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JR Consulting & Drafting Pty Ltd v Cummings

JR Consulting & Drafting Pty Ltd v Cummings

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FEDERAL COURT OF AUSTRALIA
JR Consulting & Drafting Pty Limited v Cummings [2016] FCAFC 20

Appeal from: JR Consulting & Drafting Pty Ltd & Anor v Cummings & Ors [2014] NSWSC 1252

File number: NSD 183 of 2015

Judges: BENNETT, GREENWOOD AND BESANKO JJ

Date of judgment: 3 March 2016

Catchwords:
CONTRACT – consideration of the relevant principles for the construction of a commercial contract – whether Recitals taken into account – whether court may have regard to conduct after the contract – identification of commercial purpose or object of the agreement

CONTRACT – consideration of doctrine of abandonment – where abandonment not expressly pleaded –relevance of delay and failure to perform over a long period –whether appropriate in circumstances to infer an intention that agreement should not be further performed

CONTRACT – breach of contract – whether breach of contract gave right to terminate contract – whether contract actually terminated – where case not pleaded

INTELLECTUAL PROPERTY – consideration of the principles governing the subsistence and ownership of copyright in computer software as a literary work – consideration of the notions of authorship and originality in copyright – consideration of the principles to be applied in determining authorship, originality and subsistence of copyright in sequential works constituted by regular releases and publication of versions of the software program

INTELLECTUAL PROPERTY – consideration of the principles to be applied in determining whether a party has authorised infringements of the work – consideration of the principles to be applied for the purposes of s 36(1) and s 36(1A) of the Copyright Act 1968 (Cth) – consideration of the principles to be applied in determining whether parties engaging in particular conduct are to be regarded as joint tortfeasors

Legislation:
Australian Consumer Law, ss 236, 237

Copyright Act 1968 (Cth), ss 10(1), 13(2), 14(1), 22(1), 29(1) and (2), 31(1), 32(1) and (2), 36(1), 36(1A), 115, 135AQ(2)

Trade Marks Act 1995 (Cth), s 126

Cases cited:
Allen Manufacturing Company Pty Ltd v McCallum &Company Pty Ltd (2001) 53 IPR 400
Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99
Autodesk Inc v Dyason [No 2] (1993) 176 CLR 300
Betfair Pty Ltd v Racing New South Wales and Another (2010) 189 FCR 356
BMA Special Opportunity Hub Fund Ltd & Ors v African Minerals Finance Ltd [2013] EWCA Civ 416
Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; (2001) 117 FCR 424
Byrnes and Another v Kendle (2011) 243 CLR 253
Cooper v Universal Music Australia Pty Ltd (2006) 156 FCR 380
Copyright Act: IceTV Pty Ltd v Nine Network Australia Pty Ltd (2009) 239 CLR 458
Cowell v The Rosehill Racecourse Company Limited (1937) 56 CLR 605
Data Access Corporation v Powerflex Services Pty Ltd and Others (1999) 202 CLR 1
Del Casale v Artedomus (Aust) Pty Ltd [2007] NSWCA 172; (2007) 73 IPR 326
Desktop Marketing Systems Pty Ltd v Telstra Corporation Ltd (2002) 55…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2016] FCAFC 20
Decision Date: 3 March 2016

CaseChat Overview and Summary

In the case of JR Consulting & Drafting Pty Ltd v Cummings, the court addressed multiple issues pertaining to contract law, copyright, and the principles governing commercial agreements. The dispute primarily involved JR Consulting & Drafting Pty Ltd (the respondent) and Cummings, the appellant. The crux of the matter revolved around the interpretation of a commercial contract, the subsistence and ownership of copyright in computer software, and the applicability of certain legal doctrines. The case was heard in the Full Court of the Federal Court of Australia.

