In Chou v Metstech Pty Limited [2023] FCAFC 205 (Yates, Downes and Jackman JJ, 22 December 2023), a decision of the Full Court of the Federal Court of Australia, their Honours considered an appeal from a decision of a single judge of the Court.

In very broad terms it could be described as a claim by the applicants for ownership of certain literary and artistic works authored by a former employee in pursuance of his contract of employment with the applicant parties. It was pleaded initially however as a “tortious conspiracy” and not pleading the usual elements of a copyright infringement claim under the Copyright Act1968 (Cth).

After several iterations of the pleaded case in the initiating process, including at trial, some of the cardinal concepts, as their Honours identified them, were addressed. On appeal, an issue raised challenging the declaratory relief ordered by the primary judge, was the primary judge’s error claimed by the appellants in ordering declaratory relief in the absence of a Taiwanese manufacture being a party to the proceeding. The appellants claimed that the manufacture was the “designer” of the works and that its rights in relation to the works were in rem. It followed according to the appellants, that the declaratory relief ordered should be set aside.

Background

The area of industry involved in the proceeding was the designing and distributing of telecommunications systems for use in underground mines. At [6] their Honours referred to the applicants’ (Metstech, or Metstech parties), summary of the Metstech System in closing submissions at the trial:

“… the Metstech System is a system pursuant to which two-way radio (VHF and UHF) and mobile telephone (LTE) signals can be transmitted and received along underground tunnels.  It is a “leaky feeder” system, in that the signals are transmitted and received through leaky coaxial cables, such that the entire length of each cable functions as an antenna.  The cables connect to the various devices through “N-Type” connectors.  It is a “dual band” system, in that it can transmit and receive radio frequency (RF) signals in two different bands (such as VHF and LTE) simultaneously.  It is a “duplex” system in that signals can be sent and received in two directions simultaneously.”

Their Honours noted that the primary judge had identified the “central factual dispute” as being whether Metstech’s products had been designed by the first appellant (Mr Chou), who was at relevant times, Metstech’s employee: [3]. The Act provides that, subject to any exclusion or modification by agreement, “[w]here a literary, dramatic or artistic work …or a musical work, is made by the author in pursuance of the terms of his or her employment by another person under a contract of service or apprenticeship, that other person is the owner of any copyright subsisting in the work by virtue of this Part”: the Act s 35(6).

The statement of claim filed by the Metstech parties pleaded a number of causes of action but did not plead copyright infringement. In an amended summons the Metstech parties pleaded allegations of copyright subsistence and ownership but the amended summons contained no prayers for relief based on those copyright pleadings. On the third day of the trial the Metstech parties filed a further amended summons and a commercial list statement, which introduced further allegations of copyright subsistence and ownership and sought amongst other things, declaratory relief as to subsistence and ownership in relation to certain works: [19].

The Chou parties – defined in their Honours’ reasons for judgment as Mr Chou and Welldesign Electronics Pty Limited – did not admit copyright subsistence or ownership in certain works. They claimed that the final designs were carried out by manufacturers for the Metstech parties domiciled in Taiwan.

At trial, the Metstech parties alleged that the various respondents were involved in a “tortious conspiracy” to injure the Metstech parties and the thirteenth defendant, Metstech IP Pty Ltd (Metstech IP), by transferring business and assets of Metstech and Metstech IP to other entities, resulting in the Metstech parties having a lesser or no interest in the Metstech business:[2]. The various parties, both individuals and corporations, are identified in [1] of the reasons.

The declaration

In relation to copyright, the primary judge had found that Mr Chou designed the Metstech’s Products as a result of considering the conspiracy case advanced at trial, and had made consequential findings in relation to copyright subsistence and ownership: [4]. These findings and the works were reflected in the following declaration made by the primary judge:

“The Court Declares that:

1  Copyright subsists in the following works in respect of the Products and the Metstech System, and any revisions thereof, and such copyright is held by Metstech:

(a) the Metstech PCB Assemblies;

(b) concept designs;

(c) printed circuit board schematics and layouts;

(d) firmware source code (save for the source code relating to the Raspberry Pi Software);

(e) functional specifications;

(f) test results;

(g) bills of materials;

(h) data sheets; and

(i)  manufacturing files.”

