THINKING ERGONOMIX PTY LTD v INTEG INTERNATIONAL LTD [2019] NZHC 1687

THINKING ERGONOMIX PTY LTD v INTEG INTERNATIONAL LTD [2019] NZHC 1687 [18 July 2019]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2018-404-001171[2019] NZHC 1687UNDER the Patents Act 2013BETWEEN THINKING ERGONOMIX PTY LIMITEDPlaintiffAND INTEG INTERNATIONAL LIMITEDDefendantHearing: 25 June 2019Appearances: B Henry, H Elcoat and S Singh for PlaintiffC Elliott QC for DefendantJudgment: 18 July 2019JUDGMENT OF ASSOCIATE JUDGE P J ANDREWThis judgment was delivered by Associate Judge Andrewon 18 July 2019 at 4.30 pmpursuant to r 11.5 of the High Court RulesRegistrar / Deputy RegistrarDateIntroduction[1] In the substantive proceeding, the plaintiff, Thinking Ergonomix Pty Ltd(Thinking Ergonomix), sues the defendant, Integ International Ltd (Integ), for patentinfringement and breach of copyright. The product at issue is a monitor arm system,which is used in the design and manufacture of commercial furniture.[2] The particular dispute relates to the design of the post and arm that attaches tothe monitor and holds the computer screen upright. This was described by Integ as an"ubiquitous part of office equipment".[3] In the present, interlocutory proceedings, the following applications have beenmade:(a) Application by the defendant pursuant to r 10.15 for a separate issue tobe determined in the form of a Markman hearing (dated 15 October2018);(b) Application by the plaintiff for removal of the claim of confidentialitypursuant to r 8.25 of the High Court Rules 2016 in the defendant's listof documents (dated 21 December 2018); and(c) Application by the defendant for further particulars or more explicitpleadings pursuant to r 5.21(3) (dated 15 October 2018).[4] It is well established that r 10.15 allows the determination of one or morepreliminary questions. Its purpose is to expedite proceedings by limiting or definingthe scope of the trial in advance or obviating the need for a trial altogether.1[5] A Markman hearing is a preliminary hearing as to claim construction. It is awell-established term of United States patent law and recognised as a way ofstreamlining the patent litigation process and reducing court time and cost for allparties. The name derives from Markman v Westview Instruments Inc2 in which it was1 Innes v Ewing (1986) 4 PRNZ 10 (HC).2 Markman v Westview Instruments Inc 517 US 370 (1996); and see also Britax Childcare Pty Ltdv Infa-Secure Pty Ltd (No 2) [2012] FCA 1018.held that claim construction (that is, interpretation of the integers of the claims) is aquestion of law for the court.3Defendant's application for separate issue to be determined[6] Integ seeks orders as follows:(a) That the question of the construction of certain specified terms in theclaims of New Zealand patent number 585943 (the patent), namelycavity, slot, pawl, rack, gear, collar, urged, within and engagement (thepatent terms) be determined as a preliminary issue separately from thequestion of infringement and validity, if any, of the patent; and(b) Forming the question for decision and, to the extent necessary, astatement of case.[7] The grounds upon which the application is based include the following:(a) The defendant has denied infringement and foreshadowed thelikelihood of bringing patent revocation proceedings;(b) A key issue is how the patent terms in terms of the claims of the patentare construed by the court;(c) Questions relating to the construction of the patent terms are raised bythe wording of the patent, the claim for infringement reflected in thepleadings and any cross-claim for revocation.Relevant legal principles: Preliminary hearing on separate issue[8] Rule 10.15 of the High Court Rules reads:10.15 Orders for decisionThe court may, whether or not the decision will dispose of the proceeding,make orders for—(a) the decision of any question separately from any other question,before, at, or after any trial or further trial in the proceeding; and3 In the United States, patent litigation is tried by judge and jury.(b) the formulation of the question for decision and, if thought necessary,the statement of a case.[9] In Karam v Fairfax New Zealand Ltd, Associate Judge Osborne adopted thefollowing general principles:4(a) The jurisdiction is discretionary;(b) Each case is to be considered on its own facts;(c) There is an assumption that it is usually preferable to determine allmatters in issue at one trial;(d) There is some onus on an applicant to establish a preponderant balanceof factors in favour of the determination of a separate question — theonus has been variously described as "not insignificant", "moderate",and "heavy". An appropriate approach is to consider whether theapplicant has established good, preponderant reasons in favour of aseparate question determination.[10] Associate Judge Osborne further held that the considerations relevant to theexercise of the discretion will vary with the facts of each case.5 Sets of considerations,gathered from the case law, are assembled in McGechan on Procedure6 and in Sim'sCourt Practice.7 In recent years, further examples can be found in the judgments inTurners & Growers Ltd v Zespri Group Ltd8 and Haden v Attorney-General.9[11] Fisher J, in Clear Communications Ltd v Telecom Corp of New Zealand Ltd,commented as follows regarding the risks of the r 10.15 procedure:10Split trials risk a number of difficulties. It is often difficult to define withsufficient precision the demarcation between those issues to be addressed atthe first trial and those left for the second (see, for example, the Arklowlitigation). It is not always easy to see what matters have become the subjectof issues estoppel. It may be necessary to prepare issue estoppel schedules4 Karam v Fairfax New Zealand Ltd [2012] NZHC 1331 at [58].5 At [59].6 McGechan on Procedure (online ed, Thomson Reuters) at [HR10.15.06].7 Sim's Court Practice (online ed, LexisNexis) at [HC10.15.4].8 Turners & Growers Ltd v Zespri Group Ltd HC Auckland CIV-2009-404-4392, 5 May 2010 at[11].9 Haden v Attorney-General HC Wellington CIV-2010-485-2380, 4 November 2011 at [50].10 Clear Communications Ltd v Telecom Corp of New Zealand Ltd (1998) 12 PRNZ 333 (HC) at335.and hear argument as to their scope. A judge may inadvertently disqualifyhimself or herself by expressing views on matters yet to be fully addressed atthe second hearing (Winton). Findings might be inadvertently made withoutthe benefit of evidence and argument envisaged by a party as appropriate onlyfor the second hearing. The second hearing can require the recalling of thesame witnesses with needless extra time and cost to the parties and the public.There is duplication of time spent by counsel and the Court in re-acquaintingthemselves with issues imperfectly remembered from an earlier trial and thetime spent re-traversing those matters in Court. There can be multiple appeals(in extreme cases taking the matter to the Privy Council as in Ryde v Sorenson)before returning to the Court of first instance to embark upon the second phaseof the case. Even without appeals, there can be delay in embarking upon asecond round of discovery and other interlocutory matters and amendedpleadings following the first trial and then the delay of obtaining a fixture forthe second hearing. There can be difficulties in ensuring that the same Judgeis available for the second hearing, bearing in mind the usual commitments,sabbaticals, retirements and deaths which are the unhappy lot of the judiciary.If a different Judge has to preside at the second hearing there can be difficultiesover earlier views as to credibility and the status of the notes of evidence fromthe first hearing. In my view these and other difficulties together place a heavyonus on any party seeking split trials.(emphasis added)[12] I adopt, as a basis for my analysis, the formulated criteria applied by Kós J inHaden v Attorney-General.11Question 1: Will there be difficult demarcation questions between the issues to beaddressed at the first trial and those left for the second?[13] Kós J in Haden v Attorney-General held:12The interaction between issues in split trials is said to be the single mostimportant question for consideration by a court considering a Rule 10.15application. Issues in the two hearings desirably should be discreet.[14] In determining this question, the court must look at:13(a) What is pleaded?(b) What issues arise on the separate question?(c) What issues remain for the second hearing?(d) In each case, what evidence is required to dispose of those issues?11 The same approach was applied by Associate Judge Osborne in Karam v Fairfax New ZealandLtd [2012] NZHC 1331.12 Haden v Attorney-General HC Wellington CIV-2010-485-2380, 4 November 2011 at [50(a)].13 At [50(a)].[15] In Lucas v Peterson Portable Sawing Systems Ltd, Fisher J held that therelevant principles for interpreting a patent specification include:14(a) the interpretation of a patent specification is a question of law for thecourt to determine but expert evidence can be received as to themeaning of technical terms and concepts found within thespecification;(b) the specification had to be construed through the eyes of a skilled butunimaginative addressee; the test was what an addressee skilled in theparticular art in question would understand from the document as awhole;(c) the specification had to be given a purposive construction;(d) the Court had to have regard to the surrounding circumstances as theyexisted at the priority date, and these included matters of commongeneral knowledge at that time [16] It is well established that a patent is construed objectively, through the eyes ofthe skilled addressee.15 That means evidence of the patentee as to what he or sheintended it to mean is not to be admitted, nor any indirect evidence which is said topoint to his or her intention. It is also clear that the surrounding circumstances (thematrix) and common general knowledge do not include circumstances known only tothe patentee or to a limited class of person. That is because every skilled addresseeshould be able to know what the patent means and therefore have equal access tomaterial available for interpretation.16 Furthermore, a claim must not be construedwith an eye on prior material, in order to avoid its effect.17[17] Against that background of general principle, there is considerable force in thesubmission of Mr Elliott, for Integ, that the issue