The court was tasked with determining several key legal issues. Firstly, it needed to consider the principles for the construction of the commercial contract, particularly whether recitals and subsequent conduct should be taken into account. The court also had to address whether the doctrine of abandonment could be inferred from the delay and failure to perform over a long period, despite it not being expressly pleaded. Another issue was whether a breach of contract justified termination, and if so, whether the contract had actually been terminated. Additionally, the court had to examine the principles governing the subsistence and ownership of copyright in computer software, including authorship, originality, and the authorisation of infringements.

In its reasoning, the court began by examining the contract's interpretation, considering the relevance of recitals and post-contract conduct. It concluded that recitals could be taken into account when interpreting the contract, and that the conduct of the parties after the contract could also be relevant. Regarding abandonment, the court found that while abandonment was not expressly pleaded, it could be inferred from the parties' prolonged delay and failure to perform. The court held that a breach of contract could provide a right to terminate, but it was not necessary to determine if the contract had been terminated since the case was not pleaded on that basis. On the copyright issues, the court detailed the principles for determining authorship and originality in copyright law, concluding that the copyright in the computer software subsisted as claimed by the respondent. The court also determined that the principles for authorising infringements under the Copyright Act 1968 (Cth) were correctly applied.

The outcome of the case saw the appeal being dismissed, while the cross-appeal concerning the subsistence of copyright was partially successful. The court varied the primary judge's orders to frame the restraint in terms of all versions of the computer programs up to a specified date. A declaration regarding the subsistence and ownership of the copyright was to be made, and the parties were directed to prepare a table of versions for precision. The court also set a timeline for further submissions on costs and adjourned the proceeding for the making of final orders.

Orders

Orders of the court

1. The parties submit to the Court by 1.00pm on Tuesday, 8 March 2016 proposed orders to be made in disposition of the appeal and cross‑appeal having regard to the reasons for judgment published today.

2. As to the declaration to be made concerning the subsistence of copyright (and the ownership of that copyright) in versions of the Quik Series Software (“QSS”) released up to and including 1 November 2011 the subject of the cross‑claim of the cross‑appellants before the primary judge, and the variations to be made to the injunction orders 3 and 4 made by the primary judge on 19 December 2014, the cross‑appellants are directed to prepare and serve on the appellants a table identifying the versions of QSS released up to and including 1 November 2011 the subject of that cross‑claim so as to enable the parties to submit to the Court by 1.00pm on Tuesday, 8 March 2016, together with other orders in disposition of the appeal and cross‑appeal, a proposed formulation of the declaration and proposed variations to Orders 3 and 4 of the primary judge which incorporate an agreed table of the versions of QSS if agreement can be reached as to the content of the table.

3. In the event that agreement is unable to be reached as to the content of the table, the parties are directed to submit to the Court by 1.00pm on Tuesday, 8 March 2016 their respective proposed version of the table.

4. The proceeding is adjourned to 9.30am on Friday, 11 March 2016 for the making of final orders.

5. The parties file and serve short submissions on the question of costs by midday on Thursday, 10 March 2016, such submissions from each party to be limited to no more than four pages.

6. The costs of and incidental to the appeal are reserved for determination having regard to the submissions of the parties on costs.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

