INVERNESS MEDICAL SWITZERLAND GMBH V MDS DIAGNOSTICS LIMITED HC AK CIV 2007-404-00748

INVERNESS MEDICAL SWITZERLAND GMBH V MDS DIAGNOSTICS LIMITED HC AK CIV 2007-404- 00748 21 December 2007IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2007-404-00748BETWEEN INVERNESS MEDICAL SWITZERLAND GMBH Plaintiff AND MDS DIAGNOSTICS LIMITED Defendant Hearing: 6 July and 1 August 2007 Appearances: C L Elliott for the plaintiff R J Hooker and L J Douglas for the defendant Judgment: 21 December 2007JUDGMENT OF POTTER J Re Discovery/Inspection/ConfidentialityIn accordance with r 540(4) High Court Rules I direct the Registrar to endorse this judgment with a delivery time of 12 Noon on 21 December 2007.Solicitors: T Oxnevad, P.O. Box 722, Queenstown Vallant Hooker & Partners, P.O. Box 47088, Ponsonby, Auckland Copy to: C L Elliott, P.O. Box 4338, AucklandIntroduction[1] In this proceeding the plaintiff alleges copyright infringement by the defendant. [2] This judgment concerns two interlocutory applications: a) The application of the plaintiff, Inverness Medical Switzerland GmbH ("Inverness") dated 18 May 2007 for: i) Particular and further and better discovery; ii) Confidentiality orders in respect of the documents in Part 3 of the plaintiff's list of documents. (An application relating to interrogatories of Mr Prakash Appanna was not pursued in submissions). b) An application by the defendant MDS Diagnostics Limited ("MDS") dated 18 May 2007 for: i) Further and better discovery; ii) Setting aside the plaintiff's claim to confidentiality in respect of certain documents in Part 3 of the plaintiff's lists of documents. [3] In each case the applications are opposed. Except in relation to the basis for inspection by the defendant of the plaintiff's documents, the parties have not been able to agree a basis upon which to go forward. [4] This judgment will deal first with the plaintiff's application for discovery, second with the defendant's application for discovery and third with confidentiality issues.Recent developments[5] Since the hearing of these applications there have been the following relevant developments: a) Mr Prakash Appanna, the managing director of MDS has been joined as a second defendant by judgment of Allan J dated 1 November 2007, the Judge being satisfied that the presence of Mr Appanna before the Court may be necessary to enable the Court effectually and completely to adjudicate upon and settle all questions involved in the proceeding. b) Inverness filed on 21 November 2007 an amended statement of claim as directed by Allan J. The amended statement of claim incorporates the pleadings in the original statement of claim and further particulars dated 26 July 2007 and includes pleadings and claims against Mr Appanna. c) Inverness has filed the following documents as arranged at the hearing of the interlocutory applications: i) Memorandum dated 2 August 2007, filed 3 August 2007, enclosing confidential documents for inspection by the Court; ii) Memorandum dated and filed 9 August 2007 enclosing draft affidavits of Qingning Xiang and Yang Ying on the basis that they had been approved by the deponents but had yet to be executed. The affidavit of Qingning Xiang dated 28 August 2007 was filed on 10 September 2007. It appears that a sworn affidavit by Yang Ying has not yet been filed. Inverness has filed:d) A memorandum dated and filed 14 August 2007 as to the place/location of manufacture of MDS's midstream product and the situation regarding execution of Yang Ying's affidavit. e) Memorandum dated 19 September 2007 attaching updating correspondence regarding the place/location of manufacture of MDS's midstream product.PleadingsPlaintiff[6] In its statement of claim dated 15 February 2007 (the pleading current at the time of hearing), Inverness claims to be the owner of copyright in certain drawings relating to pregnancy testing devices. It alleges that MDS imported into New Zealand devices that were copied, or substantially copied from the plaintiff's copyright works when it knew, or ought to have known, of the existence of the plaintiff's copyright. [7] Inverness pleads that:• Its pregnancy test kits are sold under the brand names ClearBlue, Clearview, CrystalClear and Clearplan.• Inverness and MDS are direct competitors in New Zealand and Australia in the pregnancy testing products market.• The products imported by MDS into New Zealand which breach its copyright include: a) MDS QuickCard® One-step Pregnancy Test; b) MDS QuickStream® hCG pregnancy test kit.(collectively called "the products")• Those products are manufactured by Phamatech Inc. in California, United States of America.• On or about 7 September 2001 Acon Biotech of Hangzhou, China ("Acon") designed a range of pregnancy testing devices which were then manufactured for two customers Perrigo and CVS by ACONlabs P S in California.• In the design of those products sketches, drawings and prototypes were created ("the copyright works"). They were made by Yang Ying an employee of Acon. Her work vests in Acon under Article 16(2) of the Copyright Act 2001 of the Peoples Republic of China.