [name], of [company], [position], [address] undertake, subject to any Court order amending or revoking these terms, to Light & Wonder, Inc. and LNW Gaming ANZ Pty Ltd (collectively, L&W) in relation to the documents produced pursuant to the orders made on 30 April 2024 (the Documents), as follows:
1. Without the prior written consent of L&W (which I acknowledge L&W may withhold in its absolute discretion), I will not use the Documents, any part of the Documents or any information contained in the Documents, for any purpose other than:
(a) Federal Court proceedings Aristocrat Technologies Australia Pty Limited v Light & Wonder, Inc. & Ors (NSD 1576/2023) or any substantive proceedings commenced in Australia on the basis of production of documents in NSD 1576/2023; and
(b) any appeal from either of the proceedings referred to in paragraph 1(a) above,
(collectively, the Proceedings), in each case only in accordance with the terms of this undertaking.
2. I have read the orders made on 30 April 2024 in NSD 1576/2023 (the Order).
3. I may only disclose the Documents, any part of the Documents or any information contained in the Documents:
(a) to the external Australian legal practitioners who are engaged by the prospective applicant in NSD 1576/2023 (Aristocrat) in relation to the Proceedings, provided that, prior to disclosure, they have signed an undertaking in substantively the same terms as this undertaking and that signed undertaking has been provided to the solicitors for the prospective respondents;
(b) to any independent experts retained by or on behalf of Aristocrat, provided that:
(i) the solicitors for the prospective applicant have first provided the solicitors for the prospective respondents with the name, current position, qualifications and employment history (with a curriculum vitae) of the proposed expert;
(ii) the prospective respondents have consented to the disclosure of the documents produced pursuant to the Order to that expert (such consent not to be unreasonably withheld); and
(iii) the expert has, prior to disclosure, signed an undertaking in substantively the same terms as this undertaking and that signed undertaking has been provided to the solicitors for the prospective respondents;
(c) to administrative, secretarial and litigation support staff employed or engaged by the persons referred to in paragraph 2(a) above to the extent reasonably required in relation to the Proceedings, provided such staff have first been made aware of the confidential nature of those documents and the terms of the Order;
(d) to the Court and its staff and stenographic and video recorders and reporters, provided that reasonable steps have been taken on behalf of Aristocrat to mark and identify the Documents or information as confidential; or
(e) to any other person, including a representative of Aristocrat, agreed to by L&W in writing or as ordered by a Court, provided that person has signed an undertaking in substantively the same terms as this undertaking.
4. I will promptly notify the external legal practitioners acting on behalf of L&W (or cause them to be notified) of any breach of this undertaking of which I become aware.
5. To the extent that I have any Documents or any other documents recording or referring to any information contained in any Documents, I will:
(a) use, handle, keep and store those documents in such a manner as will preserve their confidentiality; and
(b) establish and maintain reasonable security measures to safeguard those documents from unauthorised access or use. In particular, I will ensure that those documents are stored in a manner that will ensure that only I and other individuals described in paragraph 3 above will be permitted access to them.
6. This undertaking does not apply to such part of the Documents or information in them:
(a) which has already been disclosed to the public in a way that waives the confidential status of the Document or information otherwise than:
(i) in contravention of a confidentiality undertaking; or
(ii) in circumstances where I am aware or have reason to believe that the disclosure resulted from a breach of an obligation of confidentiality owed by any person to L&W; or
(b) which I am required to disclose under any law, by any order of any government agency, or by the rules of any stock exchange, provided that I provide (or cause to be provided) L&W with reasonable advance notice of such requirement.
7. Within six months of the conclusion of the last of the Proceedings, I will promptly delete/destroy, or cause to be deleted/destroyed, in a secure and confidential manner the Documents or any documents recording or referring to any information contained in the Documents which are in my possession, custody or power, except that the external legal practitioners who are engaged by Aristocrat in relation to the matters the subject of the Proceedings may retain a copy of those documents on their files, provided that the documents continue to be treated in accordance with this undertaking.
8. I acknowledge that my obligations in this undertaking will continue after the deletion/destruction of any documents in accordance with paragraph 7 above.
9. I irrevocably submit to the jurisdiction of the Federal Court of Australia for the purposes of enforcing the terms of this undertaking.
