Chambers Harrap Publishers Ltd v Hinkler Book Distributors Pty Ltd

[1997] FCA 1570

IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY	AG 91  of   1997

BETWEEN:	CHAMBERS HARRAP PUBLISHERS LIMITED APPLICANT
AND:	HINKLER BOOK DISTRIBUTORS PTY LIMITED RESPONDENT
JUDGE:		FINN J
DATE OF ORDER:		22 DECEMBER 1997
WHERE MADE:		CANBERRA

THE COURT ORDERS THAT:

1. Save in relation to the order sought to transfer this proceedings to the Victoria Registry of this court, the notice of motion is dismissed. 

2. Further submissions on the question of transfer are invited.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY	AG 91 of 1997

BETWEEN:	CHAMBERS HARRAP PUBLISHERS LIMITED APPLICANT
AND:	HINKLER BOOK DISTRIBUTORS PTY LIMITED RESPONDENT

JUDGE:	FINN J
DATE:	22 DECEMBER 1997
PLACE:	CANBERRA

EX TEMPORE REASONS FOR JUDGMENT

This notice of motion seeks first to vacate various interlocutory orders made by Higgins J as a judge of this court on 28 November 1997 in proceedings for breach of copyright;  secondly, to have the applicant give security for costs in the matter;  and thirdly to have the proceedings transferred to the Victoria registry of this court.

It is necessary to outline briefly the nature of the copyright claim.  The applicant, Chambers Harrap Publishers Limited, (“Chambers”), a Scottish company, is the owner of copyright in the literary work, the “Chambers Official Scrabble Words Third Edition” (“Scrabble Words”).  I should add it is also the publisher of, amongst other works, Chambers English Dictionary.  The respondent, Hinkler Book Distributors Proprietary Limited, (“Hinkler”), a Victorian company, has recently produced and distributed for sale its own work entitled “The Redwood Scrabble International Edition” (“Redwood Scrabble”).

Chambers alleges that Redwood Scrabble reproduces a substantial part of Scrabble Words.  Chambers' direct association with the game of Scrabble began in the UK in 1980 when its dictionary was chosen as the official one for that country's scrabble championship.  Thereafter over time it produced works for scrabble of which Scrabble Words is the most recent.  I need not outline in detail the evidence of the processes leading to the compilation of this work and its predecessors, other than to indicate that against the background of the rules of the game it is claimed to have involved significant creativity, to have necessitated the use of an adjudication committee of four experts who passed on whether particular questionable words ought to be included and to have required a deal of subjective selection in some number of areas.

In its present form, Scrabble Words is simply a list of words in alphabetical order that is accepted as authoritative for the purposes of the game.  Hinkler's work is of very recent origin.  Its purpose is similar to that of Scrabble Words save that it contains the following different features variations: (1) it does not list words of greater length than nine letters;  (2) it differentiates between “English only” and “American only” words (Scrabble Words does not include the “American only”);  and (3) it has two appendices, the one dealing with Q without U words, the other with four‑letter words. 

Hinkler's managing director gave evidence that the development of its work involved “an enormous amount of time and effort”.  It drew on previously published word lists, scrabble players and its own expert staff.  “Many other publications have formed part of the research base.” 

The alleged breach

It is Chambers' case that, save in respect of the variations differences noted earlier, there is a 100 per cent correlation between the words used in Scrabble Words and those in Redwood Scrabble.  As to the balance which for practical purposes involves the US only words, there is a 100 per cent correlation between Redwood Scrabble and the words used in a US publication of Miriam Webster Inc. 

Apart from emphasising the issues of subjectivity, choice and creativity in the compilation of its work, Chambers notes specifically that its list contains nine words that should not have been included in its list. These also have been copied and included in Redwood Scrabble. Chambers claims that its list is one for which appropriate originality can be claimed for copyright purposes.  Given the process of selection and judgment involved, the case, it is said, is clearly distinguishable from those compilation cases, for example, of telephone books, pocket diaries, etcetera, which involve no more than the expenditure of effort and the compilation of facts, cf G.A. Cramp and Sons Limited  v Frank Smithson Limited [1944] AC 329, Feist Publications Inc v Rural Telephone Service Company Inc (1991) 20 IPR 129. See also Glogau v Land Transport Safety Authority of New Zealand [1997] 3 NZLR 353.

