MG Distributions Pty Ltd & Ors v Khan & Anor
[2006] FMCA 666
•12 May 2006
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| MG DISTRIBUTION PTY LTD & ORS v KHAN & ORS | [2006] FMCA 666 |
| PRACTICE AND PROCEDURE – Copyright – summary dismissal – discharge of Anton Piller orders. |
| Copyright Act 1968 (Cth), ss.10, 86, 102, 103 Fair Trading Act 1999 (Vic) Federal Magistrates Act 1999, s.17A Federal Magistrates Court Rules 2001, r.13.10 |
| MG Distribution Pty Ltd & Ors v Khan & Anor [2005] FMCA 500 Dey v Victorian Railways Commissioners (1949) 78 CLR 62 Sega Enterprises Ltd and Another v Galaxy Electronics Pty Ltd (1998) 39 IPR 577 Young and Another v Odeon Music House Pty Ltd and Another (1976) 10 ALR 153 Lamb v Ariss & Anor [2006] FMCA 510 Dart Industries Inc and Another v David Bryar & Associates Pty Ltd and Others (1997) 38 IPR 389 |
| First Applicant | MG DISTRIBUTION PTY LTD |
| Second Applicant | YASH RAJ FILMS PRIVATE LIMITED |
| Third Applicant | YASH RAJ FILMS INTERNATIONAL LIMITED |
| Fourth Applicant | YASH RAJ FILMS USA INC |
| Fifth Applicant | FILMKRAFT PRODUCTIONS (INDIA) PTY LTD |
| First Respondent: | SAEED KHAN |
| Second Respondent: | ABIDA KHAN |
| File Number: | MLG 401 of 2005 |
| Judgment of: | McInnis FM |
| Hearing date: | 18 April 2006 |
| Delivered at: | Melbourne |
| Delivered on: | 12 May 2006 |
REPRESENTATION
| Counsel for the Applicants: | Mr P.H. Wallis |
| Solicitors for the Applicants: | Choