Ginos Engineers Pty Ltd v Autodesk Australia Pty Ltd - [2007] FMCA 2156

FEDERAL MAGISTRATES COURT OF AUSTRALIA

GINOS ENGINEERS PTY LTD v AUTODESK AUSTRALIA PTY LTD

[2007] FMCA 2156

COPYRIGHT – Copyright infringement – application brought by infringing party – application dismissed at applicant’s request – costs order in favour of respondent – quantification of costs.

Federal Magistrates Court Rules 2001(Cth) rr.1.03, 1.03(4), 13.10, 21.02, and 21.02(2)(a)
Copyright Act 1968 (Cth)

Nine Films and Television Pty Ltd v Ninox Television Ltd [2006] FCA 1046
Australasian Performing Rights Association Ltd v Marlin [1999] FCA 1006
Universal Music Australia Pty Ltd v Jun Miyamoto aka DJ Moto [2003] FCA 812
Datadot Technology Ltd v Alpha Microtech Pty Ltd [2003] FCA 1449

Applicant:

GINOS ENGINEERS PTY LTD

Respondent:

AUTODESK AUSTRALIA PTY LTD

File number:

ADG219 OF 2007

Judgment of:

SIMPSON FM

Hearing date:

19 October 2007, 4 and 6 December 2007

Date of last submission:

6 December 2007

Delivered at:

Adelaide

Delivered on:

6 December 2007

REPRESENTATION

Counsel for the Applicant:

Mr P Scragg

Solicitors for the Applicant:

Peter Scragg & Associates

Counsel for the Respondent:

Mr J Hennessy

Solicitors for the Respondent:

Gilbert & Tobin

ORDERS

That the applicant pay the respondent's costs fixed in the sum of $22,500.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
ADELAIDE

ADG219 of 2007

GINOS ENGINEERS PTY LTD

Applicant

And

AUTODESK AUSTRALIA PTY LTD

Respondent

REASONS FOR JUDGMENT

(Revised from Transcript)

(As Corrected)

