Tritech Technology Pty Ltd v Gordon [2000] FCA 75 (8 February 2000)

Last Updated: 22 February 2000

FEDERAL COURT OF AUSTRALIA

Tritech Technology Pty Ltd v Gordon [2000] FCA 75

PRACTICE AND PROCEDURE - injunctions - mandatory injunction - false and misleading conduct - court's discretion to grant a mandatory interlocutory injunction to correct misleading statement

TRADE PRACTICES - Trade Practices Act 1974 (Cth) s 5(1), (3), (4), and (5) - claim for declaration and injunction - whether claim under s 82 or s 87 of the Trade Practices Act 1974 (Cth)

Trade Practices Act 1974 (Cth) ss 5, 52, 82 and 87

Casborne v Scarfe (1737)1 Atk 603 referred to

Couzens v Negri [1981] VR 824 referred to

Emanuele v Australian Securities Commission [1997] HCA 20; (1997) 188 CLR 114 discussed

Films Rover International Ltd v Cannon Film Sales Ltd [1986] 3 All ER 772 referred to

G & C Kreglinger v New Patagonia Meat and Cold Storage Co, Ltd [1914] AC 25 cited

Hesperides Hotels Ltd v Muftizade [1979] AC 508 referred to

Penn v Lord Baltimore [1750] 1 Ves Sen 444 referred to

Potter v The Broken Hill Pty Co Ltd [1906] HCA 88; (1906) 3 CLR 479 followed

Reeve v Lisle [1902] AC 461 referred to

Yamaji v Westpac Banking Corporation (1993) 42 FCR 436 referred to

TRITECH TECHNOLOGY PTY LTD and HOLONOMIC INTERNATIONAL TECHNOLOGY INC v ADRIAN GORDON and APRICON PTY LTD

V 18 of 2000

JUDGE: FINKELSTEIN J

DATE: 8 FEBRUARY 2000

PLACE: MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 18 of 2000

BETWEEN:	TRITECH TECHNOLOGY PTY LTD and HOLONOMIC INTERNATIONAL TECHNOLOGY INC Applicants
AND:	ADRIAN GORDON and APRICON PTY LTD Respondents
JUDGE:	FINKELSTEIN J
DATE OF ORDER:	8 FEBRUARY 2000
WHERE MADE:	MELBOURNE

UPON the first and second applicants by their counsel undertaking:

(a) to submit to such order (if any) as the Court may consider to be just for the payment of compensation to be assessed by the court or as it may direct, to any person, whether or not a party, adversely affected by the operation of the interlocutory order or undertaking or any continuation (with or without variation) thereof; and

(b) to pay compensation referred to in (a) to the person referred to.

THE COURT ORDERS THAT:

1. Until the hearing and determination of the proceeding herein, or further order, the Respondents be and are hereby restrained, whether personally or by their servants or agents, or otherwise, from advising or informing, whether orally or in writing, or otherwise Shanghai Machinery Import & Export Group Ships Co or Shanghai Star Rubber Co Ltd that certification of the self-righting inflatable life rafts under their contract with Tritech Technology Pty Ltd or production of them for sale outside the United States constitutes or may constitute an infringement of the rights of the owner of US patent number 5,967,869.

2. Provided the Applicants pay into Court to the credit of this action the sum of $110,000 or provide a guarantee in respect of that amount from an Australian trading bank in a form satisfactory to a Registrar of the Court, the Respondents are to send a letter by facsimile transmission and by express post in the form attached to this order to Shanghai Machinery Import & Export Group Ships Co of 445 Jiangning Road, Shanghai China, Shanghai, fax number 0086-21-6271 5694, and a record of the facsimile transmission and express postage shall be promptly provided to the solicitors for the Applicants.

3. The first and second Applicants have leave to add Renard Jonas Wiggins and East China Technology Limited as Applicants to the proceeding and the title to the proceeding be amended accordingly.

4. The Applicants shall file and serve an Amended Application in the form of Exhibit SMP1 to the affidavit of Susan Mary Phillips sworn 3 February 2000 ("Susan Phillips Affidavit") by 4.00 pm on 14 February 2000.

5. The Applicants shall file and serve an Amended Statement of Claim in the form of Exhibit SMP2 to Susan Phillips Affidavit by 4.00 pm on 14 February 2000.

