Dallas Buyers Club sues to identify internet subscribers

When the (inaptly named) Online Copyright Infringement Discussion Paper was released, Minister Turnbull was reported as suggesting copyright owners should sue the downloading end-users.

Last month, Dallas Buyers Club LLC was reported to have started that process. It has commenced proceedings against various telcos and ISPs seeking preliminary discovery from them of the identities of their customers who were using IP (as in Internet Protocol) addresses at times Dallas Buyers Club LLC says illegal copies of the film were being downloaded from those addresses.

Last Monday, Perram J rejected an application by some journalists and others for access under FCR r 2.29 to most of the documents on the court file. His Honour noted the usual rule that affidavits are not “public” until they have been used in court and the potential privacy sensitivities or releasing, amongst other things, subscriber identification information at this very early stage of the proceeding.

Apparently, Dallas Buyers Club LLC’s application for preliminary discovery will be heard all the way off on 17 – 18 February 2015.

For cases where the record companies successfully obtained preliminary discovery from the Universities of some student details alleged to be engaging in infringing activities, see Sony v University of Tasmania here, here, here and here.

On a slightly different tack, it was reported on 19 November that some Universities have been suspending staff and student access to the internet, and in at least the case of UNSW, issuing fines where “internet piracy” has been discovered.

Dallas Buyers Club, LLC v iiNet Limited (No 1) [2014] FCA 1232

Computer Hacking and “property”

Software hacking and “property”

Clive Elliot QC draws attention to a New Zealand Court of Appeal decision ruling that downloading data from a computer does not constitute dishonestly obtaining property.

Watchorn was an employee of TAG. He downloaded to his personal computer files containing geophysical data relating to oil and gas exploration TAG had engaged in. The files were downloaded between 4:00pm and 9:30pm. The next day he went on holiday to Canada where amongst other things he met with officers from one of TAG’s competitors; the end result being he resigned from TAG on his return to start work for the competitor.

Watchorn was convicted in the District Court on 3 counts of accessing a computer system and thereby dishonestly obtaining property contrary to s 249 of the Crimes Act.

As the data downloaded was not “property”, the Court of Appeal quashed the convictions. The Court also refused to substitute convictions for dishonestly obtaining a benefit as the Crown had not sought to articulate what the “benefit” was. The Court did, however, accept the benefit could be a non-pecuniary advantage.

It might be possible to fit Watchorn’s actions within the scope of s 247H of the Crimes Act 1958 (Vic), but the other “serious computer offences” seem like a stretch[1] and, on the Court of Appeal`s approach the “theft” provisions shouldn’t apply.

Watchorn v R [2014] NZCA 493


  1. Is it, e.g. “impairment of reliability, security or operation of data”?  ?

$150,001 damages for infringing compatibility chart

Tonnex was found to have infringed Dynamic’s copyright in its printer cartridge compatibility chart. That finding was upheld on appeal. Now, Yates J has ordered Tonnex to pay Dynamic $150,001.00 in damages. The damages are comprised of compensatory damages under s115(2) of $1.00 and $150,000 by way of additional damages under s115(4).

The $1.00 nominal damages was agreed by the parties before the hearing. Interestingly, Yates J did not comment on this.[1]

Dynamic had argued for an award of additional damages of $400,000; Tonnex, while denying any award should be made, argued for an amount in the “tens of thousands”. Yates J arrived at $150,000 in the exercise of his Honour’s evaluative judgment.

Yates J’s reasons contain a useful summary of the applicable principles for the court to decide whether it is appropriate to award additional damages at [37] – [53].

Recognising that flagrancy is not required before an award of additional damages can be made, his Honour nonetheless found that the infringement was deliberate and studied. Although Tonnex’ directors denied knowledge of the copying and gave evidence that they had specifically instructed there was to be no copying,[2] the knowledge and acts of the employees involved – who included the National Marketing Manager – were at [101] relevantly the acts and knowledge of Tonnex. Further, Tonnex’ position throughout had not just been reliance on legal advice that copyright could not subsist in such a compilation. It had hi-handedly denied any copying at all.