Date: [insert]
Name (please print) |
NICHOLAS J:
Background
1 Before the Court is an application brought by the prospective applicant (“Aristocrat”) against four prospective respondents seeking preliminary discovery pursuant to r 7.23 of the Federal Court Rules 2011 (Cth).
2 Aristocrat is the company through which the Australian business of the Aristocrat Group is conducted. It is engaged in, inter alia, the design and supply of electronic gaming machines (“EGMs”) and games played on EGMs. There is evidence to indicate that Aristocrat holds all the intellectual property rights in the Lightning Link and Dragon Link games which were designed by High Roller Gaming Pty Ltd (“HRG”) for Aristocrat. Those games were launched in 2014 and 2016 respectively and are said by Aristocrat to be its best performing games since the time of their launch.
3 The first and second prospective respondents (collectively “L&W”) compete with Aristocrat, and other companies within the same corporate group as Aristocrat, including in the supply of EGMs and games played on EGMs in various jurisdictions including Australia and the United States. The third prospective respondent (“Ms Charles”) and the fourth prospective respondent (“Mr Sefton”) previously worked for Aristocrat and now work for L&W.
4 Ms Charles was first employed by Aristocrat in 2008. In October 2012 she was seconded to HRG, where she became involved in the design and development of Lightning Link and Dragon Link for Aristocrat. Ms Charles’ last day of employment with Aristocrat and HRG was in July 2017. She was hired by L&W in July 2021. Mr Sefton was employed as a graphics designer/illustrator by Aristocrat in May 2001. His last day of employment with Aristocrat was in February 2016, and he was also hired by L&W in July 2021.
5 There is evidence to show Ms Charles and Mr Sefton were directly involved during the period of their employment by Aristocrat and, in the case of Ms Charles, HRG, in the development of Aristocrat’s Lightning Link and Dragon Link games. Ms Charles was involved in the design of the mathematics underlying the games and Mr Sefton, a graphics designer, was involved in the design of artwork associated with the games.
6 There is also evidence to show that Ms Charles, who was a senior game designer, had access to Aristocrat’s confidential information and copyright works relating to Lightning Link and Dragon Link when working for Aristocrat and HRG. Aristocrat contended that those materials also included the source code for those games. I will return to the topic of the source code shortly.
7 Ms Charles has been directly involved in the design and development of L&W’s Dragon Train game. In August 2023 L&W publicly launched Dragon Train at the Australasian Gaming Expo held in Sydney. Ms Siobhan Lane, CEO-Gaming at L&W, said during a presentation promoting Dragon Train at that event that Ms Charles, who she said had worked on the Lightning Link product for many years while at Aristocrat, had:
made the decision to join the Light & Wonder team and start to run her own studio, Star Studio, out of Australia. And we’re proud that Emma just this week in Australia launched her inaugural product under the Light & Wonder brand, Dragon Train, you’ll see it at the Star Casino on the floor today …
8 Aristocrat relies on evidence which suggests that Ms Charles may have used confidential information obtained by her during the course of her work with Aristocrat and HRG in developing Lightning Link and Dragon Link while working on the design of L&W’s Dragon Train. In particular, there is evidence that suggests that she may have made use of a confidential spreadsheet and other confidential information created by her or other employees of Aristocrat or HRG in the course of developing Lightning Link and Dragon Link. There is also evidence that Mr Sefton was, while working for L&W, in possession of artwork which he created while working for Aristocrat.
9 Aristocrat contends that it has reasonable grounds to believe that it may have a right to obtain relief in the Court from each of the prospective respondents for the following causes of action:
(a) Breach of confidence and breach of contract: for misuse of Aristocrat’s confidential information (including, the maths documents and source code that underpin Lightning Link and Dragon Link) in the development of Dragon Train.
(b) Copyright infringement: for infringement of copyright in respect of pay tables, reel strips, weighting tables, underlying maths spreadsheets, game specifications, underlying source code, original artwork or cinematograph films for Dragon Link and Lightning Link.
(c) Passing off: misrepresenting that Dragon Train is part of the Dragon Link family of games or is a game “associated with Dragon Link”.