• Acon assigned its intellectual property rights including the copyright works to Inverness by an Acquisition Agreement dated 24 February 2006. [8] In further particulars dates 26 July 2007 Icon also claims copyright in a range of card type testing devices (which it includes in the definition of "copyright works" in the statement of claim) by Ian Richards an employee of Unilever PLC in or about April 1987. The plaintiff claims that the copyright for these products vested in Unilever PLC under the Copyright Designs and Patents Act 1988 (UK) and were assigned to the parent company of Inverness by an Acquisition Agreement dated 20 December 2001. [9] Inverness further pleads that the defendant's infringing activities have and are causing damage to Inverness. The plaintiff alleges that the defendant has been dumping stock withdrawn from the Australian market at reduced prices since about November 2006. [10] Inverness seeks relief by way of an injunction against MDS from importing, distributing, selling, offering for sale and marketing its products or any pregnancy test kits copied or substantially copied from the copyright works. It also claimsdamages or an account of profits, and additional damages, claiming flagrancy of the infringement.Defendant[11] By its statement of defence MDS admits that it and Inverness are direct competitors in New Zealand and Australia in the pregnancy testing products market and admits that it imports into New Zealand the QuickCard and QuickStream products. [12] It says those products are: a) Imported under licences held with Phamatech; b) Protected by copyright; c) Not in all material respects the same as the pregnancy testing products manufactured by and exported to New Zealand by Inverness. [13] It admits that Phamatech is the manufacturer of the products. [14] It denies that it knew or ought to have known of Acon's copyright and the copyright works and denies it deliberately or flagrantly imported and dealt in products copied or substantially copied from the copyright works. [15] The defendant has filed no pleading in response to the plaintiff's further particulars or the amended statement of claim.Principles : Discovery[16] The interlocutory applications are brought under the relevant rules in the High Court Rules relating to Discovery. McGechan on Procedure says at 293.02:One of the primary aims of the various processes of discovery is to ensure that the parties are not taken by surprise if the proceeding ultimately goes totrial; each party should be able to assess the strengths and weaknesses of the other's case at a relatively early stage. Discovery procedures are aspects of the rules intended to prevent parties keeping their cards close to their chest. As Barker J said in Green v CIR[1991] 3 NZLR 8; (1989) 3 PRNZ 622, at p 11; p 625: the whole thrust of rule changes has been to require parties to civil litigation to put as many cards on the table as possible. The adversarial approach has been eroded considerably by many of the new High Court Rules adopted in 1986.[17] McGechan comments:Unless there is a change in an opposing party's position, a litigant ought not to be taken by surprise at trial.Plaintiff's application for further and better discovery[18] Inverness seeks further discovery in eleven categories:1. All correspondence between Phamatech appointing the defendant as the Exclusive Licensee or Distributor of the Phamatech products in New Zealand and between the defendant and Phamatech accepting or relating to the appointment. 2. All correspondence between the defendant and Medsafe, New Zealand relating to the obtaining of registration of the products for sale and distribution purposes, including analytical data, clinical data, and packaging details. 3. All correspondence or related documents concerning the importation of the defendant's Products under licences held by or with Phamatech. 4. All correspondence relating to the registration of the QuickCard and QuickStream products published in the New Zealand Gazette prior to the sale of each product. 5. All sales records, invoices, order forms, stock inventories, importation documents and records generated by the defendant and/or by Phamatech for the defendant's QuickCard and QuickStream Products sold and purchased. 6. Extracts of documents from the Phamatech website and the QuickCard and QuickStream Products offered for sale in New Zealand. 7. All correspondence relating to and registration certificates of:(a) QUICK STREAM, in relation to diagnostic testing devices in class 10 (application number 743469); and (b) QUICK CARD, in relation to diagnostic testing devices in class 10 (application number 743468). 8. All design and other drawings of the packaging and/or insert leaflet instructions on each of the QuickCard and QuickStream Products. 9. All design and other drawings made by Phamatech or its agents or associates and supplied to the defendant. 10. All documents, including but not limited to photographs, relating to or evidencing samples or prototypes of the QuickCard and QuickStream Products. 11. All documents relating to the importation or offering for sale of the QuickCard and QuickStream Products by the defendant in New Zealand, including but not limited to advertising, marketing, sales meetings and website development.