Futuretronics.com.au Pty Limited v Graphix Labels Pty Ltd

• Jurisdiction: Australia Federal only
• Judgment Date: 29 October 2007
• Neutral Citation: [2007] FCA 1621
• Court: Federal Court

FEDERAL COURT OF AUSTRALIA

Futuretronics.com.au Pty Limited v Graphix Labels Pty Ltd [2007] FCA 1621

CONTRACTS – IDENTIFICATION OF TERMS – IMPLIED TERMS – where applicant company marketed for sale “skins” – where applicant arranged for first respondent company to manufacture skins – where no agreement as to price – where no agreement as to minimum term or quantity – where first respondent subsequently manufactured and marketed skins for itself in competition with applicant – whether informal contract between applicant and first respondent – whether implied term of any contract that first respondent would not manufacture skins except to supply applicant – where alleged implied term unlimited as to time and circumstances of operation

Held: No binding contract except upon the placing of an actual order by the applicant and acceptance of the order by the first respondent – not necessary for the reasonable or effective operation of contract to imply term

INTELLECTUAL PROPERTY – COPYRIGHT – where skins product bore artwork – where copyright in artwork owned by applicant – where first respondent licensed to reproduce artwork pursuant to arrangement to manufacture skins for applicant – where first respondent reproduced artwork in brochure for its own use – where first respondent gave spares of skins product bearing artwork to third party – whether reproduction of artwork a breach of Copyright Act 1968 (Cth) – whether giving of spare product a breach of Copyright Act 1968 (Cth) – whether breach of implied term of license that first respondent not to use artwork or spare product except for the purposes authorised by applicant

Held: Reproduction of artwork in brochure breach of Copyright Act 1968 (Cth) – giving spare product to third party did not breach Copyright Act 1968 (Cth) – giving spare product to third party breach of implied term of license

EMPLOYMENT LAW – DUTIES OF EMPLOYEE – where second respondent employee of first respondent – where second respondent former employee of applicant – where confidentiality agreement between second respondent and applicant – where second respondent arranged future employment with first respondent while employed by applicant – where second respondent, while still employed by applicant, emailed first respondent regarding future plans for forthcoming employment – where second respondent, after cessation of employment with applicant, pursued business opportunity to sell skins product to customer of applicant – where second respondent, after cessation of employment with first respondent, disclosed to third party name of applicant’s supplier – whether second respondent breached contract of employment with applicant – whether second respondent breached confidentiality agreement with applicant – whether second respondent breached fiduciary duties owed to applicant – whether second respondent breached employee’s duties under s 182 or s 183 Corporations Act 2001 (Cth)

Held: Email communications from second respondent to first respondent while still employed by applicant did not reveal confidential information nor contain any business opportunity diverted from applicant – no evidence that applicant company time misused by second respondent – email communications did not constitute breach of contract – email communications did not constitute breach of confidentiality agreement – email communications did not constitute breach of fiduciary duties – email communications did not constitute breach of Corporations Act 2001 (Cth) – business opportunity pursued was not business opportunity open to applicant while second respondent employed by applicant – second respondent did not use confidential information in pursuit of business opportunity – second respondent did not deliberately memorise the name of the customer – second respondent entitled to use know-how obtained in course of former employment – name of customer within know-how since not deliberately copied or memorised – second respondent’s pursuit of business opportunity did not breach confidentiality agreement – pursuit of business opportunity did not breach fiduciary duties – pursuit of business opportunity did not breach Corporations Act 2001 (Cth) – name of applicant’s supplier not confidential at common law or in equity – disclosure of name of supplier did not breach fiduciary duties – disclosure of name of supplier did not breach Corporations Act 2001 (Cth) – applicant failed to prove that name of supplier was not generally known outside the company or generally known – name of supplier not confidential within the confidentiality agreement – disclosure of name of supplier did not breach confidentiality agreement

PRACTICE AND PROCEDURE – PLEADINGS – PRIVILEGE AGAINST SELF-EXPOSURE TO PENALTY – application to amend application and statement of claim on first day of trial – where pre-trial discovery and production made – where amendments introduce new causes of action against respondents – where new causes of action include breach of civil penalty provision of Corporations Act 2001 (Cth) – where new causes of action pleaded on basis of documents discovered and produced pre-trial – where amendments opposed – where respondents allege that production of documents would have been resisted on grounds of privilege against self-exposure to penalty had breaches of Corporations Act 2001 (Cth) been pleaded initially – whether amendments should be allowed

