Tramanco Pty Ltd (ACN 010 101 872) v BPW Transpec Pty Ltd (ACN 006 645 272) [2009] FCA 1605 (24 December 2009)

Last Updated: 2 March 2010

FEDERAL COURT OF AUSTRALIA

Tramanco Pty Ltd (ACN 010 101 872) v BPW Transpec Pty Ltd

(ACN 006 645 272) [2009] FCA 1605

PRACTICE AND PROCEDURE – consideration of an urgent application for leave to serve a notice of motion seeking orders for non-party discovery, out of the jurisdiction and upon a corporation incorporated in the Republic of Germany

Federal Court Rules, Order 8

TRAMANCO PTY LTD (ACN 010 101 872) v BPW TRANSPEC PTY LTD
(ACN 006 645 272)
QUD 114 of 2009

GREENWOOD J
24 DECEMBER 2009
BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION	QUD 114 of 2009

BETWEEN:	TRAMANCO PTY LTD (ACN 010 101 872) Applicant
AND:	BPW TRANSPEC PTY LTD (ACN 006 645 272) Respondent
AND BETWEEN:	BPW TRANSPEC PTY LTD (ACN 006 645 272) Cross-Claimant
	TRAMANCO PTY LTD (ACN 010 101 872) Cross-Respondent

JUDGE:	GREENWOOD J
DATE OF ORDER:	24 DECEMBER 2009
WHERE MADE:	BRISBANE

THE COURT ORDERS THAT:

1. Orders be made in terms of the draft orders formulated by the applicant.
2. Costs of the application are reserved.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION	QUD 114 of 2009

BETWEEN:	TRAMANCO PTY LTD (ACN 010 101 872) Applicant
AND:	BPW TRANSPEC PTY LTD (ACN 006 645 272) Respondent
AND BETWEEN:	BPW TRANSPEC PTY LTD (ACN 006 645 272) Cross-Claimant
	TRAMANCO PTY LTD (ACN 010 101 872) Cross-Respondent

