BLACKMAGIC DESIGN PTY LTD ACN 098 098 287 v IAN OVERLIESE, JEROMY YOUNG, ATOMOS AUDIO PTY LTD ACN 127 008 431 and CLAIRE YOUNG
File number:
VID 172 of 2010
Judges:
FINKELSTEIN, JACOBSON AND BESANKO JJ
Date of judgment:
25 February 2011
Catchwords:
EQUITY — appeal from decision of trial judge refusing to grant permanent injunction — where appellant company manufactured and designed hardware and software for film and television production — where first and second respondents were senior employees of appellant with responsibility for hardware design and sales — first and second respondent incorporated third respondent ultimately with intention on part of first respondent of competing with appellant — first respondent developed concept of new video capture card using appellant’s confidential information as to parts usage, profits and costing — respondents restrained by interlocutory injunction from using the appellant’s confidential information — whether appropriate to make permanent injunction restraining respondents from manufacturing the video card — where first and second respondents had been out of appellant’s employ for nearly two years — where first respondent owed fiduciary duty to appellant — whether first respondent had breached duty to avoid a conflict of interest and duty — whether first respondent obliged to disclose to appellant the spreadsheet containing video capture card idea — where appellant sought equitable compensation for loss of opportunity to produce a similar video card earlier than it did — whether disclosure a defence to breach of fiduciary duty or a positive duty
CONTRACT — where it was a term of second respondent’s contract with appellant that he would disclose any conflict of interest — where no intention to compete with appellant proven on part of second respondent — whether second respondent had conflict of interest and duty — whether disclosure of spreadsheet and video card concept required
PRACTICE AND PROCEDURE — whether at end of submissions from both parties on the appeal appellants could amend notice of appeal to add ground of breach of implied contractual duty of good faith by first respondent — where case was long and complex and was clearly put to trial judge on basis of breach of fiduciary duty or breach of written term in contract — where major reconsideration of case by trial judge would be required if appeal on this point allowed — where not clear in any case that implied contractual duty of good faith would have required disclosure of video card concept
COSTS — where trial judge had ordered appellant to pay 30 per cent of costs including reserved costs of first and third respondents, 50 per cent in case of second respondent and whole of costs of fourth respondent — where reserved costs included costs of interlocutory applications on which appellant…
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.
Continue reading Blackmagic Design Pty Ltd v Overliese
Sign in free to access the full text
Details
AGLC
Blackmagic Design Pty Ltd v Overliese [2011] FCAFC 24
Case
[2011] FCAFC 24
Decision Date
CaseChat Overview and Summary
The case of Blackmagic Design Pty Ltd v Overliese involves the appellant, a company that manufactures and designs hardware and software for film and television production, suing senior employees, the first and second respondents, for allegedly using confidential information to compete against the appellant. The first respondent was responsible for hardware design, and the second respondent for sales. They incorporated the third respondent with the intent to compete with the appellant, using a video capture card concept based on the appellant's confidential information. The trial judge had previously refused to grant a permanent injunction against the respondents, which the appellant appealed.
The legal issues before the court were whether the appellant was entitled to a permanent injunction to prevent the respondents from producing the video card, if the first respondent breached any fiduciary duties by not disclosing the video card concept, and whether the second respondent had a conflict of interest. Additionally, the court considered if the appellant could amend its notice of appeal to include a breach of the implied contractual duty of good faith by the first respondent, and the appropriateness of the trial judge's costs order.
The court determined that no permanent injunction should be granted because the video card was only a concept and not a protectable property right. The first respondent did not breach any fiduciary duty by failing to disclose the spreadsheet or video card concept, as it was not a positive duty to disclose such information. The second respondent did not have a conflict of interest or duty, as there was no proven intention to compete with the appellant at the relevant time. The court ruled it was too late to amend the notice of appeal to include the implied contractual duty of good faith, and the trial judge's costs order should not be altered until after taxation. The court also found that a Sanderson order was not appropriate for the fourth respondent’s costs.
The appeal was allowed in part, and the costs order was substituted to reflect the respective contributions of each party to the litigation. The first and third respondents were to pay 35% of the appellant's costs, the second respondent 25%, and the appellant to bear the fourth respondent's costs. The appeal was otherwise dismissed, and the appellant was ordered to pay 90% of the respondents' costs of the appeal.
Orders
Orders of the court
1. The appeal be allowed in part.
2. Set aside order 4 made by Jessup J on 24 February 2010 and in lieu thereof order as follows:
4. Subject to any order previously made for the payment of the costs of a party by any other party:
(a) The first respondent pay 35 per cent of the costs (including reserved costs) of the applicant, to be taxed if not agreed and the applicant pay 65 per cent of the costs (including reserved costs) of the first respondent, to be taxed if not agreed.
(b) The second respondent pay 25 per cent of the costs (including reserved costs) of the applicant, to be taxed if not agreed and the applicant pay 75 per cent of the costs (including reserved costs) of the second respondent, to be taxed if not agreed.