of the construction of the patents(that is, the proposed preliminary issue) is a distinct, stand-alone issue – a question oflaw – that must logically be addressed as the prior question. How the claims areconstrued will have a significant bearing over what the issues actually are. Thesefactors provide support for the submission that the matters at issue here do not giverise to difficult demarcation questions and are eminently suited to the r 10.15procedure. The approach, it is argued, is supported by the Markman-type procedureadopted in the United States which demonstrates the particular benefit of early14 Lucas v Peterson Portable Sawing Systems Ltd [2003] 3 NZLR 361 (HC) at [28].15 See Glaverbel SA v British Coal Corp [1995] RPC 255 (CA).16 At 269.17 Glaverbel SA v British Coal Corp, above n 13, at p 270.determination of construction issues in patent proceedings. It is also said that NewZealand jurisprudence, which recognises that it is fairly "usual" in intellectual propertycases to have split trials, also supports the Markman procedure.18[18] I accept that Integ has sought, responsibly, to try and formulate the particularconstruction issues for preliminary determination. This includes the engaging of anexpert witness, Mr Olson, and attempting to debate and refine the particular questionsof construction by corresponding with the plaintiff. I also accept that while the 2016patent re-examination report would not be binding on the Court, it may providesignificant guidance on some of the terms in dispute. It can thus be seen as a furtherfactor favouring a separate preliminary question.[19] However, one of the difficulties the Court faces is that the plaintiff has notengaged either with the evidence or respond in any meaningful way to the proposalthat the question of construction focus on the specified terms in the patent and, whatare described in the application as the patent terms.[20] I do not accept that the plaintiff has not had the opportunity to file evidence inrelation to the substantive issue that Mr Olson addressed. It has clearly chosen not to.[21] The parties are agreed that there will be a need for some technical evidence tobe filed to address the construction issues. That is no bar to making an order underr 10.15 but the more contentious, complex and lengthy the evidence, the less likely acourt would be to rule that there should be a preliminary hearing.[22] There is also obvious merit to Mr Elliott's submission that the words at issuehere are not, on their face, complex or technical terms, but plain English words. Inthese circumstances there is a need only for some limited expert evidence. It may alsobe the case that a separate pre-trial hearing dealing with issues of construction (that is,questions of law) would be a way to discipline the process and to limit the evidence tothat which truly is of substantial assistance to the Court.1918 See NSK Ltd v General Equipment Co Ltd [2016] NZHC 1424 at [83]–[84]. Mr Elliott also arguedthat the scheme of the Patents Act 2013, and in particular ss 159 and 160 (application fordeclaration of non-infringement and proceeding for declaration of non-infringement), support aMarkman-type approach.19 See Evidence Act 2006, s 25; and see also the observations of Lord Diplock in Catnic ComponentsLtd v Hill & Smith Ltd (1982) 99 RPC 183 (HL) at 243.[23] Mr Elliott disputed the plaintiff's contention that the question of constructioncannot properly be determined without the breadth of the claim being fully tested attrial (against the full background circumstances) and that it is permissible to look atinfringing variants in addressing issues of construction.20 Integ contends that once theterms of the patent have been interpreted, they are construed for all purposes, includinginfringement, invalidity and the like; it is wrong to assert (as the plaintiffs do) that, inthe light of infringement, the terms may be construed differently.[24] Despite the force of Integ's arguments, it is necessary, as the plaintiff contends,to consider the very practical question of whether the issues of construction can, inthis case, truly be separated in a meaningful way from other issues which would needto be resolved at trial. As Associate Judge Osborne observed in Karam v Fairfax,demarcation issues arise frequently in relation to evidence that is relevant both at aseparate question hearing and at trial.21 (Evidence going to liability and that going toquantum is the classic example). In this case, there is the additional complication thatat a relatively early stage of the litigation, where the plaintiff has not engaged and theprecise questions of construction for determination have not yet been formulated (andthe plaintiff's position is not clear), the assessment of demarcation is far fromstraightforward. There is also the obvious point that the r 10.15 procedure works bestwhen the parties cooperate. Here the parties are fierce trade competitors.Question 2: Will the separate proceedings bring the proceedings to an end?