Assignment

Is there a copyright work and who owns it?

Rees J, sitting in the NSW Supreme Court, had to grapple with some unusual, but basic, issues in finding that Metstech owned copyright in a range of works made by a Mr Chou. However, it did not own copyright in software made by Mr Martin; instead having an exclusive licence over that copyright including the right to access and modify the source code.

Some background[1]

Metstech designs and distributes telecommunications systems for underground mines. (The specific technology was a ‘leaky feeder system’ which allowed two way radios and mobile phones to communicate over long distances underground where ordinarily such radio communications were not possible.[2])

Image of an axial cable layout with a headend controller at one end, bidirectional amplifiers at various intervals and and a splitter adding a branch line
Leaky Feeder System

Metstech was formed by four individuals including Jefferson, Park and Chou. They or their family companies were the shareholders. Jefferson was the CEO and Park the General Manager. Park and Chou had experience in electrical engineering and had ideas about how a new and improved system to replace the poorly functioning existing systems. Jefferson provided the funding, to the tune of $700,000 over time.

In addition to being a founding director, Chou became an employee and was paid a salary after a short initial period when Metstech did not have funds. Part of Chou’s job included placing orders for the manufacture of Metstech’s products which he arranged through a family company and his company was permitted to charge a marked-up price to Metstech over the price charged by the manufacturer.

Although Martin was offered initial shares in Metstech and an employment contract, he did not take up either offer due to legal issues he was experiencing at the time. Nonetheless. in 2018, Martin designed the Raspberry Pi Software controlling the Metstech system. He was not paid for this work. He provided it to Jefferson including access to the source code for use by Metstech including permission to modify it.

Later, in 2019, Martin did become an employee of Metstech and made some further modifications of the Raspberry Pi Software at that time.

In addition to the funding provided by Jefferson, another company, Challenger, eventually contributed a further $750,000 towards funding the product development in return for the promise of a 20% shareholding and a nominee on the board of directors.

The development of Metstech’s products proceeded well and substantial orders were coming in. Jefferson came into dispute with the other directors over repayment of his funding and their demands for increased salaries. Challenger also became frustrated with the delays in issuing its shares.

Park, Chou and some associates “staged a coup” and replaced Jefferson as CEO excluding him from access to the company’s bank accounts. To fend off Jefferson and Challenger, they also engaged in a number of schemes to transfer Metstech’s assets and related IP to a “phoenix” company. In addition, in the process of decamping they deleted from the Metstech Google Drive accounts all the data and documents relating to PCB assemblies, source code, concept designs, PCB schematics and PCB layouts, firmware source code, manufacturing files, bills of materials and test results.

After Jefferson and Challenger got wind of some of the conduct, they initiated a deed of company arrangement and, after regaining control of Metstech, brought these proceedings seeking orders relating to its ownership of the copyright, remedies for breaches of obligations of confidence and tortious conspiracy to injure the plaintiffs by unlawful means.

The plaintiffs largely succeeded on their copyright claims and breach of confidence. The claims for tortious conspiracy to injure by unlawful means failed however.

Copyright in the Metstech “products”

The plaintiffs claimed copyright in various designs for printed circuit board (PCB) assemblies as artistic works[3] and, as either original literary or artistic works, PCB schematics, manufacturing documentation – source code, concept designs, PCB schematics and PCB layouts, firmware source code, manufacturing files, bills of materials and test results – and Metstech “firmware” which was installed in micro-processor units in various components.

A graphical representation of a circuit board layout on the left and on the right a photograph of printed circuit board showing various electrical components interconnected by metal strips

(A graphical representation of a PCB layout (on the left) and the corresponding PCB (on the right))

The plaintiffs also claimed ownership of the copyright in the Raspberry Pi software and later revisions.

Were there copyright works

It will be recalled that the defendants had deleted all the data and documents from their Google Drive accounts when decamping and, it appears, none of them produced anything by way of discovery or otherwise in evidence. According to the defendants, or at least Park and Chou, they did not have any documents because the products had been designed by the third party manufacturer.

The first problem confronting the plaintiffs, therefore, was that they did not have copies of the works over which they claimed ownership. Who was the designer, and hence the author of the works, was the second problem.

Rees J was prepared to infer (at [591] to [603]) that there had been original works made by Chou in which copyright subsisted:

  • Metstech led expert evidence about the process and steps involved in designing and manufacturing products such as the PCB Assemblies including the need to document things such as functional specification, electrical schematic, PCB layout and manufacturing files, firmware code listing and compiled version of the firmware code (if applicable), bill of materials, assembly and testing instructions, troubleshooting guide, service manual, packaging information, data sheets and sales brochures. Much of this documentation would be required by the manufacturer to make such complex products
  • the design and specification of such PCB assemblies also required the use of specialised computer software such as Altium Designer and RhinoCAD. Metstech had bought or reimbursed Chou for purchases of this software and Chou was at all times anxious to ensure he had properly licensed copies of this software
  • Metstech bought or reimbursed Chou for the tools and equipment that would be used in developing and constructing models and prototypes.

Accordingly, at [603] Rees J held:

…. The disputed works must have been created and insofar as they are original literary or artistic works (or both) and that to the extent that they still exist, the employer owns them. ….

I am not sure about her Honour’s limitation “to the extent that they still exist”. Under the Act, the requirement is that the work be made in the sense of reduced to writing or some other material form.[4] The continued existence of the documents, however, would be relevant to orders for delivery up and provision of access.

Who was the author

As noted above, Park and Chou claimed that the PCB assemblies and other products were designed by the manufacturer and so, in the absence of any agreement to the contrary or assignment, any copyright belonged to the manufacturer.

Rees J rejected this claim. A number of factors led her Honour to this conclusion including:

  • Metstech’s products were original and not mere copies of existing products: [585]
  • Chou had the necessary skills to design the products: [583]
  • it was Chou who came up with the idea for the various products: [584]
  • there was voluminous correspondence describing Chou as the designer or in which he claimed to be the designer or attending to the design: [571] – [586]
  • Chou also spent hours explaining the intricacies of the system and the products to others: [586]
  • the purchase of the specialised software and the provision of the tools and equipment such as Altium Designer and RhinoCAD
  • Park and Chou first claimed that the manufacturer was the designer only when Metstech first went into administration. Prior to that, the voluminous contemporaneous correspondence such as emails repeatedly referred to Chou as the designer
  • not a single document was produced identifying the manufacturer as the designer.

Who was the owner

Rees J noted that it was not sufficient for Metstech to establish that Chou was the author and an employee. As the terms of s 35(6) make clear, Metstech also had to establish that Chou made the works in pursuance of his employment and not in the course of some extracurricular activities; at [564] adopting the question posed by Moore J in EdSonic v Cassidy:

did the employee make the work because the contract of employment expressly or impliedly required or least authorised the work to be made.

The volume of material referred to by her Honour in concluding that Chou was the designer left Rees J at [587] in “no doubt” that the answer to that question was “yes”.

There was one qualification to this conclusion at [588] – the work designing a splitter which Chou had done before he became a full-time employee being paid. While Chou was a director, Rees J doubted he qualified as an employee for the purposes of s 35(6) at that time.