The orders as to the costs of the hearing concerning liability are set out above at [10]. The cross-appellants’ success on the cross-appeal on the subsistence of copyright in QSS calls for an adjustment of those orders. Our provisional view is that only one adjustment is called for and that is to adjust the figure of 75% to 80%. However, again we will give the parties the opportunity to make submissions on the question of the costs of the hearing concerning liability.Conclusions It follows that the appeal is to be dismissed. As to the cross‑appeal, the orders of the primary judge are to be varied (Orders 3 and 4) such that the restraint contemplated by each order is to be framed not in terms of Versions 11.176, 11.406 or 11.604 but rather in terms of all versions of a suite of computer programs known as Quik Series Software published or released up to and including 1 November 2011. Apart from restraints varied as described, a declaration is to be made as to the subsistence and ownership of the copyright subsisting in each version of QSS published or released up to and including 1 November 2011. The principled basis upon which such a declaration is to be made is that the declaration is explanatory of the operative orders as varied. The restraining orders and the declaration are to recite all of the relevant version numbers of QSS so as to give precision to the declaration and the injunctions. The version numbers might be framed in terms of version X to version Y by reference to numbers and dates but precision would be ensured if a table was prepared setting out a list of all of the versions and the date of publication or release of each version. No doubt, the cross‑appellants are in a position to prepare such a table (and submit it to the appellants) as all of the information would be available to them. The table could then be incorporated into the framing of the declaration and Orders 3 and 4 as varied. A table setting out the relevant versions of QSS is to be prepared and submitted to the Court by the parties by Tuesday, 8 March 2016 together with a proposed form of the declaration and proposed orders varying the injunctions. The cross‑appeal is otherwise to be dismissed. The costs, as we have indicated, are to be the subject of further short submissions to be filed and served by Thursday, 10 March 2016. The parties are to limit their submissions to no more than four pages in length.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

Appeal from:	JR Consulting & Drafting Pty Ltd & Anor v Cummings & Ors [2014] NSWSC 1252
File number:	NSD 183 of 2015
Judges:	BENNETT, GREENWOOD AND BESANKO JJ
Date of judgment:	3 March 2016
Catchwords:	CONTRACT – consideration of the relevant principles for the construction of a commercial contract – whether Recitals taken into account – whether court may have regard to conduct after the contract – identification of commercial purpose or object of the agreement CONTRACT – consideration of doctrine of abandonment – where abandonment not expressly pleaded –relevance of delay and failure to perform over a long period –whether appropriate in circumstances to infer an intention that agreement should not be further performed CONTRACT – breach of contract – whether breach of contract gave right to terminate contract – whether contract actually terminated – where case not pleaded INTELLECTUAL PROPERTY – consideration of the principles governing the subsistence and ownership of copyright in computer software as a literary work – consideration of the notions of authorship and originality in copyright – consideration of the principles to be applied in determining authorship, originality and subsistence of copyright in sequential works constituted by regular releases and publication of versions of the software program INTELLECTUAL PROPERTY – consideration of the principles to be applied in determining whether a party has authorised infringements of the work – consideration of the principles to be applied for the purposes of s 36(1) and s 36(1A) of the Copyright Act 1968 (Cth) – consideration of the principles to be applied in determining whether parties engaging in particular conduct are to be regarded as joint tortfeasors
Legislation:	Australian Consumer Law, ss 236, 237 Copyright Act 1968 (Cth), ss 10(1), 13(2), 14(1), 22(1), 29(1) and (2), 31(1), 32(1) and (2), 36(1), 36(1A), 115, 135AQ(2) Trade Marks Act 1995 (Cth), s 126
Cases cited:	Allen Manufacturing Company Pty Ltd v McCallum &Company Pty Ltd (2001) 53 IPR 400 Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99 Autodesk Inc v Dyason [No 2] (1993) 176 CLR 300 Betfair Pty Ltd v Racing New South Wales and Another (2010) 189 FCR 356 BMA Special Opportunity Hub Fund Ltd & Ors v African Minerals Finance Ltd [2013] EWCA Civ 416 Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; (2001) 117 FCR 424 Byrnes and Another v Kendle (2011) 243 CLR 253 Cooper v Universal Music Australia Pty Ltd (2006) 156 FCR 380 Copyright Act: IceTV Pty Ltd v Nine Network Australia Pty Ltd (2009) 239 CLR 458 Cowell v The Rosehill Racecourse Company Limited (1937) 56 CLR 605 Data Access Corporation v Powerflex Services Pty Ltd and Others (1999) 202 CLR 1 Del Casale v Artedomus (Aust) Pty Ltd [2007] NSWCA 172; (2007) 73 IPR 326 Desktop Marketing Systems Pty Ltd v Telstra Corporation Ltd (2002) 55…