Mr Park and the Martin parties each denied that Mr Chou designed certain works. They also denied subsistence in respect of one of the works claimed by Metstech and ownership of that product and other claimed Metstech works: [29].

Copyright claims – an unusual approach

Their Honours’ set out in their reasons at [33] – [40], some “cardinal concepts” in copyright. The Full Court further noted that the Metstech parties did not before the primary judge, identify and prove the existence of specific literary and artistic works and addressing Mr Chou’s authorship (if any), to those identified works by reference to the Copyright Act.

Instead, the Metstech parties called on a consulting electrical engineer, who, in his report, discussed generalities including the tasks that are typically undertaken as part of electrical design and prototype manufacturing processes; the tools and software that would be required to build the Metstech System; and the role of original component, equipment and design manufacturers. The electrical engineer’s report included a view on copyright ownership of documents which were likely to be produced in the design and manufacturing process”: [41].

The Full Court considered that plaintiffs advanced their copyright case on the incorrect basis that Mr Chou was the alleged designer of electrical components and products. The correct basis was to plead and present evidence on authorship based on Mr Chou’s alleged creation of specific works that were either original literary works or artistic works within the meaning of the Copyright Act rather than “generalised categories of possible works”: [44]. In addition, the items over which Metstech claimed copyright were unusually not before the Court: [45].

The Full Court referred also to a number of general findings on credit made by the primary judge. These included that her Honour approached the evidence of Mr Chou with some caution as it appeared to her Honour that Mr Chou had not complied with the orders for disclosure: [49].

The declaration was in issue on appeal by Grounds 1 and 2. Relevantly, on publishing her reasons for judgment, the primary judge directed the parties provide proposed orders reflecting her Honour’s reasons. The plaintiffs proposed orders included the declaration. The Chou parties, Mr Park and the Martin parties each responded to the plaintiff’s proposed orders by providing written submissions. However, those submissions failed to address the proposed declaration. The Full Court therefore understood that failure, given the primary judge’s findings and reasons, as being an acceptance by the defendants that there was no impediment to the declaration being made.

The Chou parties however contended on appeal in Grounds 1 and 2, that the primary judge erred in making the declaration because, in essence, the Chou parties submitted, the Taiwanese manufacturer referred to as “Yokao” was not notified of the proceeding or joined to the proceeding as a necessary party. Grounds 1 and 2 are reproduced at [63] of the reasons.

The submission followed from the Chou parties’ argument that as the declaration affected Yakao’s rights in rem, Yakao’s joinder to the proceeding was necessary. It followed by the failure to join Yakao, the declaration should be set aside: [64]. The Full Court did not consider the declaration was an order in rem, but rather an order affecting the interests of the immediate parties: [75].

Somewhat unremarkably, Mr Park and the Martin parties supported Mr Chou’s submission saying that if this submission was accepted on appeal, then the other orders should be set aside.

The Full Court also had to consider whether these grounds could be raised now as no such objection had been raised before the Primary Judge: [66]. In deciding not to allow the Chou parties to raise the objection on appeal, the Full Court noted at [68]:  “The Chou parties informed the primary judge that they did not ‘seek to be heard’ on this subject”, except to contend that “Mr Chou did not create or design these products nor prepare the documentation” (references to the primary judge’s reasons omitted)

The Full Court emphasized that the case before the primary judge was about the work Mr Chou in fact carried out as a Metstech employee and whether that work was pursuant to the terms of that employment: [70]. The defensive case that Mr Chou did not carry out the relevant design work (or work of original significance) was a factual case only. Metstech directed its case to the work Mr Chou did as an employee, and by reason of that, there was no possibility that Yakao’s rights could be affected: [73].

The Full Court saw no reason why the declaration could not be varied to make clear that Yakao’s rights were not affected. That variation took the form that the declaration could be prefaced by the words: “As between the plaintiffs and the defendants …”: [80]. On the final day of hearing the appeal, the Chou parties accepted that if the declaration was varied as suggested, Grounds 3-10 of the appeal fell away: [89].

The Chou parties raised similar arguments to the order for delivery up. The Full Court did not accept those arguments, on the basis that the order for delivery up had “effect according to its own terms”: [90].