Hinkler, as I have noted, claims its work is an independent creation but, given the purpose of both, there was inevitable duplication in the lists:  cf Telmak Teleproducts Australia Proprietary Limited v Bond International Proprietary Limited (1985) 5 IPR 203; and that in any event Chambers' work was merely a factual compilation lacking the requisite originality: see Feist Publications Inc v Rural Telephone Service Co Inc above, Victoria Park Racing and Recreations Grounds Company Limited v Taylor (1937) 58 CLR 479 at 511.

There can be no doubt in my view that there is a serious question to be tried here, given both the evidentiary conflicts and those on the issue of originality.  While Hinkler asserts that this at best is a weak copyright case, I am unable at this stage, on account of the evidentiary conflict, to express a view on this beyond saying that in the event such may or may not be found to be so.  At present though the strength of the question to be tried does not weigh significantly against Chambers.  Its evidence, if ultimately accepted, is arresting.

On the issue of originality I should add this much, the evidence so far presented would by no means warrant the conclusion that the compilation of a scrabble word list involves no more than the mechanical application of the rules of scrabble to words of the English language.  The real issue for present purposes is one of the balance of convenience.  It weighs significantly in favour of continuing the principal restraining order made by Higgins J.  Before dealing with this matter, I should say this much about the proceedings before Higgins J.

The original orders

Given undertakings that Chambers has given on the present motion, the only order made by Higgins J of continuing significance is that which (in abbreviated form) restrains Hinkler until further order from reproducing, publishing, etc, Redwood Scrabble or any document which reproduces Scrabble Words in whole or in substantial part.  That order was made in proceedings in which Hinkler was represented in which it did not put on evidence but in which, despite short service, it did not appear to have sought an adjournment for the purpose.  I have been unable to ascertain from Hinkler's representatives why that course was taken before Higgins J.  Rather, they have attempted, futilely I might add, to argue that the proceeding before Higgins J was ex parte.

The balance of convenience

I am satisfied on the evidence that is placed before me, that Chambers is an international company of repute and that it would be quite capable of satisfying, and would satisfy, both an adverse costs order as also any damages award resulting from its undertaking as to damages in the event of its being unsuccessful in its application.  I should add, financial statements were put in evidence by Chambers. 

In contrast to this, and despite the obvious significance of the matter to Hinkler's notice of motion, I have been provided with little evidence, other than a broad assertion from its managing director that Hinkler is a company with an established reputation in the publishing industry, and that it is financially sound.  As to the latter, it was said to have had a gross turnover last year in excess of $10 million and was well able to pay any adverse damages award.  No independent financial information of any sort was placed before me. 

On the central question of damage, Hinkler makes the obvious point, being the party restrained from selling its product and at the most propitious time for its sale, i.e. Christmas, and there is clear evidence of lost sales.  It is suffering both immediate financial loss and it asserts damage to its goodwill.  In contrast, it alleges Chambers' reputation is unlikely to be presently affected by Hinkler being allowed to sell its product and if, in the event, Hinkler is found to have breached copyright, damages to Chambers will provide adequate redress.  The argument claiming no loss of reputation seems to be premised upon the notion that a purchaser of Redwood Scrabble is unlikely to be aware that the word breaches Chambers' copyright (if such is the case).

Chambers, in contrast, claims that it is has a long established reputation. Hinkler is a new player seeking to enter the field by improper means, and until the issue is decided, the status quo should be maintained, that is, Hinkler should be prevented from acting as it has, and proposes.  I should add, Hinkler disputes what should be seen as the status quo. Finally, Hinkler has asserted that, in the manner in which it has corresponded with Hinkler's distributors subsequently, orders of Higgins J, Chambers has acted in an “over-enthusiastic” fashion in enforcing the orders.  I merely note that the evidence does not reasonably support this assertion.  I consider it unnecessary to detail that evidence here.

