E LAW - MURDOCH UNIVERSITY ELECTRONIC JOURNAL OF LAW ISSN 1321-9347 Volume 9 Number 3 (September 2002) Copyright E Law and author File: matthew93.txt ftp://law.murdoch.edu.au/pub/elaw-issues/v9n3/matthew93.txt http://www.murdoch.edu.au/elaw/issues/v9n3/matthew93.html ________________________________________________________________________ Ascertaining the Dimensions of a Reasonable Restraint of Trade in an Intellectual Property Context – An Analysis of the Australian High Court’s Decision in Maggbury v Hafele Anne Matthew Queensland University of Technology School of Law Contents * Introduction * The Commercialisation process in Maggbury v Hafele * The Decision in Maggbury v Hafele o At first instance o In the Court of Appeal o In the High Court * Policy considerations * Reasonable restraints of trade in an intellectual property context * Subsequent application of Maggbury * Lessons for Inventors * Conclusions * Bibliography * Notes Introduction 1. Inventors frequently find it necessary to disclose confidential information pertaining to their inventions in order to explore the potential for commercialisation. Typically this involves showcasing the invention in order to secure financial assistance for a patent application or to attract prospective commercial partners prepared to take a role in the exploitation of the invention should the patent application be successful. 2. In such a scenario there are important concerns affecting both the prospective commercial partner and the inventor. The prospective commercial partner requires access to prototypes and particulars of the invention in order to evaluate the commercial risks and benefits attached to prospective involvement in its commercial application. Such an evaluation involves a consideration of both the prospects of success of the patent application and the likelihood of the patent being able to withstand challenge in an infringement action, even if it is granted.[1] As was recently recognised by the High Court, 'the likelihood of these outcomes (turns) upon an evaluation of the novelty and subject matter of the claimed invention'. [2] 'The main factor that provides a basis for investor optimism in these ventures is ownership of intellectual property. There is little point in committing money to a venture where others in the same industry can adopt the new idea realatively easily. A rational investor is less likely to commit funds where key ideas behind the business are not protected from competitors.'[3] 3. The prospective partner, typically a potential competitor in the market place, may be keen gain access to this information. All players will have access to prototypes and details of the patent specification in time, without charge. The disclosures made in the specification may facilitate legitimate competition through reverse engineering. But early access to the information would allow them to determine whether or not they wish to be involved in the commercial exploitation of the product. 4. On the other hand, the inventor will be more focussed upon the risks attached to disclosing particulars of its invention to the prospective partner. These concerns are threefold: the commercial advantage that may be conferred upon a competitor; the risk of compromising its capacity to protect further disclosure or use of the information; and preserving secrecy in the period leading up to patent application. 5. Unrestricted disclosure to a competitor may give them a head start over other competitors in the market and may destroy both the use value and proprietary or monopoly value of the information. Lavery describes use value as 'the value inherent in being able to use the information'.[4] Confidential information is unique in that it possesses both a use value and a monopoly value, that is the value that comes from having 'exclusive access to the information'.[5] Lavery contends that while disclosure does not diminish use value, it does compromise monopoly value as the inventor will no longer have 'the same headstart and competitive advantage which he used to have'.[6] 6. The inventor pays a high price for the prospect of a statutory monopoly: public disclosure of the invention as required by the patent application process. Generally speaking, whether or not the confidential nature of the information is destroyed by a disclosure depends upon the nature and extent of the publication, the information disclosed and the industry within which the disclosure was made.[7] Where the disclosure of confidential information is made in a patent application, the disclosure is more likely to destroy the confidential nature of the information. This is because the patent application defines the parameters of the statutory monopoly which may be granted. It is unlikely that significant aspects of the invention of value to the inventor would be left out. Disclosure in a patent application is likely to amount to publication to the world and the confidential nature of the information will be destroyed. 7. This loss of confidentiality can be particularly disastrous for the inventor where the patent application fails or is struck down on a subsequent challenge to the patent's validity in enforcement proceedings. Had the details of the invention been kept confidential it may have been protected through an equitable action for breach of confidence or perhaps as a trade secret. Such an action is lost once the particulars of the invention enter the public domain. 8. Moreover, prior to the lodgement of the patent application, secrecy is paramount. The patent application must fail if the invention is not sufficiently secret at the time of the patent application. The device commonly used by inventors keen to preserve the necessary secrecy and to protect their proprietary interests in information, is a confidentiality agreement entered into between the inventor and the prospective financier or manufacturer. The question that remains is whether the inventor is able to enforce its rights pursuant to the confidentiality agreement after the information enters the public domain. This issue was recently considered by the High Court in Maggbury Pty Ltd v Hafele Australia Pty Ltd, (Maggbury).[8] 9. A fundamental issue arising when there is a confidentiality agreement in existence between the inventor and a prospective financier or manufacturer is: what is a reasonable restraint of trade in an intellectual property context? This paper will explore this issue by (1) examining the commercialisation process which occurred in Maggbury, and (2) undertaking a critical analysis of the Court's decision with particular focus on the Court's treatment of the interface of various policy considerations. This will extend to a brief examination of policy direction in the USA. Finally (3) this paper will conclude with the lessons that inventors can take from the High Court's decision in Maggbury.[9] The Commercialisation process in Maggbury v Hafele 10. Maggbury Pty Ltd (the plaintiff), through its controller, Mr Allen, had invented and designed a number of assemblies whereby ironing boards suitable for domestic use could fold for convenient storage either against a wall or into a drawer. Maggbury was a small company and sought to find a larger commercial partner to become involved in the commercial exploitation of its designs. Maggbury commenced discussions with the Hafele companies (a registered German partnership and its Australian subsidiary). 11. Prospective commercial partners are unlikely to be interested in purchasing rights to exploit information which its competitors can freely access. So, in order to provide a legal basis upon which to maintain Hafele's interest, Maggbury lodged patent applications to secure Australian and International patent protection for its inventions. It was envisaged that if the patent applications were successful, Hafele could be granted a licence to use the statutory monopoly rights flowing from the patent. 12. As is typically the case in such start-up negotiatons, Maggbury was cautious to protect the secrecy of its invention and indicated that Hafele would be not be permitted to view prototypes until a confidentiality agreement had been signed. Entry into the agreements would provide Hafele with an opportunity to access information which would not become available to its competitors in the market for some time. Two confidentiality agreements were entered into; one with the Australian subsidiary, and another with the German parent company. These agreements were in substantially identical terms and had been prepared by Maggbury's solicitors. Hafele executed the agreements after negotiation as to their terms and after receiving their own legal advice. As it is the construction of these agreements that was the focus of the subsequent litigation, it is necessary to consider the terms of the agreements. 13. Pursuant to the agreements, Hafele was supplied with 'the Information'. This term was defined by reference to documentation and materials rather than the information disclosed therein. Clause 3.1(a) of the agreements provided: 'Information' means each and every record of information whatsoever disclosed, shown or provided to Hafele [Australia] by the inventor in relation to the Product and, without limiting the generality thereof, includes any writing, sketches, diagrams, models, film, video tape, plans, designs, drawings, manufactured prototypes, layouts, schedules or photographs. Hafele agreed to 'treat' the 'Information' disclosed by Maggbury as confidential.[10] This was despite the fact that Maggbury had not agreed that 'the Information' was indeed confidential. Hafele agreed to confine its use of 'the Information' to its assessment of whether or not to join with Maggbury in the commercial exploitation of the product[11] and further, 'not at any time hereafter (to) use 'the Information' for any purpose whatsoever' except with Maggbury's prior consent.[12] Hafele also agreed to return 'the Information' immediately if it decided not to join Maggbury in the commercial exploitation of the product.[13] 14. The agreements acknowledged that patent applications were being lodged in relation to the invention. Specifications were later published as required by Australian patent legislation and the Patent Co-operation Treaty. 15. The Hafele negotiations continued for almost two years, but a licensing agreement was never entered into. During that time Hafele examined the information, particulars and prototypes provided by Maggbury and had its own patent attorneys assess the pending patent rights. During the negotiations Maggbury displayed the prototypes at a number of trade fairs. The trial judge, Byrne J, accepted that Hafele had encouraged these displays. On the advice of its patent attorneys that the patent applications were weak, Hafele concluded that they were not worth taking a licence over. However, in an attempt to settle all claims, Hafele paid the inventor $20,000.[14] Maggbury demanded that Hafele return the prototypes, drawings, photographs and indeed all documents disclosed in the course of the negotiations.[15] 16. Maggbury subsequently became aware that Hafele had developed and was distributing folding ironing boards incorporating a number of the features of Maggbury's prototypes. The ensuing dispute over this use gave rise to the litigation. The action was brought by Maggbury together with the second plaintiff, Gisma Pty Ltd, who had taken an assignment of both patent applications and Maggbury's rights as inventor. 17. As the patents had never been granted, no action lay for patent infringement. So Maggbury was left with its remaining rights in equity and pursuant to the contract. The Decision in Maggbury v Hafele At first instance 18. Maggbury and Gisma issued interlocutory proceedings in the Supreme Court of Queensland pleading, in the alternative, a breach of the restraints in the confidentiality agreements or breach of an implied term in the confidentiality agreements limiting the express obligations to subject matter confidential at the time of the breach. Hafele effectively admitted that implied term in its defence.[16] Clearly Maggbury had assumed that the information had not lost the necessary quality of confidence despite having placed it in the public domain itself through the patent applications and trade fairs. 19. Maggbury did not succeed in obtaining a pre-trial interlocutory injunction. However at trial, Byrne J granted permanent injunctive relief. His Honour found that the confidentiality agreements were enforceable and had been breached by Hafele. There were, 'a multiplicity of corresponding discretionary features or choices between the Hafele wall-mounted board and the information supplied ... too remarkable to be a co-incidence'.[17] The injunctions restrained Hafele from manufacturing or distributing wall-mounted ironing boards designed or manufactured using the Maggbury 'Information'.[18] His Honour was careful to point out that Hafele was only restrained from using information derived from this 'designated source'. Neither the contractual obligation nor the injunctions extended to information from other sources such as Hafele's existing knowledge or information already in the public domain at the time of the breach. His Honour awarded $25,000 by way of equitable damages. In the Court of Appeal 20. Hafele successfully appealed to the Queensland Court of Appeal (de Jersey CJ, Pincus and Davies JJA). The Court of Appeal's decision is significant for its finding that a confidentiality agreement freely entered into between substantial commercial entities, was limited by the restraint of trade doctrine. The Court was unanimous: although they had been breached, the confidentiality agreements were unenforceable as unreasonable restraints of trade. The injunctions were set aside and the award of equitable damages was replaced with an award of $5000 The equitable claim 21. The Court considered that Hafele had breached its equitable obligation of confidence to the extent that information was supplied confidentially and it had been used in breach of confidence. However, this obligation had only been breached to the extent that the information that had not been publicly disclosed was used in the Hafele product. As the features that had been copied were minor (screw sizes and gauge of steel), damages were reduced to $5,000.[19] Even this minor copying saved Hafele from some design work. Restraint of trade 22. The Court of Appeal conveniently summarised its reasoning into three salient points: 1. "In our opinion the agreement not to use information is unenforceable because it has no time limit and it covers all information whether or not publicly disclosed. 2. No injunction should be granted under the general law because the information has been made public so far as it is of significant value. 3. If an injunction were granted it would have to be in a form which confined its operation to information not publicly available."[20] 23. The question for the Court was, what would be adequate to protect Maggbury's interests? This was the relevant question, so the Court held, because: "A restraint will not be enforceable unless it affords no more than adequate production to the interests of the covenantee in respect of which he is entitled to be protected".[21] 24. The onus of proof fell to Maggbury to establish that it was necessary for the 'adequate protection' of its interests to permanently prevent Hafele from using the information even after it had been publicly disclosed. While the Court recognised that Maggbury did have a right to protect itself against Hafele's unrestricted used of the information supplied, it nonetheless concluded that the Agreements had gone further that was necessary in order to adequately protect Maggbury's interests. What is a reasonable restraint in an intellectual property context? 25. The Court identified two primary impediments to the enforceability of the agreements. Firstly, the covenants purported to restrain use of the information in perpetuity. Secondly, the covenants restrained disclosure of the information supplied, whether or it was in fact confidential. The Court examined whether these restraints went beyond what was necessary to protect Maggbury, when it had itself placed the information in the public domain. Further the Court considered whether the loss of secrecy had an impact on the capacity of the plaintiff to enforce its contractual rights.