(c) The third respondent pay 35 per cent of the costs (including reserved costs) of the applicant, to be taxed if not agreed and the applicant pay 65 per cent of the costs (including reserved costs) of the third respondent, to be taxed if not agreed.
(d) The applicant pay the costs (including reserved costs) of the fourth respondent, to be taxed if not agreed.
3. The appeal be otherwise dismissed.
4. The appellant pay 90 per cent of the respondents’ costs of the appeal.
Note:
Background
Background to the litigation
The appellant’s claims also included alleged causes of action under the Trade Practices Act 1974 (Cth) (‘Trade Practices Act’) and Fair Trading Act 1999 (Vic) for misleading or deceptive conduct. The first respondent gave certain advice to the chief executive officer of the appellant in late 2007 and then in February 2008 which the appellant alleged constituted misleading or deceptive conduct. The trial judge held that there was no misleading or deceptive conduct and, in any event, the conduct was not in trade or commerce. There is no appeal against those conclusions. The appellant’s claims also included an alleged cause of action for breach of copyright against the first respondent based on certain copying he carried out in early May 2008. This claim was dismissed and there is no appeal against that conclusion. There appear to have been a couple of other claims made by the appellant such as a claim against the first respondent for allegedly inducing the second respondent to breach his written contract of employment. Those are not pursued on appeal and need be noted no further. THE FACTS The most important witnesses at the trial were Mr Petty, the first respondent and the second respondent. The trial judge did not make express general findings about the credit of each of these witnesses. He appears to have accepted most of Mr Petty’s evidence and the evidence of the second respondent. He accepted parts of the first respondent’s evidence and rejected other parts. Perhaps because of the way he understood the appellant’s case, the trial judge concentrated on the first respondent’s state of mind between February and May 2008 and his findings with respect to the second respondent’s state of mind are not entirely clear. However, as I will explain, I have been able to reach conclusions about that matter. The other general point to note is that the appellant does not challenge any of the trial judge’s findings of fact, save for his finding that Simple Card did not represent a business opportunity. Whether that is a finding of fact may be debatable. The trial judge found that the appellant launched various products during the period from November 2002 to April 2006. In November 2002, the appellant launched a product called ‘DeckLink’, a capture card, which was, at the time, one of the first 10-bit uncompressed capture cards to work seamlessly with the Macintosh operating system. Some time between November 2002 and April 2004, the appellant launched its ‘DeckLink HD’ (high definition) product. In April 2004, the appellant launched its ‘DeckLink HD Pro’ product which Mr Petty said was the world’s first true 10-bit and 12-bit dual link 4:4:4 and 4:2:2 high-end video capture card suitable for both Macintosh and Windows systems. The appellant also launched what Mr Petty described as its ‘HDLink HD Monitoring Solution’, which allowed customers to use a 24-inch computer monitor for the highest quality HD TV video monitoring. In April 2005, the appellant introduced a new type of video editing product called ‘Multibridge Extreme’ which solved the problem of insufficient space on standard computer ports to add extra audio channels by moving the electronics to an external box. In April 2006, the appellant released its ‘DeckLink HD Extreme’ product, which featured both SDI and analogue input/output connections that switched between high definition and standard definition video.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
The third ground of challenge must, in my opinion, be rejected. The appellant may well be correct when it submits that it was reasonable for it to join the fourth respondent, but it has failed to show anything in the conduct of the first, second and third respondents which would justify a Sanderson order (Gould v Vaggelas (1985) 157 CLR 215 at 229-230 per Gibbs CJ).CONCLUSION I would allow the appeal but only for the purpose of substituting for the trial judge’s order as to costs the following order.Subject to any order previously made for the payment of the costs of a party by any other party:(a)The first respondent pay 35 per cent of the costs (including reserved costs) of the applicant, to be taxed if not agreed and the applicant pay 65 per cent of the costs (including reserved costs) of the first respondent, to be taxed if not agreed.(b)The second respondent pay 25 per cent of the costs (including reserved costs) of the applicant, to be taxed if not agreed and the applicant pay 75 per cent of the costs (including reserved costs) of the second respondent, to be taxed if not agreed.(c)The third respondent pay 35 per cent of the costs (including reserved costs) of the applicant, to be taxed if not agreed and the applicant pay 65 per cent of the costs (including reserved costs) of the third respondent, to be taxed if not agreed.(d)The applicant pay the costs (including reserved costs) of the fourth respondent, to be taxed if not agreed.Otherwise, the appeal should be dismissed. In the circumstances, it is not necessary for me to deal with the other grounds in the Notice of Contention. As to the costs of the appeal, the nature of the argument does not warrant a separate order for the fourth respondent’s costs. The respondents have been substantially successful and I would order that the appellant pay 90 per cent of their costs of the appeal.