[25] The entire proceeding will not be brought to an end if the proposed questionsare answered in favour of Integ. The copyright claim will still need to be determined.Integ contends, however, that if the patent is construed narrowly in the manner forwhich it contends, then there will be no issue of infringement, no need for it tocounterclaim for invalidity and the remaining copyright claim will be of relativelynarrow compass and capable of prompt resolution. Integ also argues that interpretingthe claims of the patent will be informative in determining whether the copyright claimhas any merit.20 See Nobel's Explosives Co v Anderson (1894) 11 RPC 519 (CA) at 523 where it was held "claimconstruction is if the defendant had never been born"; and see also Beloit Technologies Inc vValmet Paper Machinery Inc [1995] RPC 705 (Patents Court).21 Karam v Fairfax New Zealand Ltd [2012] NZHC 1331 at [62].[26] The fact that the separate question, if answered affirmatively, will not bring theproceedings to an end is not determinative.22 However, it is a consideration tendingagainst granting the application. As Kós J held in Haden v Attorney-General, thecourts need to guard against granting a separate question which absorbs the bulk ofthe substantive issues for trial, thus turning an interlocutory application into asubstantive one.23Question 3: What potential time saving does the separate question offer?[27] Mr Elliott accepts that there is some tension between certainty and delay. Hecontends that a preliminary hearing on a separate issue may give rise to some delaybut that the certainty that it will likely give rise to, even if it involves some element ofdelay, will ultimately be of great benefit to the parties in terms of a more efficient andstreamlined process overall. If the defendant is wholly successful in its claimconstruction argument, then the incentives to either discontinue or settle the copyrightclaim will be significant.[28] The parties do not agree on how long a preliminary hearing would take. Thedefendant says two to three days whereas the plaintiff says a preliminary hearingwould require at least a week of hearing (its earlier estimate was two to three weeks).The Court is not well placed in this case to make a credible assessment and theplaintiff's failure to engage is not helpful.[29] It also appears that the quantum claim by the plaintiff is a relatively modestamount. That is not in itself decisive, but it tends to favour a trial that deals with allissues at once. There is virtually always an inevitable degree of duplication in splittrials generally (in particular, counsel needing to come up to speed again).Question 4: How will appeals be dealt with?[30] Mr Elliott responsibly accepted that this factor does not assist his argument.[31] The nature of the issues does lend itself to appeal as of right to the Court ofAppeal and further appeal by leave. This factor tends against granting the application.22 Haden v Attorney-General HC Wellington CIV-2010-485-2380, 4 November 2011 at [50(b)].23 At [50(b)].[32] The plaintiff has indicated that it will appeal in the event that any preliminarytrial issue is decided against it. That may simply be a tactical indication, but I do notethat the parties are intense trade competitors and there are significant matters at stakefor both of them.Question 5: Are there any other practical considerations tending one way or the other?[33] As Associate Judge Osborne noted, this question essentially re-frames the basicquestion in relation to r 10.15: whether the proposed preliminary hearing is likely toexpedite a proceeding, saving inconvenience and expense without any countervailinginjustice.[34] In support of its case, Integ has referred the Court to a number of articles andpapers about the experience of Markman hearings in North America.24 Both counselhave also referred to the Australian Federal Court decision of Britax Childcare Pty Ltdv Infa-Secure Pty Ltd where there was a preliminary hearing of patent constructionissues.25 There were ten patents at issue, and the preliminary hearing lasted 12 days.[35] I do not see this case as one requiring an extensive review or analysis of thesematerials, although I acknowledge that they are helpful in understanding the NorthAmerican approach and do support the arguments for which Mr Elliott contends. Iwould, however, make the important observation that the Canadian Court of Appealdecision of Realsearch Inc v Valon Kone Brunette Ltd concluded, (rejecting aMarkman-style hearing), that the Federal Court Rules Committee might be bettersuited for considering the option of Markman-style hearings in Canada.26 The samemight be said for the New Zealand Rules Committee. The article analysing theRealsearch approach also notes that Markman-style hearings in Canada "have notbeen ruled out completely" and that the Court of Appeal "left the door open to suchproceedings". I would further observe that the Britax case appears to be the only timethat Markman has been adopted in Australia, and I am reluctant to express any24 "Markman Hearing: Everything You Need to Know" UpCounsel <www.upcounsel.com>; VincentKovalick "Markman hearings and their critical role in U.S. patent litigation" (2009) Lexology<www.lexology.com>; David Tait Pre-trial Patent Claims Construction: Adopting Markman-styleHearings in Canada (2004) 21 CIPR 163; and Rebecca Eyre, Joe Cecil and Eric Topor PatentClaim Construction: A Survey of Federal Court Judges (Federal Judicial Centre, February 2008).25 Britax Childcare Pty Ltd v Infa-Secure Pty Ltd [2012] FCA 467.26 Realsearch Inc v Valon Kone Brunette Ltd [2004] 2 FCR 514 (FCA).concluded view as to whether that was ultimately a successful and helpful approach;the matter appears far from clear.27Bringing all the considerations together[36] In balancing all these factors overall, I conclude that the application for aseparate preliminary question should be declined. There may well be advantages tothe Markman-approach in patent litigation generally but, on the facts of this case, thedefendant has failed to establish the threshold of good, preponderant reasons in favourof a separate question determination. There is an assumption in favour of a single trial.In my view, there is too much uncertainty as to whether there will be no realdemarcation issues (should there be a preliminary determination) and whetherultimately inconvenience and expense would be saved. The modest quantum at issuealso tends to favour all issues being dealt with at once. I further find that an issuesconference pursuant to r 7.5 may provide a real opportunity to refine and define theissues in a way which might ultimately benefit both parties and address some of thelegitimate concerns the defendant raises.[37] The jurisprudence contains many warnings about preliminary issue hearingsturning out to be "treacherous shortcuts", particularly in complex cases.28 This casemay not be as complex as the plaintiff claims. Equally, however, I doubt, as thedefendant initially submitted, that the preliminary issue could be dealt with on thepapers. On the facts of this case there are too many variables for the Court to safelyconclude that the defendant has met the requisite threshold.Application by plaintiff for removal of confidentiality[38] The plaintiff seeks orders that:27 Ms Elcoat, for the plaintiff, submitted that as a result of the pre-trial ruling in Britax the expertwitnesses ultimately had to re-figure their evidence (because the Judge adopted a hybrid approachand the parties had not initially prepared on that basis). This is said to have all resulted in extracosts and wasted time.28 Haden v Attorney-General HC Wellington CIV-2010-485-2380, 4 November 2011 at [48]; and seealso the observations of Lord Evershed MR in Windsor Refrigerator Co v Branch Nominees [1961]1 Ch 375 (CA) at 396, where he referred to his own experience as emphasising "the extremeunwisdom – save in very exceptional cases – of adopting this procedure of preliminary issues. Myexperience has taught me that the shortest cut so attempted inevitably turns out to be the longestway round".(a) The documents for which confidentiality is claimed in the affidavit ofMr Bruce Davies (sworn 22 November 2018), the Managing Directorof Integ, are not confidential;(b) Alternatively, the confidential documents can be disclosed to at leastMr Dean Kuch, the plaintiff's instructor, for the purposes of litigationand on appropriate undertakings.[39] The plaintiff described the confidential documents in the following way: theygenerally show various parts of two of the defendant's monitor arm products broughttogether in a so-called "hybrid". The first of these products is the Ar-Ray product, thesubject of this proceeding. The second product is the Apollo product. The confidentialdocuments can be broken into four types:(a) technical drawings created on 9 October 2018 which depict variouselements of the Ar-Ray and Apollo systems combined into one "hybrid"system;29(b) photographs of "hybrid" products labelled Hybrid 5, 6, 7 and 8;30(c) table comparing the Ar-Ray, Apollo and "hybrid" products with theplaintiff's CMe product;31 and(d) three-dimensional renderings of monitor arm products.32[40] In a minute dated 15 February 2019, Associate Judge Smith granted leave tothe plaintiff to file a further affidavit in support of its confidentiality application.Mr Dippie, an engineering and management consultant, was then instructed by theplaintiff and given access to the documents.[41] The plaintiff says that the evidence of Mr Dippie has not assisted it inunderstanding the significance of the confidential documents.29 INT-0600–INT-0608.30 INT-0609.31 INT-0610.32 INT-0611.Relevant legal principles[42] Rule 8.15(2)(f) of the High Court Rules permits the discovering party to statein an affidavit of documents any restrictions proposed to protect the claimedconfidentiality of any document. Rule 8.28(3) provides that a party may limitinspection of confidential documents to the person specified in the affidavit ofdocuments, subject to the restrictions imposed in the affidavit.[43] If a party challenges a claimed confidentiality made in an affidavit ofdocuments, that party may apply to the Court for an order setting aside and modifyingthe claim under r 8.25(1). Under r 8.25(3), the Judge has a discretion to set aside ormodify the claim for confidentiality, dismiss the application or make any other order.