Lift Shop Pty Ltd v Next Level Elevators Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Lift Shop Pty Ltd v Next Level Elevators Pty Ltd [2025] FCAFC 108  

Appeal from: Lift Shop Pty Ltd v Next Level Elevators Pty Ltd (No 4) [2024] FedCFamC2G 554
File number(s): NSD 1098 of 2024
Judgment of: FEUTRILL, NESKOVCIN AND MOORE JJ
Date of judgment: 21 August 2025
Catchwords:

COPYRIGHT – additional damages – whether primary judge erred in determining entitlement to additional damages in advance of determining quantum and prior to the applicant’s election – whether primary judge erred in her approach to assessing the flagrancy of the conduct – where threatening communications considered in the context of the respondents’ earlier denials of copyright infringement

INTELLECTUAL PROPERTY – confidential information – whether primary judge erred in finding no breach of confidence – difficulty in identifying confidential information – where customer quote not confidential, including because it was available on a public website – whether improper use by solicitors for the respondents of material obtained from the applicant’s website – whether applicant’s employee supplied confidential information to corporate respondents by accessing customer relations management database when undertaking ordinary work activities
Legislation:

Copyright Act 1968 (Cth) s 115

Trade Marks Act 1995 (Cth) s 126(2)

Patents Act 1990 (Cth) s 122(1A)

Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) r 18.02

Federal Court Rules 2011 (Cth) r 30.01
Cases cited:

Australia Holdings Limited v Burton (2002) 58 NSWLR 464; [2002] NSWSC 170

Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 159 FCR 397, [2007] FCAFC 70

CPL Notting Hill Pty Ltd v Microsoft Corporation (No 2) [2019] FCA 223

Expectation Pty Ltd v PRD Realty Pty Ltd (2004) 140 FCR 17; [2004] FCAFC 189

House v The King (1936) 55 CLR 499

Huntsman Chemical Company Australia Pty Ltd v Narellan Pools Pty Ltd [2011] FCAFC 7

Hytera Communications Corporation Ltd v Motorola Solutions Inc (2024) 308 FCR 68; [2024] FCAFC 168

Microsoft Corporation v CPL Notting Hill Pty Ltd (2024) 177 IPR 389; [2024] FCAFC 20

Motorola Solutions, Inc. v Hytera Communications Corporation Ltd(Liability) (2022) 172 IPR 221; [2022] FCA 1585

Otter Products, LLC v Haydon [2021] FCCA 2012

Redbubble Ltd v Hells Angels Motorcycle Corporation (Australia) Pty Ltd (2024) 303 FCR 100; [2024] FCAFC 15

Smith Kline & French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health (1990) 22 FCR 73

Streetscape Projects (Australia) Pty Ltd v City of Sydney (2013) 295 ALR 760; [2013] NSWCA 2

Wheatley v Bell [1982] 2 NSWLR 544
Division: General Division
Registry: New South Wales
National Practice Area: Intellectual Property
Sub-area: Copyright and Industrial Designs
Number of paragraphs: 122
Date of hearing: 25 March 2025
Counsel for the Applicant: Mr J Hennessy SC with Mr M Fleming and Mr M Gvozdenovic
Solicitor for the Applicant: Gilbert + Tobin
Counsel for the Respondents: Mr N Murray SC with Ms F St John
Solicitor for the Respondents Allens
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Details
Case
[2025] FCAFC 108
Decision Date

CaseChat Overview and Summary

In the matter of Lift Shop Pty Ltd v Next Level Elevators Pty Ltd, the dispute centred on claims of copyright infringement and breach of confidence. The case was heard in the Federal Court of Australia, where the primary judge made several key determinations regarding the entitlement to additional damages, the flagrancy of the conduct, and the breach of confidence.

The primary legal issues before the court involved whether the primary judge erred in determining entitlement to additional damages before assessing quantum and before the applicant's election, as well as the assessment of the flagrancy of the conduct in the context of earlier denials of copyright infringement. Additionally, the court examined whether the primary judge correctly found no breach of confidence, considering the difficulty in identifying confidential information and the availability of the customer quote on a public website. The court also considered whether the respondents' solicitors improperly used material obtained from the applicant's website and if an employee of the applicant supplied confidential information by accessing the customer relations management database.

