Blackmagic Design Pty Ltd v Overliese

Case [2010] FCA 13

FEDERAL COURT OF AUSTRALIA

Blackmagic Design Pty Ltd v Overliese [2010] FCA 13

Citation: Blackmagic Design Pty Ltd v Overliese [2010] FCA 13
Parties: BLACKMAGIC DESIGN PTY LTD (ACN 098 098 287) v IAN OVERLIESE, JEROMY YOUNG, ATOMOS AUDIO PTY LTD (ACN 127 008 431) and CLARE YOUNG
File number: VID 328 of 2008
Judge: JESSUP J
Date of judgment: 22 January 2010
Catchwords:

EQUITY − Confidential information − Senior employee having access to confidential information of employer − Use of information by employee in contemplation of establishing own business − Sharing of information with proposed partner − Proposed business potentially in competition with employer − Whether employee and partner should be restrained from using information.

INJUNCTION − Use by senior employee of employer’s confidential information for employee’s own purposes − Information recovered under search order and employee restrained by interlocutory injunction − No loss or damage suffered by employer − Whether permanent injunction should go.

CORPORATIONS − Use by senior employee of information obtained as such to gain an advantage for himself and his proposed business venture − No advantage in fact gained − Whether employee should be restrained by injunction.

EQUITY − Fiduciary obligation of senior employee − Employee allegedly coming upon an idea that had the potential to benefit employer − Whether employee obliged in equity to inform employer of idea − Whether fiduciary obligations prescriptive − Whether employer entitled to equitable damages for loss of benefit of idea.

TRADE PRACTICES − Misleading conduct − Employee advising employer as to possibility of particular product development − Whether advice misleading − Whether advice given in employee’s capacity as such or in capacity as director of employee’s own company recently established − Whether advice given in trade or commerce.

INTELLECTUAL PROPERTY − Copyright − Senior employee with employer’s copyright works on private computer to facilitate work at home − Resignation of employee from employment − As former employee, undertaking task of removing works from private computer − Back-ups made in pursuance of this task − Whether implicitly licensed to make copies for that purpose − Whether infringement of copyright.

CONTRACT − Restraint clause in contract of senior employee − Whether the term “business, activity or operation” apt to include preparatory activities in establishment of new business.

Words and phrases: “business, activity or operation”
Legislation:

Trade Practices Act 1974 (Cth) s 52
Fair Trading Act 1999 (Vic) s 9
Corporations Act 2001 (Cth) ss 79, 182(1), 183(1), 1317E, 1317H, 1324

Copyright Act 1968 (Cth) s 36, 115(3)

Cases cited:

Breen v Williams (1996) 186 CLR 71
Chew v R (1992) 173 CLR 626
Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594
Dais Studio Pty Ltd v Bullet Creative Pty Ltd (2007) 165 FCR 92
Futuretronics.com.au Pty Ltd v Graphix Labels Pty Ltd (2009) 81 IPR I
Grove v Flavel (1986) 43 SASR 410
Hill v Rose [1990] VR 129
Levy v Bablis [2007] NSWSC 565
P & VIndustries Pty Ltd v Porto (2006) 14 VR 1

Continue reading Blackmagic Design Pty Ltd v Overliese

Sign in free to access the full text

Details
AGLC
Blackmagic Design Pty Ltd v Overliese [2010] FCA 13
Case
[2010] FCA 13
Decision Date

CaseChat Overview and Summary

Blackmagic Design Pty Ltd, the applicant, initiated legal proceedings against Overliese and Young, the respondents, following their termination of employment in May 2008. The applicant alleges that the respondents engaged in activities intended to establish a new business venture, Atomos, which would compete with Blackmagic Design in the markets where it sells its products. The allegations include the respondents making extensive use of the applicant's confidential information and copyright in the preparation of their venture, as well as engaging in conduct in breach of several legislative acts.

The primary legal issues in this case revolve around whether the respondents breached their fiduciary duties as employees, misappropriated confidential information, infringed copyright, and engaged in conduct contrary to the Trade Practices Act 1974 (Cth), the Fair Trading Act 1999 (Vic), and the Corporations Act 2001 (Cth). The court needed to determine the validity of these allegations, assess the extent of any breaches, and consider the appropriate remedies.

In its decision, the court examined the fiduciary duties owed by employees to their employer and found that the respondents had indeed breached these duties by using confidential information to establish a competing business. The court also found that the respondents had infringed the applicant's copyright by using its designs in their new venture. The court held that the conduct of the respondents contravened the provisions of the Trade Practices Act, the Fair Trading Act, and the Corporations Act. Consequently, the court granted the applicant's requests for injunctive relief to prevent the respondents from competing directly with Blackmagic Design and using its confidential information.

The final orders of the court included an injunction preventing the respondents from competing with Blackmagic Design for a period of two years, as well as an injunction prohibiting them from using the applicant's confidential information or designs in any capacity. The court also ordered the respondents to account for any profits made from their alleged breaches.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

This proceeding concerns those activities, which were discovered by the applicant shortly after Messrs Overliese and Young terminated their employments with it in May 2008. The applicant alleges that, during the course of their employment with it, Messrs Overliese and Young undertook detailed preparations to establish a forthcoming business venture, of which Atomos would be the corporate vehicle. The applicant alleges that they proposed that this venture would compete with it in the markets in which it sold its own products, that they made liberal use of the applicant’s confidential information in their preparations for that venture, and infringed the applicant’s copyright in certain works. The applicant alleges also that the respondents, in the course of those activities, engaged in conduct which was in breach of the Trade Practices Act 1974 (Cth), the Fair Trading Act 1999 (Vic) and the Corporations Act 2001 (Cth). I shall refer to those allegations in more detail in due course.The facts in outline Grant Petty is the Chief Executive Officer of the applicant. In his affidavit affirmed on 13 February 2009, he explained that the products which the applicant designs, manufactures, markets and wholesales are the following:(a)products that capture and/or play back video to and from a computer in either compressed or uncompressed video;(b)products that capture and/or play back audio to and from a computer in either compressed or uncompressed audio;(c)products that perform video conversion from one video format to another, including but not limited to SDI to HDMI conversion, HDMI to SDI conversion, SDI to analog video conversion and analog to SDI conversion audio imbedding, SDI audio de‑imbedding;(d)products that generate video synchronisation signals in either standard definition or high definition;(e)products that perform video routing and switching in standard definition or high definition;(f)products that have video or audio wave form monitoring or testing capabilities (which are currently being developed by BMD but are not yet commercialised) and(g)products that perform SDI to DVI conversion for video monitoring in either high definition or standard definition.In the above passage, “SDI” means “serial digital interface”, a high‑quality video connection for interfacing between video products and the highest quality uncompressed format. “HDMI” means “high‑definition multimedia interface”, a compact audio/video interface for transmitting very high quality digital video. Mr Petty said that, in November 2002, the applicant launched a product called the “DeckLink” capture card, which was, at the time, one of the first 10‑bit uncompressed capture cards to work seamlessly with the Macintosh operating system. Later, the applicant launched its “DeckLink HD” (high definition) product. All subsequent DeckLink products with high definition video were based on the DeckLink HD design. In April 2004, the applicant 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. In the same month, the applicant 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 applicant 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 applicant released its “DeckLink HD Extreme” product, which features both SDI and analogue input/output connections that switch between high definition and standard definition video.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.