Confidential Information

Section 183 Corps Act applies to information not just confidential information

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New Aim v Leung: supplier contacts, WeChat, and the reach of s 183

The Full Court has allowed New Aim’s appeal and confirmed that the identity and contact details of its 17 key Chinese suppliers were confidential information, that its former CCO breached his equitable and contractual obligations of confidence by disclosing them to a competitor, and — importantly — that s 183 of the Corporations Act 2001 (Cth) is not simply a statutory re-enactment of the equitable action for breach of confidence. Rather, it applies generally to information obtained in the relevant capacity – as a corporate officer or employee.

What happened

New Aim is a large Australian online retailer sourcing products from hundreds of suppliers in China. Mr Leung worked there for around ten years, ending up as Chief Commercial Officer. When he left in January 2021, Mr Leung declared a “moment” on WeChat, “I am determined to do better and work harder than before, and totally destroy what I built in the past 12 years”.

Mr Leung had not been given a corporate mobile phone by New Aim. As a result, he retained, on his personal phone in his WeChat contacts, the details of individuals associated with a number of New Aim’s suppliers. Between January and July 2021 he disclosed the details of contacts associated with 17 of those suppliers to Broers Group, a newly established online retail competitor set up by a Mr Chen and Mr Dai. The disclosures were typically made by sharing WeChat contacts. By July 2021, Mr Leung had become employed by Broers.

New Aim discovered through its Chief Operating Officer (COO) that Broers and another competitor, Sun Yee (of which Mr Chen was also a director), were selling products apparently identical to New Aim’s, using photographs sourced from New Aim’s own website. New Aim commenced proceedings in September 2021.

So far, this whole saga has had five rounds in court. A successful application for an interlocutory injunction; a first trial which was overturned on appeal[1] and a second trial on remitter, which was the decision under appeal.

By the time of the second trial, New Aim’s pleadings still alleged that the information about all of its suppliers was confidential. The primary judge dismissed all of New Aim’s claims essentially because New Aim had failed to establish that the identity and contact details of all its suppliers as at January 2021 was confidential information. But, although the pleadings had not been amended, it was clear [to the Full Court] that the case had narrowed in practice to the details of the 17 specific suppliers whom Mr Leung admitted he had disclosed to Broers.

The Full Court (Moshinsky, Thawley and Button JJ) allowed the appeal finding, first, that her Honour should also have addressed whether or not the information about the 17 suppliers was confidential information. Finding that particular information was confidential, as a result Mr Leung breached the equitable obligation of confidence, his contractual obligations and, s 183 of the Corporations Act.

Why the 17 suppliers’ details were confidential

The primary judge’s error was to analyse the confidentiality question only by reference to the broad pleaded class — all suppliers as at January 2021, including historical and underperforming ones — when the case had been opened, conducted, and closed by both parties on the basis that what mattered was the 17 specific suppliers whose details Mr Leung had actually disclosed.

Once attention was directed to those 17, the factors bearing on confidentiality looked quite different:

The suppliers were reliable and current. Unlike the broader class, which included historical suppliers and those dropped because of high fault rates or lack of profitability, the 17 suppliers were active, reliable suppliers of products suitable for the Australian market. Their contacts were disclosed to Broers precisely because Mr Leung regarded them as suppliers with which Broers should trade.

Finding them required substantial effort. It was common ground that identifying suppliers in China capable of supplying products suitable for the Australian market required effort and could take several months. New Aim led detailed evidence about its multi-step process for identifying, sampling, testing, and approving each supplier. The nine step process involved:

(a) Step 1 involved analysing industry and internal data for the purpose of proposing new products: Ho 1 at [26]. Sometimes new products would be suggested by an existing supplier:.

(b) Step 2 involved New Aim’s Buyer Team in China identifying a range of suppliers potentially suitable for the product line. This was achieved through searches on business-to-business websites, business-to-consumer websites and attendance at the Canton Trade Fair.

(c) Step 3 involved the Buyer Team developing a shortlist of suppliers through consideration of publicly available information and sometimes through direct contact with suppliers. Reports would be prepared to propose new suppliers.

(d) Step 4 involved contacting the shortlisted suppliers to ascertain further information including unit prices, minimum order requirements and timing limitations.

(e) Step 5 involved the Buyer Team preparing a Value Chain Analysis report, containing key financial data for each product and supplier, and a Product Proposal report, containing key information such as production time, pricing, payment terms, deposit amount and ability to comply with compliance certificates. Step 5 also involved a range of quality and safety assessments. New Aim ordered samples from a range of suppliers to compare quality and safety, usually assessed by its QC Team. The Compliance Team assessed the product to ensure that it met New Aim’s standards and any relevant legal or regulatory standards. New Aim might apply for relevant regulatory certificates where required. It might engage third parties to assist where testing was required.

(f) Step 6 involved approving the supplier and placing a first order. Approval was provided by Mr Leung when he was Head of the Buyer Team.