[19] The defendant's notice of opposition states that the categories of documents in paragraphs 1-7 and 11 do not relate to matters in question in the plaintiff's claim as pleaded in the statement of claim dated 15 February 2007 and that the categories of documents in paragraphs 8, 9 and 10 are not in the power, possession or control of MDS. [20] In response to an order for discovery made by this Court on 23 February 2007 the defendant filed an affidavit of documents by Mr Appanna dated 5 April 2007. The plaintiff says that apart from documents already exchanged through correspondence between the parties and the pleadings only two documents have been included in the defendant's list of documents. They are described as "copy information relating to MDS QuickCard and MDS QuickStream". These documents are headed "test instructions" and "home test instructions" and appear to be for the information of users of the defendant's products. [21] In response to a request by counsel for Inverness to review the list of documents to ensure compliance with its discovery obligations, MDS through Vallant Hooker & Partners advised that it does not have documentation relating to the creation of the QuickStream and QuickCard products which would be with Phamatech, MDS being merely the New Zealand distributor of the products. The letter further states that documentation regarding importation of the products is notrelevant to the plaintiff's claim as pleaded. The solicitors stated that having completed their review they considered there were no further documents to be discovered. [22] Inverness submitted that it is inconceivable that virtually no documents exist in relation to the approval process, purchase, importation and commercial sale of the defendant's products. While the plaintiff certainly requires the drawings, that is only one aspect and there are many other relevant commercial documents which should be disclosed, including for example, documentation concerning the registration procedures with Medsafe where MDS is identified as "the sponsor" by Phamatech, the manufacturer. The precise role of MDS in relation to the products is relevant. In the plaintiff's submission the indications are that the role of MDS is more than that of importer. [23] It was submitted that given the commercial and legal importance of the matter there is no reason why MDS should not discover these types of documents or provide a clear explanation as to why such documents do not exist. It was submitted that because the deficiencies in this case are glaring the Court must look behind the affidavit of Mr Appanna because clearly the defendant has misconceived its discovery obligations: Carter Holt Holdings Ltd v Fletcher Holdings Ltd [1981] 2 NZLR 613. [24] It was further submitted that while Mr Appanna has stated in answer to interrogatories that neither MDS or its solicitors have had in their possession any drawings relating to the proceeding, that is difficult to believe because on the basis of the two documents which have been produced, it appears clear that the drawings have been incorporated into the instructions for clients. The plaintiff says that real concerns arise as to just what products the defendant is bringing into New Zealand. [25] The plaintiff also referred to discovery in "parallel Australian proceedings" and submitted it was clear the documents must exist but had not been discovered in these proceedings, for example any distribution agreement.[26] In an affidavit of Qinging Xiang for the plaintiff, he states that while he accepts there would be some differences, he would have expected much more similarity between the discovery lists provided by Inverness and MDS because the two companies are essentially selling competing products which have been designed, made and imported into New Zealand. He says that no real indication has been given in any of the correspondence or affidavits of the defendant as to what steps MDS took to undertake discovery properly or what steps were taken to verify that it is complete. He contrasts the relevant discovery provided by the plaintiff in its list of documents and supplementary list of documents with the very limited discovery by the defendant. It was submitted that this highlights the patent deficiency of the defendant's discovery. [27] Mr Hooker for MDS, identified two issues: relevancy and possession power and control. On the issue of relevancy Mr Hooker introduced his oral submissions by noting that MDS admits it imports the products into New Zealand under licence from Phamatech in the United States of America. He further noted that it is not the plaintiff's case on the basis of the pleadings that MDS copied the drawings in which Inverness claims copyright. He submitted on the basis of Holdfast NZ Limited v Henkel KGaA [2007] 1 NZLR 336 that the drawings of the products are of no significance or relevance. [28] Mr Hooker referred to the following extract from the judgment of the Court of Appeal in Holdfast at [60] and [61]:Thus, it is the copyright artistic work, and not the physical form derived from that work, that is compared to the infringing article, even where the defendant copied from the physical form and not the drawings (that, the original source). That is why infringement of copyright can occur where the infringing copy was made from an indirect source, in this case packaging and any drawing that preceded it. However, proof of infringement of copyright must be established by comparison of the allegedly infringing copy and the original source (the Cipidue drawings).