Other grounds of appeal included that there was no evidentiary basis for an order for an inquiry into damages and an appeal as to costs at first instance. The Metstech parties cross appealed on grounds that the primary judge did not deal breaches of duties owed to Metstech as directors, officers and employees, however during the appeal, Metstech accepted these matters were academic if the declaration and other orders were undisturbed.

The appeal and cross-appeal were dismissed.

By Dimitrios Eliades

Generate Group Pty Ltd ACN 072 667 228 v Sea-Tech Automation Pty Ltd ACN 003 916 434 and Gregory John Harris

The earlier proceeding

In 2007 the author reported on a decision of Einstein J of the New South Wales Supreme Court in respect of a notice of motion seeking interlocutory relief. The application sought inter alia, injunctive relief requiring the defendant in that proceeding, Sea-Tech Automation Pty Ltd (“Sea-Tech”), to provide the plaintiff (“Generate”) with a copy of the source code versions of three computer programmes. [i]

The facts arise in a relatively common circumstance in intellectual property cases. A party has a concept or even a developed idea or prototype and seeks specialised assistance to further develop or refine the concept or prototype. A dispute as to the ownership of the intellectual property rights in the upgraded product is not unusual in these cases.

Broadly, the proceeding arose from a fallout between Generate, who was in the business of providing management products to the hospitality industry and Sea-Tech, who was in the business of software development. More particularly, Generate contended it entered into a written agreement with Sea-Tech, whereby it furnished Sea-Tech with software known as Bevlink version 3, which had been the product of prior software developers and which it was then using with its customers.

Generate claimed it provided Bevlink version 3 to Sea-Tech on the basis that Sea-Tech would enhance the software as reasonably required by Generate. In exchange for Sea-Tech’s services, the parties would share the revenue derived from the “Bevlink” software, later re-branded under the name “Generate”.

Between 1998 and 2002 Sea-Tech produced Bevlink versions 4 and 5 conducted maintenance on the Bevlink programme including corrections, bug fixing and customisation responsive to customer requirements, and enhancements. [ii] In early 2004, Sea-Tech had provided numerous versions of Bevlink version 6 for Generate to evaluate but the product was not ready for market.

Upon giving the appropriate undertakings to the Court as to damages, Einstein J ordered Sea-Tech to deliver to Generate copies of the source code for the identified computer programmes. His Honour was satisfied that:

• Generate had shown a degree of probability of likelihood of success in its construction of the agreement with Sea-Tech and accordingly that it had a serious and not speculative case which has a real possibility of ultimate success. [iii]
• Undertakings to the Court, including:

– By Generate’s directors’ in the sum of $190,000 (being the value attributed by the defendant to the source code);

– As to confidential disclosure arrangements regarding the software, were sufficient, when considered in the light of all of the other evidence, to warrant the exercise of the Court’s discretion in terms of both a serious case issues as well as the balance of convenience issue, to make the orders for injunctive relief. [iv]

There does not appear to have been any judgment from a final hearing of the proceeding or from any application ending the proceeding early.

Recent developments

On 18 December 2015, Generate Group Pty Ltd, commenced proceedings in the Federal Court of Australia against Sea-Tech alleging that Sea-Tech had infringed Generate’s copyright in a computer software product known as Generate V6. Sea-Tech cross claimed against Generate on grounds not clear from the available public documents, but assumed to be in relation to a competing clasim of ownership of the copyright in the relevant source code/s.

Between December 2015 and April 2016 the court file reflects an orderly compliance with a pleading timetable. By June 2016, Generate suspected that Sea-Tech was responsible for hacking into its computer system and on 5 July 2016 obtained an interlocutory injunction. Generate had by the time of the injunction application discovered evidence which indicated that its electronic files relating to the litigation had been remotely accessed using a remote access software program titled “Team Viewer” and codes not associated with Generate. [v] Generate also identified that a director of Sea-Tech, Mr Harris, who was subsequently joined as second respondent, was responsible for this unauthorised access. [vi]

TeamViewer is a software program which enables remote access to a server and connected Team Viewer logged on computers. Access is available with the correct Team Viewer ID and password. The orders associated with the injunction made on 5 July 2016 included that Sea-Tech propose a forensic expert to take and keep a secure image of devices associated with two specified TeamViewer identification numbers.

