Australian Trade Commission v Disktravel - [1999] FCA 1399

FEDERAL COURT OF AUSTRALIA
Australian Trade Commission v Disktravel [1999] FCA 1399
ADMINISTRATIVE LAW – Export Market Development Grants Act 1974 (Cth) – whether expenses fall within qualifying export development expenditure – primary and principal purpose of expenditure – how assessed – subjective and objective evidence – mis-statement by Tribunal in relation to purpose – conflating of objective and subjective evidence with objective and subjective purposes – substantive fact finding function undertaken by Tribunal – no underlying error of principle – no reviewable error – eligible industrial property rights – whether grant claimants owned eligible industrial property rights – consideration of rights contemplated by copyright in definition of eligible industrial property – whether claimed expenditure related to the disposal of eligible industrial property rights – copyright in software and ancillary works – distribution of CD ROM disks incorporating software – distribution to travel agents – reservation of intellectual property by licensor – no publication – no exercise of rights comprised in copyright – no eligible industrial property rights owned by claimants – no entitlement to grant.
WORDS AND PHRASES – “qualifying export development expenditure” – “primary and principal purpose” – “eligible industrial property rights” – “copyright”.
Export Market Development Grants Act 1974 (Cth) ss 31, 11Z(8), 38, 12(2), 14(1), 11A(1), 3(1)
Copyright Act 1968 (Cth) ss 10, 29, 31, 13, 15
Patents Act 1990 s 13
Trade Marks Act 1995 s 20
Nomad Films International Pty Ltd v Export Development Grants Board (1986) 11 FCR 67, discussed
Australian Trade Commission v F & F Asia Pty Ltd (1996) 69 FCR 252, referred to
Parker Pen (Aust) Pty Ltd v Export Development Grants Board (1983) 46 ALR 612, applied
Export Development Grants Board v Miller Pohang Coal Co Pty Ltd (1985) 61 ALR 125, cited
Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280, applied
Australian Trade Commission v Film Funding and Management Pty Ltd (1990) 24 FCR 595, cited
Autodesk Inc v Dyason (1992) 173 CLR 331, cited
Avel Pty Ltd v Multicoin Amusements Pty Ltd (1990) 171 CLR 88, applied
Australian Trade Commission v World Geoscience Corporation Ltd (Unrep, 20/8/97, Kiefel J), cited
Jolley v FCT (1989) 86 ALR 297, cited
Trade Practices Commission v Abbco Iceworks Pty Ltd (1994) 52 FCR 96, cited
Kervan Trading Pty Ltd v Aktas (1987) 8 IPR 583, cited
Australian Trade Commission v Correia and Zaknich Holdings Pty Ltd (1992) 38 FCR 153, cited
AUSTRALIAN TRADE COMMISSION v DISKTRAVEL, JOHN GAETANO MARIO FIOCCO, DIVOT PTY LTD, HOLDEN BARLOW and CECK INVESTMENTS
W 19 of 1999
FRENCH, KIEFEL AND MANSFIELD JJ
22 OCTOBER 1999
PERTH

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

W 19 OF 1999

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

AUSTRALIAN TRADE COMMISSION
Appellant

AND:

DISKTRAVEL
First Respondent

JOHN GAETANO MARIO FIOCCO
Second Respondent

DIVOT PTY LTD
Third Respondent

HOLDEN BARLOW
Fourth Respondent

CECK INVESTMENTS
Fifth Respondent

JUDGES:

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [1999] FCA 1399
Decision Date: 22 OCTOBER 1999

CaseChat Overview and Summary

In this case, the Australian Trade Commission (ATC) appeals against the decision of his Honour the primary Judge, which was affirmed by the Administrative Appeals Tribunal (AAT), that five respondents were eligible for grants under the Export Market Development Grants Act 1974 (the Act). The respondents were applicants for grants for the claim year 1994-5, based on marketing fees paid to Plutora Pty Ltd. The respondents had entered into licence agreements with Travel Vision International Pty Ltd (TVI), allowing them to use a software programme developed by TVI. The respondents also entered into marketing agreements with Plutora, a company with common directors to TVI, which obtained sub-licences for them and collected advertising fees.

The legal issues before the court were whether the respondents were eligible for grants under the Act, and whether the Tribunal and the primary Judge were correct in concluding that the respondents could dispose of industrial property rights under sub-licence agreements. The court had to consider the terms of the licence agreements, the definition of industrial property rights in the Act, and whether the expenditure incurred by the respondents qualified them for grants. The court also had to determine whether the agreements between TVI, the respondents, and Plutora resulted in a transfer or distribution of expenditure, as required by the Act.

The court held that the Tribunal and the primary Judge were in error in concluding that eligible industrial property rights could be the subject of disposition under sub-licence agreements, given the terms of the licence agreements and the definition of that term in the Act. The court found that the agreements did not result in a transfer or distribution of expenditure, and that the respondents were not eligible for grants in the period in question. The court allowed the appeal, set aside the decisions of the AAT and the primary Judge, affirmed the decision of the ATC that the respondents were not eligible for grants, and ordered the respondents to pay the ATC’s costs.