(g) Step 7 involved the Buying Team negotiating the terms of payment with the supplier.

(h) Step 8 involved New Aim’s QC Team or a third party QC company engaged by New Aim reviewing the products before they were shipped to Australia.

(i) Step 9 involved New Aim making the products available for sale to Australian consumers on a range of online platforms: at [46]. New Aim then monitored progress and sales. A part of this involved creating “fault reports”: at.

New Aim’s General Manager – Channel and Category, Ms Ho, confirmed that process applied to each of the 17 suppliers specifically and exhibited over 12,000 pages of business records to support her evidence.

New Aim took steps to protect the information. Two measures stood out. First, New Aim white-labelled its products and allocated its own SKUs (Stock Keeping Units), which meant that competitors, purchasers, and others inspecting New Aim’s products could not identify the underlying suppliers. The Full Court accepted this was a strong indicator that New Aim treated supplier identity as confidential — and that employees in the Buyer Team (which Leung headed) must have known it. Secondly, access to the New Aim Purchasing System, which contained supplier information, was password-controlled. Mr Leung himself had discussed the need to restrict access further and had told Mr Huang (the COO) that he was concerned about the risk of an employee using commercially sensitive supplier information to assist a competitor after leaving.

At [111], the Full Court acknowledged that New Aim could have protected its interests better such as by providing Mr Leung with a company issued phone or imposing restrictions on his use of his personal phone. That did not gainsay, however, that it had taken steps to preserve the confidentiality of the relevant information and Mr Leung was personally aware of its confidential nature.

The industry treated supplier information as confidential. Both parties’ experts agreed that businesses in the e-commerce space importing from China generally kept supplier information confidential and took steps such as white-labelling to protect it.

The information was not Mr Leung’s general know-how. Mr Leung argued the information was just part of his general know-how which a person in his position would inevitably acquire over time.

Accepting that general know-how fell outside the scope of protectable confidential information, the Full Court held that was not this case. The specific information about the particular 17 suppliers was not information that an ordinary person of average intellgience and honesty would regard as knowledge “not readily separable from his general knowledge”.[2] There was no evidence Leung had memorised the contacts. Rather, they were stored in his phone in his WeChat app and the details were supplemented by remarks identifying the products they supplied. The information was readily identifiable and separable from the general body of Mr Leung’s know-how. At [119], their Honours said:

…. What the evidence establishes is that, for the benefit of Broers, he used knowledge acquired through his employment at New Aim as to which contacts were likely to be suitable and useful, together with the WeChat information he retained about those contacts, to connect Broers with the relevant suppliers. In that way, he used New Aim-derived supplier information to shortcut the process that would otherwise have been required to identify and access suitable suppliers. That use was more than the application of general skill or experience. It involved the deployment, for a competitor’s benefit, of specific supplier information, and means of contact or access, retained through his employment.

The respondents conceded that if the first three elements of the breach of confidence action (identified information, quality of confidence, receipt in circumstances importing an obligation of confidence) were established, the disclosure was a misuse.

The contractual obligation

Mr Leung’s contract of employment also included a general duty of confidentiality. Its terms did not specifically single out supplier details.

As the parties had conducted the case on the basis that any relief would be the same as the relief for breach of the equitable duty, it was unnecessary to explore whether or not equity would generally intervene where there was both a contractual obligation and an equitable obligation.

Accordingly, the Full Court held this obligation was also breached for the reasons that Mr Leung had breached his equitable obligation of confidence.

Section 183: information, not just confidential information

The Full Court then allowed New Aim’s appeal against the trial judge’s finding that s 183 of the Corporations Act failed because her Honour found that s 183 applied only to confidential information and, as already noted, her Honour held that Mr Leung had not used any confidential information.

Importantly, however, the Full Court did not allow the appeal just because the information was confidential. Rather, it ruled that s 183 applied to “information” and was not limited just to protecting confidential information.

Section 183(1) of the Corporations Act provides that a person who obtains information because they are or were a director, officer or employee of a corporation must not improperly use that information to gain an advantage for themselves or someone else, or to cause detriment to the corporation.

The Full Court explained at [124] that s 183 required three matters to be addressed:

(i) precise identification of the information said to have been obtained by the relevant person;

(ii) examination of whether that information was obtained because the person is or was a director, officer or employee of the corporation; and

(iii) examination of whether the person improperly used the information either: (a) to gain an advantage for themselves or someone else; or (b) to cause detriment to the corporation.

The Full Court pointed out that:

  • Section 183 refers to “information” only;
  • There are other provisions in the Corporations Act which refer specifically to “confidential information” where that type of information is intended – see s 1317AE and s 829B; and
  • Section 183 was properly seen as statutory extension of the fiduciary duties of corporate officers and did not have its origins in confidential information. In that connection, the Full Court noted that the relevant fiduciary duties at common law ceased when the corporate officer’s position terminated. The statutory duty, however, continued after termination.

