Patent infringement trial postponed for Domino's and Precision Tracking
Domino's and small tech firm Precision Tracking will appear in court in mid-2018 to present evidence on alleged patent infringement and breach of non-disclosure agreements over a GPS driver tracking system.
The Federal Court of Australia has postponed a patent infringement trial between Domino's Pizza Enterprises and Precision Tracking, with the presiding judge agreeing that in the interest of fairness, additional time should be provided to Domino's to prepare for the trial.
Precision, a small Chippendale, Sydney-based technology company claiming to be the creator of the Domino's GPS driver tracking system, initiated legal proceedings for alleged infringement of innovation patents filed in October 2014 and August 2015.
The company claims it built the technology underpinning the pizza chain's driver tracking system over a number of years, and was preparing a national rollout in partnership with Domino's after conducting a year-long proof-of-concept trial.
Those plans, however, never came to fruition; Precision claims the pizza chain terminated the relationship and signed a deal with rival company Navman Wireless, which allegedly "reverse-engineered" the technology, breaching non-disclosure agreements (NDAs) and infringing its patents.
Counsel representing Precision told Justice Alan Robertson in Federal Court on Monday that the patent it filed in 2014 outlines features of its driver tracking system, previously called Driver Command, that were allegedly replicated by Navman.
These allegedly copied features include the customer interface that provides an estimated delivery time and is continuously adjusted based on the location of the driver, as well as providing a real-time display of the delivery driver's location on Google Maps.
Under Section 119(1) of the Patents Act 1990, "a person may, without infringing a patent, do an act that exploits a product, method or process and would infringe the patent apart from the subsection if, immediately before the priority date, the person was exploiting the product, method, or process in Australia or had taken definite steps (contractually or otherwise) to exploit the product, method, or process in Australia".
Precision's legal representative said the opposing counsel's argument is that the alleged product exploitation did not occur prior to the specified priority date of October 2014.
"But there's a substantial carve out of that defence, which is found in Subsection 3, which says that the carve out doesn't apply to a product derived from the patentee or the patentee's predecessor entitled to the patent invention, unless otherwise made publicly available," Precision's counsel argued.
"Navman and Domino's parties embarked on the process of developing, taking definite steps to the exploitation of the product around the 27th of August 2014. That's when Navman first came into Domino's and, we say, looked at our system. That of course is a disqualifying activity, we say, under Subsection 3, because it wasn't publicly available at the time."
Precision is claiming that Domino's and Navman replicated the technology because "the patents are for a very good product" involving "a combination of the car topper with its computerised device and the RFID tag or other identifier included in it, and the driver association which is achieved by that system in coordination with the other elements" such as the display on Google Maps.
Precision has a four-part argument, the first being the matters in contract and equity that protect the disclosures Precision made to Domino's and its directors and franchisees; while the second part involves information relating to "the car topper elements" that were protected before the publication of the patents.
The third part pertains to "the key misuse of confidential information on behalf of each of Domino's and Navman [involving] a disclosure and use by both parties principally for the purposes of building a proof-of-concept system in Domino's Hamilton, Queensland office", which Precision claimed occurred between September 8 and October 15, 2014.
Precision claims the system was then refined during a six-week trial, which culminated in a successful demonstration of the proof-of-concept by Navman on November 29 and 30, 2014.
The fourth part of Precision's argument involves the consequences of misuse, with its counsel saying the first consequence of misuse occurred on December 2, 2014, prior to the publication of the company's patents, when it claims Navman "displaced" Precision as the "incumbent" deploying the system across Domino's stores in Australia and New Zealand, and subsequently in France, Belgium, and the Netherlands.
"We say that displacement results in contractual damages or equitable compensation against Domino's, and on the account of profit against Navman," Precision's legal representative said.
Precision also claims that the confidential agreement established with Domino's in 2013 indicated that the information should remain confidential even after publication of the patents, and therefore "justifies injunctive relief against the system being operated as a whole" or "in the alternative, against identified parts in the system as identified by the presence of that system, of which aspects are still confidential".
"It's important to note that this is not merely a springboard case in the sense that someone gains an advantage before information becomes public ... this case is different because on the documents the evidence shows that Domino's wanted the system that Precision had at the stage of an advanced trial, they wanted that system rolled out by the 30th of June 2015," Precision's counsel said.