(d) Misleading or deceptive conduct: making misleading or deceptive representations to customers or potential customers about the features of Dragon Train relative to Dragon Link.
Aristocrat contends that having made reasonable enquiries, it does not have sufficient information to decide whether to start a proceeding in the Court for relief in respect of those cause of action.
10 The categories of documents which Aristocrat seeks to have the prospective respondents produce pursuant to an order under r 7.23 (as revised shortly prior to the commencement of the hearing) are set out in Annexure A to these reasons. The evidence relied on by Aristocrat consists of affidavits of Marc Foodman and Matthew Deitz, affidavits from Aristocrat’s solicitor, Mr John Lee, and an affidavit of independent expert, Mr Benjamin Ellis. The evidence relied on by the prospective respondents consists of an affidavit of their solicitor, Mr Richard Hoad, of Jones Day.
Rule 7.23
11 Rule 7.23 provides:
Discovery from prospective respondent
(1) A prospective applicant may apply to the Court for an order under subrule (2) if the prospective applicant:
(a) reasonably believes that the prospective applicant may have the right to obtain relief in the Court from a prospective respondent whose description has been ascertained; and
(b) after making reasonable inquiries, does not have sufficient information to decide whether to start a proceeding in the Court to obtain that relief; and
(c) reasonably believes that:
(i) the prospective respondent has or is likely to have or has had or is likely to have had in the prospective respondent’s control documents directly relevant to the question whether the prospective applicant has a right to obtain the relief; and
(ii) inspection of the documents by the prospective applicant would assist in making the decision.
(2) If the Court is satisfied about matters mentioned in subrule (1), the Court may order the prospective respondent to give discovery to the prospective applicant of the documents of the kind mentioned in subparagraph (1)(c)(i).
12 The prospective respondents referred to the judgment of Lindgren J in relation to O 15A, r 6 of the former Federal Court Rules in Alphapharm Pty Ltd v Eli Lilly Australia Pty Limited [1996] FCA 391. His Honour said at pp 29-33:
1. Paragraphs 6 (a) and 6 (c) pose an objective test, the opening words "there is" in each paragraph signifying "there exists"; but the "insufficiency test" of para 6 (b) has both subjective and objective aspects.
2. Although I need not explore the subjective aspect fully, it seems clear that if the evidence went so far as to show that a particular applicant was already able to decide to commence a proceeding by, for example, showing that the applicant had in fact decided to do so, para 6 (b) would not be satisfied even though the information available did not satisfy the objective aspect of the insufficiency test referred to below.
3. The fact that a particular applicant genuinely feels unable, because of a lack of information, to decide to commence a proceeding does not, without more, satisfy para 6 (b); the objective aspect of the paragraph requires it to be shown as an objective fact that the applicant lacks "sufficient information to enable a decision to be made whether to commence a proceeding".
4. In my view, the objective aspect of para 6 (b) invokes a notion of "reasonable sufficiency", the question raised being whether it is reasonable that the applicant for an order be required to take its decision without having the information to become available from inspection of the document or documents of which discovery is sought.
5. If the insufficiency test is satisfied, a second question will arise, namely, whether the Court's discretion should be exercised in favour of the making of an order.
6. The questions posed by rule 6 and referred to above are to be answered in the context of an adversary system of forensic contest in which a proposed respondent is ordinarily entitled to withhold its evidence, certainly prior to the commencement of proceedings.
7. The questions are also to be answered in the light of the nature of the "cause of action" contemplated and the range of information potentially available in respect of a cause of action of that kind.
8. Contrary to a submission of Eli Lilly, in my opinion rule 6 is not necessarily rendered unavailable by the fact that the applicant already has available evidence establishing a prima facie case for the granting of relief. This is made clear by the reference in para (a) to the existence of "reasonable cause to believe that the applicant has ... the right to obtain relief ..." (emphasis supplied). It would impose an artificial constraint on rule 6, not supported by its terms or purpose, to exclude, a priori, all cases in which the insufficiency of the information possessed by the applicant to enable a decision to be made whether to litigate is due to a matter of "defence" which would defeat the prima facie case.