[29] Mr Hooker submitted that therefore the comparison to be made is between the products and the works (sketches, drawings and prototypes) in which Inverness claims copyright.[30] Mr Elliott for Inverness accepted that Mr Hooker's submission was correct as far as it went, namely that on the authority of Holdfast the drawings for the products may not be relevant to infringement of copyright alleged by Inverness. But he submitted that in this case where MDS has expressly denied (at paragraph 20(iii) of the statement of defence) that the products are copied or substantially copied from the plaintiff's copyright works then the defendant assumes an onus and must discover the drawings, designs and other items to inform its denial. He submitted that the plaintiff should not be placed in a position where it is faced at trial with "surprise" documentation which is fundamental to the case. He said Inverness is entitled to know the case it faces. [31] Mr Elliott referred to paragraph 14 of Mr Appanna's affidavit affirmed 28 May 2007 in which he states:I understand that witnesses may be called at the hearing and the drawings may be in their control.[32] In support of his contention that Inverness is entitled to know the case it faces, he submitted that if such drawings exist, they must be disclosed. [33] If, Mr Elliott said, the relevant drawings, designs and documentation when discovered show that the products have not been copied or substantially copied from the plaintiff's copyright works, then the plaintiff will have the opportunity to reconsider its position and if appropriate withdraw the proceeding. At this stage, the plaintiff simply seeks proper discovery which ultimately will enable a fair trial if the matter proceeds to trial. [34] Mr Hooker agreed that Mr Elliott's stance would be valid if MDS had pleaded a positive defence, for example, that MDS imported, sold and marketed the products under a specific patent or pursuant to drawings or design, the copyright of which was owned by a party other than Inverness. He maintained, however, that the defendant's denial that it copied or substantially copied the plaintiff's copyright works is no more than a denial and it is up to the defendant how it defends the plaintiff's claim.[35] I do not accept the defendant's submissions on this aspect. The statement of defence does not limit the defence case to MDS being a mere importer and/or distributor of the products. It actively pleads that the products are not copied or substantially copied. That puts the issue clearly in question in the proceeding. [36] Inverness accepts that it carries the onus of establishing the copyright it claims in the copyright works (which it was held in Holdfast that Holdfast had failed to do). But Inverness is entitled to have discovery from MDS of any documentation which is relevant to its claim that the defendant has not copied or substantially copied the copyright works. MDS may not make that claim and then stand off, leaving the plaintiff in the dark without a fair opportunity to assess the case it faces. MDS must "put as many cards on the table as possible": Green v CIR. [37] I turn to consider the specific categories of documents listed in Schedule 1 of the plaintiff's application for further and better discovery as set out in [18] above. 1. These documents should be discovered. They are relevant to the nature of the role of MDS in New Zealand in relation to the products and to the critical issue of timing given the defendant's claim that importation of the products into New Zealand preceded the creation of the copyright works. 2. These documents should be discovered. They are relevant to the nature of the role of MDS in New Zealand in relation to the products and to the critical issue of timing given the defendant's claim that importation of the products into New Zealand preceded the creation of the copyright works. 3. This category is broad and non-specific. Further specification would be required in order to assess the relevance of the documentation sought. To the extent that such documentation is relevant to the role of MDS in relation to the importation of the products and the timing of importation, it is likely to be relevant. I consider counsel should be able to reach an agreed position on this category.4. These documents should be discovered. They are relevant to the nature of the role of MDS in New Zealand in relation to the products and to the critical issue of timing given the defendant's claim that importation of the products into New Zealand preceded the creation of the copyright works. 