Yates J also noted that, even if the directors were innocent of infringing knowledge, the situation should have changed after detailed particulars of infringement had been served (albeit late in the picture). Those particulars appear to have identified mistakes and other typographical peculiarities in the Tonnex catalogue which were really consistent only with copying from Dynamic. In other words, the directors were put on inquiry.

Instead, Tonnex sent out 38,000 emails with links to its infringing catalogue after Dynamic notified its infringement claims to it; only stopping just before the liability trial:

…. The cessation of Tonnex’s conduct was taken at a time of its own choosing, without regard to Dynamic’s rights. Regardless of Mr Solomon’s and Mr Kozman’s state of knowledge in that period, by reason of Mr Rendell’s knowledge, Tonnex must be taken to have known the true position regarding its copying of Dynamic’s Compatibility Chart. With that knowledge, it undoubtedly took commercial advantage of its wrongful conduct.

Tonnex did introduce an approvals process to vet material before it was published in future. Yates J was not particularly satisfied by this. His Honour was also concerned that Tonnex’ witnesses did not really exhibit appropriate contrition, but rather saw the litigation as a tactic by Dynamic rather than vindication of its rights.

The need to mark the court’s disapproval of Tonnex’ conduct and signal to the community that it was not alright to copy others’ property with impunity (i.e. deterrence) also played roles.

Dynamic Supplies Pty Limited v Tonnex International Pty Limited (No 3) [2014] FCA 909


  1. Contrast the apparent questioning of the practice raided by French and Kiefel JJ in [Venus Adult Films v Fraseride][venus] at [94].  ?
  2. it is fair to say his Honour expressed a degree of scepticism towards this evidence at esp. [102] and [103].  ?

On the problems of descriptive names

The Full Federal Court has dismissed Kosciuszko Thredbo’s appeal from the dismissal of its claims against ThredboNet.

Kosciuszko Thredbo (KT) runs the Thredbo ski resort. Amongst other things, one of its subsidiaries promotes the range of activities available at Thredbo from a website having the domain name: thredbo.com.au. ThredboNet leases some of the accommodation at Thredbo from KT and hires it out to prospective skiers, partygoers and the like. Indeed, the terms of its lease from KT obliged it to hire out, or at least offer for hire, the leased premises. ThredboNet had the, er, gall to promote its accommodation, amongst other things, from websites having “thredbo” in their domain names including “thredbo.com”.

KT contended that this conduct was passing off its reputation in “Thredbo” and misleading or deceptive conduct contrary to s 18 of the Australian Consumer Law.

The Full Court agreed with KT that the trial Judge had erred in requiring KT to demonstrate it had acquired sufficient secondary meaning in Thredbo, the name of the place, that KT had the exclusive right to use the name. This did not help KT in the end:

31. In the end, the word “Thredbo” is a geographical name of a location in New South Wales. The appellants’ resort and businesses are located there and they hold (and their predecessors in title held) the head lease over the land on which the village and resort complex are located. But others also operate businesses, as sublessees, in the physical location known as Thredbo. The real issue was not whether the appellants had established a monopoly over the right to use the word “Thredbo” but whether they had established that the respondents’ conduct in using that word was likely to lead ordinary or reasonable consumers seeking accommodation or services in Thredbo into believing that the respondents’ business or the accommodation or other services that the respondents were offering was or were that or those of the appellants: Campomar 202 CLR at 87 [105]; Office Cleaning 63 RPC at 42. The more significant issue, then, is whether the primary judge erred in his conclusions on the question whether the respondents’ conduct was misleading or deceptive (or likely to be so).

The trial judge didn’t.

There were a number of strands to the Full Court’s reasoning. The Full Court recognised that some degree of confusion must be accepted where 2 traders use descriptive words otherwise one would be given an unfair monopoly.