Thereafter determinations were made in respect of each parties’ respective interlocutory applications, subpoena requests for the production of documents, which included consideration of claims of legal professional privilege. [vii]

Relevantly orders were made by Jagot J on 17 April and 27 April 2018 which appear to have finalised the matter, at least before her Honour. At the time of this publication there do not appear to have been published reasons for judgment accompanying the orders. The orders:

• Made 17 April 2018 against Gregory John Harris:

– Are prefaced by a penal notice to Mr Harris and any other person who knew of this order and did anything which helped or permitted Mr Harris to breach the terms of the order.

– Provided that Mr Harris be restrained for a period of 5 years from inter alia competing with Generate in the supply of beverage monitoring information technology in Australia; being a director of any entity so competing with Generate or being an employee of such a competing entity.

– Required Mr Harris to deliver up documents list in a schedule to the orders.

– Required Mr Harris to use an identified programme to delete copies of documents list in a schedule to the orders.

– To be permanently restrained from using, accessing, copying, modifying, distributing or otherwise dealing with identified files list in a schedule to the orders or any other files copied from Generate’s server without its knowledge.

• Made 27 April against Sea-Tech Automation Pty Ltd on an ex parte basis:

– Are prefaced by a penal notice to Sea-Tech and any other person who knew of this order and did anything which helped or permitted Sea-Tech to breach the terms of the order.

– Entered judgment in favour of Generate against Sea-Tech in the amount of $4,368,135.

– Dismissed the Sea-Tech cross claim against Generate.

– Provided that Sea-Tech be restrained for a period of 5 years from inter alia competing with Generate in the supply of beverage monitoring information technology in Australia.

– Provided a restraint by Sea-Tech its servants and agents from licencing or otherwise supplying or offering to supply the computer programme currently known as Flow or Flowtech or from receiving any financial benefit from the programme.

o Required Sea-Tech to deliver up documents list in a schedule to the orders and to delete files of Generate in Sea-Techs’ possession and control from all its locations.

– Required Sea-Tech to use an identified programme to delete copies of documents list in a schedule to the orders.

– To be permanently restrained from using, accessing, copying, modifying, distributing or otherwise dealing with identified files list in a schedule to the orders or any other files copied from Generate’s server without its knowledge.

Take home point

The litigation in two superior courts over some 11 years involved a dispute as to ownership of the copyright in the source code of programme enhancements. If a single take home point emerges from the proceedings, it is best described (in this author’s opinion) by Einstein J in his 2007 in this statement:

“One of the real difficulties which faced the parties on the interlocutory hearing and which will face the parties on the final hearing, concerns the simple fact that the Software Development and Support Agreement to which they signed, did not descend into the detail of defining [or seeking to define], which parts, if any, of the source code was to be made available to the plaintiff. As will appear from what follows the definition of “software” utilised by the parties was general in its terms and did not distinguish between any language or form of code in which the computer program might be recorded.” [viii]

It is one thing therefore to make a provision as to the rights to the source code and another to identify with precision what the source code encapsulates and whether the rights relate to parts of the source code and if so what parts. The emphasis is not unlike the requirement expressed often by the courts that confidential information be identified with precision and not as a blanket catch-all phrase assumed to be linked for example to a product, method, integer or process.

Dimitrios Eliades, Barrister – BTH LLB LLM SJD

Footnotes

[i] Hearsay Issue 18 June 2007: Generate Group Pty Limited v Sea-Tech Automation Pty Limited [2007] NSWSC 226 (Einstein J, 15 March 2007) (“the 2007 decision”).

[ii] The 2007 decision at [16].

[iii] The 2007 decision at [59].

[iv] The 2007 decision at [74].

[v] Generate Group Pty Ltd v Sea-Tech Automation Pty Ltd [2017] FCA 377 (Jagot J, 13 April 2017) at [5].

[vi] Ibid.

[vii] Generate Group Pty Ltd v Sea-Tech Automation Pty Ltd [2017] FCA 377 (Jagot J, 13 April 2017); Generate Group Pty Ltd v Sea-Tech Automation Pty Ltd [2017] FCA 1261 (Gleeson J, 30 November 2017); Generate Group Pty Ltd v Sea-Tech Automation Pty Ltd [2018] FCA 482 (12 April 2018).

[viii] The 2007 decision at [20].