[44] The regime in the High Court Rules therefore gives a party swearing anaffidavit of documents the right to assert confidentiality and limit inspection on thatbasis, subject to a successful challenge by the other party that must be brought by wayof a court application under r 8.25.33[45] The Court's power to limit access to confidential documents is well settled andis described in the following manner in The Laws of New Zealand:34(11) Protecting Confidential or Sensitive Documents54. Confidentiality of documents.The power of the court to order particular discovery of documents isdiscretionary. That discretion is often exercised to protect confidential orsensitive information that is not privileged. Examples of documents that arenot privileged but which may be commercially sensitive include documentsshowing the detailed costings of products or services that are provided in acompetitive market, the marketing plans for a proposed new product, or apatent specification during the period before the application has beenaccepted and made available for inspection. The power to limit access to suchdocuments arises from the inherent jurisdiction of the Court to prevent theabuse of its process.(emphasis added)33 Intercity Group (NZ) Ltd v Nakedbus NZ Ltd [2013] NZHC 2261 at [13].34 The Laws of New Zealand (online ed, LexisNexis) Discovery at [54] (footnotes omitted).[46] The leading authority on confidentiality claims arising in the process ofdiscovery and inspection is the Court of Appeal decision in Port Nelson Ltd vCommerce Commission which held:35It is a matter of balancing on the one hand the interests of justice in ensuringthat [the plaintiff] is able to prepare and present its case, and on the other theinterests of [the defendant] in safeguarding its confidential information in acompetitive market. Relevant documents should generally be madeavailable for inspection. The fact that they are regarded as being confidential,and would not be made available were it not for the requirements of thelitigation, is immaterial. An order for non-disclosure can only be made whenthe court is satisfied in terms of r 312 that such an order is "necessary". Itmust be either apparent from the document in question or shown by otherevidence that disclosure would be likely to prejudice the party in somesignificant way. Even the possibility of prejudice may be sufficient, but thatwill depend on the seriousness of the possible prejudice and on thesignificance of the document to the issues in the proceeding, and the extent towhich limited disclosure may enable the concerns of both parties to beaccommodated.Analysis and decision[47] As the House of Lords has noted, discovery constitutes a very serious invasionof the privacy and confidentiality of a litigant's affairs;36 the process should not beallowed to place upon the litigant any harsher or more oppressive burden than isstrictly required for the purposes of securing justice.[48] I reject the plaintiff's contention that there is no valid basis for confidentiality.I find the evidence of Mr Piper, a patent attorney and the defendant's expert, and thesubmissions of Mr Elliott to be persuasive; the documents at issue are not in the publicdomain, are not trivial or nonsensical and are susceptible of sufficiently precisedescription so as to ground injunctive relief. They are, after all, 12 specific documentsdescribed in Schedule C.[49] The critical question in my view is whether adequate safeguards can be put inplace to protect the legitimate confidentiality of the defendant's documents, while stillallowing the other party (here, the plaintiff) to effectively deal with the matter.3735 Port Nelson Ltd v Commerce Commission (1994) 7 PRNZ 344 (CA) at 348.36 Harman v Secretary of State for the Home Department [1983] 1 AC 280 (HL) at 308.37 Warner-Lambert Co v Glaxo Laboratories Ltd [1975] RPC 354 (CA).[50] The plaintiff submits that the defendant's claim for confidentiality lies not inthe detail of the information in the confidential documents themselves but in the merefact that it is possible to combine the Ar-Ray system with the Apollo system. However,I agree with the submission of Mr Elliott that that argument is misconceived. On thebasis of the evidence of Mr Piper and Mr Davies, I find that the claim to confidentialitydoes lie in the detail of the information in the documents themselves; they do in factdisclose considerable technical design information.[51] Mr Davies explains in his affidavit why the particular confidential informationis confidential:A great deal of time, energy, thought and design effort has gone into thedevelopment of this hybrid system, which I believe is unique, and will be thefirst in the world to offer a monitor support system allowing the infinitelyvariable locking mechanisms of the Apollo system and also the benefits of theratchet mechanisms of the Ar-ray system.[52] The important point is that the hybrid system, which the defendant regards asunique and potentially sufficiently inventive to justify patent protection, has not beendisclosed to the public. That point is not answered by the plaintiff's contention thatthe Apollo and Ar-Ray products themselves are in the public domain. Confidentialitycan be maintained over information that is not visible or readily ascertainable despitethe product being released for public sale. Similar arguments were considered andrejected by Edwards J in Dodson Motorsport Ltd v Logiical Performance Ltd:38[346] Once a manufacturer releases its product for public sale, it cannotmaintain confidentiality over features that are either visible or readilyascertainable, absent relevant intellectual property laws. But it can maintainconfidentiality over information that is not visible or readily ascertainable.This includes, for example, drawing plans, market information, orimprovements made in the design and manufacturing process.