[22] Lack Of Time Limit 26. Hafele had covenanted to observe the obligation of confidentiality 'forever'. It was decided that this went beyond what would be adequate to protect Maggbury's interests. It was noted that 'statutory protection of copyright and patents is limited as to time, but this contract purports to give eternal protection which can surely not be necessary.' [23] While the Court was sympathetic that it may occasionally be necessary to restrain disclosure in perpetuity, 'ordinarily, in a commercial context, a time limit of some sort must be fixed'.[24] Loss of Secrecy 27. It was considered that the reasonable and adequate protection afforded to Maggbury by a confidentiality agreement was the preservation of secrecy. But as Hafele had agreed to treat information as confidential, which Maggbury itself had publicly disclosed in its patent application and at trade fairs, that reasonable and adequate protection was lost at Maggbury's own hand. 'The secret, as a secret, had ceased to exist'.[25] All that could now be achieved by compliance with the restraints was complication and hindrance in the conduct of Hafele's business. Criticism of the Court's decision 28. With respect, perhaps the Court of Appeal took too narrow a view of the scope of 'reasonable and adequate protection' in this context. When an inventor discloses information to a potential competitor with a view to commercial exploitation, presumably the foremost concerns of the inventor are (1) the preservation of secrecy so as not to detract from its likelihood of securing patent protection for the invention and, (2) to ensure that competitor is unable to use the information for their own benefit, should they choose not to join the inventor in the commercial exploitation of the product. Further, the Court seems to have heavily discounted the policy issues underpinning the economic benefits to society of encouraging inventors to publicly disclose the particulars of their invention. 29. Maggbury argued that Hafele could comply with the agreements by using only information that had been made public in the patent specifications and at the trade shows. The court noted that although this may technically be possible, it would require considerable effort to ensure that the other information provided by Magbury was excluded. Maggbury argued that this could be achieved through the use of a new design team 'uncontaminated by any knowledge of the information supplied by Maggbury'.[26] It argued that Hafele should have accepted not just the benefit of the information, but the burden of managing it.[27] 30. The Court referred extensively to the House of Lords decision of O Mustad & Son v S Allcock & Co Ltd and Dosen,[28] citing it as authority encouraging 'the notion that protection of commercial information which the covenantee has made public goes beyond what the legitimate interests of the covenantee require.'[29] 31. In summary, the Court decided that the covenants were an unreasonable restraint of trade. The question remaining was whether the covenants could be read down. Reading down 32. The agreements provided that Queensland law would apply. In Queensland there is no statutory equivalent to the New South Wales Restraints of Trade Act 1976, s 4, which would facilitate severance in these circumstances.[30] Left to the common law, the Court referred to the 'flexible approach' adopted in England where the court firstly reads the restraint clause down by rejecting words that are too wide as a consequence of poor drafting and secondly 'leaving 'improbable and unlikely events' out of consideration'.[31] While the Court could not find a High Court precedent encouraging severance, it followed the 'flexible approach' and the approach adopted by the South Australian Full Court in Rentokill Pty Ltd v Lee.[32] 33. The Court indicated that it would have been prepared to read down the covenants 'to avoid outcomes which appear contrary to the parties' true intentions'.[33] However, it found itself unable to do so. To save the clause would have required limiting the contractual obligation of confidence to information that was in fact confidential, or to incorporate a time limitation. Indeed, Maggbury had argued that the restraints were impliedly limited to information that was confidential at the time of the breach. However the Court held that such an implication could not be made where it would be contrary to the intention of the parties. The intention of the parties was clear from the face of the confidentiality agreements: Hafele was to keep all the information confidential forever regardless of whether or not it was confidential. Accordingly, the covenants remained unenforceable as unreasonable restraints of trade. Had all secrecy been destroyed by the patent application and other disclosures? 34. Counsel for Maggbury had argued that the patent application may not have disclosed all aspects of the invention. This argument appears to discount a key importance of the patent application: it defines the parameters of the statutory monopoly which may be granted. It is unlikely that significant aspects of the invention of value to the inventor would be left out. While the trial judge had made no specific finding in answer to the plaintiff's argument, the Court of Appeal commented that 'it would be surprising if a patent specification intended to protect a number of different embodiments of the invention would fail to set out, with a view to obtaining protection of them, all aspects of the invention thought by the inventor to be of value ... insofar as the patent specification failed to disclose any information about the invention, it is likely to have been either commonplace or of no real significance.'[34] 35. Maggbury had conceded that all the features of the ironing boards had been displayed at the trade fairs. While potentially these displays could be construed as limited rather than public disclosures, the patent application amounted to publication to the world. 36. In June 2000 Maggbury was granted special leave to appeal to the High Court. In the High Court 37. The appeal to the High Court (Gleeson CJ, Gummow, Kirby, Hayne and Callinan JJ), was dismissed 3:2 (Kirby and Callinan JJ dissenting). The orders of the Court of Appeal were set aside, with the exception of the award of $5,000 in equitable damages. Hafele had not cross appealed this award. 38. In short, while the majority was not critical of the assessment of the Court of Appeal, they did, in obiter, allude to softening of the approach in future, in certain limited circumstances.[35] 39. The plaintiff submitted that the agreements should be enforced as they were clearly expressed to continue in perpetuity regardless of the continuance of secrecy or lack of public disclosure. The majority refused to read the agreements in this way. They decided that obligations of confidence would ordinarily be construed as 'limited to subject matter which retained the quality of confidentiality at the time of the breach or threatened breach of those obligations'.[36] If the intention of the parties was broader, that broader intent should be explicitly stated. The majority referred to Picard v United Aircraft Corp[37] where it was said: ... there is ordinarily no reason to suppose that (the appellant inventor) means to exact any greater protection against the promisor than he will have against others. At any rate, if he does, he should say so. In this context, the majority referred to House of Lords decision of O Mustad & Son v S Allcock & Co Ltd and Dosen.[38] This case had also been referred to extensively below, in the Queensland Court of Appeal. It is useful to give it greater analysis. 40. In Mustad, decided in 1928 and reported in 1963, the House of Lords had considered whether or not a contractual restraint upon an employee to keep certain information confidential could be enforced where the appellant employer had publicly disclosed that information in a patent application. It was held that once the appellant had disclosed the information to the world, the secret ceased to exist and it was 'impossible for them to get an injunction restraining (the former employee) from disclosing what was common knowledge'.[39] The plaintiff had 'destroyed the foundation of the action'. [40] Consequently, ' there (was) no longer any subject matter upon which the agreement could operate'.[41] 41. The important point about the patent is not whether it was valid or invalid, but what it was that it disclosed, because, after the disclosure had been made by the appellants to the world, it was impossible for them to get an injunction restraining the respondents from disclosing what was common knowledge. [42] 42. With respect, the contractual obligations in Maggbury were distinctly different from those in Mustad: One deems particular information to be confidential and then imposes an obligation not to disclose it; the other imposes an obligation to keep secret information which is in fact confidential. However while these contractual obligations may be distinctly different from one another, perhaps what appealed to the Court in Maggbury was that the underlying issue is the same: There is no point being pedantic about precise nature of the contractual obligation - if it essentially requires a confidence to be kept, the foremost issue is whether or not the information has remained secret. If that information enters the public domain it is not secret any more and the precise nature of the obligation becomes irrelevant. Secrecy is unmistakably a binary concept: information is either secret or it is not. The bubble of secrecy bursts upon entering the public domain. Once the necessary quality of secrecy is lost, it cannot be restored. The majority was careful to note that in both Maggbury and Mustad the information had been placed into the public domain by the plaintiffs in a patent application, and acknowledged that different considerations would apply where a third party had made the publication, or where a fiduciary relationship was involved.[43] In such circumstances the confidant may not be 'released from his duty of confidence'.[44] Were the terms subject to the restraint of trade doctrine? 43. Clearly, on a literal reading of the agreements, Hafele was in breach of its contractual obligations. On this point all members of the Court agreed. The majority heard argument as to whether the express contractual obligations were subject to an implied term confining the contractual obligation of confidence to information which retained its confidential character at the date of the breach.[45] This was rejected. The express terms[46] were absolute: Hafele had agreed to 'treat' the information as confidential 'forever' and not to use it 'for any purpose', 'at any time hereafter', without warranty that the information was confidential. It was not possible to imply a term to contradict such 'explicit',[47] 'inescapable terms'.[48] 44. The questions which remained were whether the terms were subject to the restraint of trade doctrine and if so whether they were void because they amounted to unreasonable restraints of trade. 45. Maggbury submitted that the restraint of trade doctrine did not apply. Hafele could carry on its trade without relying upon the Maggbury Information. This could be done by reference to information already in the public domain and Hafele's own prior knowledge. The majority did not accept this argument.[49] The High Court had only months earlier in Peters (WA) Ltd v Petersville Ltd[50] considered the argument that the doctrine will not apply to some restraints by their very nature. In that case, the Court rejected both the criterion of 'fettering existing freedom' and the principle of 'sterilisation' associated with the decision in Esso Petroleum Co Ltd v Harper's Garage (Stourport) Ltd.[51] 46. The majority were also unprepared to accept argument that the doctrine should not apply where the parties had freely negotiated their bargain: The fact that the restraint can be said to have been freely bargained for by the parties to the contract provides no sufficient reason for concluding that the doctrine should not apply. All contractual restraints can be said to be of that character. [52] 47. On the basis of the majority's earlier analysis of the interests of the parties, it was found that the covenants amounted to an unreasonable restraint of trade. Hafele had expressly agreed to keep confidential forever, information which had been placed by Maggbury into the public domain. Maggbury had not attempted to argue at trial that the restraints should be read down, and the majority considered that they would have had 'substantial difficulty doing so'.[53] It was therefore unnecessary to determine whether or not the restraints could be read down or severed. However, the majority noted that if it had been successfully argued that the restraints could be read down, it would be on the basis that the restraints did not operate where 'at the time of the breach ... the subject matter had lost its confidential quality and had entered the public domain as the result of steps taken ... by Maggbury'.[54] Restraint of 'limited temporal operation' 48. The plaintiff had released the information into the public domain and was seeking a permanent injunction. The majority suggested in obiter that, despite the fact that the information was no longer secret following the patent application, it may have been possible for the contractual obligation of confidence to have a 'limited temporal operation' extending beyond the entry of the information into the public domain without offending the doctrine of restraint a trade. Such a restraint may still be reasonable in the interests of the public and the parties if the restraints sought to do no more than impose a headstart handicap. Clearly, the concepts of reverse engineering and the springboard doctrine would come into play. It is implicit, that the majority would have been prepared to take a softer approach than the Court of Appeal which considered that any operation of a restraint beyond the date of public disclosure by the plaintiff was unreasonable. 49. However, Maggbury sought an 'absolute, perpetual and unconditional injunction' as though the information were still confidential. [55] While it was therefore unnecessary for the Court to determine the point, it is still useful to examine the doctrines which may have been relevant if the Court had been so required. The Springboard Doctrine 50. The springboard doctrine recognises that often what makes information confidential is 'the fact that the maker of the document has used his brain and thus produced a result which can only be produced by somebody who has gone through the same process'.[56] When a person misuses confidential information, they generally avoid 'having to go through the same laborious, time consuming process as the confider' thereby gaining an unfair advantage or headstart over other competitors who must go through that process to achieve the same result.[57] 'Furthermore any legitimate advantage which a confider will have gained through his hard work will be negated.' [58] 51. The unfair head start is dealt with by the springboard doctrine,[59] enunciated by Roxburgh J in Terrapin Limited v Builders Supply Co. (Hayes) Ltd[60] and approved in Seager v Copydex:[61] 'a person who has obtained information in confidence is not allowed to use it as a springboard for activities detrimental to the person who made the confidential communication, and springboard it remains, even when all the features have been published or can be ascertained by actual inspection by any member of the public. ... Therefore the possessor ... of such information must be placed under a special disability in the field of competition in order to ensure that he does not get an unfair start.'