Abrasives and Related Suppliers Pty Ltd v Rotheram

[2003] FCA 838

FEDERAL COURT OF AUSTRALIA

Abrasives and Related Suppliers Pty Ltd v Rotheram [2003] FCA 838

COPYRIGHT – injunction – arguable issue to be tried

Copyright Act 1968 (Cth) s 38

ABRASIVES RELATED SUPPLIES PTY LTD & ANOR v JOHN ERIC ROTHERMAN & ORS
V545 of 2003

HEEREY J
5 AUGUST 2003
SYDNEY (VIDEO LINK FROM MELBOURNE)

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V545 OF 2003

BETWEEN:

ABRASIVES AND RELATED SUPPLIERS PTY LTD (ACN 007 890 100)
FIRST APPLICANT

MICRO-SURFACE FINISHING PRODUCTS, INC
SECOND APPLICANT

AND:

JOHN ERIC ROTHERAM
FIRST RESPONDENT

THE DISC DOCTOR AUSTRALIA PTY LTD (ACN 104 100 709)
SECOND RESPONDENT

BRAZIN LIMITED (ACN 006 624 228)
THIRD RESPONDENT

PHILIP EDWARD REED
FOURTH RESPONDENT

JUDGE:

HEEREY J

DATE OF ORDER:

5 AUGUST 2003

WHERE MADE:

SYDNEY (VIDEO LINK FROM MELBOURNE)

THE COURT NOTES THAT:

1.Upon the First Applicant undertaking by its Counsel to pay to any party adversely affected by the undermentioned order and undertakings such compensation (if any) as the Court thinks just, in such manner as the Court directs.

2.The First and Second Respondents by their Counsel undertook to the Court that until the determination of the proceeding or further order:

(a)they, whether by themselves, their directors, officers, servants, or agents, or any of them will cease and refrain from manufacturing, causing to be manufactured, marketing, promoting, advertising, offering for sale, selling or supplying any products that are marketed in the Infringing Packaging (as defined in the letter exhibited as KAS 25 to the affidavit of Kyle Smith sworn 11.07.03 and filed in this proceeding) or any packaging that contains a reproduction of a substantial part of the Artistic Works (as defined in the said letter);

(b)they, whether by themselves, their directors, officers, servants, or agents, or any of them will cease and refrain from:

i.reproducing the Artistic Work in a material form;

ii.publishing the Artistic Work; or

iii.communicating the Artistic Work to the public.

(c)they, whether by themselves, their directors, officers, servants, or agents or any of them will cease and refrain from marketing, promoting, advertising, offering for sale, selling or supplying any CD and/or DVD repair kit products goods or services by reference to the words “Disc Doctor” or any name which is substantially identical with or deceptively similar to the words “Disc Doctor”

THE COURT ORDERS THAT:

1. That until the hearing and determination of the proceeding or further order the Third Respondent whether by itself, its directors, officers, servants or agent or whosoever otherwise be restrained from:
1. causing to be manufactured, marketing, promoting, advertising for sale, offering for sale, selling or supplying any product in packaging that contains or bears:

i.the instructions;

ii.the written text; or

iii.the image of a computer disc 

(herein after referred to collectively as the "Applicants' copyright work") which form part of the copyright works which appear on the packaging which is exhibit KAS-14 to the Affidavit of Kyle Andrew Smith sworn 11 July 2003 or any copyright work that is a reproduction or a substantial reproduction in a material form of the Applicants' copyright work unless the product is manufactured or supplied by the First Applicant.

2. The foregoing order be stayed until 5pm on Friday 8 August 2003.
3. The costs of the parties of and associated with the application for interlocutory relief be reserved.
4. The Respondents file and serve their Defences and any Cross Claims by 4pm on 5 September 2003.
5. The proceeding be listed for mediation on or before 7 October 2003 before a mediator to be agreed between the parties and in the absence of agreement a Registrar appointed by the Court.
6. The proceeding be listed for further directions on 7 October 2003.
7. Liberty to Apply.