6. The Respondents shall file and serve their Defence and any Counterclaim or Cross-claim by 4.00 pm on 2 March 2000.

7. The Applicants shall file and serve any reply and Defence to Counterclaim or Cross-claim by 4.00 pm on 17 March 2000.

8. Each party shall file and serve a list of discoverable documents by 4.00 pm on 31 March 2000.

9. The proceeding be adjourned for directions at 9.30 am on 14 April 2000.

10. The costs of the Motion on notice dated 18 January 2000 be reserved.

11. The Respondents costs of the Motion on notice dated 3 February 2000 together with their costs, if any, thrown away by reason of the amendment of the Application and Statement of Claim be paid by the first and second Applicants.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 18 of 2000

BETWEEN:	TRITECH TECHNOLOGY PTY LTD and HOLONOMIC INTERNATIONAL TECHNOLOGY INC Applicants
AND:	ADRIAN GORDON and APRICON PTY LTD Respondents

JUDGE:	FINKELSTEIN J
DATE:	8 FEBRUARY 2000
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1 The first applicant, Tritech Technology Pty Ltd, wishes to manufacture for sale in Australia, Asia and Europe a self righting inflatable life raft that was invented by Derek Wright. Patents for the invention have been obtained in the United States, Australia, Brazil, Canada and the United Kingdom. An application for the grant of a patent in Japan is pending. The second applicant, Holonomic International Technology Inc, is the proprietor of those patents and is the assignee of the rights under the pending application. Holonomic has granted Tritech a licence to exploit the invention.

2 Renard Wiggins claims to be the inventor of an improvement to the life raft. As a result of an agreement with Mr Wiggins, Tritech applied for the grant of a patent in respect of the improvement in a number of jurisdictions including China, countries of the European community, and a number of Asian countries. Each application for the derivative patent was filed on 30 June 1996. According to the evidence of Antony Ward, a patent attorney, the European community applications have lapsed and are not capable of being renewed.

3 Previously Mr Wiggins had applied in the United States for the grant of a patent for the improved invention. That application was filed on 30 June 1995 and a patent, being patent no. 5 967 869, was granted on 19 October 1999. In circumstances that I will deal with in a moment, Apricon Pty Ltd, the second respondent, is now the proprietor of that patent.

4 The life raft which is the subject of the patents must be approved as being suitable for use by various regulatory authorities before it can be sold. For the European community the relevant authority is Bureau Veritas and in China it is the Chinese Classification Society.

5 In July 1999 Tritech and Holonomic engaged Shanghai Star Rubber Products Co Ltd, a Chinese corporation, to conduct the necessary tests to obtain the appropriate certification of the life raft. The results of those tests were to be sent to the two authorities for their consideration.

6 By December 1999 Shanghai Star had all but completed the tests necessary to obtain certification. Bureau Veritas has informed Shanghai Star that it is in a position to grant that certification as soon as it receives documents from Shanghai Star regarding the tests that have already been carried out. However, Shanghai Star will not send any information to Bureau Veritas, or to the Chinese certifying authority. It refuses to do so due to the intervention of Apricon and its director, Adrian Gordon, the first respondent. It is that intervention that brings the parties to Court on this urgent application.

7 I should introduce the respondents so that their role in the affair can be understood. In 1994 Mr Wiggins, who is a director of Tritech, encouraged Apricon to invest in the life raft venture. An agreement was made that, for a capital contribution, Apricon would acquire a royalty interest in the proceeds derived from the sale of the life rafts. Later Apricon lent US$50,000 to a company controlled by Mr Wiggins and, as security for that loan, took a charge over the patents for the original invention. Notwithstanding the subsistence of the charge the patents were assigned to one Kenneth Mitchell, or a company controlled by that person. That is where the patents remained until they were assigned to Holonomic.

8 When Mr Gordon discovered that the patents for the original invention had been assigned he raised the matter with Mr Wiggins. According to Mr Gordon, Mr Wiggins "agreed to assign to [Mr Gordon] the rights to patent application 08/496,873 which is now US patent no. 5,967,869 ...". That oral agreement was reduced to writing and signed on 12 August 1995. The recitals to the written agreement provide:

"Whereas [Apricon] has an existing loan of the sum of $74,000 Aust funds to [Mr Wiggins] which has been used for the purpose of [Mr Wiggins] in carring [sic] on business in the Self Righting Liferaft venture;

And whereas [Mr Wiggins] desired to borrow the aforesaidsum of money for the purpose and is agreeable to deliver an assignment of its patent rights in the Self Righting Liferaft to the Escrowholder [Stephen L Richards & Co] as collateral for the loan;"

9 In the body of the agreement provision was made for Mr Wiggins to execute an assignment in the form annexed to the agreement which was to be held in escrow. It also provided that the debt of US$50,000 (the Australian dollar equivalent of which is recorded to be $74,000) was to be paid by 24 August 1995.

