prima facie case

Program formats and copyright

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Channel 7 has lost its bid to get an interlocutory injunction against Channel 9’s show Hotplate.

Channel 7 claimed Hotplate infringes Channel 7’s copyright in the dramatic works consisting of the combination and series of incidents, plot, images and sounds that make up My Kitchen Rules:

  1. MKR Series 1, Episode 1;
  2.  the whole of MKR Series 1;
  3.  the whole of MKR Series 5; and
  4.  the whole of MKR Series 6.

Nicholas J found that Channel 7 had a reasonably arguable case, but did not agree with Channel 7 that it was a strong prima facie case. Then, his Honour considered the balance of convenience weighed in Channel 9’s favour.

Prima facie case

Nicholas J thought this might well cause Channel 7 some difficulties. At [15] his Honour said:

There may be a difficulty in framing the case in this way.  My understanding of Seven’s case is that it claims copyright in the dramatic work that constitutes the format for the MKR television program which was first reduced to material form in Series 1, Episode 1 (see Seven’s outline of submissions para 11). If that is correct, then one would expect subsequent episodes of MKR merely to reproduce the dramatic work (ie. the format) first seen in Series 1, Episode 1.  The alternative approach involves treating every subsequent episode of MKR as an original dramatic work that has its own original format.  This seems inconsistent with the way in which Seven has argued its case.  In any event, it is not necessary to explore this issue in any detail for present purposes.  In due course Seven will need to explain precisely how it puts its case.

Channel 9 contended that many of the key elements of MyKitchen Rules were common place and unoriginal. The makers of Hotplate, Endemol, also pointed to a catalogue of what it said were very substantial differences between the 2 shows:

(a) The Hotplate is based on professional restaurateurs, and established restaurant businesses, whereas MKR involves amateur cooks in their kitchens.

(b) The restaurants and contestants for The Hotplate were selected because they were varied examples of different restaurant styles and the best characters, not because they are from a particular State (as is the case for MKR) – as a result, two restaurants are in Sydney, one is in Brisbane, one is in Perth, one is in Mandurah (in Western Australia) and one is in regional Victoria.

(c) The restaurant businesses featured in The Hotplate focus on different cuisines in order to show different cooking styles, including Italian, Japanese, French, seafood, modern Australian and Asian fusion.

(d) In Round 1 of The Hotplate, the contestants are required to cook meals from their existing menu, and must be prepared to cook anything on the menu since they are not given advance notice of which two entrees, two mains and two desserts will be ordered by the judges, whereas in MKR the contestants select their own menu of one entree, one main and one dessert. The Hotplate shows the contestants preparing meals, but does not show them shopping for ingredients as for MKR.

(e) When their restaurant is featured, the contestants in The Hotplate wear what they generally wear in their day-to-day business – they are not provided with a branded apron as they are for MKR or for Masterchef (another well-known cooking program).

(f) In Round 1 of The Hotplate, the other restauranteur contestants provide their scores to the judges in a bill folder, but in Round 2 (after the restaurant makeovers), the other contestants must deliver their scores directly to the contestants whose restaurant is being featured on the night.

(g) The judges in The Hotplate give feedback to the contestants about everything from the ambiance and decor of the restaurant to the service to the overall menu to the specific dishes they serve – this is aimed at assisting the restaurateurs with how they can improve their businesses as a whole, not just the cooking. This is not an element of MKR since the program does not involve actual restaurant businesses.

(h) In Round 2 of The Hotplate, the contestants are given an amount of money to undertake renovations and makeovers of their restaurant’s furniture, colour scheme and decor in addition to updating of the restaurant’s menu. Again, this is not an element of MKR since the program does not involve the renovation or makeover of restaurant businesses. This information may be confidential to Nine. I have not had time to check while preparing this affidavit.

(i) In Round 3 of The Hotplate, the contestants cook meals from their newly renovated restaurants for diners. This is not an element of the MKR program since it does not involve restaurants or their diners.

Balance of convenience

Nicholas J accepted that Channel 7’s losses would be difficult to quantify. His Honour considered, however, that Channel 9’s losses would also be particularly difficult to quantify. The factor which appears to have tipped the balance, bearing in mind the problematic strength of Channel 7’s claim that its rights were infringed, was the disruption to Channel 9’s broadcasting schedule. 3 episodes of Hotplate had already broadcast and it was unrealistic to expect Channel 9 could simply resume where it left off, or start over again, if it successfully defended the infringement claim. At [41] and [42], his Honour said:

During the course of argument it was suggested by Senior Counsel for Seven that if Nine was restrained from broadcasting further episodes of Hotplate, it would be able to resume broadcasting them at a later date on the assumption that no permanent injunction was granted. I doubt that this would be as simple as the submission seemed to suggest. Presumably it would be necessary for Nine to re-broadcast the first three or more episodes. I think it would be difficult for Nine to re-establish the program’s momentum after it was abruptly halted by injunction and then “shelved” for however many months it takes to determine the proceeding and any subsequent appeal.