The court found that the primary judge did not err in determining that the applicant was not entitled to additional damages prior to assessing compensatory damages. The court noted that the consideration of flagrancy is an evaluative assessment rather than a binary decision. It was held that the appeal from the exercise of discretion under s 115(4) of the Copyright Act is subject to the principles in House v The King, and error is not established merely by a contention that the trial judge gave too much or too little weight to a particular factor. The court also found that the primary judge's observations about other players in the market and other usage did not impact the conclusion that the information in question was not confidential.

The appeal was dismissed, and the applicant was ordered to pay the respondents' costs of the proceedings in the court. The primary judge's approach in making a separate determination of entitlement to additional damages as part of the liability hearing was upheld, and the difficulty in identifying confidential information was also affirmed.

Orders

Orders of the court

1. The applicant have leave to file the draft Amended Notice of Appeal annexed to its Amended application for extension of time and leave to appeal dated 22 January 2025.

2. Leave to appeal be granted.

3. The appeal be dismissed.

4. The applicant pay the respondents’ costs of the proceedings in this court.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

The matters discussed above are sufficient to dispose of Lift Shop’s appeal on breach of confidentiality (with the exception of the separate complaint about the case concerning Mr Hume) because the substantive error asserted in each of grounds 6 and 7 (a failure to find that the relevant information had the necessary quality of confidentiality) was not made out. As a consequence, even if any of the other errors asserted in grounds 5 to 7 were accepted, such errors could not have affected the outcome of the proceeding before the primary judge. Nevertheless, for completeness, we deal with certain other contentions. The evidence of Mr Mawson Pursuant to ground 6, Lift Shop submitted that Mr Mawson’s evidence that he obtained the Doncaster Quote from the EstimateOne website was “glaringly improbable”. Lift Shop submitted that the evidence was improbable because it was raised late, in Mr Mawson’s fourth affidavit. In response, NLE contended that not only was the evidence not “glaringly improbable”, but it was in fact “glaringly probable”. As NLE points out, the screenshots from the Estimate One website indicated that the Doncaster Quote was present on that site in the form in which it was emailed by Ms Topui to Mr Mawson. The evidence was that Mr Mawson had directed the relevant team to look for competitor quotes on that website. As the primary judge observed at PJ [84], the timing of the receipt of the Doncaster Quote from the EstimateOne website is consistent with the narrative put forward by Mr Mawson, including the time at which NLE recast its own materials and copied parts of the Doncaster Quote for that purpose. Lift Shop has not established that Ms Topui obtained the Doncaster Quote from any other source. There is no substance to Lift Shop’s complaint. Observations by the primary judge about other players in the market and other usage Under ground 7, Lift Shop complains about observations by the primary judge that third party players in the home elevator industry obtained, and published, competitor pricing information. We accept that there was relatively limited evidence of what other participants in the industry (other than the parties) did in relation to obtaining documents, including quotes, from competitors. There was evidence that competitor quotes were available (for anyone to see) on the EstimateOne website. There was evidence from Mr Mawson that it was “standard in the industry” for competitors to obtain quotes from other lift companies. There was certainly evidence that the parties obtained competitor pricing information, including evidence that Lift Shop collected and used quotes, quotation templates, pricing information and other information from rival lift companies. There was otherwise little evidence on the topic. However, Lift Shop has not demonstrated that this has any impact on the conclusions of the primary judge, discussed above. Rather, there is no apparent basis for a conclusion that the information in question was confidential information.