10 The assignment was not executed contemporaneously with the agreement. Mr Gordon explained that he had omitted to ask Mr Wiggins to sign the document when the agreement was executed, but he did obtain Mr Wiggins' signature some two days later. The assignment records that Mr Wiggins, in consideration of the payment of $1 and other good and valuable consideration "agrees to assign, and hereby does assign, transfer and set over to [Apricon] all right, title and interest in the invention known as: Self-Righting Inflatable Life Raft for which the undersigned [Wiggins] has filed applications for patent, becoming active on or about 1st July 1995 in a number of countries as indicated on Schedule A attached hereto".

11 Schedule A was completed by hand. It provides:

" Areas

1	United States of America
2	Australia
3	Canada
4	Japan
5	Brazil
6	Europe

"

12 According to the patent attorney Mr Ward, the only application for a patent that Mr Wiggins had filed around 1 July 1995 was the US patent application. There is little doubt that this was the application that was intended to be the subject matter of the assignment, it being the only patent that was discussed by Mr Wiggins and Mr Gordon. In any event there is no other patent or application for a patent that falls within the subject matter of the assignment clause. This was the evidence of the patent attorney and Mr Gordon did not contradict that evidence.

13 As the debt due to Apricon was not repaid, Apricon became and remains, the registered proprietor of the US patent. Further, Mr Gordon believes that because the debt has not been repaid Mr Wiggins no longer has any interest in the US patent. In his affidavit Mr Gordon explained his position:

"We reached an oral agreement that if he repaid me the sum of $74,000 I would re-assign the second patent to him, which agreement has since been abandoned by him but negotiations continued for over 3 years to settle upon terms of agreement to re-assign the second patent which negotiations terminated some 12 months ago."

14 Mr Gordon overlooks the fact that Mr Wiggins has a right to redeem the security for the loan unless in the meantime the patent has been sold to satisfy the obligation in respect of which it stands as security or there has been a foreclosure. Of course the right to redeem is conditional upon payment in full by Mr Wiggins of the amount of the debt together with interest and costs. Mr Wiggins is willing to pay these amounts and has offered to bring the money into court.

15 There is a contest as regards whether Mr Wiggins has an absolute right to redeem the security upon payment of the amount due. It is said that the equity of redemption being a creature of equity can be defeated by general (equitable) discretionary considerations. The respondents have a good deal to rely upon if discretionary considerations are to be taken into account. However, the proposition contended by Apricon misunderstands the nature of the mortgagor's right. An equity of redemption has always been considered an estate in land: Casborne v Scarfe (1737) 1 Atk 603. According to high authority, no bargain can be made to prevent the mortgagor from redeeming his security on payment of what is due, with interest and costs: G & C Kreglinger v New Patagonia Meat and Cold Storage Co, Ltd [1914] AC 25. A court can not refuse an order for redemption on discretionary considerations when the argument was first put I said that it could not be correct. Nevertheless, I have consulted many equity texts, both old and new, and I have not been able to find any statement that supports the respondents view.

16 I said earlier that Apricon and Mr Gordon had interfered with the work on certification being undertaken by Shanghai Star. The fact that this has occurred is not a matter that is in dispute between the parties. Mr Gordon produced a letter that Apricon sent to Shanghai Star on 31 December 1999 confirming a conversation between Mr Gordon and representatives of the Chinese corporation. This is what is stated in the letter:

"Thank you for your time to meet with me this morning. Further to our discussions I wish to confirm with you each item discussed.

1. I appreciate and acknowledge the progress towards `Certification' which you have achieved to date in accordance with my authorisation, However [sic] I now must direct you to too [sic] suspend the certification process until clarification of the patent ownership is finalised.

2. I have provided undisputable evidence to my ownership of the Patent No 5967869 evidenced by a `Certified Abstract of Title' and my Company documents showing my directorship of Apricon Pty Ltd.

3. I now direct you to advise the French (BV) Certification Authority that

a) the Certification process is suspended until further notice

b) request that they advise Mr Wiggins from the Company Tritech Pty Ltd in Australia of the suspension

c) further advise Mr Wiggins that all future correspondence regarding the Certification will be directed to SMIEC only. Correspondence concerning Certification with Mr Wiggins must cease

d) Please send copy of letter (French BV to Wiggins) to Adrian Gordon of Apricon Pty Ltd at 18 Coulter Street Newcomb Vic Australia 3219."