In this case, the evidence from Google search results showed that there were a number of businesses that advertised with “Thredbo” in their name and/or domain names. ThredboNet’s website looked sufficiently different to KT’s websites and was limited only to the limited range of accommodation it provided. After the proceeding commenced, ThredboNet had included a disclaimer on its website. There was an initial form and a second, more explicit form. Either was sufficient:

We are not satisfied that a consumer who went to any of the respondents’ websites would reasonably have associated the operator of the website with the appellants. The respondents’ domain name www.thredbo.com was very similar to that of KT, namely www.thredbo.com.au. A consumer might easily be led to the former website thinking it was that of the appellants when doing an internet search. But in today’s society the ordinary or reasonable consumer seeking accommodation, or other goods or services, on the internet will frequently click on a result in a web search thinking it is a link to a particular site, only to find when his or her browser is directed to the selected site that it is not the site of the supplier or business that the consumer wanted. The ordinary, reasonable consumer who came upon the home page of www.thredbo.com would have seen, depending on when he or she accessed it, the first or second disclaimer in the middle of the page. Each disclaimer appeared under a recognisable, distinctive heading “About Thredbo.com”. It did not have the appearance, as asserted by the appellants, of being “buried in the text”.

This is not an endorsement of the initial interest confusion theory.

In the course of reaching their conclusion, the Full Court at [43] endorsed the proposition that:

…. Ordinarily, most people searching for a term or information will look at the first page of search results and then select the most apparently appropriate link or links from that page before they would move to a second or subsequent page of search results. Indeed, they would be unlikely to see any need to go to a second or subsequent page of search results unless they had not found some satisfactory site or sites on the first page.

There was a third issue: clause 4.3 of ThredboNet’s lease from KT appeared to forbid the use of “Thredbo”:

4.3 NO USE OF ‘THREDBO’

The Sublessee must not use or permit the use of the word ‘Thredbo’ in connection with any business carried on by the Sublessee, without the prior written consent of [KT].”

(Emphasis added by Full Court)

Because ThredboNet was required by the lease to hire out the accommodation for at least 26 weeks of the year, cl 4.3 could not mean ThredboNet could not use “Thredbo” in connection with that business. At a minimum, it must have been contemplated by both parties that ThredboNet would be able to tell its customers and potential customers the address of the properties. Further, the Full Court pointed out that the restraint was not a restraint in respect of the land on which the leased properties had been built. The restraint operated quite independently and separately from the land. Finally, KT did not provide evidence, or sufficient evidence, that a restraint of this kind was commonly accepted in such contracts as a normal incident of the arrangement. Accordingly, cl. 4.3 was invalid at common law as an unreasonable restraint of trade and operated so far outside any permissible scope that it was not capable of being read down under s 4 of the NSW Restraints of Trade Act.

Question: would it have made any difference if KT had a registered trade mark?

Kosciuszko Thredbo Pty Limited v ThredboNet Marketing Pty Limited [2014] FCAFC 87 (Siopis, Rares and Katzmann JJ)

 

Lid dip: Sue Gatford

More contempts

Bob Jane and his trading companies were found to be infringing the BOB JANE and JANE FLEET trade marks and had, amongst other things, injunctions ordered against them to stop, to change the various company names and transfer two domain names.

They didn’t.

This time, Besanko J has imposed fines of $25,000 and $15,000 on Mr Jane for his contempts, $25,000 and $15,000 on Bob Jane Global Tyre Corporation (Hong Kong) Limited, $20,000 on Bob Jane Southern Motors Pty Ltd and $2,000 fines on corporate respondents for other contempts. The respondents were also ordered to pay 80% of the applicants costs on an indemnity basis.

Bob Jane Corporation Pty Ltd v ACN 149 801 141 Pty Ltd [2014] FCA 637

2 years gaol for contempt

The Full Federal Court has reduced Mr Vaysman’s punishment for contempt from 3 years to 2 years imprisonment for repeatedly breaching injunctions not to infringe trade mark and copyright.

In 2003, Deckers Outdoor Corporation (the owner of the UGG Australia trade mark) sued Mr Vaysman, members of his extended family and various companies they operated through for infringing its trade mark and copyright. Those proceedings were settled by consent. Injunctions against trade mark infringement and copyright infringement had been ordered.

In 2004, Deckers Outdoor Corporation again sued Mr Vaysman, members of his family and the companies through which they operated for breach of the terms of settlement reached in 2003. Those proceedings were also settled by consent.

In 2007, Deckers Outdoor Corporation sued Mr Vaysman, members of his family, their companies and a number of others for the third time: for infringement of its trade marks and copyright and breaches of the prior terms of settlement.

