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  • Unreported Judgment

Integrated Medical Technology Pty Ltd v Gilbert

 

[2014] QSC 227

 

SUPREME COURT OF QUEENSLAND

 

PARTIES:

FILE NO:

Trial Division

PROCEEDING:

Application

DELIVERED ON:

15 September 2014

DELIVERED AT:

Brisbane 

HEARING DATE:

4 September 2014

JUDGE:

Jackson J

ORDERS:

The order of the Court is that:

  1. The application for an order that the documents identified in paragraph 2 of the amended application filed on 18 August 2014 not be disclosed to Armin Weiner is dismissed.
  2. Costs of the application be costs in the proceeding.

CATCHWORDS:

PROCEDURE – DISCOVERY AND INSPECTION OF DOCUMENTS – PRODUCTION AND INSPECTION – GROUNDS – GROUNDS FOR RESISTING PRODUCTION – OTHER GROUNDS – where the plaintiffs claim a breach of confidence by the defendants in using the source code for a suite of software programs – where disclosure restricted to nominated persons to preserve confidentiality of parties respective source codes - where the plaintiffs nominate an expert for disclosure – where the defendants oppose the nominated expert having access on ground that he is a trade rival – whether disclosure to nominated expert should be permitted 

Uniform Civil Procedure Rules 1999 (Qld), r 244

Gebauer Nominees Pty Ltd v Cole [2008] WASCA 38, cited

  Gebauer Nominees Pty Ltd v Hotrox Charcoal Co (2007) 23 BCL 267, cited

Hotrox Charcoal Co v Gebauer Nominees Pty Ltd [2002] WASCA 293, cited

Mallesons Stephen Jaques v KPMG Peat Marwick (1990) 4 WAR 357, referred to

Mills v Day Dawn Block Gold Mining Company Ltd (1882) 1 QLJ 62, referred to

Mobil Oil Australia Ltd & McDonalds Australia Ltd v Guina Developments Pty Ltd [1996] 2 VR 34, cited

COUNSEL:

P O’Higgins for the plaintiffs/respondents

R Bain QC and R Schulte for the defendants/applicants

SOLICITORS:

McCullough Robertson for the plaintiffs/respondents

Clayton Utz for the defendants/applicants

[1] JACKSON J:  There is one remaining question to be decided as to the orders for disclosure to be made by the defendants.

[2] The claim in the proceeding is for breach of confidence and related breaches of duty.  The plaintiffs allege that the first defendant breached his obligation of confidence in using or permitting use of the source code for a suite of software programs used by radiologists, among other things, to view, manage and store digital images of patients’ anatomy.  The plaintiffs allege that a suite of programs were written for or by the defendants, with similar functionality to the plaintiffs’ programs, through the first defendant’s breach of confidence.

[3] Both the plaintiffs and the defendants allege that the source code for their respective suites of programs are confidential.  They have agreed to orders for disclosure under which the disclosure of relevant documents is restricted to nominated experts and lawyers.  The dispute is whether one of the plaintiffs’ nominated experts should be permitted to see the defendants’ source code.  The defendants oppose that disclosure on the ground that there is a risk that he will not keep their documents confidential.  They apply for an order pursuant to Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”), r 244, that the relevant documents not be disclosed to the nominated expert.  The application does not identify only documents that go to the defendants’ source code, but the parties submissions were confined to the risks associated with the disclosure of that subject matter, so it is appropriate that these reasons are confined to it.

[4] All parties relied on the same cases: Gebauer Nominees Pty Ltd v Cole,[1]  Gebauer Nominees Pty Ltd v Hotrox Charcoal Co,[2] Hotrox Charcoal Co v Gebauer Nominees Pty Ltd[3] and Mobil Oil Australia Ltd & McDonalds Australia Ltd v Guina Developments Pty Ltd.[4] The relevant question is whether the risk of disclosure or misuse is such as to warrant that the nominated expert not be permitted to see the defendants’ documents. 

[5] The nominated expert is Armin Weiner.  He is the Chief Technology Officer and a director of WeiDan Group Pty Ltd.  The basis of the defendants’ objection is that he is a trade rival of the second defendant, JJS Technologies Pty Ltd (“JJS”).

[6] It may be said at once that the allegation of trade rivalry or competition is not that either Mr Weiner or WeiDan is at present actually in competition with JJS in any relevant market.  It is that they might become competitors in the future. 

[7] The objection is made that Mr Weiner might either consciously or unconsciously utilise confidential information imparted to him by seeing the defendants’ documents.  It is submitted that there is a risk of him breaking his obligation of confidence in either developing some as yet unwritten competitive product or communicating the information to third parties.

