Federal Court of Australia

Aristocrat Technologies Australia Pty Limited v Light & Wonder, Inc. (No 3) [2025] FCA 775

ORDERS

IN THESE ORDERS:

Tranche 1 Evidence means evidence (whether lay or expert) of facts relating to all issues in the proceedings other than Tranche 2 Evidence.

Tranche 2 Evidence means:

(a)    expert or lay evidence dealing with accounting issues, valuation issues or financial matters, each relating to the quantum of any damages or account of profits; and

(b)    to the extent not covered by (a) above, expert evidence or lay evidence relating to the rate or quantum of any notional or reasonable royalty.

THE COURT ORDERS THAT:

Directions for conduct of the hearing

1.    There be no order for separate determination pursuant to r 30.01 of the Federal Court Rules 2011 (Cth) (FCR).

2.    Pursuant to s 37P(2) of the Federal Court of Australia Act 1976 (Cth), the Court directs that evidence in these proceedings be heard in two tranches:

(a)    Tranche 1 Evidence to be heard first, and findings in relation to issues arising out of Tranche 1 Evidence to be made by the Court in reasons for judgment to be published prior to the hearing of Tranche 2 Evidence;

(b)    Tranche 2 Evidence to be heard after the publication of reasons for judgment in relation to Tranche 1 Evidence, in a manner to be programmed at the case management hearing the subject of Order 9 below.

3.    For the avoidance of doubt, no final orders will be made until the publication of reasons for judgment in relation to the Tranche 2 Evidence, at which time final orders will be made on all issues.

4.    Prior to compliance with Order 5 below, the parties liaise to prepare a list, identifying with particularity the issues arising out of the Tranche 1 Evidence:

(a)    for the purpose of the preparation of written open and closing submissions; and

(b)    to be dealt with in the reasons for judgment prior to the hearing of Tranche 2 Evidence.

Tranche 1 Evidence

5.    On or before a date to be fixed at the case management hearing referred to in Order 17 below, the Applicant file and serve its Tranche 1 Evidence in chief.

6.    On or before a date to be fixed at the case management hearing referred to in Order 17 below, the Respondents file and serve their Tranche 1 Evidence in answer.

7.    On or before a date to be fixed at the case management hearing referred to in Order 17 below, the Applicant file and serve any Tranche 1 Evidence in reply.

8.    The matter be provisionally listed for hearing of the Tranche 1 Evidence from 29 June 2026 to 17 July 2026 with an estimate of three weeks.

Tranche 2 Evidence

9.    On or before 28 days after the publication of reasons for judgment in relation to the Tranche 1 Evidence, the matter be listed for a case management hearing to determine programming and hearing of the Tranche 2 Evidence in light of the reasons for judgment in relation to the Tranche 1 Evidence.

Reply

10.    The time for the Applicant to file any Reply to the Defence of the First and Second Respondent and any Reply to the Defence of the Third Respondent pursuant to r 16.33 of the FCR be extended to 4 July 2025.

Further and better particulars

11.    The date in Order 5(b) of the Orders of Justice Burley dated 16 June 2025, being the date by which the Applicant is to provide the Respondents with further and better particulars of the Aristocrat Confidential Information that the Applicant presently alleges has been misused in connection with the development of Jewel of the Dragon, be amended to 24 July 2025.

Discovery

12.    The date in Order 5 of the Orders of Justice Burley dated 20 March 2025 (March Orders), being the date by which the parties are to serve on each other any proposed categories of discovery which they contend are required prior to the service of any evidence, be amended to 14 July 2025.

13.    The date in Order 6 of the March Orders, being the date by which the parties are to serve on each other any objections to the categories of discovery proposed, be amended to 21 July 2025.

14.    The date in Order 7 of the March Orders, being the date by which the parties are to confer with a view to reaching agreement on the respective categories of discovery, be amended to 28 July 2025.

15.    The date in Order 8 of the March Orders, being the date by which the parties are to file any interlocutory application and supporting evidence in respect of any categories of discovery which have not been agreed, be amended to 1 August 2025.

16.    The date in Order 9 of the March Orders, being the date by which the parties are to, in respect of any categories that have been agreed:

(a)    serve a verified list of all documents in their possession, custody or control that fall within those categories of documents which have been agreed; and

(b)    provide a copy of each of the documents that are the subject of (or will be the subject of) the verified list, and that are within the party’s/parties’ control (as that term is defined in the FCR) and in respect of which no claim of privilege is made, to the other party,

be amended to 29 August 2025.