Essentially, notwithstanding the two sets of earlier proceedings, the undertakings not to infringe and the injunctions against infringement, Mr Vaysman et al. had continued with their infringing activity making counterfeit UGG boots unabated at all. The proceedings involved two main aspects: the civil claims for infringement of trade mark and copyright and contempt charges for breaches of court orders made in both the earlier proceedings and also the 2007 proceedings (e.g. continuing the infringing activity in defiance of an interlocutory injunction).

Before the contempt charges were heard and the punishments handed down, there had been judgment against the Vaysman parties on the civil claims for infringement including an order for the corporate vehicle and Mr Vaysman jointly and severally to pay $3 million in compensatory damages and for the corporate vehicle to pay $3.5 million in additional damages pursuant to s 115(4) of the Copyright Act. (The corporate vehicle was by this stage being wound up.)

In relation to the most serious contempt, charge 18, the trial judge had found:

Charge 18 – Between December 2005 and (at least) November 2007 Mr Vaysman caused and encouraged the use of a factory in Roper Street Moorabbin for manufacturing and selling counterfeit footwear.  He did so contrary to consent orders to which he was a party which were made by the Court on 12 March 2004.  During this period, as I found in Deckers Outdoor Corporation Inc. Farley (No 5) [2009] FCA 1298 (“Deckers (No 5)”) at [84]-[92], over 30,000 pairs of counterfeit boots were sold with the profit on those sales amounting to over $3 million.

As Mr Vaysman was found to be in overall control of the whole operation, the trial judge sentenced him to 3 years’ imprisonment for this contempt. (Other charges of contempt were also established, but received much lighter punishments to be served concurrently with the punishment on charge 18.

By the time the contempt charges came to be heard in 2010, Mr Vaysman was no longer in Australia.

After the punishments for contempt were imposed, Mr Vaysman’s father, a 74 year old in ill-health and found by the Court to be of previously unblemished character, successfully appealed a sentence of a term of 18 months’ imprisonment. Gray and Bromberg JJ, considering imprisonment very much a last resort, imposed a fine of  $50,000, but ordered that the roughly 2 months or so he had already served in prison stand in lieu of the fine. Besanko J agreed that the sentence needed to be reduced, but would have reduced the sentence to a term of 12 months.

Mr Vaysman returned to Australia in June 2013. He was imprisoned pursuant to the contempt order. He sought leave to appeal (a long time out of time).

Besanko J, with whom Siopis J agreed, granted leave and considering the 3 year sentence manifestly excessive having regard to other sentences for contempt, ordered the sentence be reduced to two years. Besanko J did not consider that Federal Court sentencing practices needed to be adjusted for consistency with State court sentences. Nor did his Honour think any discount should be made having regard to the award of additional damages.

Dowsett J took a different approach.

His Honour considered that, to the extent that Federal Court sentences for contempt, were more lenient than comparable State courts, the Federal Court standard should be lifted. Focusing on the punitive nature of awards of additional damages, however, his Honour considered there an element of double counting or double jeopardy in not taking into account the additional damages award when fixing the contempt penalty. Dowsett J would have reduced the prison sentence from 3 years to 2 years and 3 months.

Vaysman v Deckers Outdoor Corporation Inc [2014] FCAFC 60

Winnebago 2: the disclaimer

Back in June, the Full Court, upheld the trial Judge’s conclusion that Knott was engaging in misleading or deceptive conduct, and passing off, by using the Winnebago “logos” to promote RVs of its (Knott’s) manufacture that had nothing to do with Winnebago USA. Because the breach was in the nature of “passing off” rather than trade mark infringement and because Winnebago USA had sat on its hands for 25 years allowing Knott to build up some goodwill of its own, however, the Full Court was prepared to grant an injunction only to restrain use of WINNEBAGO and the Winnebago logos by Knott which did not adequately disclaim association with the USA.
The Full Court has now handed down its decision about the form of that disclaimer:

without:

(f) where the name, mark or logo is used on one or more vehicles or in a document (including any print advertisement or webpage), stating in any relevant document (including any print advertisement or web page) or on any vehicle, clearly and prominently, and reasonably proximate to any name, mark or logo:

(i) (where the name, or mark or logo is used on or in relation to a single vehicle) “This vehicle was not manufactured by, or by anyone having any association with, Winnebago of the United States”; or …

In addition, radio and television commercials must have a prominent voiceover of no less than 10 seconds’ duration stating:

These vehicles were not manufactured by, or by anyone having any association with, Winnebago of the United States.