[8] Mr Weiner once worked for RealTime Image, a company that developed a product or products known as iPACS.  PACS is an acronym for Picture Archiving and Communication System.  The defendants’ products include a PACS known as “Contrast PACS”, but it is not suggested to be related to iPACS.  RealTime Image, including the iPACS product, was acquired by General Electric, and incorporated into the GE Healthcare business unit in 2006.  Since then, Mr Weiner has not been involved in iPACS.

[9] The defendants’ products include an RIS.  RIS is an acronym for Radiology Information System.

[10] Mr Weiner is presently engaged as a consultant to Queensland Health.  That work is not actually or potentially in a competitive area.

[11] WeiDan does not supply either a RIS or a PACS.  It does not supply any integration of health care systems products that are in a competitive space with the defendants’ products. It does not supply consultancy services to any of the defendants’ competitors.

[12] Mr Weiner does not presently intend to work on development of a RIS or PACS in the future.  The radiology industry is not an area of work he is pursuing. He has no present intention to go into a competitive space with the defendants, either on his own account, through WeiDan, or by assisting any of the defendants’ competitors.

[13] Mr Weiner offers to undertake not to use anything confidential he sees or to discuss it with anyone except to perform his duties as an expert.  The defendants do not suggest a basis for any threat of deliberate misuse of confidential information. Against this summary, the defendants paint a picture of potential threat, by a combination of techniques.  Their deponent, Mr Wilden constructs five arguments about his “concerns”. 

[14] He swears that Mr Weiner has developed a tool, which Mr Wilden has not apparently seen, yet swears without elaboration is “in direct competition with JJS’s Web Referrer Delivery System product”.  There is no evidence that the tool has ever been commercially developed or incorporated into any product.  Mr Weiner swears to the contrary. In the absence of any comprehensible basis for the assertion of direct competition and in the light of Mr Weiner’s contrary evidence, I do not accept Mr Wilden’s evidence on that point.

[15] Secondly, Mr Wilden swears that, by reading WeiDan’s webpage, the Adaptive Streaming Technology Product being offered by WeiDan is a product that “directly competes with JJS’s Web Referrer Delivery System product”.  Mr Weiner swears that it is not.  The contrary assertions are not capable of detailed analysis, but one might think that Mr Weiner, who should know the product, might have a better idea of what it does than Mr Wilden.

[16] The defendants’ evidence is that their suite of products includes a “Referrer Web Delivery System” developed initially in 2010 and redeveloped in 2012.  However, most of the evidence was directed to Mr Weiner’s prior experiences or knowledge of PACS or RIS, so I will not further separately address the Referrer Web Delivery System, as a separate component or suite of programs.  The oldest version of the defendants’ source code appears to antedate the development of the Referrer Web Delivery System.

[17] Thirdly, Mr Wilden swears that it is apparent to him from WeiDan’s website that it offers services in relation to the integration of relevant products.  This is specifically dealt with in response. Mr Weiner says that neither he nor WeiDan is presently operating in a competitive space to the defendants’ systems in that they do not supply PACS or RIS products to the market.  He also says that the integration of the health care systems listed on the WeiDan website is not competitive to any of the defendants’ products.

[18] Fourthly, Mr Wilden swears that Mr Weiner’s CV shows that he has an ongoing interest in the research and development of RIS/PACS products.  Mr Weiner swears that although in the past he developed a prototype algorithm as investigation of WeiDan providing PACS or RIS products, the algorithm is not being taken to market because it misses the market and is not commercially viable.  He has no intention to work on development of a full RIS or PACS system.  The radiology market is not an area he is pursuing and has no present intention of being a competitor to or to assist any competitors of the defendants.  WeiDan has no such intention either.

[19] Fifthly, Mr Wilden swears that WeiDan has previously offered Mr Weiner’s services to the defendants.  The relevant communication was by email enquiring as to whether Mr Weiner’s services might be of use to, inter alia, the defendant.  I do not regard its contents as significant in the context of the detailed affidavit evidence.

[20] There are other matters raised in Mr Wilden’s affidavit.  Each or all lead to his “deep” concern or being “extremely” concerned about the risk that Mr Weiner may use “the confidential information” of the defendants or in some way prejudice JJS’s chances or position.  He swears to a “substantial risk of deliberate or inadvertent use”.  It may fairly be said that there is a tinge of hyperbole in some of the language in which Mr Wilden’s affidavit is cast.

[21] There is no basis to find, in my view, that Mr Weiner or WeiDan is presently a trade rival of the defendants.  In this respect, it seems to me, Mr Wilden’s contrary assertions clearly overstate the position.