At [137] – [149], the Full Court carefully reviewed an earlier Full Court’s ruling in Futuretronics.com.au Pty Ltd v Graphix Labels Pty Ltd [2009] FCAFC 2; 81 IPR 1, which has been taken as limiting s 183 to improper use of confidential information only. The Full Court considered that it had not been directly submitted to the Futuretronics Full Court that s 183 was limited to confidential information only. Rather, the Full Court considered at [149] that the Futuretronics Full Court should be understood as deciding that s 183 did not apply because the relevant information had not been improperly used.

Accordingly (at [148]:

Section 183 is expressly framed in terms of information obtained because of a particular corporate position. Improper use is assessed objectively according to the standards of conduct that would be expected of a person in the relevant position. What would be expected is determined from the viewpoint of a reasonable person. The question is: what would be expected of a person in the position of the alleged offender by reasonable persons with knowledge of the duties, powers and authority of the position and the circumstances of the case ….[3] (emphasis supplied)

In answering that question, the confidential nature of the information is relevant to the question of improper use, and the more confidential the information the easier it will generally be to establish impropriety, but it is not a threshold requirement for the provision to apply at all.

On the facts, the Full Court had no difficulty finding a contravention. Leung knew the supplier information was commercially valuable. He knew New Aim had taken steps to protect it. He had himself expressed concern about the risk of employees using such information after they left — and then proceeded to do exactly that. He disclosed the contacts of 17 suppliers to New Aim’s competitor in order to give that competitor a head-start, and to advance his own interests in relation to his new or prospective employment with Broers. That was an improper use of information obtained because of his position. As the Full Court put it, a reasonable person in Leung’s position — a departing CCO with ten years’ experience in New Aim’s supply chain — would have regarded doing what Leung did as a breach of the standards of commercial conduct expected of such a person.

The Full Court also noted that the impropriety was amplified by Leung’s suggestion to a Broers employee that Broers copy product images from New Aim’s website — something that, as the parties had already agreed, Broers and Sun Yee proceeded to do.

The claims against Broers and Sun Yee

New Aim brought derivative breach of confidence claims against Broers and Sun Yee. Those claims were dismissed at first instance as a consequence of the dismissal of the claim against Leung. The respondents sought to have them dismissed outright, contending that the inference that Mr Chen and Mr Dai knew — or were wilfully blind to the likelihood — that the information Mr Leung provided was confidential, was not available on the evidence.

The Full Court declined to dismiss the claims. The circumstances were sufficient to raise a rational inference of awareness or wilful blindness. Both Messrs Chen and Dai had known Leung for years and knew his history at New Aim. They were both aware of Leung’s WeChat “moment” declaring that he intended to “totally destroy what I built in the past 12 years”. Broers had followed Leung’s suggestion and copied New Aim’s product images. Whether the full inference should be drawn, in light of all the evidence, was a matter for determination on remitter. Accordingly, the Full Court remitted these claims for further hearing.

New Aim Pty Ltd v Leung [2026] FCAFC 49] (Moshinsky, Thawley and Button JJ, 20 April 2026)

  1. New Aim Pty Ltd v Leung [2023] FCAFC 67; 171 IPR 511. The principal error in the first trial was that the judge had focused on the location of the information rather than its nature and content.  ?
  2. Citing Printers and Finishers Ltd v Holloway [1965] 1 WLR 1 at 6; RPC 239 at 256 (Cross J); Thomas Marshall (Exports) Ltd v Guinle [1979] Ch 227 at 246 (Megarry VC) and Del Casale v Artedomus (Aust) Pty Ltd [2007] NSWCA 172; 73 IPR 236 at [41].  ?
  3. Citing R v Byrnes [1995] HCA 1; 183 CLR 501 at [25].  ?

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Enforcing foreign judgments – consultations

1 Comment / Confidential Information, Copyright, IP generally, Patents, Trade marks / / / , , , , , , , , , , , ,

The Commonwealth government is participating in negotiations for a new Convention on the recognition and enforcement of foreign judgments. Now it is seeking public input on a range of outstanding issues.

One of the general issues on which input is sought is the extent to which and the nature of problems experienced in trying to enforce a judgment in a foreign country.

Intellectual property issues are high on the list of matters being debated. Chapter 5 of the consultation paper is directed to intellectual property rights’ issues.

The issues include whether or not intellectual property rights should even be included in the judgments covered by the Convention. So draft article 2(m) proposes to exclude judgments about intellectual property rights from the Convention altogether; alternatively, articles 5 and 6 proceed on the basis that intellectual property rights are included. Which approach should it be?

If included, the basic idea is that a judgment on subsistence, ownership or infringement of an intellectual property right made by a Court in the country which granted the right could be enforceable under the proposed Convention to the extent that the judgment dealt with the subsistence, ownership and infringement of the right in that country.

It is proposed to treat judgments about the subsistence, ownership and infringement of registered rights granted by the country where the judgment is made as falling exclusively under the Convention. Judgments about unregistered rights, such as copyright and unregistered designs, would not be exclusive.

According to the consultation paper, one consequence of this arrangement would be that judgments involving “multi-state IP infringements” of registered rights will be enforceable under the Convention only to the extent that the judgment relates to infringements in the country/jurisdiction issuing the judgment.

No doubt for sound philosophical rationalising, trade secrets do not count as intellectual property rights under the draft Convention. Practically speaking from a business’ perspective, however, one might wonder why confidential information should be treated differently to unregistered “rights”.

Another area of issues raised in the consultation paper is the extent to which awards of damages, especially additional or exemplary or otherwise punitive damages, should be capable of enforcement under the Convention.

As the next (and possibly final) meeting of the commission preparing the draft for a Treaty conference is on 24 – 29 May 2018, the deadline for submissions is COB 27 April 2018.

Hague Conference Judgments Project: Recognition and enforcement of foreign judgments

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Confidentiality orders in court proceedings

1 Comment / Confidential Information, Patents / / / , , , , , , , ,

Motorola is suing Hytera for infringement of its patents relating to mobile phone technology.1 As part of the proceeding, Hytera is seeking to invoke a Digital Mobile Radio Essential Properties Cross Licence Agreement. Hytera has obtained an order that information about various terms in the agreement be kept confidential (I.e., suppressed) for 10 years after the proceeding is decided.

Section 37AF of the Federal Court of Australia Act provides the Court with power to suppress or restrict the publication of evidence. In the case of confidential information, such as trade secrets, the party seeking to restrict access to the information must show under s 37AGthat the restriction “is necessary to prevent prejudice to the proper administration of justice”.

Perram J noted that some scepticism might be felt towards the idea that protection of confidential information met the strict standard of necessity. His Honour accepted, however, case law recognised that commercial sensitivity, especially if it were likely that competitors could benefit from information which made public through the Court system, is a circumstance in which the necessity standard could be met.The integrity of the litigious process might be undermined if parties were precluded from advancing relevant information as a result of the harm potentially flowing from publication. In this case, the agreement in question was still on foot. And the information would place Hytera at a competitive disadvantage in future negotiations with third parties. At [15], his Honour explained:

disclosure of the information would be prejudicial to the proper administration of justice because it would tend to ‘destroy or diminish’ (Origin Energy at 148) the value of confidential information with the possible consequence that commercial parties will be more reticent to approach the Court to settle their disputes. I am therefore satisfied that an order under s 37AF in this case is appropriate.

Perram J was not prepared, however, to grant Hytera’s request that the information be kept sealed for 10 years. There was no evidence about the nature and lifespan of the digital mobile radio technology in issue or the life cycle of the telecommunications standards. Having reviewed the agreement and the substance of the information that had been disclosed, Perram J was prepared to order suppression for three years only. His Honour was prepared to reconsider if further evidence were put on.

If you are going to seek suppression orders – i.e, that information be kept confidential, therefore, you will need to lead evidence which establishes (1) that the information is in fact confidential and (2) there is a real risk of prejudice if the confidentiality is not preserved. Another factor which the Court seems to be mentioning more often was that the affidavit evidence was through the solicitor “on information and belief”, rather than from someone knowledgeable within Hytera itself.

Motorola Solutions, Inc. v Hytera Communications Corporation Ltd (No 2) [2018 FCA 17

  1. Apparently, the trial is scheduled to run for 5 weeks. There are also parallel actions in the USA, China and Germany. ?

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Selected links from last week

1 Comment / Confidential Information, Copyright, Designs, Internet, Patents, Trade, Trade marks / / / , , , , , , , ,

Here is a selection of links to IP-related matters I found interesting last week:

Patents

Trade marks

  • Is the US Olympic Committee’s [#TwitterBan Fair or Foul?](https://t.co/kmG0Avith) compare
    Telstra ‘Go to Rio’ campaign cleared by Federal Court, AOC case dismissed

Copyright

Remedies

  • Want An Enforceable Online Contract? Don’t Use A Footer Link Called “Reference”–Zajac v. Walker (USA)

Designs

Not categorised

Future of the profession

I hope you find some interesting. If you did or have a question, leave a comment or send me an email

Selected links from last week Read More »

Calling The Pot Black

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Vickery J has struck out parts of a statement of claim for misuse of confidential information and ordered that the plaintiff’s solicitors and barristers who have had access to the information be barred from continuing to act in the proceeding.

DC Payments is suing Next for misuse of confidential information. The two companies compete in supplying ATM machines to retail, convenience and hospitality venues and Next was set up by some disgruntled ex-employees from DC Payments.

