Copyright and Confidential Information Law Update - Austin Engineering Pty Ltd v Podulova [2023] FCA 419

Intellectual Property
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M Marcus
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Copyright – confidential information – Norwich Pharmacal orders

Austin Engineering sought discovery from the Schlam Group about whether an
ex-employee (subsequently employed by Schlam) had saved Austin’s copyright and confidential information onto Schlam’s hard drives. Even though Schlam was not alleged to be a wrongdoer, it was ordered to disclose information, because there was evidence that the ex-employee was a wrongdoer, the information was necessary to allow Austin to proceed, and Schlam was mixed up in the wrongdoing (there was reason to believe Austin’s information was saved to Schlam’s server).


Austin Engineering is an engineering company. Ms Podulova was its employee. After Ms Podulova ceased employment with Austin, she kept a computer which Austin had given to her to work from home during the pandemic, which may have had relevant information of Austin on it. Evidence from a forensic computer expert suggested that, before and after her employment with Austin ceased, Ms Podulova may have connected multiple external USB storage devices to the computer and copied files and folders relating to Austin's business to those devices.

Although Austin recovered the desktop just over a month later, it alleged that Ms Podulova may have retained Austin's information on those USB devices. It was strongly arguable that if Ms Podulova did these things, she breached several terms of her written contract of employment with Austin, as well as equitable duties of confidence.

After she left Austin’s employment, Ms Podulova was employed by the Schlam Group. Ms Podulova accessed the Schlam SharePoint server from the Austin computer multiple times after she started working for Schlam, suggesting that she may have copied Austin's information from one of the external USB storage devices to the Schlam SharePoint server. The forensic computer expert’s opinion was that “there is a reasonable probability that the Austin information could have been copied to the Schlam SharePoint server, or used in documents being accessed on” that server. Justice Jackson accepted that inference was open.

It was not disputed that Ms Podulova kept possession of Austin's information after she ceased being Austin’s employee, that she had possession of that information at least part of the time she worked for Schlam, and that she may have used Austin's information in the course of that work.

While Ms Podulova had complied with earlier orders requiring her to produce some of the USB devices to the Court, she had not produced the main external drive which appeared to have been the repository of the bulk of Austin's information. She informed the Court that she destroyed that device before the earlier orders were made. Justice Jackson also ordered Ms Podulova to provide an affidavit as to the whereabouts and contents of that drive.


Justice Jackson ordered injunctions preventing Ms Podulova from doing certain things with Austin's information, in so far as it was stored in digital form in certain places and requiring her to produce that information to the Court.

His Honour also ordered her new employer (Schlam) to disclose details that were potentially relevant to the alleged misuse of the information.

Schlam’s involvement

Austin did not allege that Schlam was knowingly involved in any of the claimed wrongful use of Austin's information, and the extent to which anyone at Schlam other than Ms Podulova knew of what she was doing with the information was unknown. However, there was a basis in the evidence to think that Ms Podulova made use of the information in a way that involved the Schlam SharePoint server or files on that server, and an inference was open that she was using the information for the purposes of her employment with Schlam.

Austin sought orders requiring a director of each of the Schlam respondents to provide an affidavit attesting to the best of their knowledge or belief to details of devices, networks and cloud storage, email and other accounts which may have Austin's information on them and compelling production of a review of Austin's systems. Justice Jackson made the orders sought.

The basis of the orders

Justice Jackson made the orders on the basis of the principle, articulated in Norwich Pharmacal Co v Commissioners of Customs & Excise [1974] AC 133 and developed in later cases, that if through no fault of his or her own a person gets mixed up in the tortious acts of others so as to facilitate their wrongdoing, he or she comes under a duty to assist the person who has been wronged by giving the wronged person full information. This principle has equitable foundations. It is not necessary for the applicant to have a cause of action against the person to whom discovery is sought.

To obtain Norwich Pharmacal relief it is not necessary to satisfy the stringent requirements for an Anton Piller order. The Court is entitled to approach the matter by asking whether there is a serious question to be tried in circumstances where, at an early stage of the case, the evidence is often incomplete. The order is made at an early stage in the proceeding if the Court is satisfied that the applicant will probably suffer irreparable damage if there is any delay in ordering discovery.

There are three conditions that must be satisfied to obtain Norwich Pharmacal relief:

(a) there must be an arguable case that a wrong has been carried out by an ultimate wrongdoer;

(b) the order must be necessary to enable the applicant to bring legal proceedings or seek other legitimate redress for the wrongdoing; and

(c) the persons against whom the order is sought must be involved in the wrongdoing in a way which distinguishes them from being a mere witness.