Mr Gordon seeks to imply that Apricon, being the owner of the US patent, has the right to direct Shanghai Star to stop work relating to the certification of the life raft. The implication is that if Shanghai Star does not do as it is directed it may be liable in some way in an action brought at the suit of Apricon.

17 As a result Shanghai Star has suspended its work and has indicated it will not resume that work until the dispute about the ownership of the patent has been resolved. Not surprisingly, Shanghai Star does not wish to become embroiled in a dispute in which it has no interest.

18 On 17 January 2000 Tritech and Holonomic commenced this application which, in the initiating process, is described as "principally a claim for an injunction to prevent damage caused by representations of the respondents which are alleged to be made in contravention of s 52 of the Trade Practices Act 1974. There are also claims that the Respondents have induced a breach of contract and have committed an injurious falsehood. The legislative basis of the Court's jurisdiction to hear the application and grant the relief sought is said to be ss 52 and 82 of the Trade Practices Act".

19 The principal relief that is sought is as follows:

"1. A declaration that the Applicants' contract with Shanghai Star is not in breach of the Respondents' US patent 5,967,869.

2. An injunction restraining the Respondents, whether by themselves, their servants, agents or otherwise howsoever from stating that the Applicants' contract with Shanghai Star is in breach of the Respondents' US patent 5,967,869.

3. Damages and or damages under section 82 of the Trade Practices Act."

20 The application also asks for interlocutory relief in the following terms:

"1. An order that the Respondents communicate with Shanghai Machinery as soon as practicable stating that Shanghai Star may fulfil its contract with the Applicants without breaching the Respondents' US patent 5,967,869.

2. An injunction restraining the Respondents, whether by themselves, their servants, agents or otherwise howsoever from making any further statements to Shanghai Machinery or Shanghai Star to the effect that certification of the life rafts or production of them infringes the Respondents' US patent 5,697,869."

21 In the Statement of Claim that was filed with the application the causes of action referred to in the application are pleaded in some detail. Each is based upon the allegations found in paragraph 10, which are not substantially in dispute, that the respondents informed Shanghai Star that:

"(a) Apricon owns a patent over the self righting life rafts Shanghai Star had agreed with the Applicants to test;

(b) Shanghai Star would be breaching the said patent if it continued to test the self righting life rafts; and

(c) Shanghai Star should cease the certification process.

PARTICULARS

The communication is false because the only patent to which Apricon is entitled is registered in the United States of America and the activities being carried out by Shanghai Star could not infringe that patent as they do not involve the supply of life rafts to the United States of America."

22 It is the provision of that information which is said to give rise to the contravention of s 52 of the Trade Practices Act and the torts of inducing breach of contract and injurious falsehood.

23 I should mention that the applicants seek to amend the application to both remove and add claims. They propose to remove the claim based on s 82 of the Trade Practices Act. They seek to add a claim based on s 80 of the Act, to add a claim asking for a declaration that the assignment executed on 14 August 1995 is an assignment by way of mortgage and to ask for an order that the mortgage be redeemed.

24 On the day the application was instituted, on the ex parte application of the applicants, I made an order that the respondents be restrained from advising or informing Shanghai Star that certification of the life rafts or production of them for sale outside the United States constitutes or may constitute an infringement of the US patent. The applicants seek to continue that order until trial and they also ask for a mandatory injunction requiring the respondents to write to Shanghai Star informing it that continuing work under their contract with the applicants will not constitute a breach of the US patent. It is anticipated that if such a letter is received Shanghai Star will resume the work.

25 Before dealing with the application on its merits, there are two matters relating to the jurisdiction of the Court that must be dealt with.

26 In the first place it will be obvious that the dispute that gives rise to this litigation arises out of or is connected with the rights derived from the US patent. Indeed with the amendments that have been foreshadowed, the applicants will seek a declaration as to their entitlements to that patent.

27 There is a principle of law based upon the comity of nations that, subject to certain exceptions, a court does not exercise jurisdiction to entertain an action as regards the determination of the title to or the right to possession of immovable property situated outside the jurisdiction. Nor will a court exercise jurisdiction in an action for the recovery of damages for trespass to foreign immovable property: see generally The British South Africa Co v The Companhia de Mocambique [1893] AC 602. This principle has been applied to patents by the High Court, because the rights to patents are created by an exercise of sovereign power: Potter v The Broken Hill Pty Co Ltd [1906] HCA 88; (1906) 3 CLR 479.

