Why business leaders should care

A long-running dispute between UON Pty Ltd and former employee Mr Gabriel Hoascar has taken another step, and it’s a reminder that IP risk is ultimately a value-at-risk issue, not just a legal one.

What the dispute is about

The dispute concerns a motor starting, control and power management system used in demanding operating environments (including dewatering in mining applications).

What makes the case a useful “live” governance study is that it originally ran on two parallel pathways; namely, patent enforcement and breach of confidentiality; and one pathway fell away while the other continued.

In particular, the proceeding formerly included an infringement claim relating to Australian Innovation Patent No. 2020103197, but that patent was held invalid in related Federal Court proceedings (Allied Pumps Pty Ltd v LAA Industries Pty Ltd [2023] FCA 1457). UON then amended its Statement of Claim to remove the infringement claim, while continuing to press confidentiality-based claims.

Latest procedural development

In the latest decision in UON Pty Ltd v Hoascar (No 2) [2025] FCA 1608, the Federal Court dismissed an interlocutory (mid-case) strike-out application by the respondents targeting substantial parts of UON’s confidentiality-based pleading.

The Court emphasised that even if an invention lacks novelty because of prior acts and prior art documents that were “publicly available” before the priority date of the patent application, that does not automatically destroy confidentiality; especially where express contractual confidentiality obligations and more specific categories of confidential information (e.g., internal testing data, configuration details, communications) are alleged. Accordingly, a lack of novelty does not equate to a lack of confidentiality. (Procedural point: this enabled the claim to proceed; it is not a final finding on liability.)

The Court also made cost findings relating to the disposal of the patent infringement claims as a result of the Allied Pumps decision. In particular, it was held that the respondent was entitled to seek its costs in relation to the patent claims on an ordinary party-party basis (i.e. recovery of only about 60-75% of its actual legal costs) up to the date an offer of compromise was served on UON; and on an indemnity basis thereafter (i.e. recovery of about 90-95% of actual legal costs). This is because the Judge held that the UON should have known that their patent case was likely to fail as at the date of the offer.

The IP risks this Dispute Highlights

1. Protection stack risk: If your IP position relies too heavily on one layer (e.g., patents), you can be exposed when it fails. The case illustrates how disputes can continue via claims related to misuse of confidential information, especially when express contractual confidentiality obligations are in issue, even after patent protection falls away.
2. Inadequate oversight of “know-how that matters”: The final outcome of the case will likely be influenced by whether UON can prove that specific information, such as development and testing information, internal configurations, data and documentation related to the new system, was protected by confidentiality and that there was unauthorised use or disclosure of this information by Hoascar. In practice, this is where organisations can discover that “we thought it was confidential” is not the same as being able to evidence that the information was not publicly available at the time of the alleged breach. Practical steps that can be taken to demonstrate and maintain confidentiality include clearly marking documents as “CONFIDENTIAL”, employing document access restrictions (e.g., limiting distribution only to employees who have a ‘need to know’ the information; as well as using password protection, multifactor authentication, and a document management system that controls and tracks access), and confidentiality clauses in employment contracts.
3. People and handover risk: It is important that employees are aware that they have confidentiality obligations to the business during employment and post-employment. Employee departures and third-party interactions are high-risk moments. You should remind your departing employees in writing and during exit interviews of their continuing contractual and equitable obligations regarding confidentiality. Gaps between HR processes, IT access removal, device/data controls, and legal obligations can create both value leakage and evidentiary weakness.
4. Cost of enforcing or defending rights: Costs can escalate unpredictably, including cost consequences linked to settlement dynamics and litigation conduct. It is particularly important to properly consider any formal offer of compromise carefully, as failure to accept a reasonable offer puts you at risk of having to pay indemnity costs from the date of the offer. Indemnity costs are significantly higher than ordinary party-party costs.
5. Uncertainty in value at risk: Even without final liability findings, disputes can create uncertainty around:
   • customer confidence and competitive positioning;
   • pricing pressure and margin erosion;
   • management distraction from delivery and growth.

The next question: How can these risks be mitigated?

• Implement an IP strategy: Conduct an IP audit that includes mapping (i) value drivers, (ii) enabling know-how, (iii) what to patent vs keep secret, and (iv) how protection actually works day-to-day (contracts + process + controls). Turn it into Board reporting: top assets, threats, mitigations, and clear owners.
• Consider IP insurance: It won’t enhance the scope of your rights, but it can fund enforcement/defence capacity and reduce downside exposure when disputes emerge.
• Quantify value at risk: Use scenario valuation to size downside (margin/share leakage, price compression, delayed sales, redesign/workarounds, disruption to deals and fundraising).

A simple checklist for management

1. Do we know our top 5–10 intangible assets that drive earnings?
2. For each, what is the protection stack, and what happens if one layer fails?
3. Where does our critical know-how live, who can access it, and can we evidence controls?
4. Are employment and offboarding processes designed as risk controls (not just admin)?
5. Do we have funding capacity to defend/enforce value if a dispute emerges?
6. Do we know how much value is at risk if it does?