[347] Much of the information being claimed as confidential in this case isnot about visible aspects of the clutch design. Nor is it limited to proceduresfor installing aftermarket parts, or information exchanged on group chats. Theconfidential information at the heart of the claim is something different tothose limited categories. It is information and knowledge gained through thedesign, testing and manufacturing processes for the R35 clutch. Thisknowledge finds its end expression in the clutch parts and ancillary partsthemselves, but clearly goes beyond that which is visible in the part itself. (emphasis added)38 Dodson Motorsport Ltd v Logiical Performance Ltd [2019] NZHC 918.[53] In addressing what I see as the critical issue of whether adequate safeguardscan be put in place (having established that the documents in issue are trulyconfidential), it is important to recall that the plaintiff's expert witness, Mr Dippie, anengineering and management consultant, has already had access to the confidentialdocuments. Mr Dippie concludes that the drawings at issue are "no more than astraightforward combination of the Apollo and Ar-Ray products that any engineercould produce by looking at the two products". Despite that conclusion, the plaintiffcontends that it does not understand the true relevance of the documents and that it isnot satisfied with access to the documents being restricted to Mr Dippie; it seeks tohave the documents disclosed to Mr Kuch. Mr Kuch is the instructor from the plaintiffand is said to have the requisite knowledge of the industry which will shed light onand assist counsel in understanding the relevance of the documents. The issue thusbecomes whether, in balancing the competing interests of the parties, disclosure toMr Kuch would prejudice the defendant in a significant way.39[54] Asher J, in Intercity Group (NZ) Ltd v Nakedbus NZ Ltd, held (with referenceto Port Nelson) that it can be "difficult if not impossible" for a trade competitor toprotect from dissemination throughout its organisation, information received throughdiscovery.40 The Court of Appeal also observed that restrictions may be justifiedwhere disclosure of the relevant confidential information would enable a party tostructure its own business to better competitive effect.[55] Wide ranging confidentiality orders were made in Pernod Ricard New ZealandLtd v Lion-Beer Spirits & Wine (NZ) Ltd.41 In that case, Allan J declined to removeconfidentiality restrictions and discovery between trade rivals, noting the clear risk ofcommercial harm if there was open disclosure, weighed against the general contentionthat discovery was necessary to enable adequate trial preparation.[56] I find that the defendant has given a clear and persuasive explanation to theplaintiff as to the relevance of the documents at issue. I thus do not accept that it isnecessary for Mr Kuch to have access to them to "shed light" on their relevance. InDecember 2018, in correspondence from Mr Piper, the defendant's expert, to counsel39 Port Nelson Ltd v Commerce Commission (1994) 7 PRNZ 344 (CA).40 Intercity Group (NZ) Ltd v Nakedbus NZ Ltd [2013] NZHC 2261.41 Pernod Ricard New Zealand Ltd v Lion-Beer Spirits & Wine (NZ) Ltd HC Auckland CIV-2011-404-1664, 1 December 2011.for the plaintiff, Mr Piper explained that the confidential documents are a series ofrecent 2018 drawings showing the synthesis of the old Apollo system and the new Ar-Ray system. Importantly, Mr Piper stated:They support our client's view that our system is completely independent ofthe plaintiff's design, and as such support our client's design philosophy in itsindependent design path.[57] It is clear from this explanation, as Mr Elliott submitted, that the defendantsare alleging that the Ar-Ray system, which the defendant says was designed after theplaintiff's copyright works, was based upon and the result of the synthesis from theearlier Apollo system. The 2018 drawings showing a hybrid system, effectivelycombining the earlier Apollo and later Ar-Ray systems with largely similar productconfigurations and dimensions, are relevant to establishing that the Ar-Ray productwas arrived at via an independent design path. Whether that is ultimately true or notis of course beside the point; the documents at issue are plainly relevant to thedefendant's contention that it had an independent design path.[58] The defendant has further sought to explain the relevance of the documents atissue by reference to [15(b)] of its statement of defence. At [15(b)], the defendantdenies that it has infringed the plaintiff's copyright and asserts that it designed slottedmonitor post systems (albeit with different locking mechanisms in the slot) many yearsprior to the alleged date on which the plaintiff claims that it commenced the design ofits height-adjustable monitor arm system. That pleading makes reference to relevantearlier designs created by the defendant, which necessarily include, so the defendantalleges, the prior art Apollo system.