Futuretronics.com.au Pty Limited v Graphix Labels Pty Ltd (No 2)

• Jurisdiction: Australia Federal only
• Judgment Date: 27 May 2008
• Neutral Citation: [2008] FCA 746
• Court: Federal Court

FEDERAL COURT OF AUSTRALIA

Futuretronics.com.au Pty Limited v Graphix Labels Pty Ltd (No 2)

[2008] FCA 746

COPYRIGHT – infringement of copyright – compensatory damages pursuant to s 115(2) Copyright Act 1968 (Cth) – methods of measuring damages – no economic loss established – no injury to reputation established – nominal damages awarded to vindicate invasion of proprietary right

COPYRIGHT – infringement of copyright – additional damages pursuant to s 115(4) Copyright Act 1968 (Cth) – matters to be considered – not preconditions – meaning of “flagrancy of infringement” – second respondent knew or was wilfully blind to fact that he should not have used artworks as he did – flagrant infringement

COPYRIGHT – infringement of copyright – additional damages pursuant to s 115(4) Copyright Act 1968 (Cth) – conduct after infringement or after respondents informed they had allegedly infringed applicant’s copyright – conduct in relation to defence of proceeding – such conduct relevant to costs and not to additional damages

CONTRACT LAW – breach of implied term – no damage established – nominal damages awarded

Copyright Act 1968 (Cth) s 115

Autodesk Australia Pty Ltd v Cheung (1990) 17 IPR 69 referred to

Bailey v Namol Pty Ltd(1994) 53 FCR 102 applied

Fenning Film Service Ltd v Wolverhampton, Walsall and District Cinemas Ltd[1914] 3 KB 1171 referred to

Flags 2000 Pty Ltd v Smith (2003) 59 IPR 191 followed

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

General Tire & Rubber Co v Firestone Tyre and Rubber Co Ltd[1976] RPC 197 applied

Milpurrurra v Indofurn Pty Ltd(1994) 54 FCR 240 referred to

MJA Scientifics International Pty Ltd v S C Johnson and Son Pty Ltd (1998) 43 IPR 275 referred to

Paterson Zochonis Ltd v Merfarken Packaging Ltd[1983] FSR 273 referred to

Pollock v J C Williamson Ltd [1923] VLR 225 referred to

Polygram Pty Ltd v Golden Editions Pty Ltd (No 2) 38 IPR 451 referred to

Prior v Lansdowne Press Pty Ltd [1977] VR 65 referred to

Prior v Sheldon (2000) 48 IPR 301 considered

Raben Footwear Pty Ltd v Polygram Records Inc(1997) 75 FCR 88 referred to

Ravenscroft v Herbert and New English Library Limited[1980] RPC 193 referred to

Sony Entertainment (Australia) Ltd v Smith(2005) 215 ALR 788 considered

Sutherland Publishing Co Ltd v Caxton Publishing Co Ltd[1936] 1 Ch 323 referred to

Universal Music Australia Pty Ltd v Miyamoto (aka DJ Moto) (2004) 62 IPR 605 considered

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

27 MAY 2008

MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA 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:	27 MAY 2008
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1. For the infringement of copyright there be judgment in favour of the applicant against the respondents in the sum of $10,010.00.

2. For breach of the implied term there be judgment in favour of the applicant against the first respondent in the additional sum of $10.00.

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

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA 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:	27 MAY 2008
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1 The applicant made a number of claims against the respondents in a proceeding issued in this Court. A judge of the Court made an order that issues of liability be determined separately from and prior to issues of quantum. I heard and determined the issues of liability. My reasons, which I will refer to as my liability reasons, are published in Futuretronics.com.au Pty Limited v Graphix Labels Pty Ltd[2007] FCA 1621.

2 On 22 November 2007, I made the following declarations:

“1. The applicant is the owner of copyright in the artworks.

2. By the production and distribution of the brochure to the parties listed below the first respondent has infringed the applicant’s copyright in the artworks in breach of s 36 of the Copyright Act 1968 (Cth):

(i) Mr David Bartlett and Mr Boyd Dainton of Audion Australia on or about 10 October 2006;

(ii) Mr Peter Batt of Fosh Australia in October 2006;

(iii) Mr Waldo Latowski of Griffin Technology on 12 October 2006

3. The second respondent authorised the first respondent’s said infringement of the applicant’s copyright in the artworks in breach of s 36 of the Copyright Act 1968 (Cth).

