Summary judgment in Australian IP cases

By Wayne Condon.

Key Points:
This decision would permit the striking out of a claim even in circumstances where there is authority which would, at least, support the claim as one which is legally viable.

For the past 50 years in Australia the hurdle for an applicant seeking to strike out either a claim or a defence has been very high. Two Australian High Court decisions (one in the 1940s and the other in the 1960s[1]) held that summary judgment is only available where the pleaded claim or defence was "so clearly untenable that [it] cannot possibly succeed".

Not surprisingly, the application of this test meant that almost no cases were susceptible to summary judgment. The propensity was for the court to allow the parties their day in court.

Almost all intellectual property cases in Australia are litigated in the Federal Court. A fundamental change to the rules relating to summary judgment applications was introduced into the Federal Court with effect from 1 December 2005. Section 31A of the Federal Court of Australia Act 1976 (Cth) provides:

"(1) The Court may give judgment for one party against another in relation to the whole or any part of the proceeding if:

(b)  the first party is prosecuting the proceeding or that part of the proceeding; and

(c)  the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding.

(2) The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:

(a)  the first party is defending the proceeding or that part of the proceeding; and

(b)  the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.

(3) For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:

(a)  hopeless; or

(b)  bound to fail;

for it to have no reasonable prospect of success.

(4) This section does not limit any powers that the Court has apart from this section."

There have been few considerations of the new section 31A to date. However, leave has been granted to appeal to the Full Court of the Federal Court in respect of the dismissal of a summary judgment application in a recent trade mark case (Vans, Inc v Offprice.Com.Au Pty Ltd [2006] FCA 137). The case concerned the alleged sale of counterfeit shoes bearing the "Vans" trade mark. Affidavit evidence was adduced that the shoes in issue were counterfeit and there was no evidence contradicting that view. However, the respondent explained where the shoes had been sourced which gave rise to the possibility that the shoes may not have been counterfeit. The trade mark owner sought summary judgment on the trade mark infringement allegation which was refused. In granting leave to appeal to the Full Court, Justice Wilcox said:

"It seems to me it is, at least, arguable, that the effect of section 31A is that there can be summary judgment for an applicant, notwithstanding the possibility that the applicant's case would break down at trial; in other words, it is now not enough for a party resisting a summary judgment application to seek merely to put the other side to proof."

The Full Court has not yet heard the appeal but in the meantime there has been a further decision applying the new section 31A (Duncan v Lipscombe Child Care Services Inc [2006] FCA 458).

This case involved allegations of breach of contract, misleading and deceptive conduct, unconscionable conduct and defamation, all arising out of the termination of employment of the applicant as a director of the respondent company. In dealing with the misleading and deceptive conduct allegation, Justice Heerey, in dealing with the respondent's defence to the effect that the conduct alleged was not in trade or commence, and therefore not in contravention of the Trade Practices Act, was faced with conflicting authority on that issue. However, this did not deter Justice Heerey who said:

"Had this question arisen under the former strike out standard, it would be very difficult to say this part of the case was hopeless, given the divergence of authority. However, section 31A is a clear and different command. I am still of the view that ... Ms Duncan has no reasonable prospect of success."

Guided by section 31A of the Federal Court of Australia Act 1976, Justice Heerey applied a lower hurdle to the strike out application which was successful. His decision appears to be a robust application of the new rule in relation to summary judgment applications in the Federal Court. The decision would permit the striking out of a claim even in circumstances where there is authority which would, at least, support the claim as one which is legally viable. This suggests that there will be more room for cases to be dealt with by way of the summary judgment procedure in the Federal Court although it is likely that the new procedure will be most often used in "lower level" cases, including IP cases such as trade mark counterfeiting cases. It seems, for example, unlikely that the summary judgment procedure will often be exploited in patent cases[2].

[2]  For an example of an unsuccessful summary judgment application in a patent infringement case see Mycogen Plant Science Inc v Monsanto Australia Ltd [2002] FCA 613.