Amlink Technologies Pty Ltd and Australian Trade Commission
[2005] AATA 359
•22 April 2005
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2005] AATA 359
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2003/119
GENERAL ADMINISTRATIVE DIVISION ) Re AMLINK TECHNOLOGIES PTY LTD Applicant
And
AUSTRALIAN TRADE COMMISSION
Respondent
DECISION
Tribunal Senior Member B J McCabe Date22 April 2005
PlaceBrisbane
Decision
The respondent should have characterised the eligible products in question as eligible goods, instead of eligible know-how or eligible intellectual property. The decision under review is varied to that extent. The decision is otherwise affirmed.
....................[Sgd].....................
Senior Member
CATCHWORDS
BOUNTIES AND OTHER SUBSIDIES – Export Market Development Grants – change of business activity, name and other attributes – characterisation of current business activity and previous business activity – current business activity held not to be substantially different from the previous business activity – grant history of the previous business attributed to the current business – decision under review affirmed.
BOUNTIES AND OTHER SUBSIDIES – Export Market Development Grants – characterisation of “eligible products” as eligible goods or eligible know-how or eligible intellectual property – packaged computer software sold by the applicant characterised as eligible goods not eligible know-how or eligible intellectual property – decision under review varied.
Export Market Development Grants Act 1997, ss 24, 26, 27, 63, 94, 101, 107
Advent Systems Limited v Unisys Corporation (1991) 925 F 2d 670
Deta NomineesPty Ltd v Viscount Plastic Products Pty Ltd [1979] VR 167
Lee v Griffin (1861) 1 B & S 272; 30 LJQB 252 (121 ER 716)
Robinson v Graves [1935] 1 KB 579
St Albans City and District Council v International Computers Ltd [1996] 4 All ER 481
Toby Constructions Pty Ltd v Computer Bar Sales [1983] 2 NSWLR 48; (1983) 50 ALR 684; (1983) 77 FLR 377; (1983) 1 IPR 334; (1983) ASC 55-265; (1983) ATPR 40-377
REASONS FOR DECISION
22 April 2005 Senior Member B J McCabe
introduction
1. Amlink Technologies Pty Ltd (Amlink) is the applicant in these proceedings. Amlink applied for a grant under the Export Market Development Grants Act 1997 (the Act) from the Australian Trade Commission in November 2001. The grant was sought in connection with overseas promotional expenditure incurred by the applicant in the course of marketing a product it developed. The respondent approved the grant but indicated it would attribute to the applicant grants that had previously been made to Events Computing Services Pty Ltd (ECS). The respondent also decided to treat the applicant as a seller of intellectual property rights or know-how, rather than goods.
2. The applicant says it should not be deemed to have received grants made to ECS because that will limit its own eligibility to apply for further grants. It also said it should be treated as a seller of goods rather than intellectual property or know-how. The respondent’s decision was affirmed on 13 January 2003, and Amlink has now asked the Tribunal to reconsider the matter.
the material before the tribunal
3. The Tribunal was supplied with the documents required under s 37 of the Administrative Appeals Tribunal Act 1975. The following additional documents were also tendered in evidence:
·Supplementary T Documents - received 29 October 2004 (exhibit 2);
·Statement of Trevor Bruce Gardiner – undated (exhibit 3);
·A bundle of slides prepared by Trevor Bruce Gardiner (exhibit 4);
·Statement of Peter Croll - dated 25 June 2004 (exhibit 5);
·Document highlighting the difference between Amlink’s Event Management Products authored by Peter Croll - dated 16 November 2004 (exhibit 6);
·Multimedia Training Tutorials (exhibit 7);
·Implementation Kit (exhibit 8);
·Events Pro Installation Information Kit and attached disks (exhibit 9);
·Payroll Activity Summary – dated 1 July 2000 – 30 June 2001 (exhibit 10).
4. Trevor Gardiner gave evidence on behalf of the applicant. He is a director and shareholder of that company. He was also a director and shareholder of ECS at the time it received grants from the respondent.