Held: Privilege against self-exposure to penalty arises because answers or documents tending to expose a person to a penalty are sought, not because proceedings exposing a person to a penalty are commenced – respondents had opportunity to claim privilege – privilege waived – amendments allowed

Copyright Act 1968 (Cth) s 36,

Corporations Act 2001 (Cth) ss 79, 172, 182, 183, 1317E, 1317F, 1317H, 1317J

Fair Trading Act 1999 (Vic) s 12

Federal Court Rules O 11, r 10

Trade Practices Act 1974 (Cth) ss 52, 53(c) and (d), 82

Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288 referred to

Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37 referred to

Blyth Chemicals v Bushnell (1933) 49 CLR 66 referred to

BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 referred to

Byrne v Australian Airlines Ltd (1995) 185 CLR 410 referred to

Codelfa Construction Pty Ltd v State Railway Authority (NSW) (1982) 149 CLR 337 referred to

Concut Pty Ltd v Worrell (2000) 176 ALR 693 referred to

Corrs Pavey Whiting and Byrne v Collector of Customs (1987) 14 FCR 434 referred to

Forkserve Pty Ltd v Pachiaratta (2000 40 IPR 74 referred to

Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317 referred to

Gold Peg International Pty Ltd v Kovan Engineering (Aust) Pty Ltd (2005) IPR 497 distinguished

Hawkins v Clayton (1988) 164 CLR 539 referred to

Independent Management Resources Pty Ltd v Brown [1987] VR 605 referred to

Kovan Engineering (Aust) Pty Ltd v Gold Peg International Pty Ltd [2006] FCAFC 117 referred to

Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535 referred to

Nottingham University v Fishal [2000] ICR 1462 referred to

Pioneer Concrete Services Ltd v Galli [1985] VR 675 distinguished

Robb v Green [1895] 2 QB 316 referred to

Rosetex Company Pty Ltd v Licata (1994) 12 ACSR 779 referred to

JW Carter, E Peden and GJ Tolhurst, Contract Law in Australia (5^th ed, 2007)

JD Heydon, Restraint of Trade Doctrine (2^nd ed, 1999)

Seddon and Ellinghaus, Cheshire & Fifoot’s Law of Contract (8^th Aust ed, 2002)

FUTURETRONICS.COM.AU PTY LIMITED ACN 006 327 386 v GRAPHIX LABELS PTY LTD ACN 005 771 773 AND JOHN ATTA

VID 1237 OF 2006

BESANKO J

29 OCTOBER 2007

ADELAIDE (HEARD IN MELBOURNE)

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	VID 1237 OF 2006

BETWEEN:	FUTURETRONICS.COM.AU PTY LIMITED ACN 006 327 386 Applicant
AND:	GRAPHIX LABELS PTY LTD ACN 005 771 773 First Respondent JOHN ATTA Second Respondent

JUDGE:	BESANKO J
DATE OF ORDER:	29 OCTOBER 2007
WHERE MADE:	ADELAIDE (HEARD IN MELBOURNE)

THE COURT ORDERS THAT the proceeding be adjourned to a date to be fixed to enable the parties to make submissions as to the appropriate orders in light of these reasons.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	VID 1237 OF 2006

BETWEEN:	FUTURETRONICS.COM.AU PTY LIMITED ACN 006 327 386 Applicant
AND:	GRAPHIX LABELS PTY LTD ACN 005 771 773 First Respondent JOHN ATTA Second Respondent

JUDGE:	BESANKO J
DATE:	29 OCTOBER 2007
PLACE:	ADELAIDE (HEARD IN MELBOURNE)

REASONS FOR JUDGMENT

1 This is a proceeding commenced in this Court by Futuretronics.com.au Pty Ltd (“Futuretronics”) against Graphix Labels Pty Ltd (“Graphix Labels”) and Mr John Atta. Futuretronics claims declarations and injunctions against Graphix Labels and Mr Atta, orders for delivery up of certain brochures and products and manufacturing materials said to be in their possession and damages or an account of profits under the Copyright Act 1968 (Cth) (“the Copyright Act”), damages under s 82 of the Trade Practices Act 1974 (Cth) (“the Trade Practices Act”) and damages at common law. In addition to these claims, Futuretronics claims against each of Graphix Labels and Mr Atta a compensation order under s 1317H of the Corporations Act 2001 (Cth) (“the Corporations Act”) and the right to elect for an inquiry as to damages and payment of all sums found to be due upon such inquiry, or the taking of an account.

2 On 16 November 2006 a Judge of this Court made an order that issues of liability be determined separately from and prior to issues of quantum.

The claim by Futuretronics

3 On the first day of trial, Futuretronics applied to amend its application and statement of claim. The amendments...