[22] The only question is whether there is a potential of trade rivalry on the part of Mr Weiner that leads to the conclusion that there is a risk of disclosure such that Mr Weiner is an inappropriate choice of independent expert witness to whom disclosure of the defendants’ source code should be made.

[23] At the outset of the hearing of the application, the defendants tendered a draft undertaking that they said would reduce the risks that they faced to an acceptable level.  They submitted that if Mr Weiner was prepared to offer an undertaking in those terms, they would withdraw their opposition to him being permitted to inspect the defendants’ source code.

[24] The undertaking was in the following terms:

“I, Armin Weiner, Chief Technology Officer, Level 38, 7 Boundary Street, Brisbane in the State of Queensland undertake to the Court and the Defendants as follows:

1 in relation to the documents identified in Schedule 1, Part 1 – Sections 2 and 3 of the Defendants’ lists of documents which are identified in exhibits ‘JLW-3’ and ‘JLW-4’ to the first affidavit of Jason Leonard Wilden sworn on 18 October 2013 and the documents identified in the attached Schedule A (the Confidential Material) that I will not:

(i)except as required to perform my duties as an expert in these proceedings, speak with anyone about the Confidential Material; and

(ii)use anything I see in the Confidential Material to develop any other programs.

2 that I have no current intention to desire to work on development of any Radiology Information System (RIS), Picture Archiving and Communication System (PACS) or Web Referrer Delivery System products and I am not interest in pursuing work in the radiology or diagnostic imaging business sector.

3 that for the next two years I will not develop a RIS or PACS or Web Referrer Delivery System.”

[25] After an adjournment to obtain legal advice, Mr Weiner offers an undertaking in different terms as follows:

“I, Armin Weiner, Chief Technology Officer, Level 38, 7 Boundary Street, Brisbane in the State of Queensland undertake to the Court and the Defendants as follows:

1 in relation to the documents identified in Schedule 1, Part 1 – Sections 2 and 3 of the Defendants’ lists of documents which are identified in exhibits ‘JLW-3’ and ‘JLW-4’ to the first affidavit of Jason Leonard Wilden sworn on 18 October 2013 and the documents identified in the attached Schedule A (the Confidential Material), unless the Confidential Information is lawfully in the public domain or lawfully accessible, I will not:

(i)except as required to perform my duties as an expert in these proceedings, speak with anyone about the Confidential Material; and

(ii)use anything I see in the Confidential Material to develop any other programs.

2 that I have no current intention to desire to work on development of any Radiology Information System (RIS), Picture Archiving and Communication System (PACS) or Web Referrer Delivery System products and I am not interest in pursuing work in the radiology or diagnostic imaging business sector.

3 that I current have no intention to develop a RIS or PACS or Web Referrer Delivery System.

4 that I currently have no intention to compete with the Second Defendant over the next one year.

[26] The substance of the difference is that by Mr Weiner’s form of undertaking he would not promise not to engage in competition with the defendants.  He will “undertake” that he has a present intention not to do so for 12 months, which must mean that his intentions for the next 12 months do not include competitive conduct. But he does not undertake not to compete for any period.

[27] In my view, the question is whether the express limited basis of Mr Weiner’s form of undertaking tips the balance in favour of the conclusion that he should not be permitted to inspect the defendants’ documents.  I do not suggest or imply that Mr Weiner would intentionally act in any way to disclose or use the defendants’ source code.  However, although there is no present threat of circumstances arising where he might do so inadvertently, the appearance and reality of the risk that he might do so in the future would be increased if he were acting in a competitive space.  The sooner that possibility might occur, the greater the risk of misuse.

[28] Secondly, if Mr Weiner were to act in a competitive space in the near future, there might be a question about his continuing independence as an expert.  It is possible that he could be operating in a competitive space during the period leading up to the trial and while giving evidence, if conditions altered his present intention.

[29] In the modern context of the independent duty to the Court owed by an expert under UCPR r 426, it seems to me that it would be less than desirable for an expert who is in competition with one of the parties to give evidence as an expert, if there is an expert who could give the opinion evidence who can be seen to be independent.

[30] Even where the risk of disclosure is not great, I note that when a Court determines whether a legal practitioner, who might misuse a confidence, should not be permitted to act for a party in a proceeding, the interests of justice include the appearance of there being no question of potential breach of duty,[5]  because public interest considerations require that when there is a real and sensible possibility of conflict, including subconscious effects.  I recognise that this analogy is far from perfect in considering the present question, but the independence of experts is not a matter treated lightly by the courts in 2014.