The final orders of the court were that the appeal be allowed; that the decision of the primary Judge and the AAT be set aside in so far as they related to the respondents; that the decision of the ATC be affirmed; that the respondents pay the ATC’s costs; and that the respondents be given liberty to apply to vary the costs order, with the ATC able to file a reply within 14 days of the respondents’ submission.

Orders

Orders of the court

1. The appeal is allowed.

2. The decision of the Learned Primary Judge of 5 February 1999 be set aside and that of the Administrative Appeals Tribunal be set aside in so far as it relates to the respondents to this appeal.

3. The decision of the appellant notified on 25 October 1996 that each of the respondents to the appeal is “not eligible for a grant under the Export Market Development Grants Act 1974 (Cth) in respect of the claim year 1994-95” be affirmed.

4. The respondents to pay the appellant’s costs of the appeal.

5. Liberty to the Respondent to apply by written submission within 14 days to vary the costs order.

6. The Appellant to file any reply to any such submission within 14 days of the Respondent’s submission.

Note:

Background

Background to the litigation

Each of the respondents and Travel Vision International Pty Ltd (“TVI”) were applicants for grants under the Export Market Development Grants Act 1974 (“the Act”), in the claim year 1994-5. TVI licensed each of the respondents to use a software programme it had developed. It is not a respondent to this appeal. The reference in these reasons to “the respondents” in the hearing before his Honour the primary Judge, and that before the Administrative Appeals Tribunal (“the Tribunal”), is to the five licensees. The expenditure incurred by each of them, which was said to qualify them for grants under the Act, was the payment of marketing fees to a company Plutora Pty Ltd. The Tribunal substituted a decision in favour of the respondents and the primary Judge affirmed that decision. The Australian Trade Commission (“the Commission”) appeals from his Honour’s decision. Background In June 1993 TVI, a company incorporated in Australia, retained Microbase Business Systems to develop a software programme using CD-Rom disks which could store images and texts of products offered by wholesalers and retailers in the Australian and international travel industries. The aim was to create a database of travel and tourism information. It is not necessary to further describe the product for the purposes of this appeal. Further reference will however be necessary to the rights in and granted with respect to the products distributed. Among the facts agreed between the parties before the Tribunal was that “at all times TVI has owned the intellectual property rights in and associated with the Travel Vision system”. There was no other evidence as to ownership of the copyright in the software developed. TVI granted licences to the respondents (“the Licence Agreements”) to “use and commercially exploit the intellectual property and the product in the manner set out in this Agreement within the Territory and for the Term.” The territories were areas in Australia or countries overseas. It is only dispositions in the latter, obviously, to which export grants relate. The respondents, as licensees (or their sub-licensees, to which reference will shortly be made), were to obtain information and images relevant to the territory and TVI was to produce the disk for distribution by the respondents to participating travel agents. The disks contained advertisements, for which a fee was paid. Advertising fees received by the respondents were to be paid to TVI. Further reference will be made to these contractual provisions later in these reasons. Under the Licence Agreement the respondents were able to grant sub-licences, subject to the approval of TVI. The main source of income for the respondents, following their entry into a Licence Agreement, was an initial fee to be paid by a Sub-licensee in the territory, together with a percentage of advertising fees. On the same date as the Licence Agreement, a Marketing Agreement was entered into with Plutora Pty Ltd. TVI and Plutora shared common directors. Under the marketing agreement, Plutora was appointed as marketer and as agent of the licensee in question; it was retained to obtain sub-licences for the territory and was given authority to enter into such agreements. A marketing fee was paid to it and this was the expenditure upon which the respondents’ claims were based.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

FRENCH, KIEFEL AND MANSFIELD JJ

The Commission submits that that situation differs from the present case because here one can see a change effected by the agreements, namely that before them TVI would incur all promotional expenditure and after they were entered into both the respondents and TVI would. That does not, in my view, show a necessary transfer or distribution of expenditure as between the parties to the agreement. As his Honour correctly concluded, in my respectful view, the effect of the agreement was to place the licensees in a position where they would incur expenditure in the future, in connexion with their obligations under the Licence Agreement. Conclusion on the Appeal The Tribunal and his Honour were in error in concluding that eligible industrial property rights could be the subject of any disposition under Sub-licence agreements, having regard to the terms of the Licence Agreements and the definition of that term in the Act. The conclusion that must have been reached, as a matter of law, was that there was no entitlement to grants in the period in question. In my view, there should be orders that the appeal be allowed; that the order of this Court of 5 February 1999 and the decision of the Administrative Appeals Tribunal be set aside, in so far as they relate to the respondents to this appeal and the decision of the appellant notified on 25 October 1996, that each of the respondents to this appeal is “not eligible for a grant under the Export Market Development Grants Act 1974 in respect of the claim year 1994-5”, be affirmed. The respondents should pay the appellant’s costs. In my judgment, this appeal should be allowed for the reasons given by Kiefel J, with which I respectfully agree.I certify that the preceding one (1) numbered paragraph is a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield.Associate:Dated:

Ratio Decidendi

Legal Principle Established

Established by: FRENCH, KIEFEL AND MANSFIELD JJ

Full text does not contain this section.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	W 19 OF 1999