Background

The ‘overlap provisions’ generally represent a policy consideration of the government. Copyright protection in relation to artistic works (life of the author plus 70 years — see s 33), far exceeds design protection under the Designs Act 2003 (Cth) (10 years: s 46). In the case of a drawing which becomes a corresponding design applied to an object, such as the hull of a yacht, the industrial application of that corresponding design will give the author of the drawings a protection in the commercialisation of the product which is undesirable.

The result is the loss of copyright protection upon the application of a corresponding design to an object which is industrially applied, which is in essence where more than 50 are made: Reg 17 Copyright Regulations 1969.

The effect is to push copyright owners to register the design under the Designs Act for protection. The plug and mouldings were not registered as designs, however the defence is not available to a ‘work of artistic craftsmanship’: s 77(1)(a).

Facts

The Respondent manufactured the JS 9000 yacht in Australia and in other parts of the world. In 2003, the second appellant (Mr Rogers) and the third appellant (Mr Warren), who had previously been employed by Swarbrick Yachts, were employed at the factory of the fourth appellant (Boldgold).

Their employment with Boldgold related to the yacht construction of a JS9000, utilising a hull and deck moulding which Boldgold had acquired from Mr Rogers. The moulding had been given to Mr Rogers in late 2002 by Swarbrick Yachts.

In September 2003, a judge of the court granted ex parte injunctive relief preventing the reproduction in material form of the object known as “the Plug” and “from manufacturing or procuring the manufacture of any mould using the JS 9000 hull and deck mouldings”: the reasons at [14].

The question

Broadly, the question was whether the Plug, the hull and deck mouldings were works of artistic craftsmanship, thereby not being caught by the overlap provisions.    

It is noted that the questions arose and were determined according to the Copyright Act 1968 (Cth), before the amendments to the relevant provisions introduced by the Designs (Consequential Amendments) Act 2003 (Cth).   Decision

The appeal against the decision of the Full Court of the Federal Court of Australia, was allowed.

Reasons

Their Honours in their joint reasons considered that an important element in determining whether a work is a work of artistic craftsmanship, was the level of constraint upon the author/designer by the necessary functionality and utility of the object. Relevantly at [83]:

 However, determining whether a work is “a work of artistic craftsmanship” does not turn on assessing the beauty or aesthetic appeal of work or on assessing any harmony between its visual appeal and its utility. The determination turns on assessing the extent to which the particular work’s artistic expression, in its form, is unconstrained by functional considerations.

This issue had to be considered objectively: the reasons at [63] and regard to the designer’s aspirations did not play a role, even though it was admissible. The Court considered a number of factors, particularly the following passage from an article:

The designer cannot follow wherever aesthetic interests might lead. Utilitarian concerns influence, and at times dictate, available choices. Indeed, aesthetic success is often measured in terms of the harmony achieved between competing interests.”[91]

The Court found that the visual and aesthetic considerations were “subordinated to the truly functional required of a ‘sports boat’ (the reasons at [73]). It followed that as the Plug was not a work of artistic craftsmanship, the deck and the hull mouldings which were made from the Plug, could not be of that character. In addition, at the trial, the hull and the deck moulds were not put forward as independent works of artistic craftsmanship from the Plug.

Burge v Swarbrick [2007] HCA 17 (Gleeson CJ, Gummow, Kirby, Heydon and Crennan JJ, 26 April 2007)

SURVEY PLANS

A question which has been circling for some time in the Copyright Tribunal was the copyright ownership of survey plans prepared by registered surveyors in respect of real property.

Background

A number of questions of law were referred by the Copyright Tribunal to the Federal Court for determination under s 161 of the Copyright Act 1968 (Cth). The Copyright Agency Limited (CAL) had applied to the Tribunal to fix terms for the acts of copyright (specifically reproduction), done by the Crown with respect to survey plans.

CAL was collection society under s 153F for Division 2 of Part VII purposes (use of copyright material for the Crown). CAL submitted that the surveyors were authors and owners of the copyright in the survey plans which were ‘artistic works’, and accordingly were entitled to terms being determined by the Tribunal for the acts of reproduction. CAL’s submitted that, as it was a collecting society under the Copyright Act, s 183A(1) operated to replace the usual Crown use provisions requiring notice and the fixing of terms contained  under ss 183(4) and (5).