[62] 52. This formulation has recently been considered in Ocular Sciences Ltd v Aspect Vision Care Ltd[63] where Laddie J added: 'where confidential information has been used by a defendant to get an illegitimate head start, that head start is still illegitimate, even if, at a subsequent date, the information becomes public.'[64] 53. Typically the headstart period is calculated by reference to the process of reverse engineering. That is, where the product is examined and deconstructed in a process involving time and effort in order reveal the details or specifications of the product and the manner in which it was produced.[65] Reverse engineering has recently been most controversial in the area computer programming where the process borders upon breach of copyright.[66] However, reverse engineering is a legitimate process[67] which can generate information about the product, facilitating innovation whereby the product can be improved.[68] 54. In the end result, the majority's comments alluding to a softer approach if the duration of the restraint had been of 'limited temporal operation', were obiter. However it is interesting to consider the possibilities: What would have amounted to a restraint of 'limited temporal operation' for the reasonable protection of Maggbury's interests? It is imagined that the Court would have been prepared to restrain Hafele from manufacturing or marketing ironing boards based upon the Maggbury inventions until some time after the specifications were published taking into account how long it may take for a competitor to actually begin producing the ironing boards. This would take into account the advantage to Hafele over Maggbury's competitors who were not privy to the information and would be consistent with the desire of Maggbury to ensure that Hafele would be in no better position than any of Maggbury's competitors, if Hafele decided not to pursue the licensing opportunity. Dissent 55. The majority were in favour of dismissing the appeal. Kirby and Callinan JJ strongly dissented. Kirby J summarised his stance as follows: 'Hafele's real undoing in this case was the critical sequence of events, objectively proved. Hafele wanted Maggbury's concept. It signed confidentiality agreements. It secured 'the Information' on the faith of those agreements. And it then proceeded post-haste to manufacture and distribute a product which the trial judge found was a 'substantial copy' from 'the Information'. In such circumstances, Hafele cannot complain about, and should not have been surprised by, the decision of the primary judge. The law and the justice of the case support the conclusion reached and the orders made at trial.'[69] Kirby agreed with analysis of the rest of the Court that the clear and express terms of the confidentiality agreements restrained Hafele from dealing with the information supplied by Maggbury.[70] However, Kirby J considered that the restraint of trade doctrine did not and should not apply, particularly where the disclosure tends to 'advance the efficient operation of the market rather than restrict it'.[71] 56. Kirby J emphasised that this was a commercial transaction where an inventor is seeking a commercial partner. It would surely be contrary to public policy to apply the restraint of trade doctrine: a doctrine which itself was designed to defend the public interest.[72] 'Upholding the promises tends to encourage inventors to disclose to potential competitors and collaborators innovative ideas that may or may not ultimately secure patent protection. In circumstances such as those in this case, to find that the promises are unenforceable on the ground of the common law doctrine prohibiting restraint of trade is to discourage inventors of modest means from dealing with much larger manufacturers and marketing organisations upon terms that protect the interests of the inventor, whatever may be the ultimate outcome of the patent application. It is to discourage inventors from negotiating with those who can market their ideas, under conditions that protect the ideas from exploitation by others immediately after their disclosure.'[73] 57. Kirby J agreed with Callinan J that to apply the doctrine of restraint of trade would: '... have a halting effect on commercial transactions. The owners of new and unpatented products would hesitate before transmitting the information and making the disclosures essential to bring about meaningful negotiations.'[74] Kirby J referred to earlier authority where it had been stated that the restraint of trade doctrine '...being an invention of the common law must be applied to the facts "with a broad and flexible rule of reason".[75] Further, he could see no reason of legal principle or policy why the law should not hold the exploiter to the confidentiality agreement, where it had been established that the exploiter was in clear breach of its contract with the inventor.[76] 58. Kirby J also agreed with Callinan J that the provision of injunctive relief was appropriate.[77] Hafele had contended that an injunction could never be granted to restrain use of information which was publicly available. Kirby J disagreed. His Honour noted that permanent injunctions are occasionally granted to restrain breaches of express negative covenants agreed to by the party restrained.[78] Given that Hafele had expressly agreed in clause 13.3, that Maggbury would be entitled to an injunction in the event of a breach, Kirby J asked: 'Why should Hafele now be heard to resist the remedy to which it expressly agreed in respect of the precise circumstances that have occurred?'[79] However, Kirby J noted that permanent injunctions are, like all equitable remedies, discretionary, and a factor that the court must take into account in deciding whether or not to exercise its discretion, would be the extent of the damage Maggbury would suffer if Hafele were not permanently restrained and the extent of the dissemination of the information.[80] Here, the injunction granted at trial had been limited to the use of 'the information embodied in the materials provided by Maggbury on the strength of the agreements'[81] On the basis of the trial judge's findings, Kirby considered that the justification for injunctive relief was 'overwhelming'.[82] 59. Further, the injunctive relief had not been so widely drafted that it would restrain Hafele from 'manufacturing and distributing another wall-mounted ironing board designed differently without use of the novel ideas contained in Maggbury's design and demonstrated or illustrated in 'the information' supplied by Maggbury to Hafele.'[83] In other words, Hafele would 'be held to its promise - as in such circumstances would and should normally happen'.[84] 60. Callinan J's approach to the issues in this case keeps sight of the policy underlying the restraint of trade doctrine: 'every man shall be at liberty to work for himself and shall not be at liberty to deprive himself or the State of his labour, skill or talent by any contract that he enters into.'[85] It is this policy, Callinan J asserted, that 'underpins the rule that any restraint that goes beyond what the courts consider to be reasonable in the interests of both parties must be struck down, even if there is no evidence of harm to the public'.[86] Callinan was also mindful that the doctrine of restraint of trade may 'inhibit, indeed even strangle, free trade rather than facilitate it'.[87] 61. Callinan J found it repugnant that persons entering into agreements intended to legally binding could subsequently claim that they did so aware that the doctrine of restraint of trade would relieve them from their obligations.