In this matter the applicant, Ginos Engineers Pty Ltd, is an engineering company having offices in Adelaide. The respondent, Autodesk Australia Pty Ltd, is a company incorporated in Australia and is in the business of marketing and distributing software products, services and support for Autodesk Inc, a company incorporated under the laws of the United States of America. Autodesk Inc is the ultimate holding company of Autodesk Australia Pty Ltd.
These proceedings have been dismissed at the applicant's request. I am asked now to decide the question of costs.
The applicant commenced the proceedings on 6 August 2007. It claimed the following final relief:
a)A declaration as to the liability of the applicant in respect of the applicant's copyright infringement of the respondent's software;
b)Any other orders that this honourable court deems fit, just and equitable;
c)The costs of the application.
The grounds of the application were as follows:
The applicant and the respondent are unable to agree as to the liability that the applicant has as to the respondent on account of the applicant's copyright infringement of the respondent's software in the circumstances deposed to in the affirmation [sic] of its director, Zisis Ginos, made on 4 August 2007.
On 27 August 2007 the respondent filed a response in which it opposed the orders being sought by the applicant and sought the following orders:
a)That pursuant to r.13.10 of the Federal Magistrates Court (“FMC”) Rules 2001 (Cth) the proceedings be stayed or dismissed generally as:
i)firstly, disclosing no reasonable cause of action against the respondent; and
ii)secondly, being an abuse of the process of the court.
b)Order sought was such further order as the court sees fit;
c)Costs.
At the first directions hearing on 14 September 2007, before Brown FM, orders were made listing the respondent's application for dismissal for hearing on 19 October 2007 and setting a timetable for the filing of affidavits.
At the hearing of the summary judgment application on 19 October 2007 the respondent relied upon the following affidavits:
a)An affidavit of John Anthony Biviano sworn 27 August 2007 and filed the same day;
b)A further affidavit of John Anthony Biviano sworn and filed on 12 September 2007.
The applicant relied upon:
a)An affidavit of Mr Ginos sworn on 4 August 2007 and filed on 6 August 2007.
At the hearing of the summary judgment application full argument was put by Counsel for each of the respondent and the applicant.
Some time after the Adelaide proceedings, (as I will call them), had been commenced (the evidence does not allow me to be more specific) the respondent and its associated company, Autodesk Inc and Autodesk Asia PTE Ltd, brought proceedings in the New South Wales district registry of this Court. The proceedings were brought against the applicant in these proceedings and its director, Mr Ginos, as respondents.
The New South Wales proceedings (as I will call them), alleged breaches of copyright by Ginos and claimed appropriate relief. Those proceedings were on foot at the time of the summary judgment of these proceedings on 19 October 2007.
At the hearing on 19 October 2007 the following exchange took place:
His Honour: “What does your client intend to do with these proceedings?” Addressing that question to Mr Scragg or the applicant.
Counsel: “Well I think the – my client's offer is that they be dismissed without costs.”
A little later I had this to say:
His Honour: “What I want to know is whether - as things presently stand, does your client intend to continue with this litigation?”
Counsel for the applicant: “Well, perhaps I need to talk to my friend.”
His Honour, “Because if is not - if your client doesn't intend to continue with this litigation, what are we arguing about?”
Counsel for the applicant: “Well, exactly. My client is willing – I mean, the only argument is a costs argument.”
This exchange took place after more than two hours of argument in relation to the summary judgment application. After a short adjournment to allow Counsel for the applicant to speak to his client, who was not present in court, Counsel for the applicant stated to the court:
My client's position is that he consents to the proceedings being dismissed and seeks an order as to costs in its favour and the reason it seeks an order for costs is that proceedings were properly and appropriately constituted.
Counsel for the respondent opposed a costs order in the applicant's favour and made application for an order in the respondent's favour, for the costs of the action. Argument continued for a further 45 minutes, at which stage orders were made dismissing the applicant's claim and adjourning the matter for further argument in relation to costs on a later date.
Part of that argument that had taken place on 19 October 2007 concerned the respondent's application for an order for confidentiality in relation to an exhibit to an affidavit of Michael John Williams sworn 18 October 2007 and handed up to the Court when the question of costs was first being dealt with, handed up of course by Counsel for the respondent.
The respondent sought the confidentiality order on the basis that the exhibit to the affidavit was a copy of tax invoices from Gilbert and Tobin, solicitors to the respondent, detailing all the legal work that had been carried out by the solicitors and the solicitors' charges for that work. The respondent said that the document was covered by legal professional privilege.
A further hearing of the costs argument was held on 4 November 2007, some two days ago. During argument presented on behalf of the applicant it was submitted that Counsel was not in a position to comment on the affidavit of Mr Williams without having had the opportunity to read and study the exhibit to that affidavit. After some further argument, Counsel for the respondent indicated that his client's position in relation to the confidentiality order had changed and his client did not oppose Counsel for the applicant allowing his client to view the exhibit to the affidavit and to discuss the affidavit with the client, providing that the applicant client gave an undertaking that the applicant would keep the contents of the exhibit confidential to itself and its Counsel.
Counsel for the applicant informed the Court that he would view the exhibit to the affidavit on the basis that he would only show his client a copy of the exhibit to the affidavit once he had the required undertaking from the client.
Counsel for the applicant was given an opportunity to fully read the exhibit to the affidavit. He then put submissions to the Court on the question of costs. As part of those submissions he addressed the issues raised by the contents of the exhibit to the Williams affidavit.
I then heard submissions on behalf of the respondent, after which Counsel for the applicant sought to put further submissions in reply. During those submissions he indicated that his client would be denied procedural fairness if I did not grant the adjournment for the purposes of his examining the exhibit in more detail and discussing it with his client.
Somewhat reluctantly I adjourned the matter to 2:00 pm today. We have now had a further hour's argument today on the question of costs in relation to these proceedings. In that time I have heard the balance of the submissions, principally on the part of the applicant but also some further submissions in response, by the respondent's Counsel, and I now give these extempore reasons.
In deciding what to do in respect of the competing applications for costs orders I take into account that the respondent has succeeded in the action. The applicant's application has been dismissed. I take into account also that had the applicant not requested that the action be dismissed it is highly likely that I would have found for the respondent on its application for summary judgment, on the basis that no reasonable cause of action was disclosed.
One need go no further than the originating application itself to come to the conclusion that no cause of action was disclosed. I do not simply rely on that originating application but of course also rely on the other affidavit material, including the affidavit of Mr Ginos.
What the applicant is attempting to do is to bring an action to determine the respondent's right to damages for the applicant's breach of the respondent's copyright. The grounds of the application as stated in the application demonstrate that the purpose of bringing the application is to force the respondent's hand in relation to the negotiations that were going on between the applicant and the respondent about the damages that were payable for breach of copyright.
The Copyright Act 1968 (Cth) (“the Act”) does not provide for such a cause of action by a party in breach of copyright. While submissions were put by Counsel for the applicant to try to establish a cause of action outside of the Act, I am satisfied that there is no such cause of action available and even if there were it would not be an action that had a federal aspect sufficient to give the applicant a right to bring the matter in the FMC. In my view the applicant's cause of action was misconceived.