9. Rule 6 does not provide a means by which an applicant will be enabled to have available to it every document which would assist it in deciding whether to litigate. If that were the intention, paras (a) and (c) would stand alone and the additional condition set out in para (b) would not be necessary.
10. Paragraph 6 (b) contemplates that after making all reasonable inquiries, the applicant has come up against a problem, namely, that it is lacking a piece of information or pieces of information reasonably necessary to enable it to decide whether to commence a proceeding.
13 His Honour’s summary of the relevant principles was applied by the Full Court in Hooper v Kirella Pty Ltd (1999) 96 FCR 1 (Wilcox, Sackville and Katz JJ) at [40] in a passage cited with approval by the Full Court in Optiver Australia Pty Ltd v Tibra Trading Pty Ltd (2008) 169 FCR 435 (Heerey, Gyles and Middleton JJ) (“Optiver”) at [32].
14 Even if the prospective applicant has sufficient information with which to plead a cause of action, it does not necessarily follow that the prospective applicant has sufficient information to decide whether to start a proceeding for relief in this Court. A prospective applicant may be entitled to preliminary discovery to determine the extent of the prospective respondent’s breach and the strength of any potential defences: St George Bank Ltd v Rabo Australia Ltd (2004) 211 ALR 147 (“St George”) at [26(f)] per Hely J.
15 In Optiver, the Full Court was concerned with an appeal against a refusal by the primary judge to grant preliminary discovery under O 15A, r 6 because the prospective applicant had sufficient information “to meet the threshold of a ‘bare pleadable case’”. The Full Court said at [36]:
The concept of a “bare pleadable case” is not only a gloss on the text of the rule but is fundamentally inconsistent with its purpose. The policy behind the rule is that even where there is a reasonable cause to believe that a person may have a right to relief, nevertheless that person may need information to know whether the cost and risk of litigation is worthwhile. As Hely J pointed out in [St George] at [26], the question does not concern the right to relief but rather “whether to commence proceedings”. Inspection of documents in the possession of the proposed defendant may enable a properly informed decision to be made whether to commence a proceeding to obtain the relief. The “bare pleadable case” approach diverts attention from the true purpose of the rule. A person may have a pleadable case, but still not sufficient information upon which to decide whether to embark upon litigation. We are satisfied that his Honour asked himself the wrong question on this ground and that his conclusion cannot stand …
16 The language of r 7.23(1)(a) makes clear that the prospective applicant must hold the reasonable belief that it may have the right to obtain relief in the Court from the prospective respondent. A mere suspicion will not be enough. This was explained in Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd (2017) 257 FCR 62 (Allsop CJ, Perram and Nicholas JJ) at [175]-[179] by reference to Hely J’s decision in St George and the High Court’s decision in George v Rockett (1990) 170 CLR 104. As I said (Allsop CJ agreeing) at [175]-[177]:
[175] Hely J’s reasons at [28]-[29] recognise the nature of belief and the important role it plays in the operation of the rule. Belief is not the same as suspicion. As the High Court explained in George v Rockett (1990) 170 CLR 104 at 115-116:
Suspicion, as Lord Devlin said in Hussien v. Chong Fook Kam [[1970] AC 942 at p 948], “in its ordinary meaning is a state of conjecture or surmise where proof is lacking: ‘I suspect but I cannot prove.’” The facts which can reasonably ground a suspicion may be quite insufficient reasonably to ground a belief, yet some factual basis for the suspicion must be shown. […]
The objective circumstances sufficient to show a reason to believe something need to point more clearly to the subject matter of the belief, but that is not to say that the objective circumstances must establish on the balance of probabilities that the subject matter in fact occurred or exists: the assent of belief is given on more slender evidence than proof. Belief is an inclination of the mind towards assenting to, rather than rejecting, a proposition and the grounds which can reasonably induce that inclination of the mind may, depending on the circumstances, leave something to surmise or conjecture.
[176] In that case the High Court was concerned with the requirement that a magistrate issuing a search warrant have reasonable grounds for believing that the subject matter of the search warrant would afford evidence of the commission of an offence. Neither the current nor the former rule require anything quite so definite. Nevertheless, in my opinion, a requirement that a person reasonably believe that a particular state of affairs may exist will not be satisfied by evidence that does not incline the mind to the existence of that state of affairs.