[88] Callinan J considered that the requirement that restrictive covenants be reasonable was 'intertwined with public policy': 'Public policy, like other unruly horses, is apt to change its stance; and public policy is the ultimate basis of the courts' reluctance to enforce restraints. Although the decided cases are almost invariably based on unreasonableness between the parties, it is ultimately on the ground of public policy that the court will decline to enforce a restraint as being unreasonable between the parties. And a doctrine based on the general commercial good must always bear in mind the changing face of commerce. There is not, as some cases seem to suggest, a separation between what is reasonable on grounds of public policy and what is reasonable as between the parties. There is one broad question: is it in the interests of the community that this restraint should, as between the parties, be held to be reasonable and enforceable?'[89] 62. The restraint of trade doctrine itself is based upon policy keen to maintain economic freedom and freetrade. All members of the Court recognised that this doctrine sits in juxtaposition with the law's traditional desire to uphold bargains entered into freely by the parties. However, in an intellectual property context other considerations come into play. One of these is the important public policy underlying the inducement of patent protection. That policy seeks to 'encourage the disclosure of new, useful, and non-obvious inventions by granting the inventor the exclusive right to exclude others from making, using, or selling the invention for a period of years'[90] 63. However, Callinan J considered that little would be accomplished by striking down the restraint as an unreasonable restraint of trade, when the result could be an adverse effect on the very matter at the heart of that doctrine: 'the owners of new and unpatented products would hesitate before transmitting the information and making the disclosures essential to bring about meaningful negotiations.'[91] 64. In any event, Callinan J disagreed that the covenants amounted to unreasonable restraints despite the fact that they were unlimited in time and place. Enforcing the restraints would not be repugnant to the policy underlying that doctrine: the prevention of injury to the public and the stifling of competition.[92] His Honour considered that the continued application of the restraint of trade doctrine required reconsideration, but nevertheless decided, 'even on the current law of restraint of trade, the covenant can and should be given effect'.[93] Policy considerations 65. It is clear from the above discussion that the restraint of trade doctrine is based upon policy. A decision about whether the doctrine should apply in any particular circumstance should be taken with a view to a much broader range of considerations than simply what is reasonable as between the parties. It should also involve some reflection upon the broader policy considerations underlying the doctrine. 66. The dissenters in Maggbury, particularly Callinan J, were wary of applying the doctrine of restraint of trade in this intellectual property context on the basis of public policy. Callinan J emphasised the policy justifications for the restraint of trade doctrine that have emerged from a number of decisions from the United Kingdom. In the USA there has recently been some consideration of how these issues should be dealt with in an intellectual property context. 'A central tenet of intellectual property protection in the United States is the existence of a bargain between society on the one hand and inventors and authors on the other. Inventors and authors are given limited-duration monopolies during which they may exploit their inventions and creations without interference from competitors. The grant of a monopoly is intended to provide the requisite incentive for invention and creation of works of authorship. In return for this monopoly, the inventor discloses to the public how to make and use the invention...Morever, after the monopoly expires, the inventions and creations enter the public domain, free for all to use or copy. Giving others the knowledge to improve on the invention provides the basis for the advancement of science, technology, and the arts the Founding Fathers envisioned.'[94] 67. Further, the rationale for protection intellectual property has been explained as being 'based on the unfairness of another appropriating a creator's efforts and the public interest in encouraging creative intellectual endeavours for the benefit of society generally'.[95] There has been some discussion of this concern in recent cases from the USA. In Biodynamic Technologies v Chattanooga,[96] Biodynamic was involved in discussions with Chattanooga, a potential competitor, with a view to discuss the feasibility of a licence agreement for the manufacture of an orthopaedic device. A patent application had been lodged. Chattanooga backed away from the negotiations on the advice of its patent attorney's that the patent application was weak, and then proceeded to manufacture and market its own unit based upon Biodynamic's device.[97] The Court considered: [98] 'This is a case of unfair competition. ... Whether the plaintiff's had any valuable secret or not the defendant knows the facts, whatever they are, through a special confidence that he accepted. The property may be denied but the confidence cannot be. ... It is the usual disadvantage in the fact that he knew the plainttif's secrets, he must take the burden with the good.' 68. In Franke v Wiltschek[99] salespeople sought and obtained the opportunity to represent a manufacturer of toiletries. After they were shown the secret manufacturing process, they used the information to manufacture a similar product at a lower price. The Court, in rejecting the defendant's contentions that they should prevail because they could have obtained the secret process from studying the expired patent and examining the publicly marketed product, elaborated that where the defendant had assumed an obligation to keep the information confidential, it was irrelevant that they 'could have gained their knowledge from a study of the expired patent and plaintiff's publicly marketed product.'[100] 69. In Smith v Dravo[101] an action to restrain the defendant from competing with the plaintiff's freight business, the defendant argued that it was not making use of the plaintiff's secrets pertaining to freight containers. The details of the structural designs of the freight containers were disclosed by their public use and by other freely circulated material. The defendants contended that there were no further secrets to disclose. The court disagreed: '... (the law) will not deny recovery merely because the design could have been obtained through inspection. Rather, the inquiry ... appears to be: How did defendant learn of Plaintiff's design. And this, we regard as the proper test.'[102] Indeed, it was recently pointed out in Navajo Nation and Frye v Peabody Coal Company that the point is to protect proprietary information and not just privileged information.[103] 70. The observations of Callinan J in Maggbury v Hafele were clearly influenced by the attempts made in the USA to encourage innovative behaviour in inventors, while preserving the public's interest in ultimately being able to exploit patent technology. The observations in Smith v Dravo[104] and Biodynamic Technologies v Chatanooga[105] signify a desire to extend protection to an inventor to a greater extent that is evident in Magburry. From the perspective of the policy which is apparent in the USA, the fact of Maggbury's disclosure of the information was less likely to have been significant. Reasonable restraints of trade in an intellectual property context 71. As to what is reasonable, it is probably a question of fact in each case. In examining reasonableness the courts have typically examined the duration of the restraint and the extent of any geographic restraint. In an intellectual property context other considerations may come into play: Is the information in the public domain? If so, how did it come into the public domain? Is the restraint to apply for a limited time? A restraint will not be enforceable unless it is reasonable. Reasonableness of the restraint will be of particular concern where the restraint is unlimited in time. Generally restraints that purport to restrain the use of information, even after that information has become public, are most unlikely to be reasonable. 