If those conditions are met, the Court must exercise its discretion to decide whether disclosure should be ordered, so as to do justice.

Counsel for Schlam submitted that a Norwich Pharmacal order should not be made unless the Court is reasonably satisfied that the applicant will suffer irreparable damage if there is any delay, and that the order is necessary for the long-term protection of the applicant. Justice Jackson rejected this submission. He concluded that the question of irreparable damage was relevant to the issue of discretion. He considered that the likelihood that damage will be suffered by an applicant if there was delay was an important factor, and the weaker that likelihood, the less likely it is to be in the interests of justice to make the order.

Justice Jackson observed that these applications usually arise early in the proceedings where the evidence may not permit certainty, and where the point of the order sought may be to help the applicant and the Court find out the extent to which confidential information has been used or disseminated. His Honour concluded that it was not necessary to be satisfied that irreparable damage will occur before making orders.

Justice Jackson concluded that the three criteria were satisfied.

First, it was not in dispute that Austin had established there was an arguable case that wrongs have been carried out by Ms Podulova.

Second, Justice Jackson also considered the order was necessary for Austin to bring legal proceedings and to seek redress for the alleged wrongdoing: Austin had provided confidential examples of Austin's information, which included detailed technical drawings, sales and pricing information, client tender information and other communications with customers, but could not bring proceedings unless it knew what Ms Podulova had done with the information. Some of the Schlam respondents may have the information, but what information Schlam had was unknown.

Third, Justice Jackson concluded that Schlam was involved in the wrongdoing in a way which distinguished it from being a mere witness. It employed Ms Podulova and many of the alleged wrongs took place during the period of, and possibly in the course of, her employment (even if that was without Schlam's knowledge or approval). There was reason to believe that Austin's information may have been transferred to a Schlam server or used in files located on that server. That was enough to mean that Schlam was “mixed up” in the alleged wrongs.

Justice Jackson concluded that there were good reasons to exercise the discretion to require Schlam to provide information about what had taken place. Ms Podulova had allegedly committed wrongs involving some deception and dishonesty and even if Schlam had no knowing involvement in those wrongs, its evidence as to what has occurred may be valuable to compare with and supplement hers.

Further, since Ms Podulova said that the main external USB device which was used in the alleged unauthorised copying of Austin's information had been destroyed, it could not be used to reconstruct what has been done with the information on it. The only way for Austin to identify whether the information had gone further may be to inquire as to whether it had been further copied or otherwise transferred to Schlam's network or devices.

If Austin were required to wait for discovery and inspection, that may be too late to prevent Austin's information from being further disseminated or used, and therefore making the disclosure orders was necessary to prevent probable irreparable damage to Austin, and for its long-term protection.

In response to particular arguments put by Schlam:

  • Justice Jackson accepted Schlam was not an alleged wrongdoer, but Austin needed to identify the actual information used, its manner of use and who had had access to it. There was reason to think that information was within Schlam’s knowledge.
  • The forensic expert’s report only concluded that there was a reasonable probability that Austin's information could have been copied to Schlam's SharePoint server, but that evidence needed to be assessed in the interlocutory context in which it was adduced. It provided sufficient basis to think that Austin's information may have found its way to Schlam and to make it in the interests of justice to require Schlam to provide information that would help trace what had happened to it.
  • Although Schlam had cooperated to some extent: (a) its enquiries were said to be ongoing; (b) some of the information it had provided was incorrect; and (c) the details of the “comprehensive review” it had provided showed that it was inadequate. On that basis, Justice Jackson accepted that Schlam might produce better and more accurate information pursuant to the orders.


This case is a useful reminder that: (a) equity can come to the aid of ex-employers where their ex-employees have taken confidential or copyright information and a new employer may be able to shed light on the use that has been made of the information; and (b) since new employers can become unwittingly caught up in cases where an ex-employee has taken copyright and/or confidential information, it is advisable for employers to remind new employees of the need to respect any contractual obligations owed to and/or copyright owned by former employers.

  • Tom Cordiner Headshot

    Tom Cordiner KC holds the dual qualification of barrister and registered patents and trade mark attorney

  • M Marcus

    Melissa Marcus practises in defamation law and all aspects of intellectual property

  • C Cunliffe 2

    Clare Cunliffe practises in intellectual property and general commercial litigation

  • Marcus Fleming Headshot 1

    Marcus Fleming has a significant practice in commercial litigation with a particular focus on intellectual property law.

  • Surkis Amy Headshot

    Amy Surkis is a general commercial litigator with a scientific background and over 10 years' experience.

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