Bearing in mind the potential for the privilege against self-incrimination to be invoked, Bromberg J’s orders in Bluescope v Somanchi are a good illustration of what an Anton Piller order (search and seizure ex parte) should look like (but often do not).
BlueScope Steel Limited v Somanchi [2016] FCA 4
What an Anton Piller order should look like Read More »
You will remember that Winnebago (USA) successfully sued the Knotts for passing off in Australia but (in large part because of Winnebago (USA)’s delay in asserting its rights) the Knotts had developed their own reputation in Australia and so could continue using WINNEBAGO here provided it was used with an appropriate disclaimer (here and here). The damages were to be assessed.
Now we know what the damages will be:
Knott Investments, the company that built and supplied the “Australian” Winnebagoes will have to pay a royalty calculated at 1% of its sales on all sales made from 6 years before the proceedings were started until the disclaimer was put in place.
The dealers who sold the vehicles will also have to pay a royalty of 1% on their sales in addition, but only from the date proceedings were actually commenced.
Winnebago (USA) claimed damages on the basis of a reasonable royalty. The respondents resisted. It was clear that Winnebago (USA) would never have granted them a licence and, equally, they would never have taken a licence from Winnebago (USA). In those circumstances, the respondents said, the court could not impose a royalty on the basis of an assumed agreement that would never have happened:
the applicant suffered no damage by way of a lost royalty (in effect, no lost “sale”) because the applicant would not have licensed the respondents to use the Winnebago marks in the first place.
Yates J rejected that defence and held that compensation was required to be paid on what has been called “the user principle”:
Under this principle, a plaintiff is entitled to recover, by way of damages, a reasonable sum from a defendant who has wrongfully used the plaintiff’s property. The plaintiff may not have suffered actual loss from the use, and the wrongdoer may not have derived actual benefit. Nevertheless, under the principle, the defendant is obliged to pay a reasonable sum for the wrongful use. The reasonable sum is sometimes described as a reasonable rent, hiring fee, endorsement fee, licence fee or royalty (amongst other expressions), depending on the property involved and the nature of the wrongful use.
Black CJ and Jacobson J in a copyright case in the Full Court had appeared to reject the application of that principle.[1] Yates J, however, considered the principle could and should be adopted in the context of passing off (and trade mark infringement) on the basis of a long line of English and Australian cases applying the principle in the context of trespass to real property, conversion, detinue and intellectual property infringements.[2] Otherwise, the respondents would escape liability for damages as a result of the very thing that made their conduct unlawful: the lack of consent by Winnebago (USA).
The respondents also argued that no damages should be payable because, as the Full Court found, they had a concurrent reputation in WINNEBAGO in Australia. Yates J rejected this too. His Honour considered that the existence of concurrent reputations – one which did not require a disclaimer and one which did – meant there was value in being able to use the reputation without any disclaimer. Yates J arrived at the royalty of 1% on the basis that Winnebago (USA) had granted a licence to an Australian licensee at that rate and, while various other considerations were entered into, that was an appropriate round number.
Three points in relation to the dealers.
Yates J rejected their first argument: that they should not be liable for anything as the supplier, Knott Investments would already have paid a royalty. However, the dealers’ sales of vehicles in passing off were separate wrongs to those of the manufacturer and so required separate compensation.
Secondly, while Winnebago (USA) did not submit evidence about what damages the dealers’ actions caused, it claimed a royalty of 4 or 5%. Yates J considered, in the absence of evidence, that a royalty of 1% would be consistent with that imposed on the supplier.
Thirdly, the dealers (and for that matter, the Knotts) would be liable for damages for passing off only where they acted with fraud: that is, with knowledge of Winnebago (USA)’s reputation in Australia and its desire to assert those rights here. In the absence of evidence avout what the dealers knew, Yates J considered that they could only be held to have acted with fraud once proceedings were initiated:
The difficulty for the applicant is that the evidence does not address the question of what the dealers knew or thought. Even if they might have been aware of the applicant’s activities in the United States or in other overseas markets, it does not follow that they also understood that the applicant had a reputation of any significance in Australia, let alone one that was capable of legal protection, or, more importantly, that, prior to the commencement of this proceeding, the applicant was claiming that it had rights in Australia in respect of the Winnebago marks and that the commercial activities of the first respondent and its dealers constituted an infringement of those rights. However, from the time of commencement of this proceeding, when the applicant’s claims were exposed, the position of the second to twelfth respondents was different. From that time, they were on notice of the applicant’s claimed rights. Their persistence in using the Winnebago marks after this notice constitutes fraud in the relevant sense.
The need to show “fraud” is another difference between the tort of passing off and the action for misleading or deceptive conduct under the Australian Consumer Law.
Winnebago Industries Inc v Knott Investments Pty Ltd (No 4) [2015] FCA 1327
Winnebago the damages or a reasonable royalty Down Under Read More »
The Full Court (Dowsett, Kenny and Nicholas JJ) has upheld the Commonwealth’s power to sue for damages on the undertaking as to damages given by Sanofi and Wyeth when obtaining interlocutory injunctions against generic suppliers.