However, Rees J held Chou was estopped from denying that Metstech was licensed to use these materials having regard to the circumstances in which he made the design and continued to develop the design for Metstech’s use after he became an employee.

A final issue insofar as the works made by Chou are concerned was whether Metstech or Metstech IP Pty Ltd (one of the defendants) owned the copyright.

In a not uncommon arrangement, the directors of Metstech, including Jefferson, Park and Chou, had set up Metstech IP to hold the intellectual property. The directors and shareholders of both companies were the same. Metstech IP had applied for R & D grants in respect of the development of the Metstech technology and, in the books of the companies, Metstech charged Metstech IP a fee for the development work. While that fee was not paid, Metstech IP had remitted tax rebates to Metstech.

While Metstech IP had been set up to hold the intellectual property, however, there was no formal assignment of intellectual property rights in writing from Metstech to Metstech IP. As Chou had made the works as an employee of Metstech (and not Metstech IP) and in the absence of a signed, written assignment in conformity with s 196(3), Rees J held at [606] that Metstech was the owner of the copyright.

Copyright in the computer software made by Martin

The Raspberry Pi Software was a different case. When Martin wrote it, he was not an employee and had chosen not to become a director or shareholder. Nor was he paid for his work although he believed (at [106]) that “one day I might be compensated by the company if and when it was successful.”

When pressed by Jefferson, Martin transferred a copy of the source code and other documentation into a Metstech account and agreed that Metstech could amend the software as required.

Although Martin had not been engaged for reward to write the software, Rees J found ([231] – [233]) the circumstances gave rise to an implied unlimited and exclusive licence in Metstech’s favour which included the right to alter the software as need. (See also [161 and [623]])

Later, in July 2019, Martin was allotted 5% of the shares in both Metstech and Metstech IP. Jefferson and Park both considered this allocation was to secure the intellectual property in the software. Martin denied this.

As there was no written agreement formally recording the assignment, Rees J considered at [320] that s 196 precluded an assignment under the Act. Rees J also rejected at [324] Metstech’s argument that Martin understood the shares were in compensation for the transfer of ownership in the software. Her Honour appears to have considered the allotment was consistent, or at least equally consistent, with a payment to secure Martin’s continued involvement in the business.

Martin did become a full-time employee of Metstech and, in the course of his employment, he later made some further modifications to the software.

Distinguishing J R Consulting, Rees J held that the computer programs in this amended form were not new copyright works in which copyright subsisted. Martin’s evidence was that the changes were only “bug-fixes and minor enhancements”. Although the change logs showed 21 changes were made to the software in the relevant period, Metstech did not satisfy her Honour that they were more than trivial. At [620], her Honour explained:

The plaintiffs submitted that the changes made by Mr Martin were more than trivial, I am in no position to say one way or the other. I note that 21 changes were made from July 2019 to July 2020. Beyond that, I do not know. I am not satisfied that the changes made to the software after Mr Martin commenced his employment with Metstech were “original” in the requisite sense such that copyright in new versions of the software are a new work in which copyright subsists and is held by his employer, Metstech.

Thus, Metstech was left with its exclusive licence. However, this was enough for her Honour to direct that Martin continue to provide Metstech with access to the source code under the exclusive licence.

Confidential information and Conspiracy to injure

Rees J found misuse of Metstech’s confidential information on conventional grounds.

The plaintiffs alleged that the defendants (other than Metstech IP) had engaged in a tortious conspiracy to injure the plaintiffs and Metstech IP by unlawful means.

Rees J dismissed this claim, however, not as a result of any exoneration of the defendants’ conduct. Rather, damages are the gist of the action. Thus it is necessary for the plaintiff to plead that it has or will suffer pecuniary loss as a result of the conspiracy.

While the alleged conspiracy was pleaded at length, damages were neither alleged nor particularised. Nor did the plaintiffs’ evidence establish any pecuniary loss. Accordingly, at [659] her Honour dismissed the claim.

Her Honour’s decision serves as a useful warning about the risks of not documenting transfers of intellectual property in writing. That is not necessary in the case of an employee if you can prove they did the work in the course of their employment. The decision also provides a range of indications to consider if it becomes necessary to try to prove the existence and authorship of copyright works in the absence of documentary evidence.

Metstech Pty Ltd v Park [2022] NSWSC 1667


  1. As her Honour’s narration of the facts is some 550 paragraphs, this is necessarily a very “potted” outline.  ?
  2. The system consisted of long lengths of coaxial cable (serving as the antenna) strung along the shafts, with a headend controller (a Raspberry Pi computer), a number of bi-directional amplifiers (BDAs) and splitters, the BDAs (at least) including printed circuit boards (PCBs) custom-designed for the system).  ?
  3. At [551], her Honour identified the claim as being to PCB assemblies as artistic works and, at [558], her Honour noted that text and numerals on the a PCB, in engineering drawings and installation instructions could be both artistic works and, “to the extent the figures are deployed”, literary works citing Lumen Australia Pty Ltd v Frontline Australasia Pty Ltd [2018] FCA 1807; (2018) 137 IPR 189 at [206]-[209] (per Moshinsky J); Anacon Corp Ltd v Environmental Research Technology Ltd [1994] FSR 659 (per Jacobs J) (circuit diagram). The parties do not appear to have raised issues about the exclusion of circuit layouts from the definition of artistic work in s 10 of the Copyright Act 1968 or of “corresponding designs” under s 74 and the copyright / design overlap provisions of the Copyright Act or of the effect, if any, of the exclusion by Designs Act 2003 s 43 (but not in reg. 4.06) from registration of integrated circuits as a design although, from the description of the PCB assemblies in the judgment, it would appear they did not constitute “integrated circuits” on the reasoning of Moshinsky J in Lumen Australia Pty Ltd v Frontline Australasia at [298] – [311] and of course, as Moshinsky J found, the copyright / design overlap provisions do not apply to literary works.  ?
  4. Copyright Act 1968 s 32 and s 22(1)  ?

Is there a copyright work and who owns it? Read More »

Love was not in the air – Part 2

In a previous post, we looked at why Perram J held that Glass Candy’s “Warm in the Winter” and Air France’s “France is in the Air” reproduced a substantial part of the musical work in Love is in the Air, but not the literary work comprising the lyrics.

A further set of issues his Honour had to untangle was which acts involving the streaming and downloading of Warm or France infringed and who owned those rights.

You will recall that Glass Candy are an American electronic duo based in America who, in 2011, released “Warm in the Winter”. Glass Candy wrote and recorded “Warm in the Winter” in the USA. They made it available for streaming and download on, first, the Big Cartel website and then the IDIB website.[1] They or their rights management agent, Kobalt, also made the recording available through iTunes / Apple Music, Google Play, Youtube, Spotify etc.

Subsequently, Glass Candy provided a version of “Warm in the Winter” to Air France for use by the latter in its Air France: France is in the Air promotional campaign. Until this litigation started, Air France used “France is in the Air” in TVCs and radio advertisements in 114 countries (but not Australia), posted the advertisments on its Youtube channel (which could be downloaded from Australia) and, if you rang up its office from Australia and all its customer service operators were tied up, for its “music on hold” service.