Also, Knott will be required to obtain a signed acknowledgement from each purchaser, hirer etc. that he or she has been informed the vehicles was “not manufactured by, or by anyone having any association with, Winnebago of the United States.”

Given the 25 year delay, the Full Court was not prepared to countenance allowing Winnebago USA to take an account of Knott’s profits.

The Full Court did, however, remit the matter back to the trial judge on the question of damages (limited to the six years before the proceeding was brought), but with an important rider.

Winnebago USA wants to argue that its damages should be a reasonable royalty on the use of its rights. The Full Court noted that other Full Court authority [1] appeared to stand in the way of that approach, but there might be scope for that to be revisited in light of the New South Wales Court of Appeal’s consideration of remedies for the unauthorised use of property in the context of conversion.[2]

The rider: before Winnebago USA gets to try this argument, it has to satisfy the trial Judge that there is “some prospect of a substantial (that is, real) award.”

Knott Investments Pty Ltd v Winnebago Industries, Inc (No 2) [2013] FCAFC 117


  1. Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd (in liq) [2007] FCAFC 40; 157 FCR 564 at 569 [27]-[28].  ?
  2. Bunnings Group Ltd v CHEP Australia Ltd [2011] NSWCA 342; 82 NSWLR 420 at 464–470 [166]-[186].  ?

Dosing up children, overturning interlocutory injunctions and the balance of convenience

An IPwars first: my colleague, Susan Gatford, provies an update in which a Full Court overturned an interlocutory injunction against an alleged patent infringement. Do you agree with Sue that a trend seems to be developing?

Remember way back at the start of the Apple v Samsung litigation the Full Court dissolved the interlocutory injunction granted to Apple? Well, they did it again earlier this month in GlaxoSmithKline Australia Pty Ltd v Reckitt Benckiser Healthcare (UK) Limited.

The proceeding concerns an invention for accurately serving up doses of liquid medicines for children. Apparently children don’t like taking medicine from syringes with nozzles because they remind them of bad things (injections). But syringes are the most accurate way to measure doses of medicine accurately. Solution: design a syringe that doesn’t quite look like one. The syringe in the patent looked like this

Patented embodiment
Patented embodiment

It was designed by Reckitt and called a flat nosed syringe (i.e. one without a nozzle). It fits into a plastic attachment inserted into the neck of a medicine bottle. The syringe fits tightly into the neck attachment and allows accurate dosages to be measured and then administered. Reckitt has patented its bottle-syringe-bottle neck arrangement. It uses it to sell nurofen for children. This has apparently given their nurofen product a substantial competitive advantage over Glaxo’s panadol (the medicines are largely interchangeable and parents chose the one that is easiest to use in terms of dose measurement and child acceptance).

Interestingly, despite being aware of and seeking to emulate the Reckitt product, Glaxo didn’t do any patent searches. It seems that this was because it was told by the third party manufacturers of the syringe and of the bottle and neck attachment that they as manufacturers held all of the relevant patents.[1] (They were wrong.)

Two injunctions were granted. On 28 May 2013 a Glaxo product that substantially replicated the Reckitt product was injuncted.[2] According to the Court’s reasons Reckitt’s only complaint was the similarity of the bottle neck liner.[3] This wasn’t, however, only what the patent claimed as its invention (remember, the aim was to design a syringe that didn’t look like one).

Version 1
Version 1

Glaxo then re-designed the shape of the syringe and advised Reckitt that it intended to sell their panadol with the offending bottle neck liner but with a different syringe. The re-designed syringe looked like this

Version 2
Version 2

Reckitt went back to Court to argue that this fell within claim 1 of the patent, which relevantly read:

A liquid dispensing apparatus comprising a bottle, a bottle neck liner and a flat-nosed syringe having a plunger and a barrel, the barrel terminating at its distal end in a generally flat face having a diameter corresponding to the diameter of the syringe and being perpendicular to the longitudinal access of the barrel….