The State of New South Wales (the State), submitted that neither ss 183(5) nor s 183A(2) operated in relation to the acts done by the State in relation to survey plans, firstly because it owned the copyright in the survey plans and secondly, if it did not own copyright in the surveys, it had a licence to use them for the proper maintenance and conduct of the land title system.

Ownership was claimed through the operation of ss 176 or 177 of the Copyright Act, which in essence provides for ownership by the Crown where that the survey plans were either made (s 176) or first published (s 177) by, or under the direction or control, of the State. In the alternative, it was authorised to do the acts, by reason other than by the compulsory licence mechanism in s 183 of the Copyright Act, for which remuneration is required to be paid to the copyright owner.

Decision

Their Honours decided that the State did not own the copyright pursuant to either s 176 or s 177 of the Copyright Act. In addition, the State was entitled to a licence to use the surveys other than by the mechanism provided for in s 183 of the Copyright Act.

Reasons

The ownership issue

The Full Court considered that surveys were not made by or under the direction and control of the State, predominantly because the State did not have the ability to require the landowner to order the survey or complete the survey once started. A survey plan might be commenced, but the State could not direct or control its completion.

Rather the work was determined to be ‘brought about’ or made because of the direction of the client of the surveyor who instructed the making of the survey.

The benefits bestowed on a survey complying with all of the regulations, were not relevant to either the making (s 176) or the first publication (s 177) of the survey, as neither would occur but for the clients instructions to have the survey made.

The licence issue

The full Court determined that quite apart from the entitlement to licence copyright material under s 183, the State was given a licence from the copyright owner in relation to surveys.

The exclusive right to do any of the acts comprised in copyright of the artistic work, includes a right to authorise someone to do such act or acts: s 13(2) of the Copyright Act. In relation to works, those acts are found in s 31. Under the Part VII Crown Use provisions, particularly s 183, the acts of the State would be an infringement of the copyright but for the Crown Use right.

Infringement of works in governed by s 36 and in the case of an artistic work, copyright is infringed if an act set out in s 31 is done by someone not the owner or without the licence of the owner (s 36(1) of the Copyright Act). In this regard, the phrase is done if the doing of the act was done by a licence binding on the owner: s 15 of the Copyright Act.

The Full Court determined that licensed surveyors (the copyright owners of the survey), must be taken to know that when a survey satisfied any requisitions, that it will be registered for the purpose of defining the land it related. Accordingly, by allowing the survey to proceed to registration, the surveyor knew, accepted and authorised the State to do all of the acts required of a registered plan, including the right to reproduce it. The court said at [155]:

By assenting to the submission of the Relevant Plan for registration, the surveyor who made the Relevant Plan authorised the State to do everything that it was obliged to do in consequence of the registration of the Relevant Plan so as to become a registered plan. The consequence of registration is that the State was authorised to do the acts in question. It was an incident of each surveyor’s assenting to the submission of a Relevant Plan to LPI, with the intention of its becoming a registered plan, that the surveyor authorised the State to do with the Relevant Plan all of the acts described above that might otherwise constitute an infringement of the copyright in the Relevant Plan.

CAL lodged on 2 July 2007, an application for special leave in the High Court.

Copyright Agency Limited v State of New South Wales [2007] FCAFC 80 (Lindgren, Emmett & Finkelstein JJ, 5 June 2007)

Dimitrios G Eliades

 

 

 

Introduction

The High Court has considered the question of the rights to copyright (if any), in certain architectural drawings, flowing to a purchaser of real estate, in circumstances where there had been development approval given in accordance with the drawings.

Facts

Proceedings were initiated by the owner of real estate at Nelsons Bay, in New South Wales (the ‘site’), in respect of alleged threats made against it by an architectural firm, which it claimed were groundless1.   The architectural firm had prepared drawings, upon which development consent had been obtained from the local authority. The firm claimed copyright in respect of the drawings as ‘artistic works’, within the meaning of the term in s 10 of the Copyright Act 1968 (Cth).

The development had been a venture between two registered proprietors, one of which was a company in which the architectural firm’s principal had an interest. Copyright was not in dispute — the question being whether there was a licence to use them. The firm alleged that the new site owner (‘Concrete’), had no right to use the plans simply by virtue of acquiring the site. Concrete claimed, inter alia, that it had the benefit of an implied term of the contract between the firm and Concrete’s predecessors in title, to the effect that the plans could be used for the purpose for which they were created, namely the development and that the implied license extended to successors in title.

