FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
C21 Pty Ltd (Trustee) v Hou [2022] FedCFamC2G 527
File number(s): SYG 2055 of 2021 Judgment of: JUDGE MANOUSARIDIS Date of judgment: 29 June 2022 Catchwords: PRACTICE AND PROCEDURE – Intellectual Property – application for discovery by categories of documents – whether documents relevant to any issue – whether appropriate to order discovery given the time at which application made – application for discovery dismissed. Legislation: Copyright Act 1968 (Cth) s 32
Corporations Act 2001 (Cth) ss 182, 183
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 176(1), 176(2)
Federal Circuit Court of Australia Act 1999 (Cth) s 45
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) rr 14.02, 14.03 Federal Circuit Court Rules 2001 (Cth) rr 14.02, 14.03
Cases cited: Australian Building & Construction Commissioner v CFMEU & Ors (No.5) [2018] FCCA 1100
Hartnett Legal Services Pty Ltd v Ballantyne [2016] FCA 1116
Robson v Reb Engineering Pty Ltd [1997] 2 Qd R 102
Division: General Number of paragraphs: 24 Date of hearing: 28 June 2022 Place: Sydney Counsel for the Applicant: Mr C McMeniman Solicitor for the Applicant: Gilbert + Tobin Solicitor for the Respondents: Mr M Szary of MGA Lawyers, by telephone ORDERS
SYG 2055 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: C21 PTY LTD ATF THE RAMADAN FAMILY TRUST
Applicant
AND: KATE HOU
First Respondent
HIBI DESIGN PTY LTD
Second Respondent
ORDER MADE BY:
JUDGE MANOUSARIDIS
DATE OF ORDER:
29 JUNE 2022
THE COURT ORDERS THAT:
1.The application for the disclosure or production of the documents identified in the applicant’s proposed form of orders handed up in Court at 4:15 pm on 28 June 2022 is dismissed.
2.The proceeding be adjourned for a directions hearing at a time and date to be arranged with the associate to Judge Manousaridis.
3.The parties otherwise have liberty to apply on such notice as the circumstances warrant.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
INTRODUCTION
At 4:15 pm on 29 June 2022 I pronounced the following orders:
(a)the application for the disclosure or production of the documents identified in the applicant’s proposed form of orders handed up in Court at 4:15 pm on 28 June 2022 is dismissed;
(b)the proceeding be adjourned for a directions hearing at a time and date to be arranged with my associate; and
(c)the parties otherwise have liberty to apply on such notice as the circumstances warrant,
noting that I would…
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- AGLC
- C21 Pty Ltd (Trustee) v Hou [2022] FedCFamC2G 527
- Case
- [2022] FedCFamC2G 527
- Decision Date
CaseChat Overview and Summary
The primary legal issues before the court were whether Ms Hou breached her employment contract and fiduciary duties by misappropriating confidential information and copyrighted works, and if her post-employment actions constituted infringement of copyright and a breach of confidence. The court also needed to determine if the evidence provided by RAMA was sufficient to support the claims of copyright infringement and breach of confidence.
The court found that RAMA's evidence demonstrated that Ms Hou had indeed misappropriated confidential business information and copyrighted materials. The court noted that the information copied by Ms Hou included key business documents and proprietary designs, which were integral to RAMA’s business operations. The court also found that Ms Hou used this information to compete directly with RAMA by creating and selling similar products under her own brand, Hibi Design. The court held that this constituted a clear breach of her employment contract, fiduciary duties, and statutory obligations. Furthermore, the court concluded that Ms Hou's actions amounted to copyright infringement as the new products were direct copies of RAMA's designs and thus infringed upon RAMA’s exclusive rights under the Copyright Act. The court further found that Ms Hou's actions constituted a breach of confidence, as she had used confidential information that was proprietary to RAMA.
The court ordered Ms Hou to pay damages to RAMA for the breaches identified and restrained her from further using or disclosing RAMA's confidential information and copyrighted works.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
After a number of interlocutory steps had been completed, RAMA filed a statement of claim on 22 April 2022, and, on 24 June 2022, RAMA filed an amended statement of claim which is almost identical with the statement of claim it filed on 22 April 2022. In its statement of claim RAMA alleges as follows:(a)RAMA carries on the business of designing and creating mechanical keyboards, computer peripherals such as “keycaps”, and other designer items.(b)Ms Hou was employed by RAMA from 23 March 2020 to 27 September 2021 as Senior Product Designer.(c)In its day-to-day business RAMA uses design templates for a number of different keycap profiles, and design templates for a keyboard. RAMA also uses “bespoke three dimensional renders and production files for keycaps . . . for collaborations between RAMA Works and artists who create motifs to appear on the face of keycaps (Keycap Collaborations)”.(d)Each of the documents in (c) (RAMA Works) is an artistic work and an original work in which copyright subsists within the meaning of s 32 of the Copyright Act 1968 (Cth) of which RAMA is the owner; and are confidential to RAMA’s business.(e)In addition to the RAMA Works, RAMA holds the following information that is confidential to its business (RAMA Confidential Information):(i)documents RAMA keeps on its shared Google drive that include, among other things, documents relating to RAMA’s existing collaborations; employment contracts; contracts with collaborators, vendors, and manufacturers; RAMA’s sales; and RAMA’s banking details; and(ii)a contact list for artists, vendors, and manufacturers that are accessible only to RAMA’s employees as Google Contacts in their employee Gmail account.(f)On each of 22 and 24 August 2021 Ms Hou copied all of the RAMA Works and the RAMA Confidential Information onto her computer using Google Takeout; and on 14 September 2021 Ms Hou copied some of the RAMA Works and the RAMA Confidential Information onto her computer.(g)On about 1 September 2021 Ms Hou caused to register the business name “Hibi Design”, having on about 27 August 2021 registered a website located at the URL (h)On 24 September 2021 Ms Hou gave RAMA notice of her intention to resign from her employment, and she ceased her employment with RAMA on 27 September 2021.(i)On 18 October 2021 Ms Hou caused HIBI to be incorporated, and now operates a business which offers keycaps for sale or pre-order under the name of “Hibi” (Hibi Keycaps) in competition with RAMA.(j)Ms Hou and HIBI created each of the Hibi Keycaps using RAMA Works and RAMA Confidential Information. The statement of claim then pleads the following causes of actions:(a)Causes of action based on Ms Hou’ breach of her contract of employment, fiduciary duties she owed RAMA as an employee, and s 182 and s 183 of the Corporations Act 2001 (Cth). These causes of action are in part based on alleged conduct occurring before Ms Hou ceased her employment with RAMA. They are also based, in part, on Ms Hou’s conduct after her employment, and in particular by creating or causing HIBI to create Hibi Keycaps by using RAMA Works and RAMA Confidential Information, and operating a business which offers the Hibi Keycaps for sale or pre-order in competition with RAMA.(b)Causes of action based on infringement of RAMA’s copyright in the RAMA Works, the alleged infringing conduct being the following: (i)Ms Hou and HIBI created each of the Hibi Keycaps using the RAMA Works;(ii)Each of the Hibi Keycaps reproduces the whole or a substantial part of the RAMA Works.(iii)Because of (i) and (ii) HIBI had reproduced or communicated to the public in Australia the whole or a substantial part of the RAMA Works, and it did so without RAMA’s licence, and is continuing to engage in such conduct.(iv)Ms Hou authorised the conduct in (iii).(c)Causes of action for breach of confidence based on the matters in paragraphs 3(c), (f), (i), and (j) above.