5. At paragraph 12 of his submissions filed on 5 July 2007, Mr Hooker states that the records have been made available by Mr Appanna and can be inspected if they are kept confidential. I would expect the parties to be able to agree a basis for inspection of these documents by an independent expert subject to appropriate undertakings in the usual form as adopted in relation to the defendant's inspection of the plaintiff's confidential documents. I see no need for a Court appointed accountant. 6. Documentation on the Phamatech website should be available to the plaintiff and the basis for this category is therefore unclear. If the issue is that documents are referred to on the website but the document itself is not available from the website, then to the extent that the documents are already in the public domain either directly or indirectly, there should be no difficulty in the plaintiff either accessing them directly or through the defendant. 7. These documents should be discovered. They are relevant to the nature of the role of MDS in New Zealand in relation to the products and to the critical issue of timing given the defendant's claim that importation of the products into New Zealand preceded the creation of the copyright works. 8. To the extent this documentation has not already been disclosed it should be disclosed. While the packaging or instructions themselves are not in issue the extent to which they may rely on drawings, designs and prototypes is.9. The design and other drawings should be discovered for the reasons set out in [27] to [30] above. Any such design and other drawings are at the heart of this proceeding. The essential point taken by the defendant is that such documents if they exist, are not in the possession of the defendant and would be in the possession of the manufacturer, Phamatech. Mr Appanna states in his affidavit affirmed 28 May 2007 that MDS does not have in its power or possession copies of such designs or drawings. The point is also made that the request is very general and the only design and other drawings that can be relevant to this case are those that relate to the products in issue. I agree that this category must be read in the context of this proceeding and the design and other drawings referred to are limited to those which relate to the products in issue. But it is not, in my view, acceptable for the defendant to state in relation to this category (and categories 8 and 10) that if such documentation exists it would be with the manufacturer Phamatech, then to distance itself from Phamatech and simply claim that the documents are not in its power possession or control. The defendant says it is the licensee from Phamatech in relation to the distribution of the products in New Zealand. The precise nature of that relationship is likely to become more transparent when relevant documentation is disclosed. However, there is undoubtedly a commercial relationship that has been in place for a number of years. In those circumstances the defendant must make all reasonable inquiries and efforts to obtain from Phamatech the relevant documentation and to discover it to the plaintiff. In this context the plaintiff referred to Palmdale Insurance Limited (In liquidation) v L Grollo & Co Pty Ltd [1987] VR 113, a judgment of the Supreme Court of Victoria in which it was held that the Court had power when dealing with a commercial cause to direct a party to take steps to obtain access to and discover documents which that party haslodged with a public authority where there is a real likelihood that it would be given access to the documents upon request. I acknowledge the distinction drawn by Mr Hooker in oral submissions, that the entities to which the defendant in that case was required to take steps to obtain the documentation were State and Federal Taxation Authorities, whereas here Phamatech is a private company and its relationship with the defendant is purely contractual. However, I do not consider that detracts from the general point of principle that in a commercial cause where there is a relationship pursuant to which the defendant may reasonably be expected to gain access to relevant documents, then the defendant should take all reasonable steps to obtain that documentation and to make discovery. Fairness and openness in the discovery process demands as much. While Mr Appanna in his affidavit of documents sworn 5 April 2007 states that he is aware of the defendant's obligations under the discovery order and understands those obligations, he makes scant reference to the steps he has taken to fulfil those obligations. He simply says:I have diligently searched for all the documents required to be discovered under the order.He gives no details of the attempts he has made to obtain the documents, nor whether he has sought permission or co-operation from Phamatech to assist in fulfilling his discovery obligations. I consider he is required to take all reasonable steps to obtain the relevant documentation. If and only if, he is unable notwithstanding all reasonable efforts, to obtain the relevant documentation then he, or another person who has taken steps on his behalf or on behalf of the defendant, must file an affidavit detailing the attempts that have been made and the reasons why the documentation is not able to be discovered.10. These items should be disclosed, for the same reasons that the design and other drawings are required to be disclosed. 