Case management hearing

17.    The matter be listed for a case management hearing on 8 August 2025 including for making procedural orders in respect of any interlocutory application filed pursuant to order 15 above.

Other

18.    Orders 11 to 16 of the March Orders be vacated.

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

REASONS FOR JUDGMENT

BURLEY J:

1    This judgment concerns the question of whether, in proceedings arising from causes of action including breach of confidence, copyright infringement and breach of contract, it is appropriate to make orders for the separate determination of issues relating to liability from those concerning quantum pursuant to rule 30.01(1) of the Federal Court Rules 2011 (Cth) (FCR).

2    In Aristocrat Technologies Australia Pty Ltd v Light & Wonder, Inc. (No 2) [2025] FCA 64, I set out something of the background to these proceedings. I adopt the abbreviations used in that judgment, including the descriptions of the parties.

3    Aristocrat in its Further Amended Originating Application seeks relief against its competitor L&W and also against Ms Emma Jane Charles, who was employed as a senior game designer by Aristocrat but later became an employee of L&W. Aristocrat proposed, in essence, that all issues relating to liability and the provision of declaratory and injunctive relief be heard separately and determined before issues going to the form and quantum of relief. L&W and Ms Charles oppose the making of any orders separating the action. L&W proposes, in the alternative to hearing all issues at once, that the hearing be conducted in two phases, but not formally separated and that although a judgment will be delivered after each phase, final orders will only be made at the conclusion of the second hearing. In further submissions dated 27 June 2025, Aristocrat no longer pressed its proposed bifurcation order and indicated it was content for the Court to adopt L&W’s “two phase” proposal, subject to two matters: first, that the parties should confer on issues for consideration during the first phase of the hearing prior to the service of evidence; and secondly, that the Court should not be precluded from making final orders when it delivers reasons for judgment following the first phase of the hearing, if it considers it appropriate to do so. L&W agreed with Aristocrat on the first matter, but disputed the second on the basis that an order under r 30.01 would need to be made to give the Court the power to do so.

4    Although in many cases where intellectual property rights are asserted it is convenient to order the separation of issues in the manner sought by Aristocrat, in the present case the breadth of equitable relief sought militates against that course.

5    In the proceedings, in summary, Aristocrat alleges that it has acquired a substantial reputation in Australia in its Lightning Link and Dragon Link electronic gaming machines and that the gameplay of each is driven by confidential and copyright-protected material relating to their underlying mathematical designs, which is in the form of various tables, worksheets, spreadsheets and compilations (spreadsheets). It alleges that the spreadsheets contain confidential information and are also original literary works within the terms of the Copyright Act 1968 (Cth). It contends that L&W’s competing Dragon Train and Jewel of the Dragon games were developed utilising the confidential information contained in the spreadsheets, that Ms Charles obtained that information during the course of her work for Aristocrat and that L&W employed Ms Charles to develop the games knowing that she might use the information or being recklessly indifferent to that fact. Aristocrat pleads that Ms Charles and L&W acted in breach of confidence to create various new spreadsheets which were in turn used to develop the Dragon Train and Jewel of the Dragon games. It also alleges that Ms Charles acted in breach of her contract of employment with Aristocrat, and that L&W committed the tort of inducement to breach that contract. It additionally alleges infringement of copyright in the spreadsheets as literary works, on the basis that the Dragon Train game embodies reproductions of the whole or a substantial part of its literary works.

