Acohs Pty Ltd v Ucorp Pty Ltd (No 2)
[2009] FCA 1074
•18 SEPTEMBER 2009
FEDERAL COURT OF AUSTRALIA
ACOHS Pty Ltd v Ucorp Pty Ltd (No.2) [2009] FCA 1074
ACOHS PTY LTD (ACN 009 572 187) v UCORP PTY LTD (ACN 062 768 094) AND BERNARD BIALKOWER
VID 873 of 2004
JESSUP J
18 SEPTEMBER 2009
MELBOURNE
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 873 of 2004
BETWEEN:
AND:
ACOHS PTY LTD (ACN 009 572 187)
ApplicantUCORP PTY LTD (ACN 062 768 094)
First RespondentBERNARD BIALKOWER
Second Respondent
JUDGE:
JESSUP J
DATE OF ORDER:
18 SEPTEMBER 2009
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1. The applicant have leave to amend its Sixth Further Amended Statement of Claim by the replacement of subparagraph (b) of paragraph 8 thereof with the following:
‘Each MSDS in Annexure A and Annexure A1 having its layout, presentation and appearance in accordance with one or other of the templates in Annexure B’.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 873 of 2004
BETWEEN:
AND:
ACOHS PTY LTD (ACN 009 572 187)
ApplicantUCORP PTY LTD (ACN 062 768 094)
First RespondentBERNARD BIALKOWER
Second RespondentJUDGE:
JESSUP J
DATE:
18 SEPTEMBER 2009
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
This proceeding involves claims under the Copyright Act 1968 (Cth) in relation to Material Safety Data Sheets (“MSDS”), which are the commercial concern of the applicant and the first respondent.
In par 8 of its Sixth Further Amended Statement of Claim, the applicant makes the following allegations:
ACOHS is the owner of the copyright subsisting in the Infosafe System which includes (but is not limited to) the copyright subsisting in the following original literary works:
(a)the source code of each of the HTML and PDF files for MSDS rendered by Infosafe System;
(b)the layout, presentation and appearance of each Infosafe MSDS rendered by the Infosafe System;
(c)a compilation of data which, in combination with the Infosafe management programmes, generated and rendered the MSDS as required by Blackwoods pursuant to the Licence Agreement set out in paragraph 10 below (the Blackwoods compilation).
Those allegations have taken that form in a number of previous iterations of the applicant’s pleading. I was informed that they were first rendered into that form in a version of the Statement of Claim filed in late 2004. However, for present purposes, it is unnecessary to go further back than the Fifth Further Amended Statement of Claim dated 13 December 2007. Filed with that pleading were particulars of copyright ownership which, under the heading “Layout, Presentation and Appearance”, included the following:
(ix)ACOHS claims copyright in the particular layout, presentation, and appearance of MSDS rendered by the Infosafe System. All MSDS generated and rendered by the Infosafe System comprise data from the database repositories as compiled by the Infosafe System’s software applications into the particular layout, presentation and appearance of Infosafe MSDS which is determined by the templates within the software applications. Each particular layout presentation and appearance of MSDS rendered by the Infosafe system in which the Applicant claims copyright in this proceeding appears in Annexure A and in Annexure B (the Templates Annexure) contained in the DVD annexed hereto, Annexure B being the Applicant’s bare templates populated with sample data.
(x)The particular layout, presentation and appearance of the MSDS rendered by the Infosafe System was authored by ACOHS’ employees Ian Cowie and Danny Lau in the course of their employment.
(xi)The authorship of the layout, presentation, and appearance of the MSDS involved the arrangement and division of headings, devising of data fields, selection of font sizes, styles, colours, and highlights; horizontal and vertical spacing; margins; borders; heading styles; boxes and tables and other formatting (as can be seen from Annexure B) from an almost infinite combination of choices so as to present the information in the MSDS in an original, useful, informative, regulation-compliant, attractive, accessible and distinctive manner;
(xii)Each time an MSDS is generated or rendered by the Infosafe System, it appears in the particular layout, presentation and appearance determined by the Infosafe MSDS source code at that particular time. Variations in the source code between versions of the Infosafe System may cause the display of the same MSDS to be viewed slightly differently as disclosed by the MSDS templates in Annexure B. Differences between internet browser applications that interpret the source code may cause the same MSDS to be viewed slightly differently.