11. Documentation in this category may be included in previous categories or is publicly available. The documentation sought in this category is insufficiently specified. Further specification would need to focus on the relevance of the documentation sought to the issues in the case. [38] Thus the plaintiff's application is granted in terms of paragraphs 1, 2 and 3 of the application for further and better discovery dated 18 May 2007 in relation to categories 1, 2, 4, 5 (subject to confidentiality arrangements), 7, 8, 9 and 10 of Schedule 1 to the application. However, for the 14 days time period specified in the application there shall be substituted the requirement that the defendant comply with the orders by Friday 25 January 2008. [39] The defendant is also required to file by 25 January 2008 an affidavit clarifying the place/location of manufacture of the defendant's midstream product by Phamatech (refer memorandum of counsel for the plaintiff to the Court dated 19 September 2007 and paragraph 9 statement of defence).Defendant's application for further and better discovery[40] By application dated 18 May 2007 the defendant seeks discovery of specific documents listed at B(a)-(l) in the application:(a) The electronic Meta data referred to in the e-mail of Friday, September 7, 2001. (b) The photo which is described and referred to in the e-mail of Wednesday, October 10, 2001. (c) The other designs which are referred to in the e-mail of Wednesday, October 10, 2001. (d) All contractual arrangements between the plaintiff and Perrigo and instructions to and from the plaintiff and Aconlabs relating to the Perrigo project as referred to in the e-mail of December 18, 2001and the approval of the design by Perrigo on 10 October 2001 and in the e-mail of December 20, 2001. (e) The contractual documentation between Yang Ying and AconBio- Tech (Hangzhou) Co Ltd. (f) The instructions given to Yang Ying to design the pregnancy test stick. (g) The electronic Meta data files and the files which are referred to in the e-mail of May 29, 2003. (h) The photos which are referred to in the e-mail of June 2, 2003. (i) All electronic data passing between the plaintiff, Perrigo and/or CVS relating to the manufacture and/or purchase of the products in relation to which the plaintiff claims the defendant has infringed its copyright. (j) The sales order sheets of the plaintiff for the periods 2001, 2002 and between 2004 to date. (k) Documentation relating to the assignment or the transfer of rights from Acon to the plaintiff, including the transfer agreement dated 24 February 2006. (l) Computer of Ying Yang (as referred to at Part 5 of the plaintiff's List of Documents) or a verified clone of the computer.[41] The plaintiff has filed two lists of documents dated respectively 23 March 2007 and 19 April 2007. The plaintiff acknowledges difficulties in tracking down certain documents and in having the affidavits of Qingning Xiang properly sworn arising in part because of the different legal systems involved and the need for translation of many of the documents. [42] In submissions, counsel for the plaintiff summarised the chain of title and relevant employer in relation to the copyright works:• The copyright works in the midstream device were created by the company AconBio-Tech (Hangzhou) Co Ltd ("Acon").• Acon employed Yang Ying and other people involved in the design process.• Copyright in the copyright works was then transferred to Abon Biological Pharmaceutical Co Limited ("Abon") which comprised the manufacturing business of Acon.• The manufacturing division of Abon was then purchased on 24 February 2006 by Inverness. [43] Acon and Abon are distinct and different businesses. [44] In his affidavit dated 24 May 2007 Mr Xiang refers to the documents the subject of the defendant's application (being B(a)-(l) of the application) and says:I have again checked and confirm that to the best of my knowledge and belief no further documents, as listed in this application, exist other than those that have already been discovered.The plaintiff submits that when Mr Xiang says that he has searched and no further documents exist, the clear implication is that he is referring to the business acquired by Inverness, namely the Abon business which was formerly the manufacturing division of Acon and which in terms of the chain of title now owns the copyright in the copyright works. [45] In his affidavit dated 24 May 2007 at paragraph 28, and subsequently in the affidavit dated 28 August 2007 Mr Xiang has provided extensive information about his experience, qualifications and background, including his role as in-house patent counsel with Abon. The affidavit of 28 August 2007 was filed, first in draft form with a memorandum of counsel dated 9 August 2007, to meet concerns expressed by Mr Hooker on this aspect, as agreed by Mr Elliott at the hearing. [46] The specific items of which discovery is sought by the defendant in items (a)-(l) have been traversed in Mr Xiang's affidavits of 24 May 2007, 4 July 2007, and in his affidavit dated 28 August 2007 he provides further detailed information about the discovery process and the detailed steps he has taken in order to fulfil his discovery obligations.