5. The applicant was represented by Mr Varitimos. Mr Rangiah represented the respondent.
the structure, history and corporate relationships of the applicant
6. The evidence given in relation to the ownership history of the applicant was confusing. There are a number of companies with similar names, and Mr Gardiner’s evidence suggested the lines between the entities became blurred from time to time.
7. The applicant is now known as Amlink Technologies Pty Ltd. Before 2002, the company was known as Amlink Technologies (JV) Pty Ltd.
8. Amlink currently has two shareholders: CT Holdings (Qld) Pty Ltd (30%) (“CT”) and Global Approach Ltd (70%). Messrs Gardiner and Hayward control CT and own or control around 24% of the shares in Global Approach Ltd, either directly or through trust arrangements.
9. Global Approach has also changed its name. It was previously known as Amlink Group Ltd. It has a wholly-owned subsidiary known as Events Software Ltd. That company was previously known as Events Software Pty Ltd; before that, it was called Opuslow Pty Ltd.
10. CT has also changed its name. It was previously known as Events Computing Services Pty Ltd (ECS). ECS was the recipient of five grants from the respondent.
11. Mr Gardiner and Mr Hayward were (and remain) directors of the applicant at all material times. Mr Gardiner is currently the company’s managing director. Mr Gardiner and Mr Hayward were (and are) directors of CT and Events Software Ltd as well. They were both directors of Amlink Group/Global Approach until January 2004.
12. It follows I am satisfied Messrs Gardiner and Hayward (and interests associated with their families) have either enjoyed effective control or have had – at a minimum – a substantial involvement with the applicant and the other companies referred to above that developed the Events software packages.
the product
13. ECS was involved with the development of a software package designed to assist in the management of events like conferences and exhibitions. The first version of the program was called Events for DOS. It was released in 1992. There were modest sales. A new package, called Events for Windows, was released in 1995. The new package was designed to run on the new generation of computers that was being introduced to replace the old DOS-based machines.
14. The company enjoyed steady growth in sales throughout the period 1992-1998. Mr Gardiner’s affidavit suggests the company had generated $XXX,XXX in exports by 1998. It also expended $XXX,XXX in marketing expenditure in connection with the exports. During the period prior to 1998, the company received a total of $94,579 in export market development grants (EDMG) from Austrade.
15. The intellectual property in Events for Windows was sold to Amlink Group Ltd in 1998. Messrs Gardiner and Hayward took their places on the board of that company. Amlink Group held the intellectual property in another software package called LODEX.
16. Amlink Group Ltd listed on the stock exchange in December 1999. The company proceeded to invest around $XXX,XXX in the development of a new product called Events Pro. Mr Gardiner explained in his statement (exhibit 3 at para 3.6) that Events Pro “included intellectual property acquired from [ECS], which was modernised, improved and extended.” The company did not receive any EMDG assistance during this period.
17. Mr Gardiner explained in his statement that Amlink Group invested heavily in the development and promotion of the Events Pro product but the company was losing money and its share price was falling. In late 2000, the company sold off the LODEX package and decided to transfer the property in the Events software to the applicant. As part of that arrangement, Messrs Gardiner and Hayward took a 30% stake in the applicant through CT. The terms of the arrangement are set out in a joint venture agreement dated 30 November 2000. The agreement provides for the applicant to be operated as a joint venture under the management of CT.
18. The applicant took over the production and marketing of Events Pro and developed a new product called Events Interactive, a software package designed to permit conference organisers to build their own online conference registration forms. The company invested $XXX,XXX in product development and $XXX,XXX on export marketing in the 2000/2001 financial year. Mr Gardiner’s statement says the applicant’s sales of Events Pro and Events interactive began to climb during this period. Sales increased by a further 50% in 2002 (see exhibit 3 at para 3.11).