Infringement, or not

Having found that Warm and France reproduced a substantial part of Love, Perram J turned to determing which conduct engaged in by Glass Candy, Kobalt and Air France actually infringed any copyright in Australia and who owned those rights.

In summary, Perram J held that:

(1) the streaming and downloading of Warm from the Big Cartel and IDIB websites infringed the copyright in Love;

(2) the streaming and downloading of Warm from the streaming services iTunes/Apple Music, Google, Play, Spotify and Youtube did not infringe copyright as it was licensed; and

(3) the playing of France to Australians via Air France’s music on hold service did infringe, but the streaming and downloading via Youtube did not.

The infringing acts

The streaming of Warm to Australia and its downloading by subscribers in Australia entailed a number of acts:[2]

(1) the making and recording of Warm;

(2) the uploading of a copy of Warm on to the servers of each streaming service;

(3) the making available of that copy to be accessed by end-users in Australia;

(4) the streaming of the recording to someone located in Australia; and

(5) in the case of downloads, the downloading of a copy of Warm on to the end user’s computer (or smart device) in Australia.

Making and recording – the reproduction right

The making and recording of Warm and France did reproduce a substantial part of Love but, having taken place in the USA (or the USA and France), were not infringements of the copyright in Australia.[3]

There does not appear to have been evidence about where the servers of the streaming services such as iTunes / Apple Music, Google Play, Spotify or Youtube were located, but Perram J was not prepared to assume they were in Australia. So loading the copy on to the streaming service’s server was not an infringing activity either.

Making the recording available to be accessed – the communication right[4]

Although storing the copies on the streaming services’ servers was not a reproduction implicating Australian copyright, Perram J considered that Glass Candy’s acts of communicating the copies of Warm to the streaming services (uploading them) could infringe copyright in Australia and the acts of streaming and downloading in Australia would be damage suffered by the copyright owner in Australia. At [376], his Honour said:

…. That act of infringement seems to me to occur by communicating Warm to iTunes (and if it had been proven the other online music services). That was the infringement. Each time thereafter that the streaming service raised revenue by streaming or downloading Warm that was evidence of the damage suffered by the Applicants or the profits made by Glass Candy. Viewed that way, whether the streaming and downloading of Warm from the online music services is a contravention is irrelevant.

From the context, however, it appears that that act of communicating the copy to the streaming service(s) was not an infringement alleged against Glass Candy. I am not sure how that “infringement” would work, however, given his Honour’s further findings.

The alleged infringements the subject of the proceeding

That left as infringing acts being pursued by the Applicants:

(1) the streaming of Warm to Australians from the Big Cartel and IDIB websites – an exercise of the communication right;

(2) the making of the copies of Warm by users in Australia from the Big Cartel and IDIB websites – an exercise of the reproduction right; and

(3) the streaming of Warm to Australians from the streaming services – also an exercise of the communication right;

(4) the making of the copies of Warm by users in Australia from the streaming services – (at [276]) an exercise of both the communication right (by the streamng service) and the reproduction right (by the end-user); and

(5) in the case of France, the playing of “music on hold” to callers from Australia.

These allegations gave rise two problems: (a) who was the owner of the relevant right and (b) what licences of these copyrights had been granted. The issues that arose are a good illustration of the kind of tracing the chain of title fun the long term of copyright requires you to engage in to make sure you have identified the right person as the copyright owner.

In summary, Perram J found that Boomerang had no standing to sue anyone for infringing the communication right as it was not the owner of the relevant copyright; APRA was. Boomerang was the owner of the copyright in respect of the reproduction right, but its interest was partial or concurrent with AMCOS’ interest as the exclusive licensee of that right.

However, the streaming and downloading from the streaming services, iTunes / Apple Music, Youtube, Google Play and Spotify did not not infringe as those services held licences from APRA and AMCOS for those acts.

The copyright and ownership – a chain of title history

Harry Vanda and the late George Young – the Easybeats, Flash in the Pan – composed Love is in the Air in 1977.

In 1978, they assigned all their copyright in the literary and musical works comprised in Love to Alberts.

Subsequently, in 2016, when Alberts sold its business to BMG, it excluded from the sale the back catalogue of songs written by Vanda, Young and a third member of the Easybeats, Stevie Wright. Alberts instead assigned these rights to Boomerang – a new company owned by members of the Albert family.

However, in 1972 Vanda and Young had become members of the Australasian Performing Right Society (APRA), the collecting society for public performance rights and, as it was before the introduction of the broadly based communication right[5] by the Copyright Amendment (Digital Agenda) Act 2000, the cable diffusion right.

When Vanda and George Young became members of APRA, like everyone else who becomes a member, they assigned to APRA the exclusive rights:

(a) to perform in public; and

(b) to transmit via a diffusion service,

in all of their existing copyrights and any copyright works made in the future while still a member of APRA.[6]

So, the rights in Love is in the Air assigned by Vanda and Young to Alberts did not include the public performance or diffusion rights, as they had already been assigned to APRA.

An interesting point to note here is that the assignment to APRA in 1972 was not an assignment of the broad communication right, as there was no such right under Australian law at that time. Further, the repeal of the diffusion right and its replacement with the broad communication right did not affect that earlier assignment. The earlier assignment did not catch, however, the broader rights encompassed in the communication right, apart from the diffusion service, when the broader right came into force as the terms of the assignment were limited just to the diffusion right.

After the assignments from Vanda and Young, Alberts had also entered into agreements which affected the rights of reproduction and communication.

In 1986, Alberts had entered into a licence with AMCOS granting AMCOS the exclusive rights to authorise the making of records from the Alberts catalogue, including Love. Over time this was amended so as to include the making of digital records. The exclusive licence included the right to authorise the making of reproductions for the purposes of broadcasting in Australia. There were, however, three exclusions from these exclusive rights: they did not extend to making reproductions for inclusion in advertisements, or cinematographic films for the purpose of being broadcast in Australia. They also did not extend to licensing a number of named record companies.

In 1992 and again in 2005, Alberts had also entered into assignments with APRA. The 2005 assignment included an assignment of the right of communication to the public (introduced by the Digital Agenda Act in 2001).

Finally in 2016, after the assignment from Alberts of its copyright in Vanda, Young and Wright works, Boomerang also granted an exclusive licence over its copyright to AMCOS and assigned its public performance and communication rights to APRA.

At [299], Perram J found Boomerang and AMCOS had mutually abandoned the earlier licence granted by Alberts and replaced it with the 2016 licence.[7] The 2016 licence granted AMCOS exclusive rights to authorise reproduction of Love to make records, for digital downloading and communication to the public. AMCOS was not licensed to authorise use of Love in advertisements or synchronisation into a film.

A summary

So, at [326] and [342] Boomerang had no standing to sue Glass Candy or Air France in respect of any streaming or the playing of ‘music-on-hold’ as APRA was the owner of the relevant rights.

Boomerang was the owner of the reproduction right (at [334] – [335], [342]), but its interest was concurrent with AMCOS as the exclusive licensee under s 119 and s 120. AMCOS of course also had concurrent rights under those sections.

Which acts of streaming / downloading infringed?