Solicitors for the respondent wrote to solicitors for the applicant by letter dated 17 August 2007. The letter was in the following terms:
We refer to the application and the affidavit of Mr Zis Ginos dated 4 August 2007 filed in the above matter. We confirm that we act on behalf of the respondent, Autodesk Australia Pty Ltd. The above proceedings were commenced without notice and without affording our client any chance to consider your client's intended claim prior to any proceedings being launched. That was unfortunate because a review of the application filed by your client reveals that is [sic] improperly constituted and hopelessly flawed;
(a)The claim discloses no cause of action under the Copyright Act 1968 (Commonwealth) and otherwise does not attract the court's jurisdiction.
(b)Secondly, the proceedings had been filed against the wrong respondent. As indicated in our letter dated 22 May 2007 (which is exhibit ZG2 to Mr Ginos's affidavit) Autodesk Inc is the owner of copyright in the Autodesk software the subject of the case. Autodesk Australia Pty Ltd has never been the owner or exclusive licensee of copyright in that software in this jurisdiction. Autodesk Asia Pte Ltd is the exclusive licensee of that copyright in Australia.
(c)Thirdly, the declaration sought is not in the correct form.
Had your client given our client proper notice of the proposed application our client could have pointed out why the claim should not be filed and saved the parties and the court unnecessary time and expense.
In the circumstances, our client intends to file an application to dismiss your client's claim and to seek payment of its costs.
To date, your correspondence to this firm has not been properly addressed and in some instances it has been sent by mail only, which has resulted in delays in receipt. We would be grateful that in future you address all correspondence in this matter to the writers and that all correspondence is sent by facsimile in addition to ordinary mail.
In a letter from solicitors for the applicant to Gilbert and Tobin, solicitors for the respondent, dated 17 October 2007 it is stated in part:
We do not accept that the proceedings issued out of the Adelaide registry failed to disclose a cause of action and were improperly constituted. The amendments made to the statement of claim filed in the Sydney registry are acknowledgment that the relevant Australian entity is the respondent named in the proceedings issued out of the Adelaide registry. In fact it was your proceedings which were initially improperly constituted and had to be significantly amended to cure that defect.
For [sic] a pragmatic point of view we believe that it is ridiculous that the parties intend to incur legal expense in arguing about which is the appropriate registry in which the [sic] issue the proceedings. The respondents note that the question of the appropriate forum has now been raised in the Sydney proceedings and are prepared to deal with it in those proceedings.
The respondents are not prepared to accept that they have a liability for costs in relation to the Adelaide proceedings. In order to give this matter some semblance of socially aptness [sic] they are prepared to consent to the proceedings issued in the Adelaide registry being discontinued on the basis that each party bear their own costs.
Please note that this is an open offer and is a statement of the position that they will adopt when the matter comes on for argument on Friday.
In my view, after solicitors for the applicant received the letter from Gilbert and Tobin of 17 August 2007 it was incumbent on them to closely examine the matters raised, particularly the suggestion that no cause of action was disclosed under the Act and that the claim otherwise did not attract the Court's jurisdiction. Had it done so, it would and should have come to the conclusion that the action should be immediately discontinued. Instead, the applicant resisted the summary judgment application and, only when closely questioned by the Court as to the future conduct of the action, indicated that the action would not be proceeded with and that it could be dismissed. It should have done so at a much earlier point in time. I do not accept that the dismissal was because of the New South Wales proceedings.
In light of the above, I have no hesitation in concluding that the applicant's application that it be awarded any costs in the action should fail. Further, I have no hesitation in acceding to the respondent's request that there be an order for costs in its favour.
Rule 21.02(2)(a) of the FMC Rules allows the Court to set the amount of costs. I am satisfied, on the basis of the cases of Nine Films and Television Pty Ltd v Ninox Television Ltd [2006] FCA 1046 and Australasian Performing Rights Association Ltd v Marlin [1999] FCA 1006 that this is an appropriate case for me to set the amount of the costs.
I am keen to ensure that further expense, delay and protraction of this litigation is avoided. I also take comfort with the objects contained in r.1.03, which provides as follows:
The object of these Rules is to assist the just, efficient and economical resolution of proceedings. (my emphasis)
Rule 1.03(2) of the FMC Rules states:
… the Rules aim to help the Federal Magistrates Court:
·    to operate as informally as possible;
·    to use streamlined processes;
·    to encourage the use of appropriate dispute resolution procedures.
Rule 1.03(4) of the FMC Rules states:
To assist the court, the parties must:
· avoid undue delay, expense and technicality;
· consider options for primary dispute resolution as early as possible.
Given the objects to the rules and costs r.21.02, I have no hesitation in deciding to award costs here and calculated on a lump sum basis.
In deciding the appropriate order for costs I am assisted by the affidavit of Mr Williams sworn 18 October 2007. I note that similar evidence from Mr Williams has been accepted in other similar intellectual property cases, in particular the case of Universal Music Australia Pty Ltd v Jun Miyamoto aka DJ Moto [2003] FCA 812, particularly paras.29 and 30; Datadot Technology Ltd v Alpha Microtech Pty Ltd [2003] FCA 1449, particularly paras.5 and 6.
I accept as true Mr Williams' evidence. That evidence is that he is a partner at Gilbert and Tobin and has practised in the area of intellectual property law for approximately 11 years. He has been involved in or had conduct of numerous copyright infringement proceedings in the Federal Court of Australia and the Federal Magistrates Court of Australia, a number of which have been the subject of an assessment or award of costs once the substantive proceedings have been concluded.
From his experience costs are assessed for between 50% and 70% of the professional costs and disbursements expended on a matter. He says that Ms Siabon Seet is a copyright lawyer with nearly 10 years' experience with the firm. She was first instructed in this matter in August 2007. Mr Williams says that he was familiar with the work undertaken on the file and the accounts rendered in respect of this work. He provides an estimate of the costs that in his view would likely be recoverable by the applicants in an assessment process, having regard to his experience of costs awards made in complex cases in the Federal Magistrates Court.
He exhibits annexure “MJW1”, the confidential exhibit, being a bundle of confidential documents. Mr Williams then lists the following items of work that were undertaken by Ms Seet or lawyers under her supervision:
a)Consideration of claims made against the respondent and whether they can properly be made in the way they were made;
b)Obtaining instructions in relation to the claims from the respondent and other Autodesk companies;
c)Preparation of the response and defence to the application;
d)General conduct of the proceedings, including a large number of letters to the applicant's solicitors in relation to the appropriate nature of the proceedings and the appropriate course of having them dismissed at an early stage;
e)Preparation and attendance at the initial directions hearing;
f)Attempts to negotiate and withdrawal of the proceedings to minimise costs for the parties; and
g)Preparation of motion to stay or dismiss the proceedings and for the hearing of this motion including briefing Counsel.
Mr Williams says that Counsel was instructed in these proceedings from the outset and that Counsel played an active role throughout. Mr Williams says that the total of the professional costs that were incurred as at the date of the affidavit, whether billed or unbilled, totalled $24,558. He says that a breakdown of that amount is disclosed in the confidential exhibit. He says further that the amount of professional costs and disbursements incurred by the respondents and referrable to the defence in this case against the applicants (pre‑taxation) is $24,558. He says that, on the basis of a conservative approach, the costs that are likely to be assessed in favour of the respondents, recovery is only around 60% of the total costs. He therefore expects that the taxed amount would be approximately $14,734.80.