6    L&W and Ms Charles deny liability in respect of the causes of action alleged.

7    The relief sought by Aristocrat differs according to the cause of action alleged. For breach of confidence, it seeks declarations and an injunction restraining further disclosure or use of confidential information, as well as damages, equitable compensation or, at Aristocrat’s election, an account of profits. It also seeks destruction or delivery up of documents embodying its confidential information including any Dragon Train or Jewel of the Dragon products incorporating the confidential information. It additionally seeks that L&W be required to inform its customers who have the Dragon Train products in Australia that the impugned games were created using Aristocrat’s confidential information, and convert electronic gaming machines in Australia which have already been placed with or sold to customers containing the Dragon Train and Jewel of the Dragon products, to alternative game products. In the alternative it seeks a declaration that L&W and Ms Charles hold the impugned games on constructive trust for Aristocrat. For breach of contract and inducing breach of contract, Aristocrat seeks declaratory relief, injunctive relief and damages. For copyright infringement it seeks declaratory relief, an injunction restraining L&W and Ms Charles from further infringement, damages or an account of profits (at its election) pursuant to s 115(2) of the Copyright Act, and additional damages pursuant to s 115(4). It also seeks damages and an order for return of each of the impugned articles for conversion or detention pursuant to s 116 of the Copyright Act, and destruction or delivery up, at its election, of materials or articles that infringe. For contravention of the Corporations Act 2001 (Cth), Aristocrat seeks declarations, a permanent injunction on Ms Charles and equitable compensation or compensation under s 1317H of the Corporations Act. For contravention of the Australian Consumer Law (ACL) it seeks declarations, injunctions restraining the sale of the Dragon Train products and the making of certain representations by L&W about Dragon Train and its development, damages pursuant to s 236 of the ACL, compensation pursuant to s 237, publication of a corrective notice and delivery up.

8    Rule 30.01(1) of the FCR provides that a party “may apply to the Court for an order that a question arising in the proceeding be heard separately from any other questions”.

9    The principles guiding the exercise of the discretion under r 30.01 are well established. They were succinctly summarised by Branson J in Reading Australia Pty Ltd v Australian Mutual Provident Society [1999] FCA 718; 240 FCR 276 in relation to the substantially same predecessor rule (being Order 29 rule 2) at [8]:

The principles that govern the circumstances in which an order will be made under O 29 r 2 are relatively well established. They may be summarised as follows:

(a)    the term “question” in O 29 r 1 includes any question or issue of fact or law in a proceeding. The distinction in the rule between an “issue” and a “question” is the distinction between that which, when resolved, will result in an adjudication in favour of one party or the other, being an “issue”, and less decisive matters of dispute being “questions” (Landsal Pty Ltd (in liq) v REI Building Society (1993) 113 ALR 643 at 647);

(b)    a question can be the subject of an order for a separate decision under O 29 r 2 even though a decision on such a question will not determine any of the parties’ rights (Landsal Pty Ltd (in liq) v REI Building Society at 647);

(c)    however, the judicial determination of a question under O 29 r 2 must involve a conclusive or final decision based on concrete and established or agreed facts for the purpose of quelling a controversy between the parties (Bass v Permanent Trustee Co Ltd [1999] HCA 9 at para 45);

(d)    where the preliminary question is one of mixed fact and law, it is necessary that the question can be precisely formulated and that all of the facts that are on any fairly arguable view relevant to the determination of the question are ascertainable either as facts assumed to be correct for the purposes of the preliminary determination, or as agreed facts or as facts to be judicially determined (Jacobson v Ross [1995] 1 VR 337 at 341, referring to Nissan v Attorney-General [1970] AC 179 at 242-243 per Lord Pearson; Bass v Perpetual Trustee at para 53);

(e)    care must be taken in utilising the procedure provided for in O 29 r 1 to avoid the determination of issues not “ripe” for separate and preliminary determination. An issue may not be “ripe” for separate and preliminary determination in this sense where it is simply one of two or more alternative ways in which an applicant frames its case and determination of the issue would leave significant other issues unresolved (CBS Productions Pty Ltd v O’Neill (1985) 1 NSWLR 601 at 606 per Kirby P);

(f)    factors which tend to support the making of an order under O 29 r 2 include that the separate determination of the question may –

(i)    contribute to the saving of time and cost by substantially narrowing the issues for trial, or even lead to disposal of the action; or

(ii)    contribute to the settlement of the litigation (CBS Productions Pty Ltd v O’Neill at 607 per Kirby P);

(g)    factors which tell against the making of an order under O 29 r 2 include that the separate determination of the question may -

(i)    give rise to significant contested factual issues both at the time of the hearing of the preliminary question and at the time of trial (GMB Research & Development Pty Ltd v Commonwealth [1997] FCA 934);

(ii)    result in significant overlap between the evidence adduced on the hearing of the separate question and at trial — possibly involving the calling of the same witnesses at both stages of the hearing of the proceeding (GMB Research & Development Pty Ltd v Commonwealth; Arnold v Attorney-General for Victoria [1995] FCA 727). This factor will be of particular significance if the Court may be required to form a view as to the credibility of witnesses who may give evidence at both stages of the hearing of the proceeding; or

(iii)    prolong rather than shorten the litigation (GMB Research & Development Pty Ltd v Commonwealth).

