FEDERAL COURT OF AUSTRALIA
Chou v Metstech Pty Limited [2023] FCAFC 205
Appeal from: Metstech Pty Ltd v Park [2022] NSWSC 1667 File number: NSD 59 of 2023 Judgment of: YATES, DOWNES AND JACKMAN JJ Date of judgment: 22 December 2023 Catchwords: COPYRIGHT – appeal and cross-appeals – whether primary judge erred in making a declaration as to copyright subsistence and ownership and an order for delivery up – whether the plaintiffs in the proceeding below failed to join a necessary party – whether the declaration made is an order in rem – where no objection to the making or the form of the declaration was raised before the primary judge – appeal and cross-appeals dismissed
DAMAGES – whether primary judge erred in ordering an inquiry into damages – whether there was a prima facie case of the reasonable probability of damages – whether damages an available remedy for breach of the equitable obligation of confidence – whether breach of confidence and the remedies of an account of profits and an inquiry into damages pleaded – appeal and cross-appeals dismissed
COSTS – whether any appellable error disclosed by the primary judge’s exercise of discretion as to costs – whether it was factually incorrect to say that the plaintiffs had “largely succeeded” at first instance – substantial overlap in claims in relation to collusive conduct – conspiracy claim not clearly dominant or separable so as to require an apportionment of costs – no appellable error
Legislation: Circuit Layouts Act 1989 (Cth)
Copyright Act 1968 (Cth) ss 10, 31, 32
Designs Act 1906 (Cth)
Designs Act 2003 (Cth)
Cases cited: Athens v Randwick City Council [2005] NSWCA 317; 64 NSWLR 58
Australasian Oil Exploration Ltd v Lachberg (1958) 101 CLR 119
Australian Meat Group Pty Ltd v JBS Australia Pty Ltd [2018] FCAFC 207; 268 FCR 623
Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304
City of Canada Bay Council v Bonaccorso Pty Ltd (No 3) [2008] NSWCA 57
Desktop Marketing Systems Pty Ltd v Telstra Corp Ltd [2002] FCAFC 112; 119 FCR 491
Dynamic Supplies Pty Ltd v Tonnex International Pty Ltd [2011] FCA 362; 91 IPR 488
Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373
Enkelmann v Glissan (1982) 2 BPR 9640
Fatimi Pty Ltd v Bryant [2004] NSWCA 140; 59 NSWLR 678
Frank Davies Pty Ltd v Container Haulage Group Pty Ltd (No 2) (1989) 98 FLR 324
Hockey v Fairfax Media Publications Pty Ltd (No 2) [2015] FCA 750; 237 FCR 127
House v The King (1936) 55 CLR 499
IceTV Pty Ltd v Nine Network Australia Pty Ltd [2009] HCA 14; 239 CLR 458
ICT Pty Ltd v Sea Containers Ltd (1995) 39 NSWLR 640
Mawhinney v Australian Securities and Investments Commission (No 2) [2022] FCAFC 205
Mid-City Skin Cancer & Laser Centre Pty Ltd v Zahedi-Anarak [2006] NSWSC 844; 67 NSWLR 569
National Engineering Pty Ltd v Chilco Enterprises Pty Ltd
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- AGLC
- Chou v Metstech Pty Limited [2023] FCAFC 205
- Case
- [2023] FCAFC 205
- Decision Date
CaseChat Overview and Summary
The court was required to determine whether the primary judge erred in making a declaration regarding the copyright subsistence and ownership, and the order for delivery up of the infringing works. It also had to consider whether the plaintiffs failed to join a necessary party, whether the declaration was an order in rem, and if the primary judge's failure to make certain findings constituted an error. Additionally, the court had to decide whether there was a prima facie case for the reasonable probability of damages, and if damages were an available remedy for breach of the equitable obligation of confidence. The court further needed to assess if the primary judge's exercise of discretion in awarding costs disclosed any appellable error.
The court found that the primary judge did not err in making the declaration and order for delivery up, as no objection to the making or form of the declaration was raised before the primary judge. The court also determined that the plaintiffs did not fail to join a necessary party, as Yokao was not a necessary party to the proceedings. The declaration was not an order in rem, and the primary judge's failure to make certain findings did not constitute an error. The court held that there was a prima facie case for the reasonable probability of damages, and that damages were an available remedy for breach of the equitable obligation of confidence. Lastly, the court found that there was no appellable error in the primary judge's exercise of discretion in awarding costs.