Sanofi sued Apotex (then called GenRX) for patent infringement when the latter sought to registration in the Therapeutic Goods Register of drug containing clopidogrel. Sanofi obtained an interlocutory injunction preventing the listing and sale of Apotex’ product, on terms of the “usual undertaking as to damages”. Thus, as a condition of obtaining the interlocutory relief, Sanofi undertook to the court:
(a) to submit to such order (if any) as the Court may consider to be just for the payment of compensation, to be assessed by the Court or as it may direct, to any person, whether or not a party, adversely affected by the operation of the interlocutory order or undertaking or any continuation (with or without variation) thereof; and
(b) to pay the compensation referred to in (a) to the person there referred to. (emphasis supplied)
After the trial judge found Sanofi’s patent valid and infringed, the Full Court on appeal held that the patent was invalid. Ultimately, the High Court refused special leave.[1]
The Commonwealth, which was not a party to either the Sanofi or Wyeth proceedings is now claiming compensation from Sanofi and Wyeth under the “undertaking as to damages”. In broad terms, it says it suffered losses because the price it paid under the Pharmaceutical Benefits Scheme was higher than it would have been if the generic parties had not been prevented from listing and selling their products by the interlocutory injunctions.
Sanofi and Wyeth argued that sections 26B, 26C, 26D of the Therapeutic Goods Act[2] precluded the Commonwealth from claiming under the usual undertaking as to damages. The Full Court held, however, that these provisions were ancillary or additional to the Court’s powers under the undertaking. They did not provide an exhaustive code which excluded the operation of the undertaking.
Dowsett J delivered a concurring judgment, suggesting at [20] that some restriction on the scope of the usual undertaking should have been sought and then questioning, if such a restriction had been sought, whether it would have been appropriate to grant the interlocutory injunction:
…. As the Commonwealth was not a party to the proceedings in which the undertakings were given, they were presumably not extracted at its request. I infer that the Court extracted the undertakings. It is not suggested that it lacked the power to do so in order to protect the interests of identified or unidentified third parties. In submitting that the Commonwealth may not recover other than pursuant to s 26C, the Sanofi and Wyeth parties effectively seek to resile from their undertakings. It may be simply too late for them to do so. Any limitations upon the undertakings ought to have been sought at the time at which they were given. The Court would then have had to consider whether such limited undertakings were sufficient to justify the grant of the interlocutory injunctions. The Commonwealth has not put its case in that way. However, in any event, I see no basis for limiting the Commonwealth’s right to seek to enforce the undertakings to the extent that it benefits under them.
If only the regime under sections 26B, 26C, 26D had been available, it looks like Sanofi’s and Wyeth’s exposure would have been limited to situations where they had given false or misleading certificates or did not have “reasonable prospects of success”.[3]
Commonwealth of Australia v Sanofi (formerly Sanofi-Aventis) [2015] FCAFC 172
Commonwealth can sue on the undertaking as to damages Read More »
Under s 155 of the Competition and Consumer Act 2010, the ACCC can issue a notice to a person requiring them to provide information and answer questions. Failure to comply, or knowingly furnishing false or misleading information in response, is a criminal offence.
Natural Food Vending Pty Ltd was served with one such notice and failed to comply. Davies was its sole director and was convicted of aiding, abetting, counselling or procuring that failure.
The Act provides for a maximum fine of 20 penalty units ($2200) or up to 12 months imprisonment. Reeves J considered that the particular offending in this case did not warrant a sentence of imprisonment. His Honour further considered that a fine, given Davies’ impecuniosity, would effectively lead to his imprisonment on his default. Accordingly, Reeves J has now sentenced Davies to 200 hours community service provided he does not commit another offence during the service period.
Australian Competition and Consumer Commission v Davies (No 2) [2015] FCA 1290
Section 155 notices Read More »
Last month, Yates J found that Otsuka’s patent for aripiprazole was invalid.[1] As a consequence, his Honour ordered that the interlocutory injunction preventing Generic Health from listing its product on the PBS and selling it be dissolved. Otsuka has appealed and now Nicholas J has granted a stay to preserve the interlocutory injunction pending the appeal.
While not being prepared to characterise Otsuka’s prospects on the appeal as higher than arguable, Nicholas J considered the balance of convenience favoured continuation of the interlocutory injunction.
Otsuka relied principally on the fact that there would be an automatic reduction of 16% the price payable under the PBS for Abilify[2] once Generic Health’s product was listed. It contended that it would not be possible to recover that price drop if its appeal were successful.
Generic Health countered that it risked losing the benefits of first mover advantage if it were enjoined and other generic producers were not. Generic Health’s evidence was that pharmacists would usually only carry one generic brand of each drug and that was likely to be the first brand “in”. This would exacerbate the difficulties in calculating its losses. Nicholas J did not dismiss that argument, but Otsuka said it would be seeking interlocutory injunctions against any other generics who tried to enter the market pending the appeal. Nicholas J noted further that, if Otsuka failed in an injunction applications against a second or further generic, that would be a strong basis to terminate the stay.