72. However the majority of the High Court has alluded to a potential exception. Even if the restraint is expressed to survive the information being placed in the public domain by the inventor, it may be reasonable and enforceable to the extent that the restraint can be limited to the headstart period. This may be an express stipulation in the restraint. If this is not expressly stipulated in the restraint, the question becomes the extent to which the restraint can be read down so as only to restrict use to information which is confidential or to the head start period. Where the restraint cannot be read down, it will fail. Subsequent application of Maggbury 73. Maggbury has been subsequently considered in AG Australia Holdings Ltd v Burton.[106] In that case the Court was referred to Maggbury when drafting an injunction to restrain the misuse of information provided in confidence pursuant to confidentiality covenants contained in an employment agreement. It had been expressly stated in clause 13 of the employment contract that the confidentiality covenants would not apply to 'any information which becomes generally known to the public otherwise than as a breach of this agreement or the breach of any similar agreement'. The injunction was drafted to reflect clause 13. Campbell J acknowledged that this was consistent with the principles enunciated by the High Court in Maggbury. Lessons for Inventors 74. In future, when inventors are entering into confidentiality agreements with prospective commercial partners during start-up negotiations, they should be mindful of the following lessons from Maggbury. o It is clear that the agreement should include a covenant that the information is confidential, rather than just a covenant agreeing to keep the information confidential. While this may seem axiomatic Maggbury would suggest otherwise. o The agreement should be explicit that it will not apply to information that is in the public domain. It seems that the court will be unwilling to read the agreement down without such an explicit clause. o Alternatively, if the inventor does seek to restrain use of the information once it is in the public domain, such a restraint must have a temporal operation, limited to a genuine estimate of a headstart period. o It is unlikely that an inventor could restrain the prospective partner from using information forever. 75. Inventors should also be aware of the risks of disclosure: o A commercial advantage may be extended to competitors, particularly where they are provided with something more than access to prototypes, such as a greater analysis than may appear in the patent specifications; o While disclosure may lead to the statutory monopoly of a patent, applying for the patent may compromise the secrecy of the invention and the inventor's right to protect that secrecy. 76. While inventors may choose to limit the risk of disclosure in seeking assistance in commercialisation through the use of a confidentiality agreement, that agreement must be carefully drafted. If the patent application is successful then the price that is paid in disclosing the information is rewarded with a statutory monopoly. But if the application is unsuccessful, or is subsequently lost in enforcement proceedings, not only will the inventor have failed to secure a statutory monopoly, but the inventor will have compromised its capacity to prevent misuse of the information. Conclusions 77. The decision in Maggbury emphasises that inventors run a substantial risk when they disclose information in the pursuit of finance or opportunities for commercial exploitation of their invention. One of the greatest concerns arising from this decision is that it seems to discourage the very activities championed by the policies and philosophies underpinning the patent regime: encouraging inventors to disclose details of inventions in order to be rewarded with a statutory monopoly. Such disclosure, and laws which encourage it lead to the benefit and advancement of mankind as others analysing the invention may have an opportunity to further develop and refine the underlying technology. 78. This decision may therefore lead to a cautious situation developing in which inventors are discouraged from patenting and may prefer to protect the information as a trade secret using the breach of confidence action. This raises policy issues, in particular the competing policy considerations of freedom of contract, encouragement of economic freedom and free trade and the public benefits of enticing inventors with the prospect of the statutory monopoly of patent rights. Bibliography Cases AG Australia Holdings Ltd v Burton (unreported 3 May 2002, Supreme Court of New South Wales). Biodynamic Technologies Inc v Chattanooga Corp 644 F Supp 607 (1986) at 611. Concut Pty Ltd v Worrell (2000) 176 ALR 693 Dart Industries Inc Pty Ltd v David Bryar & Associates (1997) 38 IPR 384. Franke v Wiltschek 209 F.2d 493 (2nd cir.1953) Maggbury Pty Ltd v Hafele Australia Ltd (2001) 185 ALR 152 Maggbury Pty Ltd v Hafele Australia Pty Ltd (unreported, Supreme Court of Queensland, Court of Appeal, 12 May 2000). Mars UK Ltd v Teknowledge Ltd (1999) 46 IPR 248 Navajo Nation and Frye v Peabody Coal Company 2001 U.S. App. LEXIS 6052; 7 Fed. Appx. 951. Ocular Sciences Ltd v Aspect Vision Care Ltd [1997] RPC 289 O Mustad & Son v S Allcock & Co Ltd and Dosen [1963] 3 All ER 416 at 418. Peters (WA) Ltd v Petersville Ltd (2001) 181 ALR 337. Picard v United Aircraft Corp 128 F 2d 632 (1942) Rentokill v Lee (1995) 66 SASR 301. Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 R.P.C. 203 Seager v Copydex [1967]2 All ER 415 Smith v Dravo 203 F.2d 369 (7th Cir 1953) Terrapin Limited v Builders Supply Co. (Hayes) Ltd [1967] RPC 375. Books & Articles Albrey I, 'Reverse Engineering - Current Issues' (1992) 5 (3) AIPB 21. Butt, P Contractual Restraints of Trade (2002) 76 ALJ 228. Christie, A 'Protect your IP Please' (2001) 15(2) NZ Business 44. Davey K, 'Reverse Engineering of Computer Programs' (1993) 4 AIPJ 59 Dean R The Law of Trade Secrets (LBC, Sydney, 1990) Hughes G, 'Reverse Engineering of Software' (1993) Law Institute Journal 1032 Lavery P 'Secrecy Springboards and the Public Domain' [1998] EIPR 93 at 95. Legge A, Confidentiality Agreements - the vanishing Cheshire Cat? (2001) 12(4) JBFLP 321. Mitchell A, 'The Jurisdictional Basis of Trade Secret Actions' (1997) 8 Australian Intellectual Property Journal 134 McKeough J & Stewart A, Intellectual Property in Australia (Butterworths, Sydney, 1997). Mohr K, 'At the Interface of Patent and Trademark Law: Should a product configuration disclosed in a utility patent ever qualify for trade dress protection? (1999) Intellectual Property Journal 201. Provan G, 'Reverse Engineering and the Manufacture of Spare Parts' (1994) Building and Construction Law Journal 87 Toulson, R.G. & Phipps, C.M., Confidentiality (Sweet & Maxwell, London, 1996). Notes [1] These concerns were canvassed by the majority in Maggbury Pty Ltd v Hafele Australia Ltd (2001) 185 ALR 152 at 157. [2] Id. [3] A Christie, 'Protect your IP Please' (2001) 15(2) NZ Business 44. [4] P Lavery, Commercial Secrets: The Action for Breach of Confidence in Ireland (Round Hall Sweet & Maxwell, Dublin, 1996), p 49. [5] Id. [6] Id. [7] Ibid, p 71. See further, O Mustad & Son v S Allcock & Co Ltd and Dosen [1963] 3 All ER 416, Franchi v Franchi [1967] RPC 149 House of Spring Gardens v Point Blank Ltd [1984] IR 611 and Lavery P 'Secrecy Springboards and the Public Domain' [1998] EIPR 93 at 95. 