Patent Pending, Injunction Ending… The Federal Court Steps into the Ring

EOS Defence Systems Pty Limited v Pahlavani [2026] FCA 688

Introduction

Justice Stellios, sitting as duty judge in the Federal Court of Australia, has granted a mandatory interlocutory injunction requiring RedTail Technology Pty Ltd (RedTail) and its founder and sole director, secretary and shareholder (Richard Pahlavani), to withdraw all patent applications that claim priority from Australian Patent Application number 2024904131 titled “LASER DIRECTOR, AN ELECTROMAGNETIC SPECTRUM DENIAL DEVICE, A POINTING SYSTEM AND A WEAPON SYSTEM”, including any applications filed under the Patent Cooperation Treaty.

The Applicants, EOS Space Systems Pty Limited and EOS Defence Systems Pty Limited (EOS), claim that making the patent applications amounted to misuse of information and other unlawful conduct by RedTail and Mr Pahlavani based on his previous employment by the Applicants.  The mandatory interlocutory injunction application was brought on an urgent basis, with the proceedings commenced on Friday 29 May 2026, the hearing of the application occurring on Monday 1 June 2026 and Justice Stellios delivering his decision on Tuesday 2 June 2026. The proceedings continue, with the case now in the hands of Justice Moore, with a case management hearing before Justice Moore scheduled for 6 August 2026.

Background

EOS is in the business of designing and manufacturing advanced technology systems including remote weapon systems, high energy laser weapons, AI-enabled command-and-control for layered counter-drone capability, and ground-based space control capabilities for precision tracking, intelligence and deterrence. EOS’ clients include defence and military forces around the world.

EOS had employed Mr Pahlavani as a laser engineer between January 2021 and March 2024. Mr Pahlavani’s employment contract with EOS contained confidential information and intellectual property clauses. While at EOS, Mr Pahlavani worked on a project relating to a laser system or anti-drone system (Laser Rifle).

Mr Pahlavani resigned from EOS in March 2024. He then incorporated RedTail in August 2024. In December 2024, RedTail filed a provisional patent application: Australian Patent Application number 2024904131 entitled “LASER DIRECTOR, AN ELECTROMAGNETIC SPECTRUM DENIAL DEVICE, A POINTING SYSTEM AND A WEAPON SYSTEM” (the 131 Application), with an application subsequently being filed under the Patent Cooperation Treaty (the PCT Application).

EOS alleged that Mr Pahlavani had used and/or disclosed, without permission, confidential information obtained from his employment with EOS in preparing these patent applications.

Key Issues

EOS filed these proceedings seeking orders permanently restraining Mr Pahlavani and RedTail from using/disclosing confidential information obtained from Mr Pahlavani’s employment with EOS (the Confidential Information), pecuniary relief, and delivery and destruction of the information.

EOS sought this relief on the basis that Mr Pahlavani had allegedly:

(1)    contravened s 183 of the Corporations Act 2001 (Cth);

(2)    breached an equitable obligation of confidentiality owed to EOS;

(3)    breached the terms of his employment contract with EOS; and

(4)    breached his fiduciary duty to EOS

EOS also alleged that RedTail had been knowingly involved in Mr Pahlavani’s contravention of s 183 of the Corporations Act, had breached an equitable obligation of confidentiality owed to EOS, had induced Mr Pahlavani’s breach of his employment contract, and had been knowingly involved in Mr Pahlavani’s breach of fiduciary duty to EOS.

Critically, EOS also sought an urgent mandatory interlocutory injunction requiring RedTail (and Mr Pahlavani) to withdraw all patent applications that claim priority from the 131 Application, including any applications filed under the Patent Cooperation Treaty. It is this mandatory interlocutory injunction application which was the subject of Justice Stellios’ decision.

Justice Stellios decided the mandatory interlocutory injunction application on the basis of the alleged contravention of s 183(1) of the Corporations Act. Section 183(1) provides that a person who obtains information because they are, or have been, a director or other officer or employee of a corporation must not improperly use the information to (a) gain an advantage for themselves or someone else or (b) cause detriment to the corporation.

Justice Stellios applied the undisputed principles applicable to interlocutory injunction applications in determining whether to grant the injunction, namely:

• Whether there was a serious question to be tried;
• Whether the balance of convenience favoured the making of the order; and
• Whether damages would not be an adequate remedy.

In addition to these undisputed principles, Mr Pahlavani and RedTail submitted that the mandatory character of the interlocutory injunction (which required RedTail and Mr Pahlavani to perform a specific positive action i.e. to withdraw the patent applications) should be a factor that weighs heavily against the order being made. While Justice Stellios considered that the fact that the order sought required Mr Pahlavani and RedTail to take certain action was a factor to consider on the interlocutory application, his Honour also considered that the character of the order was akin to an order that would have restrained them from filing the patent applications if the order had been sought beforehand. Accordingly, the order sought could in substance be characterised as an order to refrain from prosecuting the patent applications.