28 But, as I have said, there are exceptions to the principle. Courts of equity have jurisdiction to enforce in personam claims against a party within the jurisdiction notwithstanding that the in personam action arises out of the ownership of a foreign immovable. Accordingly it is accepted that jurisdiction may be exercised in respect of a claim against a trustee although the trust estate is land outside the jurisdiction: Penn v Lord Baltimore [1750] 1 Ves Sen 444; Hesperides Hotels Ltd v Muftizade [1979] AC 508. In such an action, if the existence of the trust is disputed, it is within the power of the court to determine whether there is a trust: Couzens v Negri [1981] VR 824.

29 It follows that the present claims, although they are related to a foreign patent, are personal claims that are justiciable in a court of competent jurisdiction in this country. So also would be the claim for redemption that the applicants propose to add by way of amendment.

30 The second matter that relates to jurisdiction arises from the claim under s 52 of the Trade Practices Act. That section, which is to be found in Part V of the Act, provides:

"(1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

(2) Nothing in the succeeding provisions of this Division shall be taken as limiting by implication the generality of subsection (1)."

31 In accordance with ordinary principles of statutory construction s 52 would be confined in its operation to conduct that takes place within Australia. However s 52 and other provisions in the Trade Practices Act have been given an extended operation. Section 5 of the Act relevantly provides:

"(1) Part IV, Part IVA, Part V (other than Division 1AA) and Part VB extend to the engaging in conduct outside Australia by bodies corporate incorporated or carrying on business within Australia or by Australian citizens or persons ordinarily resident within Australia.

(1A) ...

(2) ...

(3) Where a claim under section 82 is made in a proceeding, a person is not entitled to rely at a hearing in respect of that proceeding on conduct to which a provision of this Act extends by virtue of subsection (1) or (2) of this section except with the consent in writing of the Minister.

(4) A person other than the Minister or the Commission is not entitled to make an application to the Court for an order under subsection 87 (1) or (1A) in a proceeding in respect of conduct to which a provision of this Act extends by virtue of subsection (1) or (2) of this section except with the consent in writing of the Minister.

(5) The Minister shall give a consent under subsection (3) or (4) in respect of a proceeding unless, in the opinion of the Minister:

(a) the law of the country in which the conduct concerned was

engaged in required or specifically authorised the engaging in

of the conduct; and

(b) it is not in the national interest that the consent be given."

The Minister has not given his consent to permit the applicants to rely at a hearing on s 82 or to make an application for an order under s 87.

32 Section 82 provides:

"(1) A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV, IVB or V or section 51AC may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.

(2) An action under subsection (1) may be commenced at any time within 3 years after the date on which the cause of action accrued."

33 Section 87 empowers the court to make such orders as it thinks appropriate to compensate a person for the loss and damage suffered as a result of a contravention of provisions of the Trade Practices Act. Examples of the types of orders that might be made are found in s 87(2),(3) and (4).

34 It should be noted that by s 80 the Court is given power to grant an injunction on such terms as are appropriate when it is satisfied that a person is or is likely to contravene a provision of, among others, Part V of the Act. The Court may grant interim relief in the action: see s 80(2). Nothing in s 5 effects the right of a claimant to rely upon s 80 as a basis for relief if there has been a contravention of s 52.

35 In a case where a party proposes to make a claim under s 82 in respect of conduct engaged in outside Australia, s 5(3) prevents that party from relying on that conduct at a hearing except with the consent of the Minister. It may be that the hearing to which s 5(3) refers includes an interlocutory hearing: see Yamaji v Westpac Banking Corporation (1993) 42 FCR 436 at 440. On the other hand, there is a reason for thinking that the only hearing to which the prohibition applies is a final hearing. That reason is that relief under s 82 cannot be granted at an interlocutory hearing. The grant of relief under s 82, and therefore the point of time at which a claim for that relief can be made, is only at a final hearing. Whether this is the correct view of the operation of the section is not an issue that presently requires resolution.

36 There is another issue that arises under s 5(3) that should be mentioned. When a party makes a claim under s 82 in consequence of conduct engaged in outside Australia, it is often the case (as it is here) that the same conduct will also give rise to another cause of action, usually at common law. Section 5(3) prohibits reliance on conduct to which a provision of the Trade Practices Act extends by reason of subs (1) or (2). Does s 5(3) operate to deny to the claimant the ability to rely on that conduct not in support of a claim under s 82, but in support of another cause of action to which that conduct gives rise? On a literal reading of subs 5(3) that may be the consequence. But that result seems to be so inconvenient, and thus contrary to the intention of Parliament, that it is unlikely that a literal construction should be adopted. This also is another issue that need not be determined.