In the respondents’ Second Further Amended Defence dated 16 June 2008, they denied the allegations in par 8 of the Statement of Claim, and added (relevantly to the present question):
(a)In relation to the layout, presentation and appearance of each Infosafe MSDS referred to in sub-paragraph (b) of the Claim:
(i)each MSDS as a whole, including the words and data in the MSDS and the manner in which the words and data are laid out, presented and appear in the MSDS constitutes a single literary work for the purposes of the Copyright Act 1968 (Cth) (“the Copyright Act”);
(ii)the “layout, presentation, and appearance” of each MSDS does not constitute a separate literary work from the literary work constituted by the MSDS as a whole, including the words and data in the MSDS;
(iii)ACOHS’ standard “Computer Systems Software Licence Agreement” (“ACOHS’ Standard Licence”), to which ACOHS states that each ACOHS customer referred to in the Particulars of Copyright Ownership (“Ownership Particulars”) in turn referred to in paragraph 8 of the Claim (“ACOHS Customer”) agrees prior to using the Infosafe System, includes an “MSDS Copyright Notice” which provides inter alia that”
“The Copyright in each MSDS on this CD-Rom resides in the author of the MSDS which in each case is the Manufacturer or Supplier/Importer referred to in [sic] each MSDS.”
(iv)in light of the matter set out in sub-paragraph (i) to (iii) above, the manufacturer, importer or supplier (“MIS”) of the substance the subject of each MSDS referred to in Annexure A, and not ACOHS, is the owner of all copyright in the MSDS.
They made further allegations in the alternative, based on the premise, which they rejected, that the layout, presentation and appearance of each MSDS was capable of constituting a literary work separate from the MSDS as a whole.
In a Reply to the Second Further Amended Defence filed on 2 July 2008, the applicant said, relevantly to the present matter:
(1A) Further to subparagraphs 8(a)(i) and (ii) thereof, it says that:
(a)each MSDS in annexure A to the Fifth Further Amended Statement of Claim (the statement of claim) is a separate literary work and a separate compilation being a literary work;
(b) the Applicant has, in paragraph 8 of the statement of claim (and the Particulars of Ownership thereto) set out the main (and relevant) original contributions made by the Applicant to the creation of the works in suit (being those in Annexures A and B to the statement of claim);
(c)the reference in paragraph 8 of the statement of claim to the Applicant’s original contributions to the creation of the works does not limit the scope of the copyright subsisting in the works in suit, nor the scope of the copyright owned by the Applicant (as made clear in the Particulars of Ownership last paragraph), but merely focuses upon those aspects of reproduction and infringement in respect of which the applicant sues and seeks relief;
(d)subparagraphs 8(a)(i) and (ii) are irrelevant to the Applicant’s claim to copyright in respect of the templates in Annexure B to the statement of claim (referred to in the Particulars of Ownership paragraphs (ix)-(xii).
In the course of the trial of the proceeding this week, the question arose whether it was, within the terms of par 8(b) of the Statement of Claim, open to the applicant to allege that MSDSs as such were and are original literary works in which copyright exists and of which the applicant was and is the owner, subject to disavowing what it describes as “the unformatted data” therein. The matter having been raised on 16 September 2009, during the course of the following morning, counsel for the applicant foreshadowed an application for an amendment to replace par 8(b) of the Statement of Claim with the following:
(b) Each MSDS in annexure A and annexure A1, having its layout, presentation and appearance in accordance with one or other of the templates in annexure B.
The application to amend was made at 2.15 pm yesterday. It was opposed.
In moving to amend, counsel for the applicant relied on O 13 r 2(2) of the Rules of Court. Sub rules (1) and (2) of that rule provide as follows:
(1) Subject to the following provisions of this rule, the Court may, at any stage of any proceeding, order that any document in the proceeding be amended, or that any party have leave to amend any document in the proceeding, in either case in such manner as the Court thinks fit.
(2) All necessary amendments shall be made for the purpose of determining the real questions raised by or otherwise depending on the proceeding, or of correcting any defect or error in any proceeding, or of avoiding multiplicity of proceedings.