the grant history of the parties
19. ECS has received export market development grants in the following amounts:
Grant Year
Business description stated on grant application
Grant Paid
Export Earnings
1992/1993
Manufacturer of computer software
XXXXX X
XXXXX X
1994/1995
Manufacturer of computer software
XXXXX X
XXXXX X
1995/1996
Manufacturer of computer software
XXXXX X
XXXXX X
1996/1997
Manufacturer of computer software
XXXXX X
XXXXX X
1997/1998
Manufacturer of software and provider of IT services
XXXXX X
XXXXX X
20. The applicant received a grant from the respondent in the amount of $47,955 on 24 October 2002. The applicant asked that the application be treated as its first claim for EMDG assistance. The respondent agreed to make the grant but on condition that the applicant was treated as a sixth year applicant and attributed with the grants history of ECS. The respondent also decided the applicant was to be treated as a seller of software, rather than goods. The grant was made under s 98 of the Act. The applicant sought an internal review of the decision to impose the conditions, but the decision was affirmed on 13 January 2003.
the legislative framework
21. The respondent administers the EMDG scheme under the Export Market Development Grants Act 1997. The scheme is intended to assist small and medium sized exporters of eligible products by providing grants to cover eligible expenses incurred in the course of promotional activities: s 3 of the Act.
22. The Act also provides for the Minister to issue guidelines that regulate the exercise of Austrade’s powers under the Act: s 101(2). These guidelines bind the respondent, and therefore the Tribunal: s 101(3).
(a) “Eligible products”
23. The expression eligible products is defined in s 107 of the Act to include:
·eligible goods;
·eligible services;
·eligible events;
·eligible intellectual property; and
·eligible know-how.
24. The distinction between different kinds of eligible products is important because it affects the way in which the grant is assessed: see s 63.
25. The applicant says it has been developing and selling eligible goods. That expression is partially defined in s 24 to include goods that meet the 50% Australian content rule imposed by that section. The expression goods is not otherwise defined. It will therefore be necessary to consider the meaning of the expression goods at common law. The respondent says the applicant is selling intellectual property (see T12 at 127) or know-how. Eligible intellectual property is defined at s 26 to include rights in a relation to a thing that has “resulted to a substantial extent from research or work done in Australia”. Eligible know-how is defined in s 27(2) to mean:
private knowledge, information or expertise relating to commercial or industrial operations that:
(a) is of commercial value; and
(b) is imparted for the purpose of enabling the recipient to carry out a particular activity.
26. The debate over the characterisation of software has arisen in particular in the context of the Sale of Goods legislation. The legislation is in a similar form in many common law jurisdictions. For a long time, the leading authority was the decision in Toby Constructions Pty Ltd v Computer Bar Sales [1983] 2 NSWLR 48. That case arose out of a contract for the sale of a package comprised of computer hardware and software. The Court applied the reasoning in Robinson v Graves [1935] 1 KB 579 to determine whether the package was goods or services. Robinson v Graves arose out of a contract to paint a portrait – a contract that inevitably involved the artist in delivering a canvas. The Court of Appeal said one must look to the substance of the transaction in each case: Is it in substance a contract for the sale of a tangible thing (albeit with intangible property or services supplied as an incident), or is it in substance a contract for the supply of services (albeit that tangible things might be supplied as an incident to the supply of the intangible property or services)? In Robinson v Graves, the Court concluded the parties contracted for the supply of skill and labour; the finished canvas was regarded as an incident. In Toby Constructions, the Court concluded the contract was in substance a contract for the delivery of tangible things (computer hardware) with intellectual property or know-how (in the form of software) supplied as an incident to the hardware.
27. The decision in Toby Constructions was endorsed in Sir Iain Glidewell’s obiter remarks in St Albans City and District Council v International Computers Ltd [1996] 4 All ER 481. Sir Iain illustrated his view of the law with reference to an example (at 493):
“Suppose I buy an instruction manual on the maintenance and repair of a particular make of car. The instructions are wrong in an important respect. Anybody who follows them is likely to cause serious damage to the engine of his car. In my view, the instructions are an integral part of the manual. The manual including the instructions, whether in a book or a video cassette, would in my opinion be ‘goods’ within the meaning of the [sale of goods legislation]…”
28. Sir Iain argued the position was no different in relation to software. While he accepted the intangible instructions and commands that comprise a computer program did not qualify as goods in and of themselves, the software was properly characterised as goods where the program was stored or recorded on a computer disk or other tangible media that was sold to the purchaser: at 493. Sir Iain went on to acknowledge the position may be different if the thing being supplied were not transferred through tangible media – for example, if the purchaser downloaded a copy of the program from the seller’s website on the internet, or if an employee of the seller installed the program on the purchaser’s computer using one of the supplier’s disks: at 493-494.