37 Section 5(4) does not deal with reliance on conduct at a hearing. It is concerned with the institution of an application: I take the phrase "make an application" to mean "institute an application". A difficult question arises in the case of an application for an order under s 87 that is instituted in the absence of ministerial consent. Is the failure to obtain that consent a mere defect or irregularity which can be cured by later obtaining that consent? Or is the requirement mandatory so that a proceeding commenced in defiance of the prohibition is one that can be described as a nullity or, perhaps more accurately, as a proceeding upon which no order might be made? Emanuele v Australian Securities Commission [1997] HCA 20; (1997) 188 CLR 114 is an instance of a case where a similar issue arose. There the question was whether a proceeding that could only be made by leave of the court was defective in the absence of that leave or whether leave could be obtained nunc pro tunc. The High Court decided by a majority of 3:2 that the proceeding was not a nullity and that leave could subsequently be obtained: see also Posner v Collector for Interstate Destitute Persons (Vic) [1946] HCA 50; (1946) 74 CLR 461.

38 In this case I am satisfied that there is no jurisdictional bar to the claim. In the first place, in the application as instituted the only provisions of the Trade Practices Act upon which the applicants place reliance are s 52 and s 82. It is true that their claim for interlocutory relief may be based on s 87. On the other hand, there is no need for that to be so. The application for interlocutory relief could be supported by s 80 of the Trade Practices Act. It is also supported by the general powers of the Court found in s 23 of the Federal Court of Australia Act 1976 (Cth).

39 The same is true as regards the claim for a declaration. Indeed, on one view, that claim cannot fall within s 87 at all. Declaratory relief will not afford an injured claimant any compensation. A general declaration of right is not one of the specific heads of relief mentioned in s 87. It seems to me that the applicants rely upon s 21 of the Federal Court of Australia Act for jurisdiction to grant the claimed declaration.

40 In any event it would be wrong, even if it is possible for the applicants' claim for declaratory relief to be based on s 87 and thus arguably beyond the jurisdiction of the court, where the section is not expressly relied upon and there is some other source of power to not grant the relief in question. The applicants should be entitled to rely on that other source.

41 The respondents also put forward an argument, which is a point that goes to jurisdiction in a broad sense, that the extended operation of s 52 only applies when the misleading conduct is directed to Australian citizens; corporations incorporated or carrying on business in Australia; or persons ordinarily resident in this country. That is to say, the respondents wish to import into s 5 a correspondence between the persons who can contravene the provisions of the Act and the persons who are the object of that contravention. Suffice it to say, there is nothing in the language of s 5 that requires me to reach that conclusion. To the contrary, to attempt to import language into s 5 that which would produce the result for which the respondents contend, would be to undertake an exercise in legislation not construction. Under our system, this is not a permitted function of a court.

42 I can now deal with the merits of the claim. In this regard there are a number of matters that appear to me to be uncontroversial. The first is that Apricon, as the registered proprietor of the US patent, can only enforce the monopoly thereby conferred in respect of the manufacture, use and sale of products in the United States and certain of its territories. The United States patent, like a patent granted by any other body politic, confers no rights beyond the territorial limits of the granting state.

43 The second proposition, which follows from the first, is that the United States patent confers no rights on Apricon that will be infringed by conduct that takes place wholly within the Republic of China. Accordingly, the fact that Apricon is the registered proprietor of the US patent does not give it the right to require Shanghai Star to suspend its work in connection with the certification of the life raft.

44 The third proposition, which is so self evident it probably should not be mentioned, is that if Apricon is the mortgagee of the US patent that does not improve its position as regards conduct in China. If anything, the rights of a mortgagee of a patent may be less extensive than those of the mortgagor. Of course that will depend upon the particular terms of the mortgage which will differ from case to case.

45 Accordingly, it is not necessary to decide, even on a prima facie basis, whether Apricon is a mortgagee. However it is as well to point out that when it took an assignment of the US patent, there is no doubt that the assignment was by way of security. That is how Mr Gordon understood the position and it is reflected in the recitals to the agreement dated 12 August 1995. As regards Mr Gordon's contention that Mr Wiggins, as mortgagor, abandoned his interest, it must be said that Mr Gordon proffered no facts upon which the alleged abandonment is based. I accept that an equity of redemption may be released: Reeve v Lisle [1902] AC 461, but that would require cogent evidence. None has been put forward on this application.