Counsel for the applicant submitted that the only question for the court under subrule (2) was whether the amendments were necessary for one or more of the purposes referred to therein. If so, the court had no discretion but to allow the amendment. If not, the application would necessarily fail. Counsel for the respondent submitted that, notwithstanding the apparently mandatory terms of subrule (2), the provision did leave scope for the court, in the exercise of a broad discretion to control its own procedure, to refuse leave to amend even in circumstances where the stated conditions appeared to have been satisfied.
In this respect, both sides referred me to the recent judgment of the High Court in Aon Risk Services Australia Limited v Australian National University (2009) 258 ALR 14. In that case, an application to amend had been made on the third day of an anticipated four-week trial. The amendment was allowed. The High Court held that it should not have been. In joint reasons for judgment, Gummow, Hayne, Crennan, Kiefel and Bell JJ distinguished between provisions analogous to subrules (1) and (2), respectively, of O 13 r 2. They described the terms of a rule similar to subrule (2) as “imperative”, and as “appearing to oblige amendment without more”. A similar view of the operation of O 13 r 2(2) itself was taken by Gray J many years ago in Steel v Mayne Nickless Limited (1990) 25 FCR 73, 75-76.
In Aon, their Honours in the joint judgment referred to O 28 r 12 of the Rules of the Supreme Court 1883 (UK), upon which the present r 2(2) is directly based. It was a rule in those terms to which their Honours were referring when they described the rule as appearing to “oblige amendment without more”. Although their Honours held that Dwyer v O’Mullin (1887) 13 VLR 933 had probably been wrongly decided, they ventured no criticism of the observation of Higginbottom CJ that this rule “makes an amendment mandatory”.
In the light of the authority to which I have referred, I do not think it is open to me to hold that the mandatory terms of O 13 r 2(2) are somehow qualified by reference to an overriding discretion to control the conduct of proceedings in the court. It is true that the court has power to control its own proceedings, but that power must be exercised in accordance with rules made for the purpose by the Judges. In my opinion, once the stated condition has been satisfied, r 2(2) leaves no scope for a discretionary refusal of an application to amend.
The question, therefore, is whether the amendment sought by the applicant is necessary for the purpose of determining the real questions raised by, or otherwise depending on, the proceeding. Here I should return to the joint judgment in Aon, in which their Honours said (at [71]):
The words “the real issues in the proceeding” in r 501(a) obviously refer to issues raised, perhaps unclearly, in the pleadings at the time of the application for leave to amend. The “real” issues may also extend beyond the pleadings, as cases concerned with the purpose stated in the original Rules show. But, as is explained in these reasons, to be regarded as a real issue, and for amemdment therefore to be necessary, the relevant dispute or controversy must exist at the time of the application. Amendments raising entirely new issues fall to be considered under the general discretion given by r 502(1), read with the objectives of r 21.
The provision to which their Honours referred as rule 501(a) was an analogue of the present rule 2(2), and the provision to which their Honours referred as rule 502(1) was an analogue of the present rule 2(1). The provision to which their Honours referred as rule 21 was a special rule having application in the circumstances of that case, but having no analogue in the Federal Court Rules.
Their Honours in the High Court referred to a number of older cases on provisions such as subrule (2), and said (at [82]):
What needs to be shown for leave to amend to be given, as the cases referred to above illustrate, is that the controversy or issue was in existence prior to the application for amendment being made. It is only then that it is necessary for the court to allow it properly to be raised to enable a determination upon it.
And (and [83]):
A consideration of these cases does not suggest that an unduly narrow approach should be taken to what are the real issues in controversy, although they are not, or are not sufficiently, expressed in the pleading.
What at least is clear from Aon is that provisions such as subrule (2) neither permit nor require an amendment that would have the effect of permitting a party to introduce a new case or an allegation which did not relate to a question that was in existence at the time the application was made. Further, the test is one of necessity, it not being enough that it would be convenient or desirable to make the proposed allegation in the proceeding which is on foot.
At this stage I should refer to some correspondence which passed between the parties’ solicitors in late July and early August 2009. It seems that, by letter dated 30 June 2009, the applicant’s solicitors had foreshadowed an amendment to the Fifth Further Amended Statement of Claim to replace par 8(b) thereof with the following:
Compilations, being the layout, presentation and appearance of each Infosafe MSDS rendered by the Infosafe system.