[31] These considerations are counterbalanced by the cost to the plaintiffs and delay of proceeding without the benefit of someone with Mr Weiner’s expertise or the cost and difficulty of locating another expert who possesses similar expertise but who is neither a trade rival and who will not enter a competitive space with the defendants for a period. 

[32] It is important to bear in mind that the parties have agreed to a confidentiality regime in which neither the plaintiffs nor the defendants themselves will be able to see the opposite parties source code.  Each side must rely on experts to assist in the comparison of the other’s alleged confidential information.

[33] I acknowledge the difficulties in those respects raised in the plaintiffs’ affidavit material.  Dr Low, of the plaintiffs, swears that there very few people who have the medical industry intellectual technology expertise who are not competitors or working for competitors of the plaintiffs or the defendants.  To date, Mr Weiner is the only such person working in Australia who he has been able to identify.  The defendants do not challenge that.  If Mr Weiner cannot see the defendants’ source code, it appears the plaintiffs would have to look overseas.  Dr Low swears that the costs are likely to be prohibitive.

[34] The defendants do not directly challenge that evidence.  They submit that the plaintiffs do not explain why a previously proposed expert is no longer suitable to the plaintiffs.  But in my view, Dr Low’s evidence covers the topic of available experts with the expertise possessed by Mr Weiner.  Dr Low was not required for cross-examination.

[35] The defendants also submit that the role to be played by Mr Weiner is to review the source code and provide assistance to another forensic expert.  That expert, Mr Carson, swears that an expert such as Mr Weiner is likely to save significant time because he will be able to outline the specific parts of source code that Mr Carson may be asked to forensically examine.  Without the benefit of an industry expert it is likely that Mr Carson’s approach would be more time consuming than it would otherwise be.  Mr Carson has no prior experience with a PACS or RIS.  The industry expert’s report would assist Mr Carson by identifying the parts of the source code that require forensic analysis.  The defendants submit that the difference between Mr Weiner being involved and not being involved is only a matter of time and expense.

[36] However, time and expense are matters of direct concern under the philosophy of the UCPR, r 5.

[37] There is no evidence that directly addresses how much time or how much expense.  There are over 7.5 million lines of source code, but taken alone that does not assist much.  Mr Foxe swears that it would be time consuming and difficult for any person who is unfamiliar with a PACS or RIS to compare the software object and source code, source code components and source code derivatives, because of the number of lines of source code and the need to locate the specific lines of code in one set of programs which are comparable to items of code in the other.

[38] I note that any risk of misuse of confidential information by Mr Weiner is not confined to the defendants’ source code.  Mr Weiner will also see the plaintiffs’ source code for the purposes of providing his assistance and expert opinion.

[39] I also note that the draft letter of instructions to Mr Weiner as an expert is not confined to identifying the relevant specific parts of the source code to be compared.  A premise of the plaintiffs’ claim as pleaded is that the development by the defendants of their suite of products occurred in such a short period of time that the inference should be drawn that it was done by misuse of the plaintiffs’ source code.  The subjects on which Mr Weiner is to be asked to opine include matters going to that contention.  I infer that it would be relevant for him to be able to see the defendants’ source code for the opinions he is to be asked to express as an expert who has programming expertise in the relevant area or areas of specialist expertise.

[40] The question to be resolved is one requiring an exercise of discretion, taking into account the factors on either side.  The facts of one case do not dictate the outcome in another case to be decided on different facts.  There would be no utility in further discussion of principle, in this case, in my view.

[41] Notwithstanding that there is some risk of disclosure or misuse of confidential information by Mr Weiner, as discussed above, in my view the counterbalancing factors are such that the defendants’ application for an order that the defendants’ source code not be disclosed to Mr Weiner should be refused. That part of the defendants’ application should be dismissed.

Footnotes

[1] [2008] WASCA 38.

[2] (2007) 23 BCL 267; [2006] WASC 155.

[3] [2002] WASCA 293.

[4] [1996] 2 VR 34, 38.

[5] Mills v Day Dawn Block Gold Mining Company Ltd (1882) 1 QLJ 62. Mallesons Stephen Jaques v KPMG Peat Marwick (1990) 4 WAR 357. See, for further examples, Connock, “Restraining Lawyers from Acting in the Face of a Conflict: Discussion and Advice in Australia”, (1995) Aust Bar Rev 244.

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Editorial Notes

  • Published Case Name:

    Integrated Medical Technology Pty Ltd & anor v Gilbert & ors

  • Shortened Case Name:

    Integrated Medical Technology Pty Ltd v Gilbert

  • MNC:

    [2014] QSC 227

  • Court:

    QSC

  • Judge(s):

    Jackson J

  • Date:

    15 Sep 2014

Litigation History

No Litigation History

Appeal Status

No Status