The straightforward case on infringement was the streaming and downloading from the Big Cartel and IDIB websites. The position of iTunes / Apple Music, Google Play, Spotify, Youtube was complicated by licences those entities had from APRA and AMCOS.

iTunes / Apple Music, Spotify et al.

The evidence showed that sales of Warm through Apple’s services amount to $85.41 (although some of these were probably to the Applicants’ solicitors).

Perram J held that the streaming and downloading of Warm from these services did not infringe as they held licences from APRA and AMCOS which permitted these acts.

In January 2010, Apple Pty Ltd had entered into a licence agreement with APRA and AMCOS. By cl. 9.1, the licence was a non-exclusive licence to:

(a) reproduce AMCOS Works;

(b) authorise the reproduction of AMCOS Works;

(c) communicate in the Territory the APRA Works (including authorising their electronic transmission from Your Digital Music Service to Your customers);

(d) authorise Your Affiliates to communicate the APRA Works to customers in the Territory as necessary in the course of providing the Digital Music Service,

in the form of Downloads (whether by You, or Your customers in the Territory, onto storage devices) for the purpose of Sale or to complete a Sale, including in the form of Clips provided at no charge for the sole purpose of demonstrating the Clip to customers and potential customers of Your Digital Music Service …

Love was included in the APRA and AMCOS Works.

Perram J held that the rights to reproduce and communicate to the public included the rights, not just to reproduce or communicate the whole of Love, but also a substantial part of it through the operation of Copyright Act 1968 s 14. As Warm and France reproduced a substantial part of Love, they were covered by the licences. At [352], his Honour explained:

Because Love is in the AMCOS and APRA catalogues it follows that since 2010 Apple has been fully licensed to provide digital streaming and downloading of Love. And because the doing of an act in relation to a work is taken by s 14 of the Copyright Act to include a reference to the doing of that act in relation to a substantial part of the work, it also follows that Apple has at all material times been licensed by APRA and AMCOS to make available for streaming or digital download a substantial part of Love. Of course, the Applicants’ principal contention in this case is that making Warm available for streaming or digital downloading involves the communication or reproduction of a substantial part of Love. However, it would appear that iTunes is lawfully entitled to make Warm available for streaming or downloading even if it does involve a communication or reproduction of a substantial part of Love. Consequently, the Applicants can have no possible case against Apple for making available Warm for streaming or downloading from iTunes.

Similar conclusions followed in respect of the other streaming services which also had licences with APRA and AMCOS.

As Apple did not infringe by streaming or authorising the downloading of Warm, so also Glass Candy could not be liable for authorising the (non-)infringement.

There was an additional wrinkle on this part of the case. Kobalt admitted there had been streaming from Google Play, Spotify and Youtube, but Glass Candy did not. Perram J considered the evidence did not actually establish there had been streaming or downloading from these services so, if the licences did not cover these activities, Kobalt alone would have been liable by reason of its admissions.

The Big Cartel and IDIB websites

The evidence showed that Warm had been downloaded 12 times for $11.50 in revenue from Big Cartel and only once from IDIB. There were also payments to Kobalt Australia of $266.60 from AMCOS and $366.43 from APRA. Warm was still being advertised for sale for $1 from the IDIB website.

The position of downloads from the websites Big Cartel and IDIB was straightforward. The evidence showed Padgett uploaded Warm or caused it to be uploaded and Ida No received payments from time to time from the sites. Therefore, at [348] they were liable for authorising the communications to the public and downloading from those websites.

The position of streaming was more complicated. Padgett and Ida No had licensed their distribution / streaming rights to BMI in 2010. APRA’s own records recorded BMI as the owner of copyright in Warm for the public performance and communication rights. IDIB had also licensed streaming rights in relation to its website to Kobalt US. At [390], this meant that the person liable for authorising the streaming from the idib website was either BMI or Kobalt US, neither of which was a party. The receipt of royalties by Kobalt Australia from APRA was not sufficient to find it liable for authorising the streaming.

I am not sure why, if Padgett and Ida No had licensed their rights to BMI or Kobalt USA, they were nonetheless not liable for authorising infringing conduct by those entities or authorised by them.

Air France

The case against Air France for streaming promotional videos from Youtube failed because of Youtube’s licence from APRA for the reasons Apple’s licences protected streaming and downloading. There was still liability for the music-on-hold, however, as Air France did not hold a licence from APRA.

Remedies

Glass Candy contended that any damages would be de minimis and so relief should be withheld.

At [432] Perram J rejected this argument. First, his Honour found that the copying of Love had been deliberate so the infringements were flagrant. That meant additional damages may well be awarded. In addition, his Honour anticipated that the compensatory damages award might not be so modest:

Further, whilst it is tempting to think that the damages might be limited by the apparently modest infringements I have found, the Respondents (other than Kobalt) will no doubt have to deal with a contention by the Applicants that their damages should be assessed on a foregone licence basis. Without wishing to lend colour to that contention, damages on that basis may not be so modest.

[Boomerang Investments Pty Ltd v Padgett (Liability)][2020] FCA 535[8]


  1. Italians Do It Better – a record label jointly owned by Padgett (aka Johhny Jewel) and a DJ, Mike Simonetti.  ?
  2. Similar analysis applies to the uses of France by Air France which, additionally involved the transmission of France via a diffusion service to callers on hold.  ?
  3. As noted in my previous post, Perram J may have been interested in exploring whether or not an Australian court could hear and determine questions of infringement under US law.  ?
  4. Copyright Act 1968 s 31(1)(a)(iv): the exclusive right to communicate the work to the public.  ?
  5. Copyright Act 1968 s 31(1)(a)(iv): the exclusive right to communicate the work to the public.  ?
  6. Of course, that would not apply to copyright which had been assigned to someone else before becoming a member of APRA.  ?
  7. As Alberts successor in title, Boomerang was bound by the terms of the 1986 licence granted to AMCOS: Copyright Act 1968 s 196(4).  ?
  8. The applicants’ subsequent attempt to have the Reasons revised or to re-open their case was given short shrift.  ?

Love was not in the air – Part 2 Read More »

Yellow tops and labels

It’s not exactly front page news, but over at news.com.au they have a short video explaining the battle between Kraft and Bega over who can market peanut butter in that yellow get-up. This follows news that Kraft has applied for special leave to appeal the dismissal of its complaint.

A Current Affair also has a go with a lot more flag waving and some gruesome finger dipping.

If you’re looking for the more formal legal analysis, the Full court decision is here.

So far, the moral of the story is that an unregistered trade mark is not property in its own right. Such a “thing” can be assigned only as part of the transfer of the goodwill of a business as a going concern. If you are going to sell your business, or its assets, but you don’t want to the purchaser to use an unregistered name, or get-up, after the sale, you will need to impose appropriate contractual restraints.

Kraft Foods Group Brands LLC v Bega Cheese Limited [2020] FCAFC 65 (special leave application pending)

Yellow tops and labels Read More »

Cartel conduct and IP licences and assignments

Will your assignments and licences of intellectual property, such as in a typical franchise agreement, expose your client to liability for cartel conduct or will you be ready to apply for an authorisation?

One of the bills pending before Parliament contains the long pursued (by the ACCC) repeal of s 51(3) of the Competition and Consumer Act 2010.

Section 51(3) exempts from most of the prohibitions in Pt IV of the Competition and Consumer Act terms and conditions in assignments and licences of intellectual property which most of us take for granted.

The rationale for repeal is that most transactions involving IP do not have anti-competitive effects or purposes and, if they do, they should not be exempt from the competition laws.

Rodney De Boos, a consultant at DCC with many years’ experience in licensing and commercialisation of IP, however, points out that this explanation was developed before the provisions banning cartel conduct were introduced into the Act. And, he contends, typical arrangements in IP agreements which allocate, for example, territories or customers will constitute cartel conduct and so need authorisation if the parties are not to be in breach of the cartel provisions.

As Rodney explains, a cartel provision are certain types of specified provisions between competitors.

Now, it may well be that an assignor and assignee, or a licensor and licensee, will not be competitors. There are many types of arrangements, however, where the Competition and Consumer Act will deem them to be competitors. An obvious example is the case of a franchisor who has retail outlets (either itself or through a related body corporate) as well as retail franchisees. Other arrangements involving IP could also be similarly problematical.

You can read Rodney’s concerns in more detail here.

The bill repealing s 51(3) has already passed the House of Representatives and is due to be debated by the Senate in the sittings coming up.

Cartel conduct and IP licences and assignments Read More »

Not a Comedy of Error

Robertson J has overturned the Registrar’s decision to cancel a number of trade mark registrations for VOKES[1] as errors wrongly made in the Register and ruled they were properly registered in Laminar’s name.

Until 2001, Vokes was the registered owner of the trade marks.

On 15 August 2001, it applied to the Registrar under s 216 to have the name of the registered owner changed to AES Environmental Pty Ltd.

On 12 October 2005, Laminar submitted to the Registrar an assignment of the trade marks from AES to it and Laminar became the registered owner.

In December 2014, Vokes applied to the Registrar under s 81 to have the registration in the name of Laminar cancelled and the registrations restored into Vokes’ name.

The application under s 216 in 2001 had not been made because Vokes changed its name to AES. Rather, it seems Vokes had assigned the trade marks to BTR in 1998 and BTR wanted to assign them in 2001 to AES. There were no assignment documents, or at least none were submitted to the Registrar. So, it seems Vokes / BTR / AES were trying to use s 216 as a kind of short cut. AES subsequently assigned the trade marks to Laminar.

The Registrar pointed out that there was authority that s 216 could not be used to register transfers by assignment , it was only for situations where there had been a change in the name of the entity on the Register.[2] Accordingly, the Registrar held that the registration of the trade marks in the name of AES had been wrongly made and so ordered that change of name of the registered owner to be rectified.

Laminar appealed.

Robertson J clearly thought it a bit rich for Vokes to be coming back to correct the Register some 13 years after its own ruse.

HIs Honour held that the power to correct “errors or omissions” under s 81 was not triggered by the events in 2001. On the basis of the information then before the Registrar, there had been no error.

At [60], his Honour said:

There was no finding by the delegate that in August 2001, and by reference to what the Registrar then knew, there had been an error made by the Registrar. The error was on the part of the person submitting the form in circumstances where there had not, in truth, been a change of name and address: as found by the delegate, Vokes had not changed its name. This was not brought to the Registrar’s attention, so far as the delegate found, before December 2014 when Vokes made its application under s 81.

And then, by way of further explanation, at [65]:

Contrary to the conclusion of the delegate in the present case at [23], in my opinion there was no jurisdictional error on the part of the Registrar in 2001. It is true that there was not a change in the name of the registered owner of the registered trade marks but the Registrar did not know that nor should she have known it: the submission was not pressed before me that it was plain on the face of the form that there was no change of name in the registered owner. If there were no jurisdictional error then it follows that the decisions to record changes of the owner’s name on the Register were not decisions which “had no legal foundation and are no decisions at all” as found by the delegate as a consequence of his conclusion that the decisions were tainted by jurisdictional error.

Therefore, the power under s 81 was not enlivened.

In any event, Robertson J ruled that, if he were wrong in that conclusion, the intervening events (i.e., the assignment from AES to Laminar) meant that the Registrar’s power under s 81 was no longer available. A “person aggrieved” had other remedies they could pursue.

The decision in Mediaquest, which had been relied on by the Registrar, was distinguished. That case involved an application to record an assignment where the objection to the registration of the assignment was made within one month of the assignment being recorded.

Laminar Air Flow Pty Ltd v Registrar of Trade Marks [2017] FCA 1447


  1. There were also registrations for UNIVEE and VOKES VEE-GLASS.  ?
  2. Citing the continuing effects of Crazy Ron’s at [123].  ?

Not a Comedy of Error Read More »

Don’t file in the wrong applicant’s name

Because, if you do, the Full Court has definitively ruled that the error cannot be rectified and any resulting registration will be irredeemably invalid.

This is the first of at least two rulings departing from the trial judge’s reasons which the Full Court made in the course of dismissing Pham Global’s appeal from the decision to revoke its trade mark registrations and find it infringed Insight Clinical Imaging’s trade marks. So Pham Global still lost, but with ramifications for us all.

Some background

Since 2008, Insight Clinical Imaging has been using the name INSIGHT and its composite mark for its radiology services largely in Perth, WA.[1]

Mr Pham is a radiologist and the sole director of the company through which a radiology business is conducted in NSW. Originally, the company was called AKP Radiology Consultants Pty Ltd. In December 2011, however, Mr Pham applied to register the Insight Radiology mark as a trade mark for radiology services.

Insight Clinical’s trade mark is below on the left. On the right below is the trade mark applied for by Mr Pham.

In March 2012, AKP Radiology Services first started using the Insight Radiology mark for its business.[2]

On 6 June 2013, Insight Clinical lodged its opposition to Mr Pham’s application.

On 17 June 2013, Mr Pham’s company changed its name from AKP Radiology Services to Insight Radiology Pty Ltd.[3] Then, on 1 July 2013, Mr Pham sought to assign the trade mark application to his company.

Insight Clinical Imaging’s opposition was successful before the Office and Mr Pham’s company appealed unsuccessfully. In accordance with the trial judge’s orders, Mr Pham’s company then changed its name to Pham Global Pty Ltd and sought leave to appeal.

While leave was granted, the appeal was dismissed.

Who is the applicant

The trial judge found that the Insight Radiology mark was designed for, and used by, Mr Pham’s company. It even paid the designer.

Mr Pham, however, maintained that it had not been a mistake that the application was made in his name rather than the company’s. There was no evidence that Mr Pham ever actually licensed his company to use the trade mark. Moreover, Mr Pham’s explanation for why he decided to assign the application to his company – “I just did it” – was not accepted. He explicitly rejected the proposition that he made the assignment in response to Insight Clinical’s opposition to registration of the trade mark or that it was a result of a mistake.

Accordingly, her Honour held that Mr Pham was not the owner of the application when it was made, his company was. In line with the decisions in Mobileworld and Crazy Ron’s, however, her Honour found that the assignment of the application to the company before the trade mark was actually registered rectified the error.

On appeal, the Full Court noted that Mobileworld and Crazy Ron’s were both obiter on this point.