In a reply dated 28 July 2009, the respondents’ solicitors set out the existing terms of par 8(b) of the Fifth Further Amended Statement of Claim, and of the corresponding sections of the Particulars of Copyright Ownership to which I have referred. They added:
Significantly, the Particulars of Copyright Ownership also distinguish between the content of the MSDS rendered by the Infosafe System and the layout of those MSDS:
“For the avoidance of doubt, Acohs makes no claim to the bare unformatted data contained in the individual MSDS generated and rendered by the Infosafe System…”
These paragraphs and, in particular the description of Mr Cowie and Mr Lau as the authors of the “layout, presentation and appearance” of the Infosafe MSDS, indicate that the copyright works the subject of paragraph 8(b) of the FASC, as it is presently drafted, are the layouts depicted in Annexure B, as embodied in each of the MSDS in Annexure A.
The respondent’s solicitors stated their client’s position as follows:
If the proposed amendment seeks to extend the Applicant’s claim beyond the templates in Annexure B (as embodied in each of the MSDS in Annexure A) to encompass the content of each of the MSDS in Annexure A (as formatted and arranged by the Infosafe System), it is wholly inconsistent with the Particulars of Copyright Ownership and represents a fundamental departure from the claim as presented to date. If, for example, the Applicant had claimed to be the owner of copyright in compilations comprising the content of each of the MSDS in Annexure A as formatted and arranged by the Infosafe System, the authors of those compilations would need to have been particularised. Messrs Cowie and Lau clearly were not responsible for the material form of the content of each MSDS in Annexure A, even if they somehow contributed to their layout. If the claim had been pleaded this way the interlocutory steps would have taken a different course.
If, however, the proposed amendment only seeks to clarify that the “layout, presentation and appearance” reflected in the templates in Annexure B is itself a compilation of layout elements (as described in paragraph (xi) of the Particulars of Copyright Ownership), then it advances the Applicant’s case no further than the existing Particulars of Copyright Ownership and is for that reason entirely redundant.
Either way, in circumstances where the proceeding was commenced in July 2004, the pleadings were finalised in July 2008, and the matter has been set down for a trial commencing in approximately one month, it is far too late for the Applicants now to seek further amendment to their Statement of Claim beyond what His Honour was prepared to contemplate on 3 June 2009. In particular, if the purpose of the proposed amendment is to extend the applicant’s layout claim to the content of the MSDS in Annexure A, it risks a further delay of the trial of a proceeding that should have been completed long ago. Such amendments will no longer be allowed where the result will be unfairness to the Respondents and inconvenience for the Court.
The applicant’s solicitors responded by correspondence dated 6 August 2009, and sent by facsimile on 7 August 2009, as follows:
I refer to your letter dated 28 July 2009.
The applicant will not apply to amend paragraph 8(b) of the Fifth Further Amended Satement of Claim. I confirm again that the applicant claims copyright in each of the MSDS in Annexure A as a literary work being a compilation, the protectable elements of which are their layout, presentation and appearance as exemplified in the templates of Annexure B.
A final response was sent by the solicitors for the respondents on 10 August 2009, as follows:
We refer to your letter dated 7 August 2009 concerning the formerly proposed amendment to paragraph 8(b) of the Fifth Further Amended Statement of Claim. Thanks you for your letter.
We note that the Respondents will continue to proceed only on the basis of the copyright claims as pleaded in the Fifth Further Amended Statement of Claim and the Particulars of Copyright Ownership.
The position which was thus reached can only be described as an unsatisfactory one. In par 1A of its Reply, the applicant had made it tolerably clear that it took the view that par 8(b) of the Fifth Further Amended Statement of Claim should be understood as extending to a claim for copyright in the MSDSs as such. This was not a proper pleading by way of Reply. However, the respondents did not move to have it struck out as embarrassing. It remained, and remains, a pleading by reference to which it is open to the applicant to conduct its case. Further, the correspondence to which I have referred leaves no doubt but that the respondents were keenly aware of the distinction between a copyright claim for the layout, presentation and appearance and a copyright claim for the whole of an MSDS as such. Indeed, their solicitors drew attention to that distinction in their correspondence. The applicant ought then to have moved to amend its pleading, so as to put the matter beyond doubt. It did not do so, with the consequence that the case has been conducted to date on the strength of the pleading as it stands. Indeed, on the first day of the trial, and again in the course of their opening, counsel for the respondents made it clear that the architecture of the applicant’s case was not such as involved any claim for copyright in the MSDSs as such.