10    In general terms, Aristocrat proposed in Annexure A to its submissions dated 20 June 2025 that a formal order for separation be made that involves declaratory and injunctive relief being determined at the liability hearing, and the pecuniary relief (being damages or account of profits and equitable compensation) being determined at a separate quantification hearing. Notably, Aristocrat proposed that the following prayers for relief (among others) would be determined and final orders made at the liability hearing:

(1)    in relation to the cause of action in breach of confidence, orders for the destruction or delivery up of confidential information and a declaration of constructive trust over the game products (and the rights associated with each);

(2)    in relation to copyright infringement, orders for the return of articles pursuant to s 116 of the Copyright Act and the destruction or delivery up of infringing materials;

(3)    orders arising from alleged breaches of confidence, copyright and the ACL for notification to be made to customers of L&W and a corrective notice published.

11    However, the following points demonstrate a close relationship between the pecuniary relief sought and the non-pecuniary remedies noted above:

(1)    Section 116(1C) of the Copyright Act provides that a court is not to grant any relief to the owner of the copyright in an action for conversion or detention if the relief that the court has granted or proposes to grant under s 115 (being relief generally) is, in the opinion of the court, a sufficient remedy: Elwood Clothing Pty Ltd v Cotton On Clothing Pty Ltd [2009] FCA 633; 81 IPR 378 at [48] (Gordon J). Aristocrat has accepted that this part of the prayer for relief should be heard in the second part of the hearing, and only seeks the issue of return of the articles under s 116 to be determined at the liability hearing.

(2)    In relation to remedies for destruction or delivery up of Aristocrat’s confidential information, ordinarily the court would not make an order of this kind without knowing the other relief being granted, including pecuniary relief.

(3)    In relation to any declaration of constructive trust, ordinarily relief by way of constructive trust is imposed only if some other remedy is not suitable, which depends on an election by the party between equitable compensation or an account of profits: Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; 230 CLR 89 at [200]. Before a constructive trust is imposed, the court should first decide whether, having regard to the issues in the litigation, there is an appropriate equitable remedy which falls short of the imposition of a trust: Guimelli v Guimelli [1999] HCA 10; 196 CLR 101 at [10].

(4)    In relation to the relief sought under the ACL, Aristocrat alleges that L&W falsely represented that Dragon Train “was an insignificant part of L&W’s overall business”. That is disputed in L&W’s Defence. To determine liability for such alleged misrepresentation, the size and scope of the L&W business, and proportion of Dragon Train to it, will need to be decided.

12    I am persuaded by these matters that such is the nature of the relief sought by Aristocrat that a simple separation of issues is not suitable in this case.

13    However, in my view, as L&W accepts, there are efficiencies available if the Court considers and delivers judgment on matters relating to liability as a first phase of the hearing and defers making final orders until after a second stage which concerns questions of relief.

14    In phase 1, the parties would adduce evidence on all issues other than evidence directed at matters of detailed calculation. Prior to the hearing, the parties would prepare a list of issues arising out of that evidence that would guide their submissions, and the Court would make findings on those issues. As noted above and agreed between the parties, conferral on this list of issues would first occur prior to the service of evidence in the first stage, to ensure clarity on the issues to be addressed by the evidence. It may be revisited after the evidence is complete and before the first phase hearing. After the delivery of judgment, but not final orders, following the first phase, the terms of the judgment would (on the hypothesis that Aristocrat succeeds) form the basis of any assumptions relied upon by experts for the purpose of calculating any damages or profits and would also assist in refining the scope of any discovery for the purposes of enabling an election between damages and an account of profits.

15    This course has several advantages such that in my view it is the preferable course. First, it will avoid the preparation of evidence and the provision of discovery going to questions of quantum, until it is established whether Aristocrat has established liability and the scope of such findings. Secondly, it substantially eliminates the need for the parties to instruct experts on multiple alternative hypotheses going to quantification, as the phase 1 judgment will establish the basis for any liability. Thirdly, it enables proper consideration of Aristocrat’s entitlement to any equitable relief, at the conclusion of phase 2, when matters of pecuniary relief are also determined. Fourthly, it may facilitate a settlement of the proceedings after phase 1.

16    Accordingly, I shall make orders such that the proceedings be prepared and heard in two phases as indicated in the short minutes prepared by the parties following the case management hearing.

Associate:

Dated:    11 July 2025