46 It is theoretically possible there is some other basis upon which the respondents could assert rights against Shanghai Star such as would permit them to require that company to cease work on the certification of the life raft. During the course of the hearing I asked Mr Hammond, senior counsel for the respondents, to identify the source of any such right. Two matters were mentioned as a possible basis for the subsistence of rights against Shanghai Star. I reject each of them as constituting even an arguable ground for the existence of a claim against the Chinese corporation.

47 The first was that by the assignment Mr Wiggins assigned not only the United States patent, but all rights to the invention wherever substituting. This was said to follow from that part of the assigning clause which provides that what was assigned was "all right, title and interest in the invention known as self righting inflatable life raft".

48 I do not accept that it is arguable that this was the intention of the parties. When the assignment is read in full and considered in the context of the agreement which imposed the obligation to execute the assignment and all of the surrounding circumstances, the assignment should be understood as limited to the rights that subsist in any application for a patent in the countries mentioned in the schedule. If the assignment is not confined to those rights then it is not clear what is the subject matter of the assignment. The only "rights" to an invention that are can be assigned, and enforced against third parties, are those created by statute. Of course parties may undertake personal obligations as regards an invention, but those obligations will not affect third parties.

49 In any event, I have already set out the evidence of Mr Gordon where he concedes that the subject matter of the assignment was the United States patent. Thus the submission presently made on the respondents' behalf is inconsistent with the discussions between Mr Gordon and Mr Wiggins which are reflected in the agreement that they executed.

50 There is another reason why the argument based on the assignment has no merit. It will be remembered that Mr Wiggins is only the inventor of an improvement to the life raft. Accordingly all that Mr Wiggins could assign to Apricon is a right to the improvement. In the absence of permission from the owner of the original patents, Apricon could not manufacture the life raft in any jurisdiction where a patent for the original invention subsists. Moreover, even if Apricon is entitled to the invention constituted by the improvement, that would not give it the right to prevent Shanghai Star continuing with the certification work.

51 I should mention here another point advanced on behalf of Apricon, namely that it still has equitable rights over the original patents. The argument is that although Apricon may have "lost those rights" when the original patents were transferred to Mitchell, and this is on the assumption that Mitchell was a bona fide purchaser for value in good faith, when the patents were transferred to Holonomic, Apricon's rights were revived. The argument is that Holonomic, through its director Mr Wiggins, knew of the interest that Apricon held over the patents and thus it is bound by that interest.

52 I cannot say that this is a hopeless argument. It may be that Apricon can press its rights against Holonomic, although there are obvious difficulties in its path. However, for present purposes it makes little difference whether Apricon has or does not have equitable rights over the original patents. The fact is, and this point was all but conceded by Mr Hammond, that those rights would not enable Apricon or Mr Gordon to direct Shanghai Star to cease work on the life raft.

53 Moreover, if I am right in the view that Mr Wiggins is entitled to redeem the security granted by him over the US patent, and it appears that it is unlikely that Apricon will be able to resist that claim, the charge over the original patents will disappear along with the charge over the US patent for, as I understand the position, each stands as security for the same debt.

54 The second alleged source of rights is based on the fact that when Mr Wiggins or Tritech applied for the patents for the improved invention those applications sought to rely on the date of the filing of the US application as the priority date for the improvement. It is not uncommon to find patent legislation that permits an inventor who claims an invention that is supported by matter disclosed in an earlier application, to give as the priority date for his or her invention, the date of the earliest relevant application disclosing the matter. That is the position in both the United Kingdom and Australia. The fact that the priority date is derived from an earlier application does not give the later patent owner any right in respect of the original invention. Further nor does the original applicant derive any interest in the later invention.

55 There being no other grounds relied upon, I can safely say, notwithstanding that this is an interlocutory application, that Apricon's assertion that it is entitled to prevent Shanghai Star continuing with its contract with Tritech and Holonomic, to the extent that this assertion is based on the grounds that have been mentioned, is without foundation. I cannot say that there is no ground that will support a claim against Shanghai Star. However, if there is then it has not been identified by the respondents.

56 The foregoing discussion demonstrates that the applicants have made out a more than an arguable case that the respondents have engaged in misleading and deceptive conduct in their dealings with Shanghai Star. The question then is what relief, if any, should be given in consequence.