In addition he estimates that for the hearing to dismiss the applicant's claim, (including travel costs for Counsel to attend the hearing), a further $10,000 of professional costs and Counsel fees will be charged to the client. He suggests that, subjecting the amount to a similar 60 % taxation rate, he would expect the taxed amount to which Autodesk would be entitled on a taxation would be approximately $6,000.
Since Mr Williams' affidavit, Counsel for the respondent has informed me on the basis of some further documents that have been provided to the Court that he is now able to say that the total cost of fees and disbursements referrable to the motion to dismiss, including travel and appearance by Counsel, was $10,899.49. Further, he informs me that the work in progress that Mr Williams was considering when he prepared his affidavit is now more accurately determined to be the sum of $13,312.70 rather than the $11,197.95 referred to in the confidential exhibit. Counsel for the respondent further tells me that there has been further work done as a result of these proceedings and that the value of that work totals $7,564.15.
The total then for all work done on behalf of Gilbert and Tobin for the respondents is the sum of $45,136.39.
I am informed further that there are two items in the schedule in the confidential exhibit that are no longer claimed by the respondent as the work concerned relates to work in relation to the New South Wales proceedings. A reduction of something like $380 is made to the total amount that Mr Williams was considering when he prepared his affidavit.
Having studied the schedules I would feel more comfortable with a reduction of 50% rather than the 60% that Mr Williams mentioned. Taking into account the other matters that I mentioned, the total is now $44,693.64. I propose to reduce that by 50% and to round the figure to the sum of $22,500. There will be orders accordingly.

I certify that the preceding forty-five (45) paragraphs are a true copy of the reasons for judgment of Simpson FM.

Associate: Julie Davey

Date: 6 December 2007

CORRECTIONS

Hearing Dates: Hearing date of 6 December 2007 omitted.
Date of last submission: In lieu of 4 December 2007 insert 6 December 2007