Next’s General Manager, Bosma, emailed a spreadsheet of its customers to 2 other employees: Solomon and Whale. Like Bosma, Whale had been an emploee of DC Payments too. Somehow, Bosma’s email to Whale went to his old account at DC Payments. DC Payments’ General Counsel recognised the mistake and instructed her staff not to look at it, but to delete it. However, the email and the spreadsheet were included in DC Payments’ discovery and eventually information from the spreadsheet found its way into Annexures identifying misused confidential information in DC Payments’ Amended Statement of Claim and some particulars.

Next has successfully sued to have those parts of the pleading struck out for misuse of its confidential information.

DC Payments sought to argue that the information was not confidential as it could discover who Next’s customers were by going around to the shops and venues to see which ATMs were installed and by whom. That might seem questionable as use of the spreadsheet saved DC Payments all the time and trouble of going through such an exercise. Further, the judgment indicates that the information used from the spreadsheet was very much more detailed than just the identity of the customers. The Master Customer List constituted by the spreadsheet included some 26 categories of information in addition to the customer’s name, address and ACN/ABN. These included details such as the names and contact details of the customer contacts, the customer’s bank account details, the Next sales agent responsible for the customer, the number of transactions made a month through the ATM at the customer’s site, the rebates payable to the customer and the maximum withdrawls authorised for the ATM.

It would appear that DC Payments did not admit it had used the confidential information to prepare the Schedules and particulars in the amended pleadings. However, Vickery J found there must have been misuse. Essentially, the Schedules and particulars included information which corresponded to the information in the spreadsheet, including information about the Next sales representative for the customer which was not in the public domain, and DC Payments did not advance any evidence to explain how it had sourced the information.

Vickery J therefore ordered that the Schedules and particulars incorporating Next’s confidential information be struck out. This was ordered even though his Honour considered that DC Payments could have obtained the information in question through “well drafted interrogatories”. His Honour accepted that the relevant principle was that DC Payments should not gain any advantage from its breach of confidentiality. In addition, it was ordered to delete any electronic copies of the Master Customer List and destroy any documents which contained information derived from it.

Further, as noted above, Vickery J ordered that DC Payments’ solicitors and counsel who had access to the confidential information could no longer act for it in the proceeding:

Any lawyer or person within the organisation of any firm of lawyers engaged by DC Payments, or any counsel retained on behalf of DC Payments, who has seen or directly or indirectly made use of the Master Customer List, should be retrained from continuing to act or work for DC Payments in this litigation.

Presumably, armed with his Honour’s judgment, the first job for DC Payments’ new lawyers will be to draft the well-crafted interrogatories foreshadowed by his Honour. It will be interesting to see if such an application would be rejected by the potential exclusion through s 138 of the Evidence Act 2008 (Vic) as, perhaps, his Honour warned at [83].

If you have a comment or question about this post, please feel free to post it in the comments section below or send me an email.

DC Payments Pty Ltd v Next Payments Pty Ltd [2016] VSC 315

Calling The Pot Black Read More »

Productivity Commission reports on IP (in draft)

1 Comment / Antitrust, Confidential Information, Copyright, Designs, IP generally, Patents, PBR, Semiconductor chips, Trade marks / / / , , , , , , , ,

The Productivity Commission has released its draft report into Intellectual Property Arrangements.

You will be startled to learn that the Productivity Commission has discovered Australia is a net importer of intellectual property. We buy more IP from the rest of the world than we sell to it. Fig. 2 in the Report indicates Australian IP earned AUD1 villion from overseas, but we paid out about AUS4.5 billion for the use of their IP. The Productivity Commission then notes that we provide surprisingly strong IP protection for a country in our position.[1] This finding guides the Productivity Commission’s recommendations which might broadly be characterised as: take the least restrictive option in terms of IP protection (where our international obligations permit).

The Productivity Commission explained its position this way:

Intellectual property (IP) arrangements need to balance the interests of rights holders with users. IP arrangements should:[2]

• encourage investment in IP that would not otherwise occur;

• provide the minimum incentives necessary to encourage that investment;

• resist impeding follow-on innovation, competition and access to goods and services. (emphasis supplied)

So, for example, after much gnashing of economists’ teeth about the (let’s face it, indefensible) term of copyright protection, the Productivity Commission considers that the appropriate term of protection is somewhere between 15 and 25 years.[3] However, what it actually recommends is rather more limited:

4.1: remove the current unlimited term of protection for published works.[4]

5.1: implement Parliament’s At What Cost? IT pricing and the Australia Tax recommendation to make it clear that it is not an infringement of copyright to circumvent geoblocking.

5.2 repeal the remaining parallel import restrictions for books.

5.3 amend the Copyright Act 1968 to replace the current fair dealing exceptions with a broad exception for fair use.

The latter two, so far, have elicited the loudest complaints here and here.[13] Meanwhile, the US’ Register of Copyrights is celebrating the first anniversary of her Fair Use Index.

18.1 expand the safe harbours to online service providers.[5]

Patents

The Productivity Commission reports that there are 120,000 active patents registered in Australia. 93% of these have been granted to non-residents. There are also 25,000 – 30,000 applications each year; of which about 60% ultimately proceed to grant.