[177] The function of the words “or may have” in the former rule was to make clear that the relevant belief need not incorporate a firm view that there is a right to relief. This was the view expressed by French J in East Grace Corporation v Xing (No 2) [2005] FCA 1266 at [36], which was later endorsed by a Full Court in Telstra Corporation Ltd v Minister for Broadband, Communications and the Digital Economy (2008) 166 FCR 64 at [58]. Consistently with that view, I do not think those words were intended to allow a prospective applicant to obtain an order for preliminary discovery in circumstances where there existed nothing more than a mere possibility that the prospective respondent may have engaged in conduct which, if proven, would entitle the prospective applicant to relief.
Submissions
17 Subject to two exceptions, the prospective respondents do not contend that the requirements of subpara (a) of r 7.23(1) are not satisfied. That is to say, subject to those two exceptions, they do not dispute that Aristocrat reasonably believes that it may have the right to obtain relief from this Court against the prospective respondents.
18 The first exception concerns the source code for the Dragon Train (category 1(d)). The prospective respondents say that Ms Charles and Mr Sefton are not computer programmers or coders and that there is no suggestion that Aristocrat’s source code has been taken or used by them. They say that Aristocrat’s application in so far as it seeks production of the source code lacks any tangible support and does not rise higher than mere assertion. L&W also maintains that its source code is highly confidential and that an order requiring it to be produced to a competitor should not be made lightly.
19 The second exception relates to category 2(c) which seeks L&W’s communications with customers and potential customers of Dragon Train, and its advertising material for Dragon Train, which refer to Lightning Link or Dragon Link. The prospective respondents submit that Aristocrat has not established the existence of any reasonable basis to believe that Aristocrat may have a right to seek relief against L&W in relation to such material and that, here again, the documents sought relate to a case that does not rise beyond mere assertion.
20 With regard to subpara (b) of r 7.23(1), the prospective respondents do not contend that Aristocrat has not made reasonable enquiries but say that Aristocrat already has sufficient information to decide whether to start a proceeding in the Court to obtain relief. They submit that what Aristocrat is really seeking to do by means of preliminary discovery is to obtain information which would allow it to fully assess the strength of its case against the prospective respondents before making any decision to commence a proceeding, and that the material sought by Aristocrat goes beyond what is reasonably necessary to enable it to make such a decision. They submit that even if there is more information in the prospective respondents’ possession that may assist Aristocrat in making its decision, it does not follow that the material already in Aristocrat’s possession is insufficient to enable it to make a decision.
21 In support of their submission the prospective respondents pointed to Aristocrat’s evidence, including the confidential evidence of Mr Ellis concerning the contents of a document voluntarily produced to Aristocrat’s solicitors by the prospective respondents’ solicitors (Ex B) and another spreadsheet produced by Aristocrat (Ex C) and the similarities between the two as identified by Mr Ellis in his affidavit evidence (Annexure BJE-4) and highlighted in the aide memoire handed-up by Aristocrat (MFI-2).
22 Senior Counsel for the prospective respondents, Mr Heerey KC, submitted that the material voluntarily provided by L&W (including Ex B) was more than adequate to enable Mr Ellis to give an expert opinion in relation to that material and for Aristocrat to make its decision whether or not to commence a proceeding in this Court. However, Mr Heerey made clear that the prospective respondents do not accept that the information in Ex C and Ex B (much of which appears to be identical) has been used in the design of Dragon Train. Further, in his submissions Mr Heerey stated that the prospective respondents “deny copying and positively assert independent creation”.