The trial judge held that there was a sufficiently strong argument that the words

“having a diameter corresponding to the diameter of the syringe barrel and being perpendicular to the longitudinal access of the barrel”

would be understood by an addressee skilled in the art at the time of the patent to apply to the distal end of the barrel.[4] Accordingly, his Honour held that Reckitt had a sufficiently strong prima facie case that warranted the grant of an injunction. His Honour rejected Glaxo’s application to lead further evidence as to the balance of convenience and made orders restraining the sale of the re-designed product. Glaxo appealed.

It argued that the trial judge’s interpretation required the additional words “at its distal end” to be added to the above extract, and that this was impermissible. The Full Court agreed. Put simply, its view of the strength of Reckitt’s infringement case on the design-around syringe was substantially lower than that of the trial judge. It also said that the trial judge erred procedurally by forcing Glaxo to rely only on its balance of convenience evidence from the May hearing, and by rejecting the further balance of convenience evidence on which it sought to rely in July. At the May hearing the trial judge had rejected Glaxo’s evidence as to balance of convenience in strong terms and made findings in accordance with of evidence filed by Reckitt in reply to it. The Full Court said

It was, of course, a matter for the primary judge to make findings of fact based on the evidence before him. But having made strong findings of fact, which were directly contrary to Ms Tomkins’ first affidavit, in the context of assessing the balance of convenience at the first hearing, it is difficult to understand why GSK should be prevented at the second hearing from relying upon additional evidence from Ms Tomkins in the form of her second affidavit which expanded upon the reasons why the primary judge’s suggested option was impracticable and posed public health and safety risks (see further below). All the more so in circumstances where the second hearing took place more than six weeks after the first hearing and related to an allegation of patent infringement in respect of a different apparatus. These considerations are not displaced or diminished by s 37M of the FCA Act.

The case is a timely reminder that:-
1. leave to appeal against interlocutory orders in patent and like cases is a serious option;
2. applications relating to “design around” products need to be considered both substantively and procedurally as the separate applications that they are in fact; and
3. it is worth paying very careful attention to balance of convenience evidence, which is often a moving feast, and doing your best to make sure that the Court does too. Referring the Court to this case might just help in that endeavour.

GlaxoSmithKline Australia Pty Ltd v Reckitt Benckiser Healthcare (UK) Limited [2013] FCAFC 102

Susan Gatford is barrister on Gordon & Jackson’s list at the Victorian Bar. She practices out of Owen Dixon Chambers in Melbourne and is also a registered trade mark attorney.


  1. Reckitt Benckiser Healthcare (UK) Ltd v GlaxoSmithKline Australia Pty Ltd [2013] FCA 583 (Reckitt (No.1)) at [36].  ?
  2. Reckitt (No.1).  ?
  3. Reckitt (No.1) at [37].  ?
  4. Reckitt Benckiser Healthcare (UK) Ltd v GlaxoSmithKline Australia Pty Ltd (No 2) [2013] FCA 736 at [20].  ?

Apple and that ITC ban

Well written piece in The New Yorker outlining the role of the US International Trade Commission in patent disputes and President Obama’s veto of the ITC’s order to block imports of “older” Apple products.

Mind you, make sure you are not eating your cornflakes over breakfast or sipping your decaf skinny latte when you get to the paragraph:

Samsung’s lawyers may take their talents to Seoul, Tokyo, London, or other venues in which home-court advantage is increasingly important ….

Prof. Wegner apparently saw it differently.

Lid dip: Miguel Belmar

A couple of other points from Insight on appeal

Following on from the earlier post, the Full Court did, however, dismiss ACER’s appeals against Besanko J’s rulings that:

  1. Dr Hart owned the copyright in the SOQH, even though it was created while he was employed by the Department of Education; and
  2. The assignment of the right to sue for past infringements was valid.[1]

The ruling on the right to sue for past infringements is particularly important as it is the first substantial appellate consideration of the question. It is all the stronger because it was executed some 2 years after the assignment of copyright but Besanko J and the Full Court found there was sufficient nexus with the copyright assignment to support its validity.

Insight SRC IP Holdings Pty Ltd v Australian Council for Educational Research Ltd [2013] FCAFC 62


  1. Bit more on the ownership, assignment and additional damages questions here. ?