Serious Question to be Tried

EOS succeeded in persuading Justice Stellios that there was a serious question to be tried in respect of the alleged contravention of s 183(1) of the Corporations Act. His Honour considered that the uncontested expert evidence filed by EOS established that concepts that formed part of the EOS project on the Laser Rifle (to which Mr Pahlavani contributed and in relation to which he had access) were concepts forming part of the PCT Application. This led to the conclusion that there was a serious question to be tried as to whether Mr Pahlavani improperly used information obtained because he was an EOS employee to gain an advantage for himself and for RedTail.

In reaching this conclusion, Justice Stellios rejected the following arguments from Mr Pahlavani and RedTail:

• That EOS had not specifically identified the information alleged to be confidential. His Honour disagreed, finding that the confidential information had been specifically identified, with his Honour’s view being strengthened by the fact that Mr Pahlavani had been able to “engage” with the alleged confidential information allegations.
• That the alleged confidential information was not in fact confidential. His Honour considered that the position was not presently clear on the evidence before him and, so, it did not displace the existence of a serious question to be tried. Further, his Honour noted that s 183(1) of the Corporations Act required consideration of whether Mr Pahlavani and RedTail had improperly used information (not confidential information).
• That EOS’ actions had given rise to an estoppel on the basis that Mr Pahlavani had allegedly disclosed that he had a pre-existing project to EOS and EOS had agreed that he could continue to own and develop the technology the subject of that pre-existing project. His Honour considered that the possibility of an estoppel argument was insufficiently clear to undermine the fact that there was a serious question to be tried.

Balance of Convenience

EOS then went on to successfully persuade his Honour that the balance of convenience favoured the grant of the mandatory interlocutory injunction.

EOS argued that:

• If allowed to proceed, the PCT Application and the 131 Application would become public on or about 18 June 2026, so destroying the confidentiality of the information. This would impact EOS’ ability to commercialise its product (particularly given the nature of their customer base, being defence and government organisations which mandate strict confidentiality protocols), leading to lost future sales and significant waste of invested resources. Competitors would also potentially be able to reverse-engineer or replicate the technology.
• Even if EOS was entitled to be assigned any patent arising from the PCT Application, that would not address the harm identified above. Justice Stellios considered that this factor and the previous factor weighed heavily in EOS’ favour.
• EOS accepted that they might need to give an undertaking as to damages which would protect RedTail’s and Mr Pahlavani’s position.  In contrast, RedTail and Mr Pahlavani did not have the means to meet an adverse pecuniary relief order. This meant that, even if damages were an adequate remedy, there would likely be no compensation flowing to EOS. Justice Stellios accepted this submission.

In answer to EOS’s position, RedTail and Mr Pahlavani argued that:

• They would suffer material prejudice, in particular that the injunction sought would put an end to the current patent applications. This would result in a lost opportunity to seek patent protection in multiple jurisdictions on the basis of the current priority date, and consequent financial loss for RedTail and Mr Pahlavani given the investment made in the patent applications. RedTail and Mr Pahlavani would also be unable to obtain outside investment in RedTail’s business because investors would be unwilling to invest in a product without patent protection. Further, EOS’ proffered undertaking would be insufficient to adequately address that prejudice, and damages would not be an adequate remedy. While his Honour accepted that RedTail and Mr Pahlavani would suffer the detriment outlined above and that there might be some challenges for any assessment of damages, Justice Stellios was not persuaded that the lost opportunity from the forced withdrawal of the patent applications was not compensable in the ordinary way. His Honour noted that EOS had offered the usual undertaking, and that it was uncontested that they had the financial means to satisfy an award for damages.
• EOS had delayed bringing its application for a mandatory interlocutory injunction. While his Honour accepted that there had been some delay, Justice Stellios did not consider this delay to be disentitling.
• EOS had approached the Court with unclean hands, including because of the matters that formed the basis of the estoppel claim. His Honour did not give weight to this argument.
• There was no serious question to be tried. For the reasons set out above, his Honour did not give weight to this argument.
• There was an alternative mechanism suggested to EOS, of seeking the redaction of passages from the PCT Application. RedTail’s and Mr Pahlavani’s counsel, however, conceded during the hearing that there would be no guarantee that such an option would be effective.

Outcome and Implications

Accordingly, Justice Stellios granted the mandatory interlocutory injunction, subject to EOS providing the usual undertaking as to damages. The 131 Application has now been withdrawn, with its status showing as “lapsed” on the Australian patents register.

Justice Stellios’ decision will be welcome news for employers for whom enforcement of confidentiality obligations owed by former employees is critical. His Honour’s decision continues the recent run of interlocutory injunction cases heard by the Federal Court of Australia in the context of patent disputes, albeit the fundamental dispute here related to an alleged misuse of confidential information. Justice Stellios’ decision illustrates the swiftness with which the Federal Court can hear and determine interlocutory injunction applications. Justice Stellios’ decision also illustrates the Federal Court’s willingness to grant an interlocutory injunction where the facts justify the grant of the injunction, even when, as in this case, the enjoined party loses the opportunity to pursue a valuable property (patent) right as a result.

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