22 September, 2017
Spruson

Production of Documents from the United States for Use in Australian Patent Litigation

Production of Documents from the United States for Use in Australian Patent Litigation

Introduction

In the United States discovery of documents for use in proceedings outside the U.S. is articulated in Title 28 of the Code of Laws of the United States of America (28 U.S.C. §1732).  This provision can be a powerful tool for obtaining documents and, in some cases, oral evidence from the U.S.-based persons and entities for purposes of non-U.S. proceedings.  There are several criteria that must be satisfied before the court may exercise discretion to grant broad ranging discovery or order dispositions.

Applications for orders under 28 U.S.C. §1732 have been made in relation to court proceedings in a geographically broad range of counties including Nigeria, Tanzania, Germany and Australia.  Earlier this year the Australian Federal Court provided guidance on the use of 28 U.S.C. §1732 to obtain evidence for use in litigation in Australian Courts.

This decision is discussed below, but a key question is whether 28 U.S.C. §1732 can be used to obtain evidence for use in Australian patent litigation from a person or entity who is not a party to that action.  For example, where an Australian infringing party is a subsidiary or licensee of the entity in the U.S. and the U.S. parent company or licensor is the “moving spirit” behind the infringement, or at least involved in it, and ordinary discovery might not give access to relevant evidence.  In this scenario, 28 U.S.C. §1732 might be available to gain discovery from the U.S. parent company or licensor that could then be used in the Australian litigation proceedings.

This article examines the requirements of 28 U.S.C. §1732 and the limitations placed on the use of information obtained and the utility of an application under it in Australia.

Requirements of 28 U.S.C. §1732

There are three requirements that must be satisfied before a U.S. court may exercise discretion to make an order under 28 U.S.C. §1732.  First, the person or entity must reside or be located within the jurisdiction of the U.S. District Court to which the application is made.  Second, the material to be discovered must be for use in a proceeding in a foreign or international tribunal. Third, the application must be made by a foreign or international tribunal or by a person who is interested in a foreign litigation (an “interested person”).

The first requirement is relatively straightforward.  The second and third have been interpreted broadly by U.S. Courts. For example, the term “interested person”, contained in the third requirement, includes individuals who possess a reasonable interest in the matter in addition to actual litigants. There are some limitations on what amounts to a tribunal under 28 U.S.C. §1732 and it may or may not include an arbitration hearing.  However, the admissibility of the material under the rules of the foreign court is usually of little importance.

The U.S. Courts’ discretion comes into play after these three requirements have been satisfied.  U.S. case law has established several further tests for the exercise of the judges’ discretion and opened the door for judges to consider an even broader range of factors.  One major consideration is the court’s discretion is less likely to be exercised when discovery is sought from a party to an existing foreign litigation. In comparison, the courts are more likely to grant an order when litigation has not commenced or where discovery is sought from a person or entity that is not a party to any existing litigation.

On the exercise of the discretion, U.S. Courts have also taken the view that it is relevant to ask whether the foreign tribunal already has the evidence made available to it (e.g. under its own discovery rules).  If not, then the U.S. Court is more likely to make an order under 28 U.S.C. §1732.  Additionally, the issues of “exhaustion” and “undue burden” are taken into account.  The former had caused the U.S. courts to consider whether an order under 28 U.S.C. §1732 will only be made granted as a last resort and how the restrictions foreign courts place on gathering evidence have to be considered.  On this point the U.S. Courts have been inclined to favour the granting of an order regardless of the position taken by the foreign court.

Australian Gloss – Lavecky v Visa Inc [2017] FCA 454

In May 2017, Australian Courts provided guidance on the use of 28 U.S.C. §1732.  Australian Courts have been reluctant to allow unfettered use of the provision and, in general, the courts will not permit local litigants to go on “fishing expeditions”.  The courts consider it important to seek their consent prior to proceeding.

In Lavecky v Visa Inc Perram J sets out a list of factors “… likely to be germane to a consideration of whether to endorse an application made under (such) procedures ….”. The more significant factors are:

  • the importance of the material;
  • whether there are other methods for obtaining it; and
  • whether the material affects procedural limits in Australia, e.g. is the application a “fishing expedition” or does it run contrary to the “unwillingness” of the Australian Courts to order depositions.

The cost, timing and likely prospects of success are also considered, however the essential point is that the courts will endorse an application under 28 U.S.C. §1732 in certain circumstances and subject to certain constraints.

How 28 U.S.C §1732 can be used in Australian Patent Litigation

To our knowledge, 28 U.S.C. §1732 has not been successfully used in patent litigation in Australia. Lavecky v Visa Inc demonstrates the constraints on the use of the provision that may apply in patent litigation given the reluctance of judges in the Australian Federal Court to grant broad ranging discovery in patent infringement and revocation actions.

One area where an application may be permitted is in relation to U.S.-based persons and entities who are not involved in a contemplated or commenced litigation in an Australian Court.  As indicated above, an example is where a patent infringement action is contemplated or recently issued and it is apparent that key information is contained in documents held by another party.  This may include where:

  • a U.S.- based person or company that holds the documents is not or will not be a party to the Australian action;
  • an Australian-based infringer is either unwilling or unable to obtain the documents from this other party;
  • the documents contain information that is relevant, the documents would be discoverable if held by the Australian infringer and the information in the documents is otherwise unobtainable;
  • producing those documents would not be too costly, onerous or take too long in the context of the progress of the Australian litigation; and, particularly
  • the documents contain information of a type that, if held by the Australian infringer, the Australian Court would be likely to make subject to an order compelling discovery.

In these circumstances, there could be a role for an application under 28 U.S.C. §1732.  Generally, it may provide an additional discovery tool, particularly in cross-border patent litigation and should also be considered in advance of any patent litigation in an Australian Court.

Authors: Brett Rowland, Special Counsel; Sarah Vo, Paralegal


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