29. Sir Iain’s reasoning has the benefit of relative certainty of application, but it is not altogether satisfying. It echoes the reasoning in Lee v Griffin (1861) B & S 272; 30 LJQB 252. In that case, the plaintiff approached a dentist to prepare a set of dentures. Blackburn J concluded a contract that resulted in the delivery of a tangible thing was a contract for the supply of goods. The question was important in that case (and in subsequent Australian cases which have endorsed the reasoning, like Deta NomineesPty Ltd v Viscount Plastic Products Pty Ltd [1979] VR 167) because of the old rule which prevented a party suing on a contract for the supply of services where the value of the services exceeded a specified amount.
30. Taken to its extreme, that reasoning would mean a court would identify contracts for the sale of goods in all manner of situations that were never intended to be treated in that way: consulting a radiologist for the purpose of obtaining x-rays or retaining a lawyer to provide written advice, for example. That cannot be right, as the Court of Appeal explained in Robinson v Graves when it doubted the reasoning in Lee v Griffin. Certainty of application is a desirable trait in a rule like the one under consideration here, but one must guard against reductionism.
31. I note the United States Court of Appeals for the Third Circuit reached a similar conclusion to Toby Constructions in Advent Systems Limited v Unisys Corporation 925 F 2d 670 (1991). In that case, the Court had to decide whether software could be characterised as goods for the purposes of the Uniform Commercial Code. West J explained software came into existence when a computer program was transposed onto a medium compatible with the computer’s needs: at 674. His Honour explained (at 675):
That a computer program may be copyrightable as intellectual property does not alter the fact that once in the form of a floppy disc or other medium, the program is tangible, moveable and available in the marketplace.
32. His Honour proceeded to apply what is, in effect, the reasoning in Robinson v Graves to conclude a contract for the sale of a package of hardware and software was in substance a contract for the sale of goods, albeit with intellectual property or services attached. But I also note that policy considerations which may or may not be relevant in this country appeared to weigh heavily on his Honour’s mind: see, for example, at 676.
33. There is no computer hardware as such in this case. The program is supplied to customers as software on mass-produced CD Roms. The applicant does not relinquish the intellectual property in the software; it merely licences purchasers of the media to use the program. It is presumably possible to supply the program to customers over the internet, but the evidence suggests most if not all of the software was sold on mass produced CD Roms.
34. If the reasoning in St Albans were applied uncritically, the result in this case would be clear enough on the facts: the package would be characterised as goods because a tangible item (the CD Rom) is an integral part of the package that is sold to customers. But the reasoning in Robinson v Graves suggests a more nuanced approach is required before a conclusion can be reached. The ministerial guidelines published pursuant to s 101 must also be taken into account.
35. The guidelines suggest at para 4.5.4:
The method of determining which category the software fits into will be largely based on what, if any rights the buyer acquires when purchasing the software. This distinction will often not be clear-cut because of the nature of the software. However, as an indication, sales of discs for retail and similar distribution would generally be regarded as the sale of a good whilst the sale of rights to a territory (eg, via a licensing agreement) and similar activities would constitute a disposal of IPR or know-how.
36. The guidelines go on at paragraph 4.5.5 to suggest “the distinction between goods and know-how may be seen in the method of disposal”. The guidelines continue:
If the know-how is embodied in a good which (even though covered by copyright) is sold to the end user without any formal contract relating to the retention of the applicant’s rights in the know-how, it is likely that the subject of the sale is the good, not the know-how.
37. It is therefore necessary to pay closer attention to the nature and effect of the licence agreement. Purchasers of this software are required to enter into a formal licence agreement which describes the applicant as the licensor and says it retains ownership of the software. The purchaser requires a code to unlock the software and use it in his or her computer. Although a temporary code is provided with the software, a permanent activation code is not provided to the purchaser until he or she pays a fee to the applicant. The respondent says that is a basis for distinguishing the product from books or CD Roms which can be used upon acquisition. It might also distinguish the product from other software packages that can be purchased and used “off the shelf”, like Microsoft Word.