JUDGE:	GREENWOOD J
DATE:	24 DECEMBER 2009
PLACE:	BRISBANE

EX TEMPORE REASONS FOR JUDGMENT

1. This is an application for non-party discovery against a foreign corporation established in the Republic of Germany. It is thus outside the jurisdiction of this court. The application for orders directed to that corporation for non-party discovery under Order 15A, rule 8, is made in the context of proceedings commenced against an Australian incorporated respondent described as BPW Transpec Pty Ltd. The statement of claim in the proceeding describes the respondent as the Australian wholly owned subsidiary of a German company described as BPW Bergische Achsen KG, which is described in the pleading as the respondent’s parent company. The respondent is a wholly owned subsidiary of that company for all practical purposes.
2. The respondent’s parent company is a trailer axle manufacturer that also makes electronic logging systems for trailers, according to para 1(d) of the statement of claim. The pleading asserts that the respondent, as the subsidiary of the respondent’s parent company, conducts business throughout Australia with offices in various states including Victoria and New South Wales, Queensland and Western Australia and is engaged in the marketing, sale and distribution of the respondent parent company’s products (para 1(e)). The pleading and supporting affidavits assert that the applicant “has carried on the business of the manufacture, promotion and sale of a method for logging the performance of a vehicle suspension system (particularly that of a trailer that is to be towed behind a prime mover or other truck) and which is to be marketed principally (but not exclusively) to the trucking industry” (para 1(b)).
3. The applicant is the patentee of Australian patent number 2004264997 for a “method for logging the performance of a vehicle suspension system”. The patent has a priority date of 19 August 2003. The inventors described in the patent are Mr Roger Philip Sack and Mr Peter James Doust. By para 4 of the statement of claim, the applicant contends that from a date unknown to it but which is, at the latest, 6 May 2009, the respondent has imported into Australia or made, sold or otherwise disposed of, offered to make, sell or otherwise dispose of, or kept for the purpose of doing any of those things, an electronic braking system made by the respondent’s parent company. That system is described as the “respondent’s EBS”. That system is said to incorporate a “vehicle suspension system logging method in a computer program (“the infringing method”) and associated hardware and devices (“the infringing device”) that is marketed by the Respondent to the Australian trucking industry” (para 4(b), statement of claim).
4. The particulars of that contention are said to be that the respondent advertised in an article in a particular magazine, its intention to offer for sale and sell the respondent’s EBS containing the infringing system and infringing device. Further particulars are given which are not necessary to repeat here (see particulars (b), (c), (d) and (e) of para 4(b) of the statement of claim). Claim 1 of the patent frames the monopoly as “a method for logging the performance of a vehicle suspension system including the steps of measuring the dynamic effect of an impulsive load with an electronic weighing system, wherein the electronic weighing system is mounted on board the vehicle, and determining one or more parameters selected from the group consisting of the dampening ratio of the suspension, the oscillation frequency of the suspension and the impact loading of the vehicle”. Paragraphs 6, 7, 8, 9, 10 and 11 of the statement of claim plead the monopoly recited in claims 12, 19, 20, 21, 22 and 23 of the patent.
5. By para 12 of the pleading, the applicant says that so far as it is presently aware, the infringing method and the infringing device possess each of the integers of claims 1 and/or 12 and/or 19 and/or 21 and/or 22 and/or 23 of the patent. The particulars of the infringing method reflected in the utilisation of the infringing device are said to be these things. The infringing method contains a “road conditions monitoring function” which “it is said by the Respondent in [particular] magazine articles [and a letter to Bennett & Philp], logs the pressure spikes in trailer airbags to give a road roughness count”. The pleading contends that the system as described by the respondent for monitoring road conditions and, as part of that system, “logging the pressure spikes in trailer air bags to give a road roughness count”, must contain particular features. Those features are described at particulars (b), (i) to (xi) to para 12 of the statement of claim. The articulation of these features identified in the particulars are said to give rise to the deductive conclusion that the patent has been infringed.
6. The features are, briefly, said to be these: (i) a method for logging the performance of a vehicle’s suspension system; (ii) within or as part of that method, steps for measuring the dynamic effect of an impulsive load; (iii) a form of electronic system for logging that performance; (iv) that weighing system being mounted on board the vehicle; (v) the program in that system containing means for measuring the damp[en]ing ratio of the suspension or means of extrapolating data from the dampening ratio, the oscillation frequency of the suspension and the impact loading of the vehicle; (vi) a means of so logging the performance of a vehicle over a standard road section at different times to test the performance of an individual axle or group of axles on a trailer or on a prime mover or truck (or other form of vehicle) to an impulsive load; (vii) a program for recording the variation in a mass signal as the vehicle travels along a normal, uneven road at speed; and (viii) some other things which I will not repeat for the purposes of this application.
7. By para 13, it is pleaded that by reason of the matters just mentioned (including some others), the respondent is said to have exploited the invention claimed in claim 1 of the patent and the other dependent claims. Those matters then frame the contentions that are advanced in the principal proceeding. The respondent has put on a pleading by which it defends those contentions and, in the pleading, it denies that it has infringed any of the claims of the applicant’s patent. The defendant also asserts other matters in relation to the nature of claim 1, which it describes as a method claim exhibiting particular features.
8. The present application came before the court, firstly, in some degree of urgency, yesterday, on 23 December 2009, for resolution this morning on 24 December 2009 and secondly, the application is framed by reference to a debate about the utility of access to software contained within the “road condition monitoring system”. The inventor of the patent, Mr Sack, has put on an affidavit in support of the non-party discovery application and in that affidavit he says that he and Mr Doust are the inventors of the subject matter of the patent. Mr Sack says that he has 46 years experience in the road transport equipment industry and during that time he has designed and manufactured air suspension systems for the applicant. He explains his background in terms of selling electronic weighing systems for commercial vehicles and ultimately the set of circumstances that led to the design and manufacture and sale of the applicant’s own electronic weighing systems in the 1980s moving through the chronology to the development of the invention the subject of the patent.