I am not satisfied that any appropriate case has been made out by Hinkler for varying the restraining order of Higgins J that remains the subject of contention between the parties.  Notwithstanding that the motion to vacate is the respondent's, its evidence on the matters that bear heavily both on the issue of serious question and on balance of convenience, does not have the cogency one would properly expect in meeting the material so far advanced by Chambers as would induce me not to continue the award of interlocutory injunctive relief.  Chambers' case, if made out, may well be overwhelming. 

I am, on the evidence so far, well satisfied of Chambers' financial circumstances, but not so of Hinkler's, and I am not satisfied that, on the case Chambers is advancing, the appropriate relief in any event would merely be damages.  Notwithstanding the restraining order probably has more significant effects on Hinkler's business than its denial would have on Chambers.  I do not consider that the circumstances either require or justify the vacation of the first of Higgins J’s orders.

I should add this much about the basis of my refusal to vary or revoke Higgins J’s order.  I readily acknowledge that, to use the words of Finkelstein J in BP Chemicals ANZ Pty Ltd v Manildra Starches Pty Limited, unreported 5 November 1997:

“[T]he jurisdiction to revoke or vary an [interlocutory injunction] should not be exercised when the real basis for the application as to the original order was wrongly made.  Such an argument should be addressed to a court of appeal.”

In any event, as his Honour noted, the jurisdiction is one to be “exercised only sparingly”.  Nonetheless, the parties here have been content to approach this matter in large measure as if this were the original application.  No attempt was made to invoke those considerations that will bear directly on applications to vary or revoke which are discussed in the BP Chemicals case.  In these circumstances and in the absence of any reasons for Higgins J’s decisions and of explanation of the course taken by Hinkler before his Honour, I have considered it necessary, if not necessarily entirely appropriate, to enter upon the merits of the matter in far greater detail than should ordinarily be the case on a motion such as this when prosecuted on the basis this has.

Security for costs

Hinkler, additionally, has sought that Chambers give security for costs both for the proceeding and for its undertaking as to damages.  The ground of the application is that Chambers is a company registered outside the jurisdiction, and with no assets within the jurisdiction, see Federal Court Rules, Order 28, Rule 31A.  That combination of circumstances is, as McHugh J indicated in PS Chillaram and Co Limited v China Ocean Shipping Co (1991) 102 ALR 321 at 323, “Great weight in determining whether an order for security of costs should be made”, but it is not of itself conclusive of the matter. See CBS Records Australia Limited v Telmak Teleproducts Australia Pty Limited (1987) 72 ALR 270 at 284-285, Barton v Minister for Foreign Affairs (1984) 2 FCR 463.

I have clear evidence of Chambers' standing and financial position, of its reasons for prosecuting its claim and of its financial capacity to meet any adverse orders likely to be made against it in the event of its application failing.  The respondent, I would add, has put in evidence of its estimate of likely party and party costs, and of a favourable damages award if it was found entitled to enforce the undertaking as to damages given by Chambers, that is, in excess of $37,000 and $100,000 respectively.  Given the above, given that Chambers is a company registered in the United Kingdom with the advantages that today follow from that in terms of enforcement of judgments, and that no particular considerations adverse to Chambers have been raised by the respondent, I see no reason, in the present circumstances, for making the order sought.  It would be unnecessary. 

Save in relation to the order sought to transfer this proceedings to the Victoria Registry of this court, I dismiss the notice of motion.  I will invite further submissions on the transfer question.

I certify that this and the preceding six (6) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn.

Associate:

Dated:           23 February 1998

Counsel for the Applicant:	Mr Erskine
Solicitor for the Applicant:	Barker Gosling
Counsel for the Respondent:	Mr McGowan
Solicitor for the Respondent:	Purves Clark Richards
Date of Hearing:	17 December 1997
Date of Judgment:	22 December 1997