Relevantly, the immediate predecessor in title was a trustee appointed by the Supreme Court under s 66 G of the Conveyancing Act 1919 (NSW). The application for the court’s intervention under the section arose because the proprietors of the property held the property as tenants in common and had had a falling out. Accordingly, application was made to the Court for the appointment of trustee to carry out the sale of the property. It should be noted that there were no limitations by the trustee as to the exclusion of the benefit of the architectural drawings.

The failure to exclude the plans from the sale, was a major factor in the Court’s determination of whether or not a license existed in favour the owner of the site, which amounted to an authorisation within the meaning of s 15 of the Copyright Act. If in fact it was an authorisation, express or implied within that provision, then the threats were unjustified within the meaning of s 202(1) of the Copyright Act.

The provisions

Section 15 provides:

For the purposes of this Act, an act shall be deemed to have been done with the licence of the owner of a copyright if the doing of the act was authorized by a licence binding the owner of the copyright.

Section 202(1) provides:

1. Where a person, by means of circulars, advertisements or otherwise, threatens a person with an action or proceeding in respect of an infringement of copyright, then, whether the person making the threats is or is not the owner of the copyright or an exclusive licensee, a person aggrieved may bring an action against the first mentioned person and may obtain a declaration to the effect that the threats are unjustifiable, and an injunction against the continuance of the threats, and may recover such damages (if any) as he or she has sustained, unless the first mentioned person satisfies the court that the acts in respect of which the action or proceeding was threatened constituted, or, if done, would constitute, an infringement of copyright.

Decision

Their Honours found for Concrete unanimously. Kirby and Crennan JJ, placing emphasis on the site being sold with a current development approval attached. This, their Honours said, indicated to a purchaser that the development consent could be used for the purpose of building in accordance with the architectural plans2.  Gummow ACJ considered that if the firm were to deny consent for Concrete to use the plans, it would be pursuing its own interests which would be in conflict with the interests of the joint venture in which it was a participant.

Subject to any contrary agreement, Callinan J implied the term for the use of the plans in a contractual engagement of an architect. In this regard, Hayne J stated that the issues which arose in the case and the determination thereof, was not in his view a determination for all situations arising between an owner of real estate and an appointed architect.

The case involved a second issue for the High Court’s consideration.  Parramatta had sought at trial, the disqualification of the Trial Judge on the basis of apprehended bias arising from statements made by his Honour and in respect of questions which his Honour put to one of Parramatta’s witnesses. The High Court unanimously found that there was no bias by his Honour leading to a retrial, but that his Honour was attempting by his questioning, to identify the issues for resolution.

The Court considered that the Full Court erred in entertaining submissions in relation to copyright and thereafter dealing with the issue of bias. The Full Court had upheld the appeal in favour of the architects and thereafter found the allegation of bias made out. However, Gummow ACJ noted, the relief for the finding of bias was a re-trial. By making consequential orders upon the finding on the copyright issue, no relief had been given for the finding on bias. 

Relevantly, his Honour said at [1] — [3]:

Having decided that issue adversely to Concrete and disagreeing with the outcome at the trial, the Full Court went on to consider the challenge to the conduct of the trial which had been put on a quite different footing, namely, the alleged apparent bias of the primary judge. The Full Court upheld that challenge.

In proceeding in this way, the Full Court itself fell into error. The present respondents, Parramatta Design & Developments Pty Limited (“Parramatta”) and Mr Fares, were permitted to present their arguments to the Full Court on inconsistent bases. If the bias submissions were to succeed, the remedy would be a retrial. If the copyright submissions were to succeed, the Full Court would itself provide the orders which should have been made and there would be no occasion to order a retrial.

The Full Court so disposed of the appeal as to accept the bias submissions but without consequential relief. If allowed to stand uncorrected, this outcome would have the adverse consequences for the administration of justice to which Kirby and Crennan JJ refer in their reasons for judgment in passages with which I agree.

Conclusion

The case is certainly an argument in favour of purchasers of development sites in which local council approval has been given in accordance with certain drawings. Of course, this is a different situation if the vendor/seller specifically does not include the drawings in the sale, which in practice would seem an unlikely situation.