There is evidence from Ms Officer to show that Nine considers Hotplate to be a key piece of its programming that Nine has decided to broadcast in prime-time slots not only with a view to achieving high ratings for Hotplate itself, but also with a view to boosting the ratings of some of Nine’s other programs.

Seven Network (Operations) Limited v Endemol Australia Pty Limited [2015] FCA 800

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Interlocutory Injunction to transfer domain name

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Nicholas J has granted Thomas International an interlocutory injunction ordering Humantech to transfer the domain names, thomasinternational.com.au and thomas.co.za, to Thomas International. Thomas International had to give the usual undertakings and, as a foreign corporation, provide security for costs.

Thomas International is an English company which provides psychological testing and psychometric assessments, and competency and skills-based assessments, particularly using computerised services accessed over the internet through thomasinternational.net. It also makes its materials and services available through distributors. It appointed Humantech, a company associated with a Mr Schutte, as its master distributor/licensee for South Africa and Australia with power to exercise its rights through distributors. Humantech was permitted to use the “Thomas” trade marks, to incorporate a company in Australia under the name Thomas International (Australia) and to register the domain names. There were also obligations when the arrangements ceased or were terminated to cease use of the trade marks and change the corporate name of Thomas International (Australia) to a name which did not include Thomas.

In due course, the Schutte interests also incorporated another entity, ACT, which offered similar services to Thomas International’s assessment and training services. Thomas International alleges that, after some successful years’ trading, revenues from Thomas International (Australia) starting dropping off and the Schutte interests were diverting customers to ACT which, without permission, was using materials based on Thomas International’s materials.

Thomas International sued Humantech, Thomas International (Australia), ACT and Mr Schutte. There was a meeting between the parties and their lawyers shortly after. Thomas International said it would not discuss a new licensing arrangement until an undertaking dealing with the existing issues was provided. As a result, Humantech and the Schutte interests provided an undertaking to cease use of Thomas International’s trade marks, intellectual property and to transfer the domain names over. Thomas International also agreed to negotiate about a new licensing arrangement in good faith.

The next day Thomas International made its licence proposal to the Schutte interests. They considered it was financially unworkable and left the meeting. Later that day, they then put Humantech (and subsequently the other corporate entities) into administration and disabled the website. Shortly thereafter, Thomas International applied for interlocutory injunctions.

As noted, Nicholas J granted the interlocutory injunctions including an order that the domain names be transferred to Thomas International. The terms of the Undertaking meant it had a prima facie case to force the Schutte interests to stop using the Thomas name and trade mark and for the transfer of the domain names.

The Schutte interests’ main attempt to rebut that was their argument that the Undertaking was invalid or unenforceable. That was said to result because, it was alleged, that Thomas International extracted the Undertaking in return for its promise to negotiate a new licence arrangement in good faith. The Schutte interests contended that the terms of the licence they were offered were so unreasonable as to show that Thomas International did not negotiate, and had no intention of negotiating, in good faith. This issue was not developed in detail at this stage, but Nicholas J pointed out that, on the current state of the law in Australia, an obligation to negotiate in good faith did not require a party to subordinate its own interests to that of the other party.

On the balance of convenience, Nicholas J accepted Thomas International’s argument that:

the present state of affairs may cause TIL significant reputational damage as a result of customers who have purchased units entitling them to make use of facilities provided by TIL at the Thomas Hub being prevented from gaining access to it through the TIA website. I accept this submission. I also consider that any such damage may be irreparable and that damages will most likely not provide an adequate remedy. The financial statements of TIA for the financial year ending 30 June 2014 show that the company has net assets of just under $145,000.

On the other hand, the Schutte interests’ main argument was the disruption to their business, and that of their customers, if they could not continue to use the domain names, the main access point for provision of services both to Thomas International (Australia)’s customers and those ACT. As Nicholas J pointed out, however, the Schutte parties had already disabled access to the websites so they had already caused that problem themselves.

It would appear that Thomas International first learned something about ACT’s activities, the subject of the complaint, in May 2014 (i.e., a year earlier). However, Thomas International was able to lead evidence showing all the work it did, and the difficulties it encounted, in trying to ascertain what ACT was doing until proceedings were issued. In this context, the termination by Humantech of the main employee with responsibilities for running the Thomas part of its business may will have been highly significant.

Permission to proceed against the companies although administrators were appointed was granted as the interests of the administrators were adequately protected by the undertaking as to damages and provision for securities.

Thomas International Limited v Humantech Pty Ltd [2015] FCA 541

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