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	V545 OF 2003

BETWEEN:

ABRASIVES AND RELATED SUPPLIERS PTY LTD (ACN 007 890 100)
FIRST APPLICANT

MICRO-SURFACE FINISHING PRODUCTS, INC
SECOND APPLICANT

AND:

JOHN ERIC ROTHERAM
FIRST RESPONDENT

THE DISC DOCTOR AUSTRALIA PTY LTD (ACN 104 100 709)
SECOND RESPONDENT

BRAZIN LIMITED (ACN 006 624 228)
THIRD RESPONDENT

PHILIP EDWARD REED
FOURTH RESPONDENT

JUDGE:	HEEREY J
DATE:	5 AUGUST 2003
PLACE:	SYDNEY (VIDEOLINK FROM MELBOURNE)

REASONS FOR JUDGMENT

1. The applicants seek interlocutory injunctions to restrain the marketing of a CD and DVD cleaning device, the packaging of which is said to infringe the applicants’ copyright in aspects of their own packaging of a similar device.  The first respondent Mr John Eric Rotheram and his company, the second respondent The Disc Doctor Australia Pty Ltd, are the suppliers of their device (“the respondents’ device”).  The third respondent Brazin Limited operates a chain of approximately 280 retail outlets throughout Australia which trade under the name “Sanity”.  There are at the moment about 2500 units of the respondents’ device held in Sanity stores.

2. Consent orders have been agreed upon as between the applicants and the first and second respondents.  The third respondent has opposed the grant of any interlocutory relief against it.

3. I am satisfied there is an arguable issue to be tried as between the applicants and the third respondent.  Even granted that copyright in the bandaid device is vested in a third party, Grin Creative, it is nevertheless arguable that either the applicants have copyright in the remaining parts of the packaging, namely the instructions, the packaging text and the compact disc device or, alternatively, the applicants and Grin Creative hold copyright in the whole works as tenants in common and one of them has standing to enforce: Lahore, Copyright and Designs [20,300].

4. As to the Copyright Act 1968 (Cth) s 38 point, it seems at least arguable that by the date of the demand on 24 June 2003 and the service of affidavits shortly afterwards on 11 July 2003, the third respondent was put on notice that the first and second respondents were, on whatever basis, going to cease and desist in the sale of articles in the allegedly infringing packaging.

5. As to the balance of convenience, there is sufficient evidence for present purposes that the respondents’ device is inferior.  It does not seem to be controverted that, contrary to what appears on the packaging, the user has to rub for 20 minutes as opposed to one.  There is evidence of actual complaints by purchasers of the respondents’ device.  They may not be many, but common sense would indicate that with a relatively cheap item of this kind (retail price $20) people may not use it immediately, or if they find it unsatisfactory they may not bother to make a complaint.  It is of some significance I think that the third respondent itself has received some complaints but does not disclose how many.  There is an arguable case that the applicants would suffer significant but not readily provable damage by the sale of a demonstratively inferior product in packaging virtually identical to that used by the applicants.

6. I think the damage to the third respondent's reputation by the re-call of the respondents’ devices is rather exaggerated.  The worst that could happen would be a customer asking for the item and being told that it is not available.  The ordinary customer would not be told of the litigation lying behind this and I find it hard to see that there would be any appreciable loss of reputation to the third respondent.  It seems that the modern systems of stock control that the third respondent has should enable directions to be given so that the stock can be recalled readily speedily.

7. As to the competence of the applicants, and in particular the first applicant, to give an undertaking to damages, its balance sheet seems quite healthy.  It has liquid assets in the form of cash, debtors and stock well in excess of a million dollars.  Its current liabilities are creditors of $280,000.  The main liabilities seem to be otherwise internal loans.  It seems to be common ground that the product in question is a successful and popular one.  So on the evidence available to me the first applicant has a successful business and liquid assets and should be in a position to meet each undertaking as to damages if called upon, which I would not expect to be great, limited as they are to the cost of some 2500 units which the third respondent holds in stock, these being items for which the third respondent has paid or is liable for $5.45 and would be sold at $20.

8. For those reasons I will grant the injunction sought on the undertakings which Mr Wise is instructed to give.

I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey .

Associate:

Dated:             12 August 2003

Counsel for the Applicants:

M W Wise

Solicitors for the Applicants:

Middletons

Counsel for the First and Second Respondents:

G Herbert

Solicitors for the First and Second Respondents:

N A Young & Co

Counsel for the Third Respondent

Solicitors for the Third Respondent

G S Clarke

Gilbert & Tobin

Date of Hearing:

5 August 2003

Date of Judgment:

5 August 2003