The Commonwealth also sought a specific undertaking to pay damages from Otsuka as the price of the injunction. It argues it will suffer loss, in the form of the higher prices payable under the PBS, if Generic Health continues to be enjoined but the appeal ultimately fails.
Nicholas J noted that a case has been stated to the Full Court on whether the Commonwealth can indeed claim under the “usual undertaking as to damages”. Subject to the outcome of that case, his Honour considered the Commonwealth was sufficiently within the scope of the usual undertaking and so did not need a separate, specific undertaking.
Nicholas J increased the security for costs that Otsuka had to provide to Generic Health in the amount of an additional $8.7 million[3] and, in addition, required a security of $6 million separately to the Commonwealth. His Honour also noted that the Commonwealth could apply to extend that security if the appeal was not decied in the first half of 2016.[4]
Otsuka Pharmaceutical Co., Ltd v Generic Health Pty Ltd [2015] FCA 848
Abilify interlocutory injunction continues pending appeal Read More »
Perram J has refused to allow Dallas Buyers Club LLC to send out its proposed letters of demand to the account holders identified through its preliminary discovery application.
Under pressure from the judge, Dallas Buyers Club LLC was forced to disclose that it would be seeking to claim compensation under 4 heads:
Perram J considered that (1) and, perhaps more surprisingly, (4) were legitimate. (2) and (3), however, were not.
Perram J also indicated his Honour would be prepared to lift the stay on sending the letters out if limited to (1) and (2). Bearing in mind that Dallas Buyers Club LLC is not in the jurisdiction, however, his Honour would require Dallas Buyers Club LLC to post a bond of $600,000 as surety for its compliance with his Honour’s orders about the use of the information.
His Honour did get informed what sum Dallas Buyers Club LLC actually had in mind demanding if some (alleged) infringer did contact it in response to the proposed letter. Other than disclosing that it was “substantial”, his Honour did not spill those beans to the public.
At [7] and [8], his Honour further indicated the Court’s considerable unwillingness to embark on the type of supervisory role over the use of the discovered information that the English and Canadian courts have been willing to undertake. Perram J thought those courts might be more willing to engage in such supervision as a result of the human rights protections for privacy in those jurisdictions. Perram J accepted that the discretionary nature of the preliminary discovery remedy permitted privacy issues to be taken into account. Rather than embark in close, ongoing supervision, however, it would appear that an Australian court will not afford the rights holder too many chances to satisfy the Court that it would use the discovered information appropriately
Dallas Buyers Club LLC v iiNet Limited (No 4) [2015] FCA 838
lid dip @mslods
Dallas Buyers’ Club: no sale (yet) Read More »
Sanofi sued Apotex (then known as GenRx) for infringement of its “clopidogrel patent”. It obtained interlocutory injunctions against Apotex against the sale of Apotex’ product and preventing Apotex from applying to list its product under the Pharmaceutical Benefits scheme (PBS). As a condition of the grant of those interlocutory injunctions, Sanofi gave the “usual undertaking as to damages”:
“(a) submit to such order (if any) as the Court may consider to be just for the payment of compensation, to be assessed by the Court or as it may direct, to any person whether or not a party, adversely affected by the operation of the interlocutory injunction or any continuation (with or without variation); and
“(b) pay the compensation referred to in subpara (a) to the person or persons there referred to.”
Sanofi won at trial, but lost on appeal with the Full Court ordering its patent be revoked. Sanofi’s application for special leave to appeal to the High Court was refused on 12 March 2010.
Apotex sought compensation under the undertaking by motion in May 2010. Sanofi and Apotex resolved that application by negotiation.
The Commonwealth also sought compensation under the undertaking as to damages by application made in April 2013. If we did not know before, we now know the Commonwealth is seeking $60 million. Essentially, the Commonwealth contends that is how much less it would have had to pay out under the PBS if the interlocutory injunctions had not prevented Apotex applying to list its product under the PBS:
“The Commonwealth has provided some particulars of its damages. It alleges it has suffered financial loss in excess of $60 million as a result of Apotex being prevented by the various interlocutory orders and undertakings from achieving a listing for its clopidogrel products under the PBS. Most of the Commonwealth’s loss is said to flow from statutory price reductions and price disclosure reductions that would have occurred had Apotex not been the subject of the relevant interlocutory restraints.”
The case is a long way off resolution. Nicholas J has allowed Sanofi to amend its points of defence to the Commonwealth’s claim to rely on the Commonwealth’s delay in making its application for compensation and to rely on infringement of copyright in Sanofi’s product information documents. Sanofi will be required to particularise the prejudice its claims it suffered as a result of the delay.
Nicholas J however refused leave to amend to plead that the Full Court’s decision invalidating Sanofi’s patent was wrong in light of the Full Bench’s subsequent decision in AstraZeneca (rosuvastatin). That would be inconsistent with res judicata and the principle of finality of litigation.
Commonwealth of Australia v Sanofi-Aventis [2015] FCA 384
Commonwealth seeks $60 million on the undertaking as to damages Read More »
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
Dallas Buyers Club sues to identify internet subscribers Read More »
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
Computer Hacking and “property” Read More »
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
$150,001 damages for infringing compatibility chart Read More »