The Full Court then noted that longstanding precedent required that grounds of opposition were assessed at the date the application was filed. That meant that, where the ground of opposition was under s 58 that the applicant was not the owner of the trade mark,[4] the applicant when the application was filed had to be the owner of the trade mark. At [32], the Full Court said:

Once it is understood that the legislative scheme operates in the context of established principle that the alternative sources of ownership of a trade mark are authorship and use before filing an application for registration or the combination of authorship, filing of an application for registration and an intention to use or authorise use, the relationship between s 27 and ss 58 and 59 of the 1995 Act becomes apparent. The grounds of opposition in ss 58 and 59 reflect the requirements of s 27. Only a person claiming to be an owner may apply for registration. That claim may be justified at the time the application is made based on either alternative source of ownership. But if the claim is not justified at that time, ss 58 and/or 59 are available grounds of opposition. Moreover, if the applicant is not the owner of the mark at the time of the filing of the application, the assignment provisions in ss 106 – 111 do not assist because they authorise the assignment of the mark and thus pre-suppose, consistent with established principle, that the applicant owns the mark.

Well, it’s a nice simple rule; should be pretty straightforward to apply in practice shouldn’t it? Of course, it does mean that the law for trade marks is way out of step with the law for patents and registered designs, sections 22A and 138(3)(4).[5]

When time permits, I shall try to do a post on the new law of substantial identity.

Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd [2017] FCAFC 83 (Greenwood, Jagot and Beach JJ)


  1. It did not apply to register its trade mark until October 2012.  ?
  2. On 17 June 2013, Mr Pham caused AKP Radiology Consultants to change its name to Insight Radiology Pty Ltd. As a consequence of the first instance decision, however, the name of the company was changed again – to Pham Global Pty Ltd.  ?
  3. Mr Pham’s company also made a further application to register the words INSIGHT RADIOLOGY alone. Insight Clinical has also opposed it, but it appears to be stayed pending the outcome of the court case. (There was also an earlier application in 2008, TM Application No 1236945 for INSIGHT IMAGING / INSIGHT RADIOLOGY. This application was made by a Daniel Moses and a Jason Wenderoth, but lapsed after acceptance without ever becoming registered.)  ?
  4. The same principle applies under s 59, which was also in play.  ?
  5. Foster’s Australia Limited v Cash’s (Australia) Pty Ltd [2013] FCA 527.  ?

Don’t file in the wrong applicant’s name Read More »

Not “hired to invent” so no entitlement – Merial v Intervet

In Australia, we are often told our US clients get title through the “work made for hire” or the “hired to invent” doctrines under US law. Intervet has failed in its attempt to rely on the latter doctrine in its unsuccessful attempt to patent a “soft chew” medicament for pets. Moshinsky J also accepted Merial’s opposition on grounds of lack of inventive step. This post will deal with the entitlement issue. Lack of inventive step case, based on the 2001 amendments, will be the subject of a later post.

Some background

In 2002, Intervet was part of the Akzo group. Most of its R & D activities were carried out at its plant in Delaware. However, a Ms Cady was based in New Jersey and had responsibility for developing formulations for commercialisation. She did not, however, have a laboratory. She had worked with a Mr Pieloch of Pharma Chemie to develop products before. Ms Cady engaged Pharma Chemie to develop a palatable “soft chew” dosage form for companion animals such as horses and dogs.

A formulation was developed. Intervet made a provisional application in the USA, naming a Mr Huron, Ms Cady and Mr Pieloch as inventors.[1] Like Ms Cady, Mr Huron was an employee of Intervet. When the PCT came to be filed on 13 August 2003, Mr Huron, Mr Pieloch and Ms Cady were named as the inventors.

Intervet’s in-house patent attorney sent a copy of the PCT specification to Mr Pieloch was a request to sign a declaration acknowledging that Intervet owned all the rights. Pharma Chemie and Mr Pieloch rejected the request, asserting through their lawyers:[2]

It is our client’s position that Pharma Chemie invented the soft chew technology as described in the above-referenced patent application in 1992, and continued its work on the technology through the 1990’s and into the new millenium [sic]. All of the work on this technology was completed prior to Pharma Chemie’s entry into the Manufacturing and Supply Agreement with Intervet in 2002. Pharma Chemie also invented the manufacturing procedure described in the patent application cited above, and provided Formax with this information well prior to its entry into the development agreement with Intervet in 2002.

Pharma Chemie is therefore the owner of the technology described in the above-referenced patent application, not Intervet. For this reason, Mr. Pieloch will not agree to sign the Declaration and Power of Attorney for this application. ….

Intervet made various attempts to prosecute the US application without Mr Pieloch’s signature. These did not progress, however, and the application in the USA ultimately lapsed. The Australian application, the subject of Merial’s opposition, was at least a divisional from the original PCT application.

Claim 1 of the patent application was for:

A soft chew formulation for oral administration comprising a pharmaceutical for control of a parasite of Equidae, Canidae, Felidae, Bovidae, Ovidae Capridae, or Suidae organisms in a soft chew formulation, a flavouring component, a starch component, a sugar component, an oil component and an emulsifying agent that acts as a forming agent, wherein the moisture content of the composition is between 5.0 and 7.5 percent wt, the soft chew formulation is formed by knockout and the soft chew formulation is not an extrudate.

Merial has lost its opposition to the application before the Commissioner and appealed to the Court. Both Mr Huron and Ms Cady had left Intervet by this time, and Ms Cady was one of the witnesses for Merial.

Entitlement

Section 15 requires that the grantee of a patent derive its title ultimately from all of the inventors. Although Intervet had identified Mr Pieloch as one of the three inventors, Merial’s opposition succeeded because Intervet could not claim title from Mr Pieloch whom Moshinsky J found was the sole inventor.

Moshinsky J accepted Mr Pieloch’s evidence that he had developed the technology used for Intervet’s product through his company, Pharma Chemie, before Ms Cady engaged Pharma Chemie to develop Intervet’s product. Pharma Chemie had used its own technology to make a “soft chew” which used Intervet’s additive. So, at least as claimed in Intervet’s application, Pharma Chemie was the inventor of the relevant technology.[3] Mr Pieloch was careful to eschew any claim to the specific product which embodied Intervet’s additive, but the claims were very much broader than that.

Intervet argued it was nonetheless entitled to the invention through an assignment in a Manufacturing and Supply Agreement under which Pharma Chemie developed the product. Alternatively, Intervet argued the assignment was implied under the US “hired to invent” doctrine.

Manufacturing and Supply Agreement

Intervet’s main problem with this argument was that it could not produce the agreement. Instead, it relied on evidence of other agreements with Pharma Chemie (after the event and relating to other projects) which did include express assignments and the importance to companies like Intervet of ensuring they had the rights to their products locked down.

Moshinsky J was not persuaded:

a) Mr Pieloch was adamant that Pharma Chemie had already developed the technology the subject of the application before the projects with Intervet and had even applied for a patent over it.

b) In re-examination, Mr Pieloch expressly denied that he had ever signed an assignment in the terms claimed by Intervet over the relevant technology (as opposed to the specific product using Intervet’s additives).

c) In 2003 in correspondence about the PCT application, Pharma Chemie’s lawyers had explicitly denied there was any such term and Intervet had not challenged that denial then or until the present proceedings.

d) If there had been such an express assignment, Intervet would have taken steps to keep it safe and secure and would have asserted it aginst Pharma Chemie when Pharma Chemie’s lawyers denied the assignment as long ago as 2003.