[59] I also find that disclosure of the documents would likely be highly prejudicialto the defendant. They are clearly of a commercially sensitive nature and thedefendant's claims, that they are the select configurations of the hybrid product that itintends to develop and eventually commercialise, must be taken seriously. There isthus considerable force to the submission that there would be significant prejudice ifthe documents were accessed by Mr Kuch, an agent of the plaintiff (the defendant'sdirect commercial competitor).[60] I also reject the plaintiff's suggestion that Mr Kuch could somehowcompartmentalise the information; in my view that is an unrealistic proposition. AsMr Elliott submitted, the problem is that the parties are developing directly competingand technically similar products, and it would be very difficult in a practical sense topolice any terms restricting disclosure and use of the information within the plaintiff.The real risk of "seepage" needs to be recognised.[61] In balancing the competing interests of the parties, the better solution, if theplaintiff truly is unsure of the relevance and/or significance of the documents, is for itto engage another expert witness to examine them.42 The defendant has indicated awillingness to allow another expert (but not Mr Kuch) to have such access and toprovide advice to counsel. In the circumstances here, there does seem to be merit toMr Elliott's submissions that Mr Dippie, a commercial engineer, may well lack thespecific expertise and experience to enable him to provide a great deal of assistance tothe Court. While I accept that there might be a limited pool of expert witnessesavailable, there is no evidence before me to suggest that another witness with suitablequalifications is not available. It is not clear why the plaintiff retained an expert inrelation to thermal energy equipment and whose expertise, on the face of his affidavit,includes limited expertise and experience in the area of the technology at issue. In anyevent, I agree that the plaintiff should not now benefit from that fact by claiminginadequate understanding of the defendant's evidence.[62] For all these reasons, I conclude that the plaintiff's application for removal ofthe confidentiality restrictions should be rejected. As noted, the defendant remainswilling to agree to a solution whereby the plaintiff could engage another expert (withrelevant expertise) and allow him or her to have access to the documents on thecondition that appropriate undertakings are given.Defendant's application for further particulars or more explicit pleading[63] The defendant seeks further particulars in relation to what it says are gaps inthe statement of claim insofar as the copyright cause of action is concerned. Theseare:42 See New Zealand Railways Corp v Auckland Regional Council (1990) 3 PRNZ 332 (CA), wherethe Court of Appeal upheld the High Court's decision to restrict access to the party's advisors(albeit varying the terms of access).(a) each of the alleged artistic works in models in a particular oraspect/parts of the works that are alleged to be original;(b) the basis on which the plaintiff alleges to own the copyright, includingdetails of the authors, the relationship with the authors and details ofany other means whereby copyright was acquired by the plaintiff;(c) Full particulars of the specific features or parts of the 63 drawings reliedupon as being original;(d) specific features or parts of the Ar-Ray monitor arm which amount tosubstantial reproduction of the copyright works.[64] The plaintiff, in response, claims to have "repeatedly informed the defendant"that further particulars will be provided on provision of an amended statement ofclaim. The plaintiff has advised that it will be in a position to file an amendedstatement of claim following determination of the current confidentiality application.[65] I do not see the need, in the circumstances, to make formal orders requiring theplaintiff to file further particulars. However, the Court expects the plaintiff to nowaddress this issue in accordance with its commitment to do so.Result[66] I make the following orders:(a) The defendant's application for a separate issue to be determined,pursuant to r 10.15 of the High Court Rules 2016, is dismissed;(b) The plaintiff's application for removal of the defendant's claim ofconfidentiality is dismissed.[67] As to the question of costs, I am of the preliminary view that there should beno order as to costs and costs should lie where they fall. Both parties have had ameasure of success. If costs cannot be agreed, then memoranda are to be filed within14 days.[68] The Registrar is to allocate a case management conference for directions to bemade for the disposition of the proceedings. The parties should anticipate that at thecase management conference a trial date is likely to be set and relevant pre-trialtimetable directions made.__________________________Associate Judge P J Andrew