7 See Lavery (1996) p53. [8] (2001) 185 ALR 152. [9] Id. [10] Clause 5.1 [11] Clause 5.2 [12] Clause 5.6. [13] Clause 8.2 and 10.1. [14] It was accepted in the Court of Appeal that Maggbury did not accept the payment on that basis. [15] This demand was made pursuant to clause 11 of the confidentiality agreement. [16] In the High Court, the majority did not accept that such a term could be implied. Rather it was the result arising from the proper construction of the agreements. See (2001) 185 ALR 152 at 159. [17] (2001) 185 ALR 152 at 160. [18] The trial judge found that there had been no misuse of information pertaining to the drawer mounted ironing boards. The injunctive relief was granted in relation to the wall mounted version. [19] Maggbury Pty Ltd v Hafele Australia Pty Ltd (unreported, Supreme Court of Queensland, Court of Appeal, 12 May 2000) at [35]. [20] Ibid at [36]. [21] Ibid at [12] citing Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288 at 306. [22] Ibid at [12]. [23] Ibid at [18]. [24] Id. [25] Id citing Lord Buckmaster in O Mustad & Son v S Allcock & Co Ltd and Dosen [1963] 3 All ER 416 at 418. [26] Maggbury Pty Ltd v Hafele Australia Pty Ltd (unreported, Supreme Court of Queensland, Court of Appeal, 12 May 2000) at [14]. [27] This concept is supported in Biodynamic Technologies Inc v Chattanooga Corp 644 F Supp 607 (1986) at 611. [28] [1963] 3 All ER 416. This case was decided on June 19, 19 [28] and was only later reported in 1963 on account of the references to it in the report of Peter Pan Manufacturing Corporation v Corsets Silhouette Ltd [1963] 3 All ER 407. [29] Maggbury Pty Ltd v Hafele Australia Pty Ltd (unreported, Supreme Court of Queensland, Court of Appeal, 12 May 2000) at [17]. [30] In NSW, severance is permitted by the Restraints of Trade Act 1976, s 4. That statute is taken to have 'confirmed and enlarged the capacity of the Court to enforce just and reasonable covenants which may on their face be too widely expressed'. See Maggbury Pty Ltd v Hafele Australia Pty Ltd (unreported, Supreme Court of Queensland, Court of Appeal, 12 May 2000) at [19] citing Sheller JA in Kone Elevators Pty Ltd v McNay (1997) 19 ATPR ¶41-564 at ¶43,833. [31] Maggbury Pty Ltd v Hafele Australia Pty Ltd (unreported, Supreme Court of Queensland, Court of Appeal, 12 May 2000) at [19] citing Dean R The Law of Trade Secrets (LBC, Sydney 1990), p 394. [32] (1995) 66 SASR 301. In that case Matheson J (at 326) read down the covenant by focusing on what the covenant was 'aimed at' while Doyle CJ (at 304) accepted that restraints should not be unenforceable merely because unlikely circumstances and those beyond the contemplation of the parties fell within them. [33] Maggbury Pty Ltd v Hafele Australia Pty Ltd (unreported, Supreme Court of Queensland, Court of Appeal, 12 May 2000) at [20]. [34] Ibid at [26] - [29]. [35] See discussion below of a restraint with a 'limited temporal operation'. [36] Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 185 ALR 152 at 163-164. [37] 128 F 2d 632 (1942) per Judge Learned Hand at 637. A similar point had been made in Conmar Products Corp v Universal Slide Fastener Co 172 F 2d 150 (1949) at 156 per Judge Learned Hand. [38] [1963] 3 All ER 416. This case was decided on June 19, 1928 and was only later reported in 1963 on account of the references to it in the report of Peter Pan Manufacturing Corporation v Corsets Silhouette Ltd [1963] 3 All ER 407. [39] [1963] 3 All ER 416 at 418. [40] See extract from the judgement of Atkin LJ at [1965] 1 WLR 1293 at 1315. The judgments of the Court of Appeal in O Mustad & Son v S Allcock & Co Ltd and Dosen have not been separately reported but extracts for the judgments can be found in the judgment of Roskill J in Cranleigh Precision Engineering Ltd v Bryant [1965] 1 WLR 1293. [41] Id. [42] [1963] 3 All ER 416 at 418. [43] (2001) 185 ALR 152 at 165 citing Cranleigh Precision Engineering Ltd v Bryant [1965] 1 WLR 1293 and Concut Pty Ltd v Worrell (2000) 176 ALR 693 at 700-1. [44] (2001) 185 ALR 152 at 165 citing Attorney-General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109 at 285. [45] (2001) 185 ALR 152 at 166. [46] Clauses 5.1, 11.1 and 5.6. [47] Picard v United Aircraft Corp 128 F 2d 632 (1942) at 637. [48] Conmar Products Corp v Universal Slide Fastener Co 172 F 2d 150 (1949) at 156. [49] (2001) 185 ALR 152 at 167. [50] (2001) 181 ALR 337. [51] (2001) 185 ALR 152 at 167. [52] (2001) 185 ALR 1 [52] at 168; Esso Petroleum Co Ltd v Harper's Garage (Stourport) Ltd [1968] AC 269 at 298, 306-9, 316-7 and 328-9. Some commentators have considered this to be one of the most significant pronouncements of the case. See P Butt, 'Contractual Restraints of Trade' (2002) 76 ALJ 228. As to concerns over the courts interference generally in contracts freely bargained for, see A Legge, 'Confidentiality Agreements - the vanishing Cheshire cat?' (2001) 12 JBFLP 321 at 322. [53] (2001) 185 ALR 152 at 168. [54] Id. [55] (2001) 185 ALR 152 at 166. [56] Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 R.P.C. 203 at 315 per Lord Greene M.R. [57] Lavery (1996), p 56. [58] Id. [59] The doctrine was recently applied in Dart Industries Inc Pty Ltd v David Bryar & Associates (1997) 38 IPR 384. [60] [1967] RPC 375. [61] [1967] 2 All ER 415. [62] Terrapin Limited v Builders Supply Co. (Hayes) Ltd [1967] RPC 375 at 391. [63] [1997] RPC 289 [64] Ibid at 396-7. [65] Lavery (1996) p 49. [66] See Mars UK Ltd v Teknowledge Ltd (1999) 46 IPR 248; K Davey, 'Reverse Engineering of Computer Programs' (1993) 4 AIPJ 59 at 65; G Hughes 'Reverse Engineering of Software' (1993) Law Institute Journal 1032 at 1032; and I Albrey 'Reverse Engineering - Current Issues' (1992) 5 (3) Australian Intellectual Property Bulletin 21. [67] See however ss 74-77 of the Copyright Act 1968 (Cth), which raise particular concerns in the reverse engineering of spare parts; See also G Provan, 'Reverse Engineering and the Manufacture of Spare Parts' (1994) Building and Construction Law Journal 87. [68] See A Mitchell, 'The Jurisdictional Basis of Trade Secret Actions' (1997) 8 Australian Intellectual Property Journal 134 at 147; See also Lavery (1996), p 49. [69] (2001) 185 ALR 152 at 175 [70] Callinan J expressed his agreement with the rest of the Court at 174. [71] (2001) 185 ALR 152 at 171. This is consistent with the findings of Byrne J, the trial judge. [72] (2001) 185 ALR 152 at 170. [73] Ibid at 171-172. [74] Ibid at 172 citing Callinan J at 179 citing Biodynamic Technologies Inc v Chattanooga Corp 644 F Supp 607 (1986) at 611. [75] (2001) 185 ALR 162 at 171 citing Howard F Hudson Pty Ltd v Ronayne (1972) 126 CLR 449 at 453 citing Esso Petroleum Co Ltd v Harper's Garage (Stourport) Ltd [1968] AC 269 at 331 [76] See (2001) 185 ALR 152 at 172. [77] See (2001) 185 ALR 152 at 172-174. [78] Id, citing by way of example, BHP Co Ltd v Hapag-Lloyd AG [1980] 2 NSWLR 572 at 581 and Queensland Co-operative Milling Association v Pamag Pty Ltd (1973) 133 CLR 260. [79] (2001) 185 ALR 152 at 173. [80] Id, citing British Franco Electric Pty Ltd v Dowling Plastics Pty Ltd [1981] 1 NSWLR 448 at 451. [81] (2001) 185 ALR 152 at 174 [82] Id. [83] Id. [84] Id. [85] Herbert Morris Ltd v Saxelby [1916] 1 AC 688 at 701. [86] (2001) 185 ALR 152 at 177 [87] Id. [88] Ibid at 178. The evidence before the trial judge was that both parties had received legal advice prior to entry into the confidentiality agreements. [89] (2001) 185 ALR 152 at 178-179 citing Lord Pearce in Esso Petroleum Co Ltd v Harper's Garage (Stourport) Ltd [1968] AC 269 at 324. [90] Rhone-Poulenc Agro, S.A. v Dekalb Genetics Corporation and Monsanto Company 271 F.3d 1081 (2001) [91] (2001) 185 ALR 152 at 179, citing Biodynamic Technologies Inc v Chattanooga Corp 644 F Supp 607 (1986) at 611. [92] (2001) 185 ALR 152 at 179. [93] Id. [94] K Mohr, 'At the Interface of Patent and Trademark Law: Should a product configuration disclosed in a utility patent ever qualify for trade dress protection? (1999) Intellectual Property Journal 201 at 206. [95] Id. See also K Davey, 'Reverse Engineering of Computer Programs' (1993) 4 AIPJ 59 at 60 citing S Ricketson, The Law of Intellectual Property, (Law Book Co, Sydney, 1984), p 7. [96] 644 F Supp 607 (1986) [97] Ibid at 609. [98] United States District Court of Florida, Miami Division [99] 209 F.2d 493 (2nd cir.1953) [100] Id. [101] 203 F.2d 369 (7th Cir 1953). [102] Ibid at 371. [103] See Navajo Nation and Frye v Peabody Coal Company 2001 U.S. App. LEXIS 6052; 7 Fed. Appx. 951. [104] 203 F.2d 369 (7th Cir 1953). [105] 644 F Supp 607 (1986) at 611 [106] (unreported 3 May 2002, Supreme Court of New South Wales).