9. Mr Sack acknowledges that he does not personally have particular skill levels in computer programming but Mr Sack observes that Mr Doust does have a very high degree of skill and ability in writing programs and Mr Doust has been working as the technical manager of the applicant’s electronic division for many years. Mr Doust apparently writes, installs and maintains computer programs developed by the applicant. In the course of Mr Sack’s affidavit he says that he has been able to make deductions as to what the program utility of the respondent’s device is likely to comprise and where and in what respects it picks up and utilises particular aspects of the claims of the applicant’s patent. This assertion of fact in the affidavit is consistent with the propositions put in support of the application that the applicant comes at this matter by deductive reasoning on the footing that it says that if the respondent’s contentions as to the functionality of its device are correct (as reflected in advertisements), then the respondent must necessarily utilise the method contained in the patent. That, of course, is a matter for trial and I make no observation whatsoever about it.
10. However, in support of this application it is said that the respondent admits by para 4(b) of its defence that its BPW EBS (electronic braking system) includes a software program that utilises information captured by an air pressure transducer connected to the air bags of a vehicle’s air bag suspension which records changes in air pressure, and so provides “an indication of the overall condition (roughness) of the road over which the vehicle to which the BPW EBS has been fitted, has travelled”.
11. Mr Sack notes the denials of infringement of the patent. Mr Sack then goes on to say that the applicant is not going to be able to properly prepare its case for trial, both by being able to properly brief its lawyers and properly brief an expert to obtain a report in this matter, if it is denied access to the program and other materials the subject of the present notice of motion. Mr Sack goes on to say in his affidavit that access to this code is critical, especially in relation to the source code, for those features which facilitate the method which falls, it is said, within the scope of claim 1 of the patent.
12. At para 68 of his affidavit, Mr Sack, says – in response to some exchanges I will mention in a moment between the solicitors for the respondent, Messrs Madgwicks and the solicitors for the applicant, Bennett & Philp – that Madgwicks has said on behalf of the respondent that the source code for the RCM (road conditions monitoring) comprises approximately 5 per cent of the BPW EBS source code. Mr Sack says at para 68(b) that, logically, that will mean that the programming for the source code for the RCM feature is all part of the one programming source code for the EBS feature. He says that the RCM feature (that is to say the road condition monitoring feature) will be but one of the subsets, or “chapters” as he describes it, of the EBS source code.
13. Mr Sack says it would be extraordinarily unusual to have two separate programs that involve having two separate processors on board the vehicle to which the system is fitted. He says that even then both processors would quite likely be controlled by one program in any event. The issue is whether the applicant is entitled to non-party discovery from a non-party that has, in its power, possession or control, a “thing” which would be relevant to the claims in the proceeding, as presently framed, at least by the pleadings. As to that question, some exchanges have taken place between the solicitors for the parties as to who has what in their possession and the best and most efficient method of advancing the litigation and securing access to whatever it may be.
14. As a result of those exchanges the applicant’s solicitors took the view that it would be necessary to seek non-party discovery against the Australian respondent’s parent, and I will mention something more about that in a moment. To that end, as a result of a directions hearing in early December, the applicant’s solicitors provided a draft notice of motion to the solicitors for the respondent and sought advice, or a response, as to whether the solicitors for the subsidiary could obtain instructions from its parent to accept service of the notice of motion, failing which, of course, an application would be necessary for leave to serve the application for non-party discovery out of the jurisdiction in accordance with the Convention arrangements, on the particular corporation in the Republic of Germany.
15. It would, of course, be helpful if the costs of that matter could be avoided but that depends upon whether or not, at least in principle, the German parent company chooses to submit to the jurisdiction which is entirely a matter for it. On 11 December 2009, Bennett & Philp wrote to Madgwicks referring to the draft notice of motion emailed the previous day at 3.45 pm on Thursday, 10 December 2009, and pursued an inquiry as to where things might be in that regard. On 16 December 2009, Madgwicks responded by referring to the letters of 10 December 2009 and 11 December 2009 from the applicant’s solicitors. Madgwicks advised that the draft notice of motion had been forwarded to the German parent and instructions had been sought as to the acceptance of service or otherwise.
16. Madgwicks said that they were awaiting those instructions and noted that an extension of time might be necessary for that purpose. They also said that should any application for leave to serve the notice of motion out of the jurisdiction be brought on, they would require the application to be served on them as the respondent would be seeking to be heard as to whether service out of the jurisdiction should be ordered. That, of course, might have involved an appearance on behalf of the parent but, more importantly, the respondent itself, having an interest in the proceedings, said it would wish to be heard on that question.
17. Messrs Bennett & Philp responded on 17 December 2009 making some observations and noted that Madgwicks were awaiting a response from the German parent of the respondent on that question. On 18 December 2009, Madgwicks responded and referred to the draft notice of motion of 10 December 2009 and advised that it was not instructed to accept service of the notice of motion on behalf of the German parent. The letter nominates in more specificity the correct corporate title of the German entity. The letter also goes on to make these observations:

(1) We hold no instructions on behalf of our client’s parent German company. We are instructed by BPW Transpec Pty Ltd. Furthermore, we advised you in our correspondence of 16 December 2009 that our client wished to seek leave of the court to be heard at the return of your client’s application for leave to serve its notice of motion outside Australia. Whether or not our client is given such leave is a matter for the court.

(2) Our client is a party to the proceedings.

18. Some other observations are made which I will not quote, about that matter. Madgwicks also said:

(3) The respondent does not have in its possession, custody or power, the source code relating to the RCM feature. With respect, it is not entirely clear what source code your client seeks as defined in its draft notice of motion and supplemented by your letter of 11 December 2009. Your letter of 11 December 2009 appears to broaden the ambit of the motion to include the source code relating to both the RCM feature and the EBS.

19. Madgwicks further said:

Our client’s German parent company has possession, custody or power of the source code relating to the RCM feature. However, this source code is meaningless without the source code for the EBS.

20. Madgwicks then said, citing the full corporate title of the German parent, that the German parent does not have possession, custody or power of the EBS source code. Madgwicks said:

The EBS source code is the sole property of Haldex – ...

21. Haldex is another European, although not German, corporation. Having regard to all of those matters, the Australian subsidiary says that there is no utility in making any orders as presently sought. There are a number of grounds for that contention and I will not purport to canvass all of them. Essentially they involve the notion that it is not demonstrated that access to the source code is relevant in all the circumstances. Secondly, the respondent says that it has offered an interim inspection opportunity by which the applicant would be entitled to see screen displays produced by the software which produces reports. These reports would enable the applicant to isolate and identify aspects of functionality of the software and the data gathered from the respondent’s device which assembles that data, having regard to the sensors (and other features) incorporated within the respondent’s device and the software within it.
22. The respondent also says that the applicant has not exhausted all opportunities for discovery in the proceeding and thus it is not appropriate at this moment in the chronology to be seeking non-party discovery from another entity. The respondent also says that there is a serious question as to whether the court has jurisdiction to grant leave to issue a notice of motion for orders for non-party discovery out of the jurisdiction of Australia and upon the respondent’s parent in the Republic of Germany. The respondent says that those orders have no utility ultimately because one could not be confident that the orders could be enforced and in those circumstances it would not be in the public interest to make orders which may suffer from that difficulty. The respondent also says that there are questions of comity involved in all of these considerations.
23. I do not pretend to have canvassed necessarily all of the respondent’s detailed submissions although of course I have read both the respondent’s submissions and the applicant’s submissions and I should point out again that this matter is being dealt with today, 24 December 2009, with some degree of urgency overnight on 23 December 2009. There is a further aspect of the matter in terms of exchanges between the parties. An affidavit has been filed in the proceedings on behalf of the Australian subsidiary by Mr Alfred Unger, who is the managing director of the respondent. In his affidavit, he says a number of things about the respondent and Haldex, and he then addresses the question of the source code. He says that the respondent receives BPW ECO Tronic – EBS units from BPW Germany (that is, the German parent). He says that these units contain object code but not source code.
24. The respondent, he says, does not have possession of or access to source code in relation to the RCM feature or source code in relation to the electronic braking system itself. He says that on or about 17 December 2009, he spoke with a woman called Ms Brigit Sattler of the German parent about the source code for the RCM feature and the EBS. He says that Ms Sattler is employed by the German parent as an export sales administrator. He says that during his discussion with Ms Sattler, she confirmed his understanding that the German parent has access to the source code in relation to the RCM feature but that it does not have possession of or access to the source code for the EBS itself. He says that Ms Sattler also confirmed his understanding that Haldex, which Mr Unger says he now knows to be a Swedish company, has full legal possession and control of the EBS source code and that the German parent has no right to obtain the EBS source code from Haldex.
25. Mr Unger says that he understands that the source code for the RCM feature is useless or meaningless without the source code for the EBS and Ms Sattler further confirmed this during the discussion on 17 December 2009. He says that on that basis, the RCM feature will not assist the applicant in proving its claims in the proceeding. He also says that he has read the affidavit of Mr Sack, sworn 18 December 2009 (which I referred to a moment ago), in these proceedings. He says that he is unaware of Mr Sack’s expertise in computer engineering but he is able to say that based on the information available to him from the German parent as set out above, he does not agree with the conclusions set out in para 68 of Mr Sack’s affidavit. It follows, therefore, it is said, that some of those factual contentions in para 68 are in controversy and there is disagreement between Mr Sack and Mr Unger about those facts and conclusions.
26. As I mentioned previously, Mr Sack at para 68 notes the contention that the source code for the RCM comprises approximately 5 per cent of the EBS software. Mr Sack seeks to respond to Mr Unger’s contentions. Mr Sack says that the programming for the source code for the RCM feature is all part of the one programming source code for the EBS feature and he goes on to say that the RCM feature is a subset of the EBS software. Thus, it is necessary, he says, to have access to what he believes to be the integrated software so that experts can form views about these things (that is, the contended infringement of the various claims of the patent). For present purposes, I am satisfied that access to the software for the RCM feature (and if it be integrated with the EBS, the EBS software) is relevant to the proceeding and the forensic analysis of the controversy in the case warrants the production of that thing.
27. The question that arises relates fundamentally to one of jurisdiction.
28. I should mention that in relation to the matter of whether the time is ripe for a non-party discovery application, there is some force in what is said about those matters. However, I note that there have been exchanges between the parties about this issue of the software. It is therefore a known thing, which is said to be relevant to this case and, by the other side, said to be irrelevant. It is not something that requires discovery to have taken place, first, before the software is identified and isolated, because statements have been made about it and who has possession of what, and in what circumstances. So it seems to me that the application is not itself premature because it is quite focussed and seeks access to a very specific thing.
29. The more particularly difficult issue is the question of the jurisdiction of the court. Of course, the rules of court provide for service out of the jurisdiction of originating proceedings and other proceedings upon a party outside the jurisdiction, and establish a process by which leave is to be obtained for taking that step. In the submissions on behalf of the respondent in the proceeding, which of course are not made on behalf of the German parent, there are submissions addressed to the scope of the orders and the controversy in the cases about the extent to which Order 8 is facilitative of orders related to proceedings of this kind. I think it is sufficient for present purposes to simply say this: there is a question as to whether the scope of the rule in Order 8 facilitates an order for leave to serve an application for non-party discovery out of the jurisdiction upon a foreign corporation. I note that a number of these cases deal, of course, with originating proceedings and in particular, some of them are to do with applications for preliminary discovery before a proceeding is commenced, which, once commenced, raises a justiciable controversy within the scope of Chapter III. This proceeding, of course, has been commenced and the Patents Act 1990 (Cth) vests jurisdiction in respect of infringement proceedings in the Federal Court. The court clearly has jurisdiction in the substantive proceeding and, in this case, the process to be served out of the jurisdiction is not sought to be issued in any way preliminary to the commencement of a proceeding. Nevertheless, there are issues about the scope of Order 8 of the Federal Court Rules. For present purposes, I do not propose to decide and I am not asked to decide either by the applicant or the respondent, that matter. It will require some careful consideration.
30. I am sufficiently satisfied, however, that there is a basis upon which the proceeding (that is, the application for service of an application for non-party discovery, out of the jurisdiction) can be the subject of an application for leave. The final question that arises is whether the application for non-party discovery should be the subject of further orders of this kind. I suggested in the course of the hearing that there may be circumstances which would warrant an order that the application for leave be served upon the German parent by service upon its Australian subsidiary. I made that suggestion because there are a number of features of the litigation which seem to me to anchor within the jurisdiction not only the controversy but the connection of a non-party foreign corporation to the jurisdiction, although, of course, I do not suggest that the foreign parent is submitting to the jurisdiction.
31. The factors that I think are relevant are these. In the correspondence that passed between the parties and in particular I note the letter of 18 December 2009, Madgwicks say they hold no instructions from the German parent. They say that the respondent, being, of course, the Australian subsidiary, does not have in its possession, custody or power the source code relating to the RCM feature. Madgwicks say that the respondent’s German parent company has possession, custody or power of the source code which plainly invites the conclusion that some dialogue has taken place between Madgwicks and either the German parent or, alternatively, the Australian subsidiary communicating the position of the German parent, and it may logically be the latter.
32. Mr Unger’s affidavit deposes to discussions between Mr Unger and the German parent of the respondent. In addition, in the statement of claim, facts are asserted that the respondent has attended various trade fairs and other exhibitions where it is actively promoting the sale of devices made by the parent. It seems to me therefore, that there is merit in making orders that the application for non-party discovery be served upon the foreign corporation by service upon the Australian wholly owned subsidiary of the corporation.
33. In exercising the discretion to make that order, I also note the most recent intervention of the Commonwealth Parliament in the conduct of commercial litigation reflected in the Access to Justice (Civil Litigation Reforms) Amendment Act 2009 (Cth), which commences operation, relevantly, on 1 January 2010. It is, of course, not operational now but it certainly informs the exercise of the discretion because it is a statement of the Parliament’s view about these things. The legislation will effect amendments to the Federal Court of Australia Act and by s 37M, the Parliament has said this:

(1) The overarching purpose of the civil practice and procedure provisions is to facilitate the just resolution of disputes:

(a) according to law; and

(b) as quickly, inexpensively and efficiently as possible.

34. Section 37M(2) provides that without limiting the generality of subsection (1),

the overarching purpose includes the following objectives:

(a) the just determination of all proceedings before the Court;
(b) the efficient use of the judicial and administrative resources available for the purposes of the Court;
(c) the efficient disposal of the Court’s overall caseload;
(d) the disposal of all proceedings in a timely manner;
(e) the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute.

35. The amendments to the Federal Court of Australia Act go on to specify the obligation of parties to comply with the overarching purpose. I mention these things simply because they are background circumstances. They do not go to express statutory provisions empowering jurisdiction but the Parliament has made plain its intention that commercial litigation should be resolved efficiently in accordance with the overarching purpose but, of course, according to law.
36. Having regard to all these observations, it seems to me that the appropriate course is to make an order that the application for non-party discovery be served upon the German parent and effected in the method described in the proposed draft orders, which I invited the applicant to frame yesterday. That would then facilitate the bringing on of the motion in circumstances where the foreign corporation can raise whatever questions, issues and arguments it wishes to make in addition to those which were made on behalf of the Australian respondent.

I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood.

Associate:

Counsel for the Applicant:	K Philp (Solicitor)
Solicitor for the Applicant:	Bennett & Philp
Counsel for the Respondent:	A Crowe SC
Solicitor for the Respondent:	Madgwicks Lawyers
Date of Hearing:	23 December 2009
Date of Judgment:	24 December 2009