Decision

Reasons for decision

It follows that we do not accept Lift Shop’s contentions that the primary judge erred in determining that Lift Shop was not entitled to additional damages prior to any assessment of compensatory damages. Whether the primary judge erred in her conclusions on flagrancy and additional damages Ground 2 of the Notice of Appeal is that the primary judge:erred in finding that the conduct of NLE, Mawson and Boyle was not flagrant, for the purposes of s 115(4)(b)(i) of the Copyright Act, and ought to have found that their conduct in infringing Lift Shop’s copyright was flagrant. As observed by NLE, this ground, as framed, involves something of a mischaracterisation of both the proper operation of s 115(4) and the reasons of the primary judge. When s 115(4) refers to “Where, in an action under this section… the court is satisfied that it is proper to do so, having regard to… (i) the flagrancy of the infringement”, this does not involve the Court in conducting some binary assessment in the form of “Was the infringement flagrant? Yes or No?”. It is not a tick-a-box exercise. The relevant provision does not say “whether the infringement was flagrant”, but rather refers to “the flagrancy of the infringement”. The application of this factor involves the Court conducting an evaluative assessment of the flagrancy of the infringement. That might include the nature and extent of that flagrancy. Flagrancy involves questions of degree. The degree of flagrancy (“the flagrancy of the infringement”) is a factor to be weighed along with other factors. In the course of oral submissions, Lift Shop accepted that that the primary judge did not make any finding that the conduct of NLE, Mawson or Boyle was “not flagrant”. Rather, reliance was placed on the second part of ground 2: that her Honour failed to find that the relevant conduct was flagrant. That involves the same misconception. The consideration of flagrancy is not a binary process. The task for the Court is to consider the flagrancy of the conduct, and to also consider other factors listed under s 115(4). Further, an appeal from an assessment as to entitlement to additional damages attracts the principles in House v The King (1936) 55 CLR 499 (House v The King). In that regard, the following observations were made in Motorola Full Court at [903] – [904], with which we agree:[903]The authorities make clear that the award of additional damages under s 115(4) of the Copyright Act is discretionary. The matters enumerated in s 115(4)(b) are not conditions to the award of additional damages, but factors to be taken into account; additional damages may be awarded notwithstanding that one or more of those factors is not present: Raben Footwear at 93 (Burchett J, with whom Lehane J agreed) and 103 (Tamberlin J); Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd (in liq) (2007) 157 FCR 564 (Aristocrat v DAP Services) at [41] (Black CJ and Jacobson J). Additional damages under s 115(4) may be awarded on principles that correspond to those governing awards of aggravated and exemplary damages at common law, which include punitive and deterrent objectives: Raben Footwear at 93; Aristocrat v DAP Services at [42] and [43]; Venus Adult Shops Pty Ltd v Fraserside Holdings Ltd (2006) 157 FCR 442 (Venus) at [114] (French and Kiefel JJ). [904]It follows that an appeal from the exercise of discretion under s 115(4) is subject to the principles stated in House v The King. The weight to be given to the mandatory considerations enumerated in s 115(4) is a matter for the trial judge and error is not established merely by a contention that the trial judge gave too much or too little weight to a particular factor: Venus at [119].

Ratio Decidendi

Legal Principle Established

By Order 3 of the orders made on 30 July 2024 (Re: Declarations and Injunctions), the primary judge made a declaration in the following form (the declaration of non-entitlement):DECLARES that if Lift Shop elects to pursue a claim for damages under s 115 of the Copyright Act 1968 (Cth) for the infringement the subject of the declarations in paragraphs 1 and 2 such claim is limited to an assessment of damages under s 115(2) of the Copyright Act and Lift Shop is not entitled to additional damages pursuit [sic: pursuant] to s 115(4) of the Copyright Act. In doing so, the primary judge adopted an approach, which is not uncommon in intellectual property cases, of determining whether there is an entitlement to additional damages as part of the separate determination of liability in advance of determining quantum. Sometimes that is done pursuant to an order for separate determination along the lines of the order made by the primary judge in the present case. However, ideally the order for separate determination should deal explicitly with any entitlement to additional damages: for example, by adding the words “(including entitlement to additional damages)” to the description of the matter being dealt with separately. The common practice in intellectual property cases of making an order for separate determination of issues as to liability prior to issues as to quantum involves a particular application of the general principles concerning whether an order should be made pursuant to the relevant rules of Court (being r 18.02 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) and r 30.01 of the Federal Court Rules 2011 (Cth)). That territory is well trodden. No complaint is made by Lift Shop in the present case as to the making of the order for separate determination on 20 August 2020, or as to whether the declaration of non-entitlement was made pursuant to that order. Lift Shop’s complaint is a different one. In ground 1 of its appeal, Lift Shop contends that the approach of the primary judge in making the declaration of non-entitlement involved error, and that it is not open to a court to determine the entitlement to additional damages pursuant to s 115(4) of the Copyright Act:(a)prior to the applicant making an election between an account of profits and damages; or(b)prior to the hearing and determination of the quantum of damages to be awarded pursuant to s 115(2) of the Copyright Act. It is notable that the approach of the primary judge of making a separate determination as to entitlement to additional damages as part of the liability hearing was a course which Lift Shop urged upon her. In its written submissions at the trial, Lift Shop submitted that Next Level’s conduct rendered it liable to additional damages, that such an award was appropriate, and that the quantification of the award of additional damages was a matter to be assessed on any inquiry as to damages following the trial. Lift Shop’s argument in this Court is inconsistent with the approach it adopted at the trial.