57 The cessation of work by Shanghai Star has the potential to cause the applicants to suffer substantial losses. Mr Montgomery, an officer of each applicant, has sworn of the importance of having the certification works finalised as quickly as possible. New regulations require passenger ships to replace their life rafts. The shipping companies are currently looking to place significant orders for replacement life rafts. Tritech is involved in negotiations with a number of parties. It is competing with others for substantial business. If there is a delay in the certification process then Tritech will no longer be competitive. Its potential customers will go elsewhere. In this way, substantial business may be lost.

58 On the other side, the respondents do not point to any loss that they will suffer if Shanghai Star completes its work. Not only have the respondents failed to identify any damage they might suffer if the interlocutory relief is granted, none is logically apparent, save that in some way their security might be at risk. Accordingly, on the question whether the Court should, as a matter of discretion, grant relief pending trial, the so-called "balance of convenience" is, unusually, "all the one way", provided I can ensure that the security is not jeopardised.

59 Is there any reason why the applicants should not be entitled to a mandatory interlocutory injunction? The cases say that the court should exercise caution before granting mandatory relief. The problem arises in the event that the court makes the wrong decision. Often the grant of mandatory relief will cause real injustice if it turns out that the order should not have been made. There is also the possibility that a mandatory order will often give the party seeking relief that which it claims in the action, thus making it unlikely that there will be a trial: see Shepherd Homes Ltd v Sandham [1971] Ch 340 at 341. Further, as Hoffmann J pointed out in Films Rover International Ltd v Cannon Film Sales Ltd [1986] 3 All ER 772 mandatory injunctions (whether interlocutory or final) are sometimes difficult to formulate with sufficient precision to be enforceable. His Lordship also pointed out that an order requiring someone to do something is usually perceived as a more intrusive exercise of the coercive powers of the court than an order requiring that person temporarily to refrain from action. Thus it is that the court is more reluctant to make a mandatory order.

60 Bearing these matters in mind, I am nevertheless of the view that this is a proper case for a mandatory order. However, I only propose to make the order on the condition that the applicants bring into court the amount secured by the mortgage over the US patent. If that money is brought into court to support the undertaking in damages then I cannot see that any irreparable harm will be suffered by the respondents if a mandatory order is made. Although I have not had the benefit of a precise calculation of the interest and costs that are due to Apricon, if the applicants bring into court $110,000 that should be sufficient to satisfy Apricon's entitlement. Subject to any comment by counsel, I will order that Mr Gordon write a letter on behalf of Apricon Pty Ltd to Shanghai Star in the following terms:

"I am required to write this letter by order of the Federal Court of Australia.

On 30 December 1999 I wrote to you concerning the work that you were performing on the self righting life raft. In that letter I gave you a number of directions including the following:

1. That you suspend the certification process until the ownership of

United States patent no. 5967869 is clarified.

2. That you advise the French certification authority that the certification process has been suspended.

(A copy of the letter is enclosed).

As I advised you, Apricon Pty Ltd is the registered proprietor of the US patent. However, as proprietor Apricon Pty Ltd is not entitled to give the directions that were contained in the letter of 30 December 1999. Accordingly, please be advised that those directions are now withdrawn.

You will be able to continue your work on the self righting life raft without infringing any right of Apricon Pty Ltd as proprietor of the US patent.

You may wish to consult with your lawyers on the contents of this letter. For their information, as well as for your own, you will find enclosed a copy of the orders made by the Federal Court of Australia a copy of the reasons for judgment of the Court for making the orders and a copy of both the Amended Application and the Amended Statement of Claim which describe the nature of the claims that Mr Wiggins and his companies make against Apricon Pty Ltd and myself.

Yours faithfully

Adrian Gordon

(for and on behalf of Apricon Pty Ltd)"

So that the effect of this letter is not undermined I also propose to continue the injunction that I granted on 17 January 2000 until the trial of the action.

61 In addition, there will be orders made in accordance with the minutes submitted by the applicants as to the addition of parties, the amendment of the application and the delivery of an amended statement of claim. There is also a need for further directions to bring the case ready for trial. The applicants should bring in minutes of orders dealing with these matters.

I certify that the preceding sixty-one (61) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein .

Associate:

Dated: 8 February 2000

Counsel for the Applicant:	Mrs S Crennan QC Mr T McLean Mr M Flynn
Solicitor for the Applicant:	Corrs Chambers Westgarth
Counsel for the Respondent:	Mr J Hammond QC Mr G Parncutt
Solicitor for the Respondent:	Wighton & McDonald
Date of Hearing:	4 and 7 February 2000
Date of Judgment:	8 February 2000