38. The guidelines continue at para 4.5.6:
Where an applicant exports something (for example discs and/or manual) which is intrinsically know-how and which enables the recipient itself to perform such task, Austrade will be likely to assess it as know-how where there is a license agreement between the parties and where the selling price is very high in relation to the costs of the physical inputs making up the product.
39. The cost of the package (about $20,000 at the time of the application for assistance) is very high relative to the value of the physical inputs. The respondent concluded in its original decision that the high price indicated the purchaser was paying for know-how or intellectual property, since no one would pay that much money for a collection of blank CD Roms. Of course, no one would pay $39.95 for a blank DVD either, or $29.95 for a blank CD used for recorded music. The fact that the difference between the sale price of a DVD movie and costs of the physical inputs is not as great as the difference between the cost of the physical inputs and the sale price of Events Pro can be explained in a variety of ways – most obviously by the economies of scale in the production of DVD movies.
40. The guidelines certainly contain some indications that Austrade ought to treat the product in this case as know-how or intellectual property. Of course, indicia are by definition indicative rather than determinative. Indicia are clues designed to assist the decision-maker to identify and apply the underlying principles in the law or in the guidelines (which in this case have the effect of law).
41. I think the best clue to the identification of the underlying principles for characterising the property can be found in the reference in para. 4.5.6 to the need to identify the intrinsic nature of the property. In other words, the guidelines adopt the Robinson v Graves requirement that one looks to substance.
42. It is easy enough to understand how a court might conclude that a contract with an artist to produce a portrait, or with an author to produce a manuscript, qualifies as the supply of know-how or intellectual property and not a contract for the supply of goods – even though the product of the producer’s endeavours might be expressed in a physical form. That conclusion is consistent with Robinson v Graves and the guidelines. But once the artist has painted the portrait and it is resold, it is likely to be sold as goods. Even more clearly, when the publisher reproduces the manuscript of the author and prints thousands of copies of a book, the copies are almost certainly sold as goods. That reasoning applies in a discussion about software. If the program had been commissioned by the purchaser and written (or even modified) to its specifications, the contract of supply is likely to be a supply of know-how or intellectual property rather than goods. The situation is different once the product is sold as a tangible commodity after being copied or mass-produced. At that point, the products cease to be know-how and become goods.
43. While one hesitates to describe this product as being available “off the shelf” given its high price, the Robinson v Graves analysis suggests the product is properly characterised as goods. I am satisfied the guidelines are consistent with that approach. What was once know-how has become a commodity marketed in a tangible form. The fact the licence agreement places restrictions on the use of the product after sale does not make it much different to music CDs and DVD movies – products that are clearly goods. The requirement for an access code is apparently an innovative attempt to combat piracy which might rob the producers of revenue. It is merely a more sophisticated protection than the regional coding system used in DVDs. That evidence does not change my conclusion. The existence of 24 hour service is also not determinative: help-desks and other forms of the round-the-clock assistance are available as part of the purchase price of many goods, such as computers and cars.
(b) eligible expenses
44. I did not understand there to be any question over the nature of the applicant’s expenses.
Changes in ownership of a business: the operation of s 94
45. The level of assistance available may be affected by s 94, which applies where there has been a change in the ownership of a business seeking grants. Section 94(1) says the consequences in s 94(3) follow if:
(a) at any time a person ( previous owner ) carried on a particular business in Australia; and
(b) at a later time:
(i) the previous owner sold or transferred the business or any part ( relevant part ) of the business; or
(ii) in the case of a business carried on by a partnership—there was a change in the membership of the partnership that carried on the business; or
(iii) the previous owner entered into any other arrangement relating to that business; and
(c) as a result of the sale, transfer, change in membership or other arrangement, another person ( new owner ) carries on:
(i) the business or the relevant part of the business; or
(ii) a business that is, to any extent, similar to the business, or any part of the business, carried on by the previous owner.