According to the Productivity Commission, however, there are too many granted patents which do not contribute social value and are not “additional” – in the sense that they would not have been made if there was no patent protection.[6]

This needs to be remedied. However, the Productivity Commission acknowledges that international agreements put constraints on our freedom of action. There are 10 recommendations for patents.

The key recommendation for standard patents is yet another go at raising the threshold of inventive step.

an invention is taken to involve an inventive step if, having regard to the prior art base, it is not obvious to a person skilled in the relevant art.

This looks very similar to what we already have. As the Productivity Commission envisages matters, however, there are important differences. First, it reverses the onus currently expressed in s 7(2). According to the Productivity Commission, the current position is the opposite of where the onus lies in the USA, Japan, the EU and the UK (amongst others). Rather than a challenger having to prove the invention is obvious, therefore, the patentee will have to prove it is not.

Secondly, the Productivity Commission sees the current requirement that there be only a scintilla of invention being raised. The Productivity Commission sees this low threshold being reflected in the limitation on “obvious to try” being something which the skilled addressee would be directly led as a matter of course. Instead, the Productivity Commission considers that the test should be at least:

whether a course of action required to arrive at the invention or solution to the problem would have been obvious for a person skilled in the art to try with a reasonable expectation of success (as applied by the Boards of Appeal of the EPO).[7]

This change would be buttressed with appropriate comments in the Explanatory Memorandum and, additionally, the insertion of an objects clause into the Act. The latter would be intended to ensure that the Courts focused on the social objectives of the Patents Act including, in particular, the public interest.[8]

On the more colourful fronts, the Productivity Commission also recommended repeal of the abomination innovation patent and amendment of s 18 explicitly to exclude from patentable subject matter business methods and software.[9]

Pointing to analysis which estimates the net present value to R & D of the extension of term for a pharmaceutical patentat at year 10 at $370 million – of which only $7.5 million would accrue to Australia because our industry is so small – while the cost to the Australian government and consumers of the same extension of term is estimated at $1.4 billion, the Productivity Commission also wants a significant tightening up of the regime for extending the term of pharmaceutical patents. The Productivity Commission also opposes any extension of the period of data protection for therapeutic goods, including biologics.[10]

The Productivity Commission also recommends exploring raising the renewal fees payable, particularly in later year’s of a patent’s life.

Registered designs

The Productivity Commission considers the registered design system deficient but, as we have committed to it internationally and there is no better alternative, we are stuck with it.

However, continuing the net importer theme, Australia should not go into the Hague system “until an evidence-based case is made, informed by a cost–benefit analysis.”

Trade marks

I’m just going to cut and paste here: the Government should:

  • restore the power for the trade mark registrar to apply mandatory disclaimers to trade mark applications, consistent with the recommendation of the Advisory Council on Intellectual Property in 2004 (the only people that won’t support this are in the place that counts – IP Australia)
  • repeal part 17 of the Trade Marks Act 1995 (Cth) (Trade Marks Act)
  • amend s. 43 of the Trade Marks Act so that the presumption of registrability does not apply to the registration of marks that could be misleading or confusing
  • amend the schedule of fees for trade mark registrations so that higher fees apply for marks that register in multiple classes and/or entire classes of goods and services.
  • require the Trade Marks Office to return to its previous practice of routinely challenging trade mark applications that contain contemporary geographical references (under s. 43 of the Trade Marks Act). Challenges would not extend where endorsements require goods and services to be produced in the area nominated
  • in conjunction with the Australian Securities and Investments Commission, link the Australian Trade Mark On-line Search System database with the business registration portal, including to ensure a warning if a registration may infringe an existing trade mark, and to allow for searches of disclaimers and endorsements.

Also, s 123 should be fixed up so that parallel importing does not infringe.

Like the rest of us, the Productivity Commission is bemused by the Circuits Layout Act and recommends implementing “without delay” ACIP’s 2010 recommendation to enable “essentially derived variety declarations to be made in respect of any [plant] variety.”

On competition policy, s 51(3) should be repealed and the ACCC should develop guidelines on the application of our antitrust rules to IP.

Innovatively, the Productivity Commission also recommends free access to all publications funded directly by Government (Commonwealth, State or Terriroty) or through university funding.

There are also at least 17 requests for further information.