Difficulties may arise, where the architect has, in the agreement with his/her client, specified that the licence is a personal one, limited to that particular proprietor. In this regard, the architect’s association with the venture provided elements of conscience, which might not be as clear in most cases in which the question of the licence to use the drawings is raised.

Endnotes

1. See s 202 of the Copyright Act 1968 (Cth).
2. Their Honours’ joint judgment at [94].

 

Background

The case involved the copyrights to software improvements, between a customer and a contract service provider. The plaintiff (Generate) was a client of the defendant (Sea-Tech), in relation to the production of computer software programs which were used in the hospitality industry. The programs enabled the measurement of drink portions and the ability to integrate the bar services and gaming functions of the machines in a premises. Generate had utilised the services of another software developer to create earlier versions of the program which it updated through Sea-Tech. Sea- Tech and Generate entered into a written agreement for three years with successive twelve month terms, which the parties could terminate on one months notice. In late 2006, Sea-tech gave such notice which was accepted by Generate.

Proceedings

Generate sought interlocutory relief by motion, requiring Sea-Tech to provide copies of the source code versions of three particular programs. Although there were disputes between the parties as to certain factual matters, as an interlocutory application, his Honour considered that it was inappropriate to deal with the resolution of those disputed facts.

Decision

Einstein J granted the relief sought by the motion to Generate, making a number of orders as to confidentiality by reason of the commercial sensitivity of the material and the fact that both parties were in related industries.

Reasons

His Honour found that there was a serious question to the tried. The agreement dealt with the issue of title, but did not deal with the issue of licensing of the software. In relation to the aspect of the balance of convenience, his Honour considered that the circumstances ‘clearly favoured the plaintiff’, the main danger being to the loss of customers. His Honour did not elaborate on his observation that the circumstances clearly indicated the balance of convenience was with Generate. It is suggested that a consideration may have been, the identification by Generate of any claim it might have. In this manner the application may have yielded information in the nature of a pre-action discovery.

Dimitrios Eliades

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The Facts

The first respondent (Toea) was the owner of the land upon which certain markets operated (the Carrara Markets). The second respondent (Mr Rosenlund) was the full time manager, responsible for operating, supervising and controlling the market for Toea.

There were approximately 400 stalls at the Carrara Markets. Toea granted stallholders a license to occupy designated areas pursuant to a written agreement for a fee.

Over a period of about 18 months, the applicant (Louis Vuitton), through its investigators, made trap purchases of illegal items bearing one or more of the Louis Vuitton trademarks or marks which were deceptively similar thereto. Louis Vuitton did not seek relief from the infringing stall holders, but rather from the market operators, to whom the documented results of the illegal activities were given.

The Issue

Toea and Mr Rosenlund did not essentially dispute the infringements by the stallholders, but disputed whether in the circumstances, either or both of them, infringed the trademarks by their conduct.

Louis Vuitton’s Methodology

Louis Vuitton manufactured merchandise including handbags, luggage and accessories, utilising its registered trademarks in the design. Its products were only available through its own retail outlets. Save for the second hand market, it was and is not possible to purchase a new Louis Vuitton item through the usual retail outlets. The products are of extremely high quality and priced at the upper end of the market (the reasons at [4]).

Control of the Markets

The Carrara Markets, the largest on the Queensland Gold Coast, attracted between 18,000 — 23,000 customers each weekend. Stallholders had continuous access to their stalls and were either:

• permanent stallholders, who could erect signage and secure permanent structures; or
• casual stallholders, who had no rights to erect structures nor to require the identical stall to be allocated to them. In practice, the rules were relaxed for long term casual stall members.

Toea provided ATM facilities, issued newsletters and notices to the stallholders, suggesting marketing strategies on how they might operate more profitably. Toea also arranged bus services to attend other retail complexes and pick up patrons, who wanted to shop at the Carrara Markets.

Toea and Mr Rosenlund exercised some control over the type of goods sold and the location of certain stalls. For example, they would consciously separate stalls, which dealt in similar products.

In addition, it was a characteristic of the market that some stalls (usually long term), were sold in the same way as businesses are sold outside of the market environment. These sales were conducted through Toea. Mr Rosenlund would interview prospective buyers and upon the sale of a permanent stall, Toea received a 10% commission on the sale price. Sales were recorded for up to $400,000.00.