It additionally alleges that Domino's gave Navman an "extremely short amount of time" to deliver a proof-of-concept system, and that Navman would not have been able to successfully do so in time if Precision's information had been kept confidential.
"We say regardless of whether we've been displaced, Navman could not itself have gotten this contract and put itself in a position to deliver features required so as to roll out the system in Australia and New Zealand by the 30th of June 2015 unless it had the benefit of these requirements specified from our client's system," Precision's counsel said.
The company's legal team further argued that the Domino's IT department "wanted to get rid of Precision, but business was happy with Precision, so [they knew] it's going to be difficult". It alleges that a member of the IT team told Navman of "a potential gap" in its system compared to its incumbent, which could be a "showstopper".
The IT worker allegedly went on to disclose confidential information on Precision's system to see if Navman could replicate it, Precision said.
"We're saying that the way the requirements were specified were far more than a functionality match in the sense of 'I want to have a word processing program'; they were a detailed set of features at very low level of abstractions, and that's because they were able to be taken from Precision's user guide [provided to Domino's franchisees trialling the system] and turned into a statement of requirements," Precision's counsel said.
Counsel for Precision read out a number of emails allegedly exchanged between Domino's IT department and Navman, including one mentioning that the Domino's operations team had formally signed off so Navman would "potentially replace [Precision] as our preferred GPS provider".
The email also allegedly outlined the functionality requirements, some of which counsel said were derived from Precision. Counsel for Precision alleged Domino's IT team was "extremely keen to finalise the overall commercial proposition, and to conclude our contract negotiations".
"In effect, at this point, the deal is done because they immediately proceed to discussing questions of rollout and my client is now off the scene," Precision's counsel argued.
Experts examining the similarities between the Precision and Navman systems were not able to conclusively express their views on whether there is a patent infringement, Precision's representative said, due to Navman not providing the information needed.
The parties had been previously ordered to provide source code for the software underpinning their respective systems, as well as detailed explanations of how they work, including the Navman Qube devices now mounted on delivery vehicles.
"We're trying very hard to get the discovery which would enable them to have certainty on that topic, and ultimately that failed because the affidavit from Navman which was delivered on the 21st of October didn't resolve the issue conclusively so [the experts] couldn't reach an agreement on how the system worked," Precision's counsel said.
Domino's legal team did not address the claims about its IT department during the first two days of the trial, instead alleging that the information Precision claims as confidential was already disclosed by Precision itself on multiple occasions, such as during pitches to pizza rivals Crust Pizza and Eagle Boys and to insurance organisation NRMA, as well as during presentations at technology conferences such as Tech23.
According to Domino's, Precision has been "only too willing since 2012 to tell everyone about [its driver tracking technology] either by attending conferences or by putting videos up on YouTube, disclosing some or all of the elements of the system that [Precision] now says wants to maintain their confidentiality over".
In those presentations, Domino's alleged that its own confidential corporate information was also disclosed, including its one-year trial of Precision's technology across "12 to 20 odd stores" and numbered results demonstrating how the technology enabled the reduction in worker's compensation calculations, number of road accidents during deliveries, delivery times, and maintenance costs, as well as how it helped boost productivity.
As such, Domino's claims Precision breached the NDA, adding that the company information had not been publicly available in its disclosures to the New York Stock Exchange for FY14 -- which Precision had allegedly claimed in justifying its use of the information.
Domino's said new materials also suggest that Delivery Command, the name of Precision's driver tracking system, was subsequently incorporated in Australia as a separate company on January 28, 2016.
Domino's argued that this means Delivery Command, as a separate company that did not sign any confidentiality agreements and is therefore not bound by obligations, used confidential information provided by Precision's directors -- who are also the directors of Delivery Command.
In its case for postponing the trial, Domino's alleged that Precision also did not comply with its discovery obligations until very recently, including its email correspondence with NRMA and a copy of the presentation it delivered to NRMA.
The NRMA documents are relevant because they demonstrate Precision's disclosure of elements of its own driver tracking system that it claims are confidential, Domino's argued.
Given the delay in discovering the NRMA documents, Domino's counsel argued it would be "unfair" to continue the trial, as the party is "entitled to know all of the facts, matters, and circumstances by which we would prosecute the whole of our case".
In approving the postponement, Robertson J noted the "untidiness" of Precision's approach to providing relevant documents.
The trial has been pushed to mid-2018, and is expected to last four weeks.