If you are inspired to make a further submission, you should get it in before 3 June 2016.[11]

  1. Not much discussion here whether the best way to get more technological development is through a strong IP regime or to,scrap the IP system and fully commit to free riding.  ?
  2. Despite the tentative nature of this declaration, it is the first “Main key points”.  ?
  3. Draft finding 4.2.  ?
  4. The Government is trying to do this – see schedule 3 of the exposure draft of the Copyright Amendment (Disability Access and Other Measures) Bill (pdf).  ?
  5. See schedule 2 of the Disability Access and Other Measures bill.  ?
  6. You will have to read Appendix D to find out how the Productivity Commission works out which patents are socially valuable and “additional”.  ?
  7. The EPO cases the Productivity Commission referred to are T 149/93 (Retinoids/Kligman) (1995) at 5.2 and T 1877/08 (Refrigerants/EI du Pont) (2010) at 3.8.3.  ?
  8. Here, the Productivity Commission notes that the Full Federal Court rejected reference to the public interest in Grant.  ?
  9. Dr Summerfield tells you why he thinks that’s a bad idea over here and of course, the Europeans (including the UK in that) do not have all sorts of complications carrying out their nice, clean exclusion.  ?
  10. In an interesting departure from its overarching premise that patents do not really contribute much to innovation because there are other protections such as lead time and trade secrets, the Productivity Commission warns that reliance on data secrecy is sub-optimal compared to patent protection.  ?
  11. Bearing in mind they have to submit their Final Report to Government by 18 August 2016.  ?
  12. In between buying your books from Amazon and Bookdepository, some references to the larger economic issues affecting booksellers here.  ?

Productivity Commission reports on IP (in draft) Read More »

What an Anton Piller order should look like

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Bearing in mind the potential for the privilege against self-incrimination to be invoked, Bromberg J’s orders in Bluescope v Somanchi are a good illustration of what an Anton Piller order (search and seizure ex parte) should look like (but often do not).

BlueScope Steel Limited v Somanchi [2016] FCA 4

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You can arbitrate disputes under an IP licence agreement

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Hamerschlag J, in the New South Wales Supreme Court, has ruled that disputes between a licensor and licensee under a technology licence agreement fall within the arbitration clause in the agreement and, consequently, the arbitrator’s determination that he has jurisdication is valid and binding on the parties.

The disputes between the parties related to (1) the application of the “improvements” clause and (2) whether licence fees would be payable if the licensee embarked on different strategies in the future. Hamerschlag J rejected the licensor’s, Lardken’s, argument that neither of the matters were disputes within the scope of the arbitration clause, cl. 19(b):

(b) All disputes arising in connection with this Licence, which are not adjusted by Licensing Agreement between the parties concerned, shall be finally settled by arbitration. The arbitration shall be held before a single arbitrator appointed by the parties or in the absence of agreement by the Chair of the Law Society of New South Wales, and conducted in accordance with and under the Commercial Arbitration Act 1984 of New South Wales. Judgment upon the award rendered may be entered in any court having jurisdiction, or application may be made to such court for a judicial acceptance of the award, or an order of enforcement as the case may be.

The improvements clause

Lardken licensed Lloyd to use Lardken’s technology relating to methods of collecting energy, converting it to heat, transferring the heat energy to a storage medium based on graphite and extracting and releasing the heat energy into useable form.

The licence agreement had one of those “Improvements” clauses, cl. 5.4(a), by which Lloyd agreed to transfer ownership of any improvements in the technology it developed to Lardken and would receive a non-exclusive licence back.

A third party, Ausra, applied for patents in the USA and Australia. Lloyd had notified Lardken about these applications, but had settled a dispute with Ausra on terms that Ausra assigned its rights in the patent applications to Lloyd. Lardken claimed that “Ausra’s” patent applications had been developed from confidential information about Lardken’s technology which, it was alleged, Ausra accessed at Lloyd’s facility. Lardken also claimed it was entitled to ownership of patent applications filed by one of Lloyd’s subsidiaries, Solfast.

Lloyd denied that any of this technology were improvements within the meaning of the licence agreement and, when Lardken refused to agree, referred the matter to arbitration.

Lardken argued that these disputes were not capable of determination by the arbitrator as a matter of public policy as only the Commissioner of Patents had authority under the Patents Act to grant patents or, subject to appeal to the Court, determine who was an entitled person under s 15 and s 32 and s 36.

Hammerschlag J held that the issue between the parties was a dispute about whether the Ausra or the Solfast technology fell within the terms of cl. 5.4(a). That was a dispute falling within the scope of the arbitration clause. The arbitrator’s decision would not, and could not, affect the Commissioner’s determination whether to grant the patent applications or not. The Commissioner’s powers under ss 15, 32 and 36, to determine entitlement, were not exclusive: questions of assignment for example were regularly determined in other fora. All the arbitrator’s decision would do would be to decide rights and obligations as between Lardken and Lloyd.

The liability to pay licence fees

Lloyd also sought the arbitrator’s ruling that it would not have to pay additional licence fees if:

  1. it itself constructed something using Lardken’s technology; or
  2. it sub-licensed one of its subsidiaries to construct something using Lardken’s technology.

Lardken argued the dispute about Lloyd’s potential liability to pay royalties in the future was not a ‘dispute’ capable of arbitration. There was, as yet, no “live issue” between the parties, it was really an attempt to seek an advisory opinion about a hypothetical eventuality.

Hammerschlag J also found that this was a dispute covered by the arbitration clause.