[47] With two qualifications which I mention below, I consider the affidavits of Mr Xiang evidence that the plaintiff has properly understood and responsibly carried out what is required in relation to its discovery obligations. A high standard of compliance is required and the plaintiff has accepted this. There are no evident circumstances or lacunae that would require the Court to go behind Mr Xiang's statements on oath regarding the inquiries he has made and the outcome of his efforts to meet the plaintiff's discovery obligations. [48] The first qualification is in relation to (k), transfer of rights. At the hearing Mr Elliott undertook to provide the Acquisition Agreement. By memorandum dated 9 August 2007 counsel advised that the Acquisition Agreement is publicly available and accessible on a website of which details were provided. He offered to provide a hard copy of the agreement if required. I assume that if counsel for the defendant required a hard copy a request has been made directly to counsel for the plaintiff. [49] Secondly, in relation to (i) and (l), counsel for the plaintiff filed with his memorandum of 9 August 2007 a draft affidavit of Yang Ying. It appears that affidavit has yet to be filed, duly sworn or affirmed, to provide direct evidence as to matters which are presently the subject of hearsay assertion, in response to these items. [50] Subject to those two qualifications, the defendant's application for further and better discovery is declined.Confidentiality issues[51] The process of inspection by the defendant of the plaintiff's documents in the list of documents dated 23 March 2007 and supplementary list dated 19 April 2007, is very much "work in progress", and the orders respectively sought by the parties in their applications have been largely overtaken by events. [52] Following an indication by me at the hearing on 6 July 2007 of the Court's likely approach to the requirement of the plaintiff for inspection of documents in Part 3 of the lists of documents to proceed on a counsel only basis, with undertakings instandard form being provided, inspection has proceeded on that basis. However, some difficulties have remained. [53] At the hearing on 1 August 2007 Mr Elliott provided a helpful schedule of confidential documents with plaintiff's comments. He analysed the confidential documents in three categories and identified those that should be treated as open. [54] In respect of a number of the items in the schedule, the plaintiff said it would conduct further inquiry to ascertain whether the product was released to the market in which case the claim to confidentiality would not remain appropriate. By way of example I refer to items 52-56. I assume these inquiries have been made and the results conveyed to counsel for the defendant. [55] This was part of a process to clarify which documents should properly remain in category 3 and which should be included in category 1, rather than category 3. This is an extension of the inquiry raised by the defendant's initial complaint that some documents in category 1 were also included in category 3 which obviously required clarification of the status of the documents in question. [56] As to document 49, it was noted that the balance of the document in the Chinese language would need to be translated. He undertook to further investigate the matter and arrange a further report from Mr Xiang. This is referred to in Mr Xiang's affidavit dated 28 August 2007 at paragraph 13. He explains that the contract is comprised in three pages, not only the two of which the defendant had obtained an English translation. He explains the general nature of the document being a general contract between Aconbio and a manufacturer Xing Feng Plastic Co Limited. He says that it contains highly confidential information including trade secrets and "know how" in existence between those two parties and which has subsequently developed and now exists between Abon and Xing Feng. [57] Pursuant to r 307 of the High Court Rules I inspected certain documents made available by counsel for the plaintiff for the purpose of deciding the validity of the plaintiff's claim to confidentiality in relation to these documents.[58] I inspected the following documents which are listed in Part 3 of the plaintiff's list of documents:100-1 (notebook 070-FHC-103 for strip developing) 100-2 (notebook 053-FHC-103 for Wide wick variation study) 100-4 (notebook 089-FHC-103 for Perrigo variation study)[59] These documents are trial notebooks relating to research and development in relation to the plaintiff's products developed by its predecessors in title. They are not relevant to the issue of the claimed copyright of the plaintiff in the copyright works, except to the limited extent that the dates upon which research and development on the products was conducted may be relevant to the issue of timing which is critical in this case. The fact of the dates upon which the trials were recorded should be open to the defendant (and I do not understand the plaintiff to dispute this – refer Mr Elliott's e-mail to Ms Douglas on Friday 27 July 2007 annexed to the schedule of confidential documents provided to the Court on 1 August 2007), but the documents are otherwise properly categorised as confidential. [60] Subsequent to the hearing under cover of memorandum dated 2 August 2007 counsel for the plaintiff provided to the Court further documents in respect of which confidentiality is claimed by the plaintiff, for inspection under r 307. They were:(a) Documents 63 and 64 being examples of packaging in its formative design stages. (b) Documents 90 to 94 being examples of experiments, studies and tests.