The appeal and cross-appeals were dismissed, and the declaration made by the primary judge was varied to clarify the scope of the copyright ownership. The parties were required to file and serve written submissions and any affidavits on the question of costs of the appeal by specified dates. The final orders included the dismissal of the appeals and cross-appeals, variation of the declaration, and the requirement for the parties to file submissions regarding the costs of the appeal.
Orders
Orders of the court
1. The appeal and cross-appeals be dismissed.
2. Declaration 1 made by the primary judge be varied as follows:
(a) the words “As between the plaintiffs and the defendants” be inserted at the beginning of the declaration; and
(b) the following words be added at the end: “Note that paras (e) to (i) are limited to the documentation created by Mr Chou in the course of designing Metstech’s products in order to arrange their manufacture.”
3. The parties file and serve written submissions and any affidavit(s) on the question of costs of the appeal by 2 February 2024.
4. The parties file and serve written submissions and any affidavit(s) in reply on the question of costs of the appeal by 16 February 2024.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
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
Grounds 3 to 10 of the notice of appeal challenge, either directly or indirectly, this finding and a number of the primary judge’s other findings along the way, including findings on credit and certain inferences which the primary judge made or (in the Chou parties’ contention) failed to make.The form of the declaration as made On publishing her reasons for judgment, the primary judge made a direction that the parties propose orders reflecting her reasons. The plaintiffs proposed orders that included the declaration quoted at [4] above. Mr Park, the Chou parties, and the Martin parties each responded to the plaintiffs’ proposal by providing written submissions. Those submissions did not address the proposed declaration. It can be taken, therefore, that the parties to this appeal considered that, at the time it was being proposed, the declaration was appropriate, given the primary judge’s findings, and that there was no legal impediment to it being made. It can also be taken that the parties regarded the proposed declaration as being in proper form and as conforming to the findings that had been made. Notwithstanding this, the Chou parties contend in Grounds 1 and 2 of the appeal that the primary judge erred in making the declaration:Failure to join a necessary party1.The learned Trial Judge (Rees J) erred in making declarations (and delivery up orders) in favour of the First to Fourth Respondents (as Plaintiffs in the Court below) (hereinafter, Plaintiffs) in relation to the ownership by Metstech Pty Ltd (Metstech) of copyright, in respect of the Products (as defined in the orders made by her Honour on 5 December 2022 (Orders)) and the Metstech System (as defined in the Orders), in the following works:(a) printed circuit board (PCB) schematics and layouts;(b)firmware source code (save for the source code relating to the Raspberry Pi Software);(c) functional specifications;(d) test results;(e) bills of materials;(f) data sheets; and(g) manufacturing files,in circumstances where the Taiwanese company referred to as “Yokao” (also Yo Kao Technology Co Ltd) (J[147]) (Yokao) was neither given notice of the proceedings nor joined to the proceedings by the Plaintiffs, notwithstanding that it was a necessary party to the proceedings, including in circumstances where:(i)the Plaintiffs and the learned Trial Judge were on notice of the 3rd/4th Defendants’ contention that Yokao had created and was relevantly the author of the works referred to in sub-paragraphs (a) to (g) above;(ii)her Honour found (at J[151], J[574]) that Yokao had been engaged to manufacture the PCBs;(iii)the expert evidence of the expert witness called by the Plaintiffs, Dr Georgevits, whose evidence was accepted by her Honour (J[23], J[62], J[581]), was, as her Honour recorded (J[598]), that an original design manufacturer (ODM) or “Yokao” could have been involved in generating the electrical schematics and the PCB layouts, writing firmware code, manufacturing and testing prototypes;(iv)her Honour found (at J[599]) that, to such extent as Yokao assisted with the design and prototyping stages associated with the Metstech products, such tasks were relatively minor compared to the tasks undertaken by the Third Defendant, such that Yokao was neither an author or a joint author of the work within the meaning of the Copyright Act 1968 (Cth); and(v)the unchallenged evidence of Dr Georgevits (as recorded at J[72]) was that, when design work is completed by an ODM, the question of ownership of the design is ultimately subject to the contractual arrangements between the client and the design house.2.In the absence of the joinder of Yokao as a party to the proceedings, the learned Trial Judge ought to have dismissed, at least as against the Appellants (the Third and Fourth Defendants in the Court below) (hereinafter, 3ʳᵈ/4ᵗʰ Defendants), the entirety of the claims brought by the Plaintiffs for declaratory relief and other orders in respect of the ownership of intellectual property rights associated with the Products and the Metstech System.(Emphasis original.)