Hired to invent

Intervet next argued that US law implied a term to assign into the agreement by which Pharma Chemie developed the products for Intervet.

As foreign law, whether or not US law would in fact imply such a term was a question of fact to be determined on the evidence. Both Intervet and Merial advanced lawyers’ opinions on this question.

Both parties’ witnesses agreed that, under US law, a court could imply a term requiring an assignment. Intervet’s independent expert’s, a Mr Blackburn’s, evidence was that:

US law generally permits a court to imply a contract term in appropriate circumstances to handle developments and contractual gaps; one application of this principle is the “employed to invent” or “hired to invent” doctrine, which requires or obligates an inventor to assign an invention resulting from the development of a product that it was engaged to perform where the inventor was hired specifically to make the invention; while there is no binding precedent directly on point holding that a non-employee or independent contractor can be employed to invent or hired to invent, the reasoning of Standard Peeks and Dubilier suggest that the substance of the relationship between the parties and how the invention is made is the controlling factor.[4]

Merial’s expert, Mr Kowalski, contended that the case law relied on by Mr Blackburn applied only to the employer-employee relationship and did not extend to agreements with independent contractors.

Moshinsky J accepted that the cases relied on by Intervet dealt only with situations involving the employer-employee relationship, but his Honour was not satisfied that they were necessarily so limited. Moshinsky J had earlier noted that Mr Kowalski was Merial’s lawyer and had been involved in the preparation of Mr Pieloch’s affidavits for Merial. At [48(e)], his Honour considered that Mr Kowalski’s evidence at times appeared to be an exercise in advocacy and therefore generally preferred the evidence of Mr Blackburn where there were differences between them.

Having decided to proceed on the basis “that the “hired to invent” doctrine is capable of application notwithstanding that Pharma Chemie is a corporate entity and independent contractor rather than an employee”, Moshinsky J nonetheless held at [127] that no term to assign should be implied:

…. Mr Blackburn emphasised that what “controls” is the nature of the contractual relationship between the parties and how the invention was made; and that the critical fact is whether the contract specifically required the invention to be made. In the present case, I have found that Pharma Chemie was not engaged by Intervet Inc to develop a soft chew dosage form; it was engaged, rather, to incorporate Intervet Inc’s active ingredients into a formulation, using Pharma Chemie’s soft chew technology (see [89] above). Further, I have found that the Manufacturing and Supply Agreement referred to in Ms Marsh’s letter dated 16 September 2003 related to the development projects referred to in these reasons as the Horse Project and the Dog Project (see [75] above). It appears from the 16 September 2003 letter that the agreement contained (in paragraphs 1.4 and 9.3) express provisions relating to the assignment of intellectual property rights to Intervet Inc subject to prescribed conditions. In light of these express provisions, there is no room to imply a term (in this or any other agreement relating to the Horse Project or the Dog Project) requiring Pharma Chemie to assign to Intervet Inc any invention resulting from the projects. I have also found above that there was no response to the 16 September 2003 letter (see [80] above). If Intervet Inc had had a basis to contend that, contrary to the propositions set out in the letter, it acquired rights to an invention under the Manufacturing and Supply Agreement (or any other agreement) it is likely that it would have responded. This provides further support for the proposition that a term is not to be implied in the Manufacturing and Supply Agreement or any other agreement to the effect that Pharma Chemie was required to assign to Intervet Inc any invention resulting from the projects.

Accordingly, although the “hired to invent” doctrine could apply in principle, it did not apply on the facts.

It is worth contrasting the approach taken by Moshinsky J based on the application of US law to the arrangements between Intervet and Pharma Chemie with that applied in copyright by the Full Court in Enzed Holdings. In Enzed Holdings, the Full Court held that ownership of copyright in an artistic work in Australia fell to be determined according to Australian law. So, even though the artistic work in question was created in New Zealand, it was irrelevant that under New Zealand law ownership vested in the commissioning party not the author.[5] This approach would not have saved Intervet in this case, however, as the reasons Moshinshky J found to reject the “hired to invent” argument should lead to the same conclusion under Australian law.

Merial, Inc. v Intervet International B.V. (No 3) [2017] FCA 21


  1. By the time of the trial, both Mr Huron and Ms Cady worked for competitors of Intervet and gave evidence for Merial.  ?
  2. 16 September 2003 letter from Pharma Chemie’s lawyer to Intervet’s inhouse patent attorney.  ?
  3. Patents Act 1990 s 15.  ?
  4. Referring to Standard Parts Co v Peck, 264 US 52 (1924) and United States v Dubilier Condenser Corp, 289 US 178, 187 (1933).  ?
  5. In contrast to Enzed Holdings, the US 2nd Circuit Court of Appeals applied the law of the place where the work was made to determine entitlement to copyright in the USA in *Itar-Tass v Russian Kurier Inc (1998) 43 IPR 565.  ?

Not “hired to invent” so no entitlement – Merial v Intervet Read More »

Assigning rights in future copyright – Bollywood style

Typically, a composer or lyricist who becomes a member of a performing right society (well, at least a performing right society in the British tradition) assigns the copyright insofar as it relates to “performing rights”[1] to the collecting society including all rights to Works they might make in the future.

Messrs Salim and Suleiman Merchant are apparently renowned composers of music for the soundtracks of Bollywood movies. In 1996 and 1998, respectively, they became members of the Performing Right Society, the PRS, the collecting society in the UK. As part of the terms of becoming members, they each agreed to assign to the PRS:

“absolutely for all parts of the world the rights which belong to you on the date of this Agreement or which you may acquire or own whilst you remain our member”.

However, in 2008, they signed up to compose the music for a film called Kurbaan. One of the terms of their contract with the producers, Dharma Productions Private Limited, was that all copyright in any music they wrote vested in Dharma Productions on creation.

Kurbaan was subsequently broadcast on B4U, apparently a broadcaster that specialises in all things Bollywood, including the Merchants’ music composed for the film. B4U refused to pay licence fees to the PRS.

B4U’s argued that the terms of the agreement with Dharma Productions meant that s 11 of the CDPA 1988[2] operated so that the Merchants never became the owner of any copyright in the Kurbaan music since it vested eo instanti on creation in Dharma Productions. Therefore, the Merchants never had any copyright in the music which could be assigned to the PRS.

Nice try!

The Court of Appeal said that the assignment to the PRS, being the first in time, took priority so s 91 of the CDPA[3] operated to assign the copyright to the PRS, on creation, and the Merchants had nothing to assign to Dharma.

Formally, the Court of Appeal focused on the wording in the PRS agreement that assigned any copyright that the composer may acquire while a member. Moses LJ treated this as sufficient to cover situations where, but for the agreement with Dharma Productions, the Merchants would have acquired copyright.