Counsel for the respondents submitted that O 13 r (2)(2) operates only in relation to amendments necessary to bring the pleadings or other documents into a form which is consistent with the way in which a case has in fact been conducted. Although that articulates a traditional discretionary basis upon which amendments have been allowed, I consider it to be an inadequate statement of the reach of r 2(2). For a start, it does not deal with the application of that subrule in a pre-trial situation. In terms, the subrule requires that the question be “raised by or otherwise depending on the proceeding”. Although it was unsatisfactory for the applicant only to have raised the question of the status of each MSDS as a copyright work in its own right in its Reply, the fact is that it did so, and no attempt was made to strike out the pleading as embarrassing. Further, by its correspondence dated 6 August 2009, the applicant asserted that it claimed copyright in the MSDSs themselves.
I think it is tolerably clear – and counsel for the respondents did not submit otherwise – that, if the applicant were unable to advance a claim that each MSDS is a copyright work in the current proceeding, it would be shut out from doing so on any future occasion: Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 588. As a matter of ordinary language, that means that the question whether each MSDS is a copyright work is one which depends on the proceeding within the meaning of O 13 r 2(2). That is to say, if the question is not now decided, it will never be decided elsewhere.
Counsel for the respondents submitted that the amendment should not be allowed because it was not in a proper form, in that it would result in an embarrassing pleading by reference to the following paragraph in the particulars of copyright ownership:
For the avoidance of doubt, ACOHS makes no claim to the bare unformatted data contained in the individual MSDS generated and rendered by the Infosafe system, but ACOHS reserves its rights in relation to other aspects of the Infosafe system.
It was said that a document or artefact was either alleged to be a work or it was not. One could not make an allegation that something was a work, and then foreswear any claim to some aspect of it. However, counsel for the applicant has confirmed that the particulars are to be understood as foreswearing any claim to originality in the data referred to. Understood in this sense, I do not think that the amendment would give rise to any embarrassment.
For the above reasons, the conclusion that the question now sought to be raised by the applicant’s amendment is raised by or otherwise depends on, the present proceedings seems inescapable. In the circumstance, I consider that I have no discretion but to grant the applicant leave to make the amendment which it seeks.
The situation thus produced is not, regrettably, the one most obviously calculated to achieve the just, efficient and speedy disposition of this proceeding. It will be necessary to allow the respondents not only the time to amend their Defence (and, given the present terms of that pleading, I cannot assume that any such amendment would be of little consequence), but also the opportunity, of which they have indicated they would avail themselves, to consider whether it will be necessary to re-open their evidentiary case. Although the time occupied hearing the parties’ submissions on the present motion has, of itself, produced the result that the trial will not be complete within the allocated time, the adjournment required by the granting of the amendment will necessarily produce further complications, and lead to further costs.
Neither is the result seemingly ordained by O 13 r 2(2) one which I can view with any favour. Had it been a matter of discretion, I would not have allowed the amendment. I would infer from the correspondence between the parties to which I have referred that the applicant then made a conscious choice not to amend its Statement of Claim, but to take its chances that the kind of case which it now wishes to run would be open on the pleading as it stood. To the considerable inconvenience of the respondents and of the court, the applicant has now made a different choice, and has done so after its own final submissions are complete, and during the course of the final submissions of counsel for the respondents. However, considerations of this kind, which would normally inform the exercise of the court’s discretion under subrule (1), appear to have no place in an application which relies on subrule (2).
In the result I shall order that the applicant have leave to amend its Sixth Further Amended Statement of Claim by the replacement of subparagraph (b) of paragraph 8 thereof with the following:
(b) Each MSDS in annexure A and annexure A1 having its layout, presentation and appearance in accordance with one or other of the templates in annexure B.
I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jessup. Associate:
Dated: 22 September 2009
Counsel for the Applicant: Mr J Burnside QC with Mr G Dalton Solicitor for the Applicant: Murray Round Counsel for the Respondents: Mr R Garratt QC with Mr P Wallis & Mr S Rebikoff Solicitor for the Respondents: Holding Redlich
Date of Hearing: 18 September 2009 Date of Judgment: 18 September 2009
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