46. Austrade concluded s 94(1) was satisfied. In those circumstances, s 94(3)(e) applied in the absence of an exemption: 94(2). Section 94(3)(e) says:
(3) Austrade must: …
(e) treat any grant, or advance on account of grant, paid or payable (whether under this Act or under the repealed Act) to the previous owner in the capacity of owner of the business, or of the relevant part of the business, as having been paid, or as being payable, to the new owner;
47. Austrade declined to grant an exemption. In the course of reviewing that decision, the Tribunal must take into account the ministerial guidelines published pursuant to s 101.
48. The first step in the analysis is to determine whether Austrade’s decision that the applicant met the criteria in s 94(1) is correct. The sub-section can be satisfied if an entity which acquires one business carries on a “business that is, to any extent, similar to the business, or any part of the business” carried on by the previous owner. I am satisfied there are similarities between the business carried on by ECS and the applicant. The real question in this case is whether the exemption ought to be granted, which requires a more detailed consideration and comparison of the businesses of the applicant and ECS.
49. Paragraph 8.2.7 explains how the exemption test operates. It refers to the Business Activity Index outlined in paragraph 8.2.9. It also refers to the need to have regard to the matters set out in paragraph 8.2.8. Paragraph 8.2.8 of the guidelines says:
“The Commission must grant a special exemption in relation to a business activity referred to in paragraph 94(1)(b) (‘the current business activity’) where it is of the opinion that that business activity is substantially different from the business activity referred to in paragraph 94(1)(a) (‘the previous business activity’), having regard to any difference between:
(a)the product of the current business activity and that of the previous business activity;
(b)what is done in the course of the business of the current business activity and that of the previous business activity;
(c)the customers, including the export market customers, of the current business activity and those of the previous business activity;
(d)The directors, shareholders, and management personnel of the current business activity and those of the previous business activity;
(e)The suppliers of the current business activity and those of the previous business activity;
(f)The overseas representatives of the current business activity and those of the previous business activity;
(g)The employees of the current business activity and those of the previous business activity;
(h)The markets, including export markets of the current business activity and those of the previous business activity;
(i)The premises from which the current business activity is conducted and the premises from which the previous business activity was conducted;
(j)The logo of the current business activity and those of the previous business activity;
(k)The property or assets including the intellectual property of the current business activity and those of the previous business activity.”
50. The respondent says the businesses carried on by ECS and the applicant are the same for at least the following reasons:
·The products supplied by the two entities are not substantially different;
·Messrs Gardiner and Hayward are directors of the applicant and ECS;
·The ultimate shareholders of each company are substantially the same;
·The way in which the businesses are carried out, including export activities, are similar;
·The business premises of both businesses are similar;
·The majority of the assets and business of ECS was transferred to the applicant.
51. I have already described the corporate relationships between ECS and the applicant. There is no suggestion that the changes (eg, the sale of ECS’s assets to Amlink Group, and the subsequent transfer to the applicant) were the product of a desire to confuse the respondent or anyone else. There appear to have been sound business reasons for the changes: see, for example, the written and oral evidence of Mr Gardiner. Even so, I note the shared history of ECS and the applicant.
52. Mr Gardiner’s statement addresses the criteria in paragraph 8.2.8. I will consider his comments in relation to each heading in paragraph 8.2.8.
(a) the product of the current business activity and that of the previous business activity
53. Mr Gardiner points out Events Interactive did not come into existence until after the applicant took over the business. He acknowledges some of the concepts, ideas and intellectual property in Events for Windows have “migrated” into Events Pro, and some of the “core functionalities” are the same. Even so, Mr Gardiner says Events Pro is a much more sophisticated product aimed at a more sophisticated market. He points out Events Pro uses a different programming language, is much bigger and contains more database fields and indices.
54. Professor Peter Croll opined that Events Pro and – in particular – Events Interactive should be regarded as completely different products. He says in his statement that the products are not merely upgraded versions of Events for Windows. I will not reproduce his reasons here: suffice to say he has prepared a detailed report identifying differences in the products. The report was tendered in evidence, although he was not called to give evidence. The report was not challenged in the course of the hearing. I accept his evidence.