B4U Network (Europe) Limited v Performing Right Society Limited [2013] EWCA Civ 1236

Lid dip: Peter Clarke


  1. The APRA membership form defines these, with some exceptions, as the right to perform the work in public and to communicate it to the public.  ?
  2. Corresponding in effect to s 35(6) of our Act.  ?
  3. Corresponding to s 197 of our Act.  ?

Assigning rights in future copyright – Bollywood style Read More »

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. ?

A couple of other points from Insight on appeal Read More »

No damage for infringing copyright in questionnaire

Besanko J has awarded Insight SRC $32,510.00 for the infringements of its copyright in the School Organisational Health Questionnaire by the Australian Council for Educational Reseaarch (ACER). The award consisted of $10 nominal damages and $32,500 by way of additional damages. There are some interesting points about ownership, assignment and damages.

The questionnaire consisted of 57 questions arranged under 12 headings or modules. ACER reproduced some 25 of these questions from 5 modules between 2006 and October 2009 as part of a project with Independent Schools Victoria.

There was no dispute that copyright subsisted in the questionnaire or that ACER had reproduced a substantial part. Rather, ACER disputed Insight SRC’s title to the copyright and whether Insight SRC had suffered any damage.

Ownership

ACER’s basic point was that, as Dr Hart made the questionnaire in the course of his employment by the Victorian Department of Education, the Department (or the Crown) and not Dr Hart was the owner of the copyright pursuant to s 35 or the Crown Copyright provisions (here and here) of the Copyright Act 1968. If Dr Hart was not the original owner of the copyright, Insight SRC had no title since its rights depended on a chain of assignments starting with Dr Hart and not involving the Department (or the Crown).

Besanko J agreed with ACER that Dr Hart had created the questionnaire while employed by the Victorian Department of Education. However, his Honour found that Dr Hart and the Department (through Dr Hart’s superior) had agreed Dr Hart would retain ownership of the copyright and so s 35(6) and s 176 were excluded by the operation of s 35(3) and s 179.

The interesting point here is that the agreement between Dr Hart and his superior was purely oral but, as Besanko J pointed out, unlike the case with assignments pursuant to s 196 or s 197, there was no requirement for an agreement which excluded the operation of s 35(6) and s 176 to be in writing.

Besanko J did also find that s 176 would not have applied as Dr Hart, although an employee of the Department, was not acting under the control or direction of anyone in the Department in creating the questionnaire.

Assignment

Insight SRC claimed to be the owner of the copyright in the questionnaire by assignment. The assignment of copyright to it was made on 1 October 2009; that is, after ACER had ceased its infringing conduct.[1]

The main point of interest is that prior to 12 May 2011, none of the assignments – to Hart Cultural Lodges or Insight SRC – included the right to sue for past infringements. Deeds assigning the right to sue for past infringements from Dr Hart to Hart Cultural Lodges and then from Hart Cultural Lodges to Insight SRC were executed only on 12 May 2011.

After a review of the case law, including Trendtex and the High Court’s ruling in Equuscorp v Haxton, Besanko J accepted that Australian law now permitted the assignment of “bare” rights to litigation provided the assignee had a pre-existing genuine commercial interest in enforcing the claims of the assignor:

…. It must now be taken to be established in Australia that the circumstances in which a bare or mere right of action may be assigned include a case where the assignee has a pre-existing genuine commercial interest in enforcing the claims of the assignor.

While Besanko J was somewhat bemused why there was an assignment to Hart Cultural Lodges, his Honour considered that the ownership of the copyright in the questionnaire was a sufficient pre-existing genuine commercial interest to validate the late assignment of the right to sue for past infringements.

Damages

ACER generated some $213,000 in revenue from its infringing use of the questionnaire. Independent Schools Victoria in turn earned some $807,000 from supplying the questionnaire to its associated schools in infringement of the copyright.

Besanko J refused to award Insight SRC general damages; his Honour awarded nominal damages of $10 only.

The basis for this refusal to award general damages was that all Insight SRC obtained through the assignment of the right to sue for past infringements was whatever rights Dr Hart had to assign. Dr Hart himself had no right to general damages because:

118 …. Dr Hart was not personally conducting a business involving the use of the [questionnaire] between the beginning of 2006 and 1 October 2009 and it has been no part of their case before me that Dr Hart personally would have exploited any commercial opportunities with ISV. Furthermore, Dr Hart did not claim that he could recover any such loss as the major shareholder of Insight SRC and that the Court could lift the corporate veil. On the other hand, what Dr Hart did have as the copyright owner was a right to nominal damages for infringement of copyright and a right to claim additional damages under subs 115(4). An award of nominal damages is appropriate to vindicate the invasion of a copyright owner’s proprietary right….

That is, as Dr Hart was not himself in the business of selling the questionnaire, he could not claim the profits lost on the sales made by an infringing “competitor” – he was not in competition with ACER.

If general damages had been available, Besanko J would have assessed them at $130,000. Rather questionably (with respect),[2] his Honour started with the revenue earned by ACER and reduced that amount by its costs to reflect the profits it made.

Besanko J would not have made any allowance for the revenues made by Independent Schools Victoria as that was not how Insight SRC put its case. The judgment does not explain why Insight SRC did not pursue such a claim. Presumably, it would not have claimed a share of Independent Schools Victoria’s revenues if it [or its exclusive licensee, rather] had secured the contract instead of ACER.

Additional damages

Besanko J found that ACER’s infringement was flagrant and awarded $32,500 by way of additional damages pursuant to s 115(4). ACER had a permissions unit to secure copyright licences where necessary and well knew of its obligations not to use copyright for commercial purposes without an appropriate licence. The fact that the officer in charge of ACER’s program did acknowledge Dr Hart’s authorship in footnotes did not save ACER either.

The amount of any additional damages is highly discretionary and notoriously difficult to predict. Given his Honour’s finding that ACER made $130,000 profit[3] and the permissibility of taking into account that profit in assessessing the amount of additional damages,[4] the award may seem surprisingly low given his Honour’s characterisation of the infringement as flagrant.

Insight SRC IP Holdings Pty Ltd v The Australian Council for Educational Research Limited [2012] FCA 779


  1. The situation was rather more complicated: Dr Hart had assigned, or purported to assign, his copyright in the questionnaire to Hart Cultural Lodges (Dr Hart’s family trust) by two deeds, both dated 30 June 2009 and Hart Cultural Lodges in turn assigned its interests to Insight SRC by deed dated 1 October 2009. Dr Hart was the director and major shareholder of Insight SRC. To complicate matters further, Insight SRC granted an exclusive licence to another “Insight” company of which Dr Hart was also the director and major shareholder. That other Insight company having been the operating entity between 2006 and 2009, but not having a written agreement in place to qualify it as an exclusive licensee in terms of the Act.  ?
  2. See Aristocrat Technologies v DAP Services (Kempsey) [2007] FCAFC 40 at [3], [18]-[20].  ?
  3. At [190] in the face of ACER’s claim at [151] that it made no profits at all.  ?
  4. See Aristocrat Technologies v DAP Services (Kempsey) [2007] FCAFC 40 at [48]-[54] and Facton Ltd v Rifai [2012] FCAFC9 at [40]–42] and [48].  ?

No damage for infringing copyright in questionnaire Read More »

Scroll to Top