4. It was an implied term of the agreement between the applicant and the first respondent (“the agreement”) that the artworks would be used by the first respondent for the purpose of fulfilling orders and for no other purpose (“the implied term”).

5. The first respondent breached the implied term by providing samples of skins bearing some of the artworks to persons including one Ian Bagnall of Powermove Distribution Pty Ltd without the authorisation of the applicant.”

3 The artworks referred to in the declarations are the artworks provided by the applicant to the first respondent for the purposes of being printed onto skins. I refer to [41] of my liability reasons. The brochure referred to in the declarations is a brochure prepared by the first respondent and on which there were printed images of iPods displaying the artworks.

4 In addition to the declarations, I made orders for delivery up in relation to the brochure and samples of the skins and for the disclosure of information in relation to the distribution of samples of the skins. It is not necessary for me to set out the terms of those orders. I made an order that the applicant’s application otherwise be dismissed.

5 I also made a number of procedural orders designed to facilitate the hearing and determination of the applicant’s claim for damages. The applicant had elected to claim damages rather than an account of profits.

6 These reasons deal with the applicant’s claim for damages for infringement of its copyright in the artworks and for breach of the implied term. The causes of action for infringement of copyright lie against both respondents, whereas the cause of action for breach of the implied term lie against the first respondent only.

7 I will deal first with the claim for damages for infringement of copyright.

Infringement of copyright

8 The relevant section of the Copyright Act 1968 (Cth) (“Act”) is s 115 which provides relevantly:

“115 Actions for infringement

(2) Subject to this Act, the relief that a court may grant in an action for an infringement of copyright includes an injunction (subject to such terms, if any, as the court thinks fit) and either damages or an account of profits.

…

(4) Where, in an action under this section:

(a) an infringement of copyright is established; and

(b) the court is satisfied that it is proper to do so, having regard to:

(i) the flagrancy of the infringement; and

(ia) the need to deter similar infringements of copyright; and

(ib) the conduct of the defendant after the act constituting the infringement or, if relevant, after the defendant was informed that the defendant had allegedly infringed the plaintiff’s copyright; and

(ii) whether the infringement involved the conversion of a work or other subject matter from hardcopy or analog form into a digital or other electronic machine readable form; and

(iii) any benefit shown to have accrued to the defendant by reason of the infringement; and

(iv) all other relevant matters;

the court may, in assessing damages for the infringement, award such additional damages as it considers appropriate in the circumstances.”

9 The applicant claims damages pursuant to s 115(2) and additional damages pursuant to s 115(4). It should be noted that the respondents did not raise as a “defence” to the claim for damages the matters in s 115(3) of the Act.

10 In relation to the claim for damages under s 115(2) of the Act, the Court, in awarding damages for infringement of copyright, will have regard to similar considerations as attend the award of damages in tort: General Tire & Rubber Co v Firestone Tyre and Rubber Co Ltd[1976] RPC 197. The purpose of an award is to compensate the plaintiff for the loss suffered as a result of the defendant’s infringement: Bailey v Namol Pty Ltd(1994) 53 FCR 102 at 110-111.

11 Various methods of measuring damages for an infringement of copyright have been described in the cases. In Sutherland Publishing Co Ltd v Caxton Publishing Co Ltd[1936] 1 Ch 323 at 336, Lord Wright MR said that the measure of damages in a copyright case “is the depreciation caused by the infringement to the value of the copyright as a chose in action”. However, the authorities make it clear that is only one method of measuring damages: Autodesk Australia Pty Ltd v Cheung (1990) 17 IPR 69; Bailey 53 FCR at 111-112; Milpurrurru v Indofurn Pty Ltd(1994) 54 FCR 240. Another method is to determine the licence fee or royalty the infringing party would have to pay to use the work lawfully. There are difficulties in applying that approach in circumstances where it cannot be inferred that the infringing party would pay a licence fee rather than not use the work (Autodesk 17 IPR at 75). The applicant did not contend that either of the aforesaid methods was appropriate in this case. It submitted that this...