(b) what is done in the course of the current business activity and that of the previous business activity
55. Mr Gardiner refers to a number of differences between the business of the applicant and ECS. In essence, the applicant is a bigger, more sophisticated business. It has more employees, higher turnover and more customers from around the world. It out-sources more of its development and conducts an around-the-clock operation. I am not convinced these factors mean the business is different; they may just mean it is a successful business that has grown and evolved.
(c) the customers
56. The statement of Mr Gardiner acknowledges there are some customers of the applicant who were also customers of ECS. He downplays that figure, however, and points out that 90% of the export customers are of the current business were not customers of ECS.
(d) the directors, shareholders and management personnel
57. There are certainly more personnel involved in the applicant’s business compared to that of ECS. But I also note the prominent roles of Mr Gardiner and Mr Hayward in both businesses. I would not in any event be surprised at a relatively high level of staff turnover in a software development business.
(e) the suppliers
58. ECS sourced all of its inputs from Microsoft, according to Mr Gardiner. He says the applicant uses a much wider range of suppliers. That is consistent once again with a growing and evolving business.
(f) the overseas representatives
59. ECS was represented overseas by a number of companies. Amlink is represented by different companies.
(g) the employees
60. Mr Gardiner points out only four out of eight employees of ECS are employed by the applicant. The applicant employs 27 people.
(h) the export customers
61. Mr Gardiner notes that ECS exported to 14 countries. The applicant exports to all of those countries, and many more.
(i) the premises
62. The applicant operates from the same address as ECS, albeit that the applicant has taken more space in the same building.
(j) the logo
63. The two companies have different logos, although I note the applicant still uses the word “Events” as part of its promotional material for Events pro. Mr Gardiner points out the word “Events” is a common one used to describe events management software. He refers to the use of the word by competitors as part of their promotional activities.
(k) the property or assets
64. ECS’s principal asset was the intellectual property in Events for Windows. That asset was acquired by Amlink Group, and then transferred to the applicant. Since then, the applicant has acquired other assets, including the intellectual property in Events Pro and Events Interactive. The applicant says Events for Windows has now been “written off”.
the business activity index
65. The guideline also provides for the application of a Business Activity Index that is intended to assist decision-makers in the administration of the program. Mr Gardiner’s statement attempts to apply the index. He concludes there is a Business Activity Index Score of 163 out of a possible total of 245 – a score of 66.5%. I do not think the Index points to a clear conclusion.
is it the same business?
66. I do not think the business activity of the applicant is substantially different to the business of ECS. I accept Amlink’s business is bigger and more diverse and more prosperous. It employs more people and has more customers. I accept the products of the company have evolved to the point where they are clearly superior in terms of functionality and technically different. However both businesses developed and sold (or develop and sell) event management software. One has evolved from the other and become bigger, better and different in the process - exactly the result intended by the EMDG scheme. The business has already been the recipient of grants in relation to the Events products, and the applicant should not be permitted to consume more of the limited amount of the grant funds available now that its business and products have grown and evolved. It is therefore appropriate to attribute the grant history of the earlier business to the applicant pursuant to s 94(3)(e). The respondent was right to refuse an exemption.
conclusion
67. The respondent should have concluded the eligible products in question were characterised as eligible goods, instead of eligible know-how or eligible intellectual property. The decision under review is varied to that extent. The decision is otherwise affirmed.
68. I further direct that the transcript of evidence and all of the material on the Tribunal file relating to this matter shall not be published to anyone other than the Tribunal and its staff, the parties and their legal advisers pursuant to s 35 of the Administrative Appeals Tribunal Act 1975.
69. I do not think there is anything in these reasons that prevents the reasons from being published, notwithstanding the s 35 order being made in relation to the transcript of evidence and the contents of the file. I will entertain submissions from the parties as to whether or not the decision should be published without restrictions.
I certify that the 69 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member B J McCabe.
Signed: .....................................................................................
Associate: Sam J AppletonDates of Hearing 17 November 2004
18 November 2004
Date of Decision 22 April 2005
The applicant was represented by Mr Varitimos.
The respondent was represented by Mr Rangiah.
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