When Lloyd had written to Lardken stating its interpretation of the licence agreement, Lardken had responded disagreeing. Thus, at [101]:

There is thus clear disagreement between the parties on matters arising in connection with the Licensing Agreement. Each has claimed that the Licensing Agreement operates in a way which the other disputes; see Halki Shipping Corporation v Sopex Oils Ltd [1998] 1 WLR 726 at 757. See also the incisive discussion as to what constitutes a dispute in Tjong Very Sumito v Antig Investments at 747 and following, and Sutton et al, Russell on Arbitration , 23rd ed (2007) at [5-003].

Further, that fact that there was an element of futurity about the liability to pay did not render it purely abstract or hypothetical. Hammerschlag J accepted that purely hypothetical matters may not qualify as ‘disputes’, At [104]:

Although both of these disputes involve an element of futurity they are not purely abstract or hypothetical in the sense which makes them incapable of being the subject of determination. They concern whether certain prospective conduct will result in liability to pay fees under the Licensing Agreement (or put another way whether in the event of that conduct occurring the failure to pay would be a breach of contract). It was not suggested that the prospect that that conduct would occur was fanciful.

In reaching this conclusion, his Honour noted that declarations could be granted by the Court in similar situations:

98. In The Commonwealth v Sterling Nicholas Duty Free [1972] HCA 19; (1972) 126 CLR 297 at 305 Barwick CJ said:

The jurisdiction to make a declaratory order without consequential relief is a large and most useful jurisdiction. In my opinion, the present was an apt case for its exercise. The respondent undoubtedly desired and intended to do as he asked the Court to declare he lawfully could do. The matter, in my opinion, was in no sense hypothetical, but in any case not hypothetical in a sense relevant to the exercise of this jurisdiction. Of its nature, the jurisdiction includes the power to declare that conduct which has not yet taken place will not be in breach of a contract or a law. Indeed, it is that capacity which contributes enormously to the utility of the jurisdiction.

Hammerschlag J did note, however, it was a matter for the arbitrator’s discretion whether or not to make a determination on the issue.

The judgment doesn’t say how much it would cost to build one of these plant, but one might well think it makes sense for a party to be able to find out in advance what, if any, licence fee would be payable before it had committed to, or incurred, the expense of building the plant.

Larkden Pty Limited -v- Lloyd Energy Systems Pty Limited [2011] NSWSC 268

Lid dip: Steve White

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The mobile (iPhone) confidentiality agreement

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iPhone J.D. reviews an intriguing development: a standard from Non-disclosure Agreement “app” for your iPhone – iNDA.

The developer told iPhone J.D.:

“People often have informal meeting where they would like to discuss ideas with colleagues, friends, or prospective employees. We want to promote these meetings by giving people legal protection available to them at all times.”

STOP LAUGHING, this is fascinating:

The discloser actually signs the document with his or her finger on the iPhone and the signed document is emailed to both parties. Read the review and watch the demo.

A couple of  points about this (1) enforceability and (2) ramifications.

First, although it is available in the Australian iTunes store ($5.99) and the developer’s website says the agreement has been drafted by “a leading contract law firm”, the developer’s conversation with the iPhone J.D. suggests the app was drafted in line with US laws. Whether or not it would be enforceable in Australia may well be another matter. One can’t tell from the screen shots what the wording is. Also, it doesn’t look like you can add details like what the information claimed to be confidential is. On the other hand, we have electronic signature laws too and a relationship of confidentiality can arise where the confidential nature of the circumstances is apparent from the circumstances. Signing up to such a document might, just might, lead to such an inference. You should form your own views.

Secondly and in many respects far more intriguingly, think about the ramifications.

We already go along to mediations toting our laptops and maybe a printer, type up the terms and print them out for signature.

With this product people can have in their pockets – well in their iPhones – and with them at (pretty much) all times a document which is intended to create binding legal relations with some other party and actually get them signed up on the spot.

OK, this particular document is pretty rudimentary and I personally don’t often find myself suddenly desperate to sign the person I’m talking to up to an NDA. How much longer will it be though before the number of fields in the document that can be customised is increased and you can actually start tailoring some form or other to the particular circumstances?

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Confidentiality, unconscionability and contract

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Telstra and Optus have an interconnect agreement, in part to regulate how callers originating from one network get delivered to the other, charges and the like.

Optus successfully sued Telstra for misusing Optus’ confidential information under the agreement: information about call traffic between the two networks.

(You should look at that judgment as it illustrates the two-edged nature of many definitions of confidential information.)

In this part of the fight, Edmonds J declined to grant relief under the equitable obligation of confidence as the contractual obligations in question were comprehensive.

His Honour also explored the meaning of the prohibition on unconscionable conduct in s 51AA of the TPA, but declined to find a contravention in that context.

Optus Networks Ltd v Telstra Corporation Ltd (No. 3) [2009] FCA 728

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