care needs to be taken reporting court judgements, and in this case we shall rely heavily on the words of Queensland Supreme Court Judge, The Honourable Justice Thomas Bradley. He explained that the plaintiffs – the Austrian company Madritsch and their Australian representative Nioa – allege that Thales used confidential information about a solution to a problem affecting all Steyr assault rifles, including the Army’s Austeyr, in breach of a non-disclosure agreement.

The brief background is that both the original 5.56mm Steyr AUG and its local derivative are gas operated weapons that were never designed to incorporate a 40mm under barrel grenade launcher. When the Australian Army decided that they wanted one fitted, the initial Thales solution had the unintended consequence that when fired the recoil pushed the bolt back slightly so that the weapon had to be manually re-cocked to fire a bullet. These events occurred in 2006.

Normally legal findings are dry affairs – particularly in IP matters – but the judgement of Justice Bradley most definitely is not. If anyone wants to learn about how a gas operated military assault rifle works they should read the initial several dozen pages of the document, which come with illustrations, charts and clearly worded explanations. Judge Bradley has a background in industrial law and a private interest in Numismatics (the study of coins and medals) and these presumably further assisted him to explain the highly technical complexities of the matter. A link to the full judgement is here: caselaw/qsc/2021/170.

In summary, Thales were initially unable to solve the grenade launcher problem, despite many attempts. They became aware that Madritsch had developed a solution for the Austrian Army. They entered into discussions with the company, obtained technical data and then six conversion kits for Austeyrs after signing various NDAs. Subsequently, Thales said that they were no longer interested in a deal with Madritsch, though it took some time for the conversion kits to be returned. In the meantime, Thales had implemented a solution for the Australian Army.

Later at a defence technology exhibition, Madritsch came across a modified Austeyr rifle at the Thales stand and on closer inspection it looked like the changes were extremely similar – if not identical – to the ones that they had offered to sell. The heart of the judgement is from pages 53-56 in which Justice Bradley rejects significant parts of evidence from Thales claiming that it was just coincidental and questions the truthfulness and character of several of the key witnesses.

There are many parts to his findings in favour of the plaintiffs and just one paragraph will illustrate the tone, writing on page 75:

“I am satisfied that Thales engaged in this conduct with the purpose of misleading or deceiving the plaintiffs so that they (and Nioa in particular) would not make a direct approach to the Commonwealth about supplying the Madritsch Solution kits for the use of the ADF until such time as Thales was ready to offer its alternative solution to the bolt unlocking problem to the Commonwealth in the LAND 125-3C program.”

Thales Australia said they were disappointed with the result. “Since the judgement was handed down on 26 July 2021 Thales has carefully assessed its options for an appeal. Today (20 August), we have lodged an appeal with the Queensland Court of Appeal on the basis that Thales was incorrectly found liable based on inferences that were not supported by the evidence, and in some respects were contrary to the evidence. The appeal is against both the breach of confidence and the misleading and deceptive conduct rulings. We look forward to the matters being heard by the Court of Appeal, most likely in 2022.

This is an excerpt from APDR. To read the full story, click here.


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Kym Bergmann is the editor for Asia Pacific Defence Reporter (APDR) and Defence Review Asia (DRA). He has more than 25 years of experience in journalism and the defence industry. After graduating with honours from the Australian National University, he joined Capital 7 television, holding several positions including foreign news editor and chief political correspondent. During that time he also wrote for Business Review Weekly, undertaking analysis of various defence matters. After two years on the staff of a federal minister, he moved to the defence industry and held senior positions in several companies, including Blohm+Voss, Thales, Celsius and Saab. In 1997 he was one of two Australians selected for the Thomson CSF 'Preparation for Senior Management' MBA course. He has also worked as a consultant for a number of companies including Raytheon, Tenix and others. He has served on the boards of Thomson Sintra Pacific and Saab Pacific.


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