23 In support of their submissions the prospective respondents also referred to the existence of a US proceeding in which Aristocrat has sued L&W in the United States District Court for Nevada (“the US proceeding”). The US proceeding was apparently commenced on or about 26 February 2024, some months after Aristocrat filed its originating application in this proceeding. A copy of the complaint in the US proceeding is in evidence. In it, Aristocrat makes various allegations against L&W including the following:
(a) L&W developed Dragon Train using Ms Charles’s knowledge about how Dragon Link and Lightning Link work;
(b) there are similarities between Dragon Link and Dragon Train that seemingly cannot be explained by any legitimate reverse engineering;
(c) absent this misappropriation of Aristocrat’s trade secrets, L&W could not have replicated the signature gameplay and “feel” of Dragon Link and Lightning Link to the degree it did;
(d) L&W’s misappropriation of Aristocrat’s trade secrets has been wilful, malicious, and part of a sustained and systematic effort to “rip off” the signature elements – and “free-ride” on the commercial success – of Aristocrat’s Dragon Link games;
(e) L&W’s replicating of the Dragon Link Trade Dress on its own gaming machines and digital games constitutes false designation of origin, false or misleading description, and/or false or misleading representation;
(f) L&W has acquired through improper means one or more of Aristocrat’s trade secrets embodied in the Dragon Link and Lightning Link games, including insofar as L&W knew or had reason to know that it had received the information from persons, including Ms Charles and/or Mr Sefton, who owed a duty to Aristocrat to maintain the secrecy of the information, to not disclose the information, and to not use it for the benefit of others;
(g) L&W has used without authorisation one or more of Aristocrat's trade secrets to develop L&W's Dragon Train games, which L&W intentionally designed to copy and compete with Aristocrat's Dragon Link and Lightning Link games.
The prospective respondents submitted that these are the very same allegations that Aristocrat relies on in this proceeding. They submitted that the fact that Aristocrat was willing to file the complaint in the United States District Court indicates that Aristocrat is already in possession of the information it reasonably requires in order to make a decision to commence a proceeding in this Court.
24 The prospective respondents also submitted that if the Court is satisfied that the requirements r 7.23(1) are met, then it should nevertheless, in the exercise of its discretion, decline to make any order for preliminary discovery. The prospective respondents asked the Court to exercise its discretion on two bases: the fact that Aristocrat has already commenced a proceeding in the United States District Court based on the same factual allegations, and because L&W has already undertaken a substantial review of its records and produced several documents voluntarily.
25 The prospective respondents further submitted that, if the Court was minded to grant preliminary discovery, the Court “… should exercise its discretion to grant discovery only of what is really necessary for Aristocrat to make its decision”, which would be “significantly narrower than what Aristocrat seeks”.
Consideration
26 At the core of Aristocrat’s concerns is the possibility that its confidential information or copyright works have been embodied or used in the design of Dragon Train. The material voluntarily supplied by L&W to Aristocrat suggests that this may have in fact occurred but stops well short of disclosing whether or not such material was actually used in the design of Dragon Train. In this context, the correctness of the prospective respondents’ assertion that Dragon Train was not the product of copying, but of independent creation, cannot be sensibly assessed by Aristocrat without knowing more about the underlying design of Dragon Train and, in particular, the mathematical rules, formulae and models used to create or implement the game.
27 I consider that Aristocrat is entitled to preliminary discovery of such material for the purpose of assessing whether or not its confidential information may have been used in the design or implementation of Dragon Train.
28 As to the source code, there does not appear to be any reasonable basis to believe that either Ms Charles or Mr Sefton has copied or disclosed source code for Dragon Link or Lightning Link. In particular, there is nothing in the evidence that would incline a reasonable person to believe that they may have copied or disclosed source code. For that reason, I am not persuaded that the prospective respondents should be required to produce the source code for Dragon Train. Of course, it would be open to Aristocrat to seek discovery of source code in the substantive proceeding (if commenced) if there then exists reason to believe that the prospective respondents have directly or indirectly reproduced Aristocrat’s source code.
29 So far as the US proceeding is concerned, I do not accept the prospective respondents’ submission that it shows Aristocrat already has sufficient information with which to make its decision to commence a proceeding in this Court. The evidence relied on by Aristocrat includes a copy of a motion (Ex A) filed by L&W in the US proceeding on or about 9 April 2024 seeking to have Aristocrat’s complaint dismissed. In their motion L&W assert at p 13:
Aristocrat’s speculative allegations are also wholly insufficient to plausibly allege that any L&W Defendant knowingly used Aristocrat’s trade secrets. Like acquisition, Aristocrat offers no allegations regarding how or when L&W supposedly “used” its trade secrets … Aristocrat’s only circumstantial allegations of “use” are that L&W’s Dragon Train games “feel” “similar” to Aristocrat’s Dragon Link games, and that “L&W could only have achieved this degree of similarity with Dragon Link’s gameplay by use of Aristocrat’s trade secrets.” … But circumstantial allegations regarding product similarity, even if true, do not support a reasonable inference that L&W used Aristocrat’s trade secrets to develop its Dragon Train product, particularly where Aristocrat acknowledges that L&W has been developing competing casino games for decades …
In any event, Aristocrat fails to plausibly allege that, at the time of use, each L&W Defendant knew or had reason to know that knowledge of the trade secret was derived through improper means, and instead, merely recites the elements of a trade secret claim.
(Footnote and citations omitted)
30 As shown above, L&W describes the US proceeding as speculative and implausible and seeks an order for summary dismissal on that basis. Presumably L&W would say the same here, were Aristocrat to commence a proceeding in this Court without additional evidence. The fact that L&W is seeking summary dismissal of the US proceeding reinforces my view that it would not be reasonable to require Aristocrat to make its decision as to whether or not to commence a similar proceeding in this Court, without first obtaining preliminary discovery. Moreover, the evidence indicates that preliminary discovery is not available in the US. Aristocrat did not have the option of making a decision in relation to the US proceeding in light of information concerning the design of Dragon Train known only to L&W and the other prospective respondents. The commencement of the US proceeding does not, in itself, demonstrate that Aristocrat has no right to seek preliminary discovery in this jurisdiction.
31 As to the prospective respondents’ submissions based on the general discretion, there is in my view no sufficient reason shown for not making an order for preliminary discovery. L&W says that the documents Aristocrat seeks include material that is highly confidential. However, as the Full Court observed in Optiver at [40], confidentiality is ordinarily protected by appropriate directions and undertakings. The orders to be made will impose appropriate conditions and restrictions on the use of the prospective respondents’ documents and information.
32 It is often difficult to draw a line between documents reasonably required to enable a prospective applicant to make its decision to commence a proceeding and documents which, though not reasonably necessary for that purpose, would be good to have before commencing a proceeding. In cases between competitors concerning what both parties claim to be their own trade secrets, the distinction can be an important one. In my opinion, some of the documents sought by Aristocrat are in the category of good to have, but not reasonably necessary for the making of the decision to commence a proceeding against the prospective respondents.
33 While the drafting of category 1 requires some modification, the documents referred to in subparas (a)-(c) are in my view reasonably required by Aristocrat in order to decide whether to commence a proceeding in this Court against the prospective respondents for breach of confidence and infringement of copyright.
34 Category 3 is in my view appropriate. Although the prospective respondents said that documents within this category had been produced by L&W, it is not apparent from the evidence whether Ms Charles or Mr Sefton were asked by L&W to produce all documents in their possession or control within category 3.
35 Category 4 is in my opinion also appropriate on the basis that the documents within this category are likely to be directly relevant to Aristocrat’s assessment of L&W’s contention that Dragon Train was not the product of copying, but of independent creation.
36 With regard to category 5, it has been narrowed considerably and now references material held within a particular folder associated with Mr Sefton’s name. An email in evidence from Ms Charles suggests that it may contain files of the kind described in this category. I am satisfied that category 5 is appropriate.
37 I am therefore satisfied that the documents falling within categories 1(a)-(c) (as amended), 3, 4 and 5 are reasonably required by Aristocrat to decide whether to commence a proceeding in this Court against the prospective respondents for breach of confidence and infringement of copyright.
38 For reasons previously explained I decline to make an order for production of category 1(d) (i.e. source code). As to categories 2(a) and (b), in my opinion they go beyond what is reasonably required to enable Aristocrat to make its decision. With respect to category 2(c), there is no evidence which shows a reasonable basis for Aristocrat to believe that L&W’s communications with its customers concerning Dragon Train may have been misleading or deceptive or likely to mislead or deceive. I therefore decline to order production of documents in category 2(c).
39 With regard to the confidentiality regime to apply to the prospective respondents’ discovery, the parties were in substantial agreement. The differences between them primarily related to the treatment of those parts of documents that the prospective respondents will be required to discover which may contain some irrelevant but confidential material and which they may wish to have redacted. In my view the confidentiality regime proposed by the prospective applicant provides the prospective respondents with adequate protection in relation to such material.
40 I will make orders accordingly together with what I regard as the appropriate order for costs.
I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Nicholas. |
Associate:
1. The following documents in relation to Dragon Train:
(a) the maths documents, including any underlying mathematical spreadsheets relevant to any feature of Dragon Train;
(b) pay tables, reel strips and weighting tables;
(c) game specifications;
(d) source code.
2. All documents created on or after Ms Charles or Mr Sefton commenced providing any services to L&W (whichever is the earlier), evidencing or recording:
(a) the development or design of Dragon Train by reference to Dragon Link, Lightning Link or any features of those Aristocrat games;
(b) the development or design of Dragon Train incorporating any of the features of Dragon Link;
(c) all communications with customers or potential customers of Dragon Train, and all advertising, marketing or promotional material for Dragon Train, which refer to Lightning Link and/or Dragon Link.
3. Any documents or material related to Dragon Link, Lightning Link or other Aristocrat games copied, transferred, removed or exported in physical or electronic form from Aristocrat or HRG or retained by:
(a) Ms Charles after leaving her employment by Aristocrat; and
(b) Mr Sefton after leaving his employment by Aristocrat.
4. All documents created on or after Ms Charles or Mr Sefton commenced providing any services to L&W (whichever is the earlier) by Ms Charles or Mr Sefton referring to Dragon Link, Lightning Link or any features of Dragon Link or Lightning Link.
5. Any photographs or video files saved at the following file path: M:\Gaming\syd-common\Lloyd Sefton\by game, as referred to in part in an electronic message exchange between Emma Charles and Yuri Leontiev dated 14 September 2022 and produced to Aristocrat by L&W on 3 November 2023 (see Affidavit of John Dominic Lee dated 20 December 2023 at Confidential Annexure JDL-4 [7]), evidencing or recording Dragon Link and/or Lightning Link in operation.
In this Annexure, terms are defined as follows:
L&W means Light & Wonder, Inc. (ARBN 666 710 836) and LNW Gaming ANZ Pty Ltd t/a Light and Wonder (ACN 001 660 537).
Aristocrat means Aristocrat Technologies Australia Pty Limited (ACN 001 660 715), and includes any abbreviations of that name such as “Acrat”.
document has the same meaning as in the Evidence Act 1995 (Cth) and includes without limitation any written documents, drafts, notes, correspondence, invoices, financial records, emails, email attachments, text messages, electronic files and other electronic records of any kind.
Dragon Link means any form of electronic game or gaming machine called “Dragon Link” or any other abbreviations of that game such as “DL” and includes each of the themed games, and any abbreviations of the themed games, known as ‘Silk Road’, ‘Golden Gong’, ‘Peace & Long Life’, ‘Genghis Khan’, ‘Golden Century’, ‘Spring Festival’, ‘Prosperous’, ‘Autumn Moon’, ‘Peacock Princess’ and ‘Panda Magic’.
Dragon Train means any form of electronic game or gaming machine under the name “Dragon Train” or any other abbreviations of that game such as “DT” or “DTX” and includes each of the themed games, and any abbreviations of the themed games, known as ‘Khutulun Battle Princess’, ‘Forever Emperor’, ‘Chi Lin Wins’ and ‘Sun Shots’.
Feature means any additional free game, free spin of certain reels, metamorphosis of the basic game rules or secondary choice necessary to complete a game (except gamble), as defined in the Standard (see Affidavit of Marc David Foodman of 20 December 2023, at Exhibit MDF-1 p130 and Affidavit of Matthew William Deitz of 21 March 2024 at [18]) and includes features such as the Hold & Spin feature.
Lightning Link means any form of electronic game or gaming machine called “Lightning Link” or any other abbreviations of that game such as “LL” and includes each of the themed games, and any abbreviations of the themed games, known as ‘Magic Pearl’, ‘Sahara Gold’, ‘Happy Lantern’, ‘High Stakes’, ‘Best Bet’, ‘Moon Race’, ‘Heart Throb’, ‘Tiki Fire’, ‘Bengal Treasures’ and ‘Wild Chuco’.
Ms Charles means Emma Charles.
Mr Sefton means Lloyd Sefton.