[61] I have inspected those documents. Documents 90 to 94 are examples of experiments, studies and tests by AconBio-Tech (Hangzhou) Co Limited during 2002, except for document 91 which is entitled FHC-103 Wide Wick Change Validation Report and is dated 26 October 2001, and document 93 which is entitled Perrigo hCG Midstream Accelerated Stability Report and is dated January 16, 2003. These reports all relate to research and development. I consider they fail to meet the test of relevance for discovery purposes, except perhaps as to dates. I accept the plaintiff's claim that they contain highly confidential information.[62] Documents 63 and 64 are examples of packaging, clearly at the design stage. They represent design variations prior to the packaging being released into the public domain. Again, they are of marginal relevance to the issues in this case, except perhaps as to date, in each case October 2002. [63] I therefore dismiss the defendant's challenge to the plaintiff's claim to confidentiality in respect of all the above mentioned documents, except to the limited extent stated above. [64] For the sake of completeness I confirm the indication given to counsel for the defendant at the hearing, that I consider inspection by the Court of each and every one of the confidential documents is unnecessary and impractical. The analysis provided by Mr Elliott greatly assisted identification of a practical and rational approach. [65] There remains an issue regarding document 8. Test validation results for the pregnancy test kits were included with the drawings. The plaintiff says the inclusion was inadvertent and arose from an oversight on the part of Mr Xiang. Consistent with its approach to all test validation results, the plaintiff maintains that these results are confidential and that the inadvertent inclusion of them in document 8 does not amount to an effective waiver of confidentiality in relation to other test validation results. The defendant relies on the discovery of the test validation results in document 8 to claim a waiver of confidentiality in relation to other documents which include test validation results. [66] I accept the plaintiff's explanation. In the context of this detailed discovery the explanation that the inclusion of the test validation results was inadvertent is entirely credible. The plaintiff's approach to such results has been quite consistent. It would be neither fair nor just to imply a general waiver of confidentiality in relation to test validation results from this single instance of error. [67] There has also been an issue between the parties about the provision of copies of confidential documents. Counsel for the plaintiff has advised that copies of all confidential documents have been supplied to the defendant's solicitors other than asmall category of highly confidential and indirectly relevant documents. At this stage, when Mr Appanna has only recently been joined as a defendant and MDS has yet to answer discovery as ordered in this judgment, it would be premature to order the plaintiff to provide copies of documents it classifies as highly confidential. Hopefully with the assistance of the developments and determinations referred to above, counsel for the parties will be able to resolve any outstanding issues. If not, leave is reserved to apply for determination by the Court of any appropriate issues. [68] Summary of conclusionsa) The plaintiff's application for further and better discovery is granted as set out in [38] to [39]. b) The defendant's application for further and better discovery is declined, except to the extent stated (refer [50]). c) Determinations pursuant to r 307 in relation to specific documents submitted to the Court are set out in [57] to [62]. d) The defendant's challenge to the plaintiff's claim to confidentiality in relation to Part 3 documents is dismissed, except to the extent stated (refer [63]).Leave reserved[69] This judgment covers a wide range of matters concerned with discovery and inspection. The process is ongoing. If I have omitted consideration of any particular issue which remains current, leave is reserved to apply. [70] I consider that with a pragmatic and co-operative approach by counsel for both parties, future issues should be able to be resolved by agreement without requiring the intervention of the Court.Next event[71] This matter will be placed in the Commercial List callover on Friday 29 February 2008 so that timetable directions can be made as may be necessary and any other matters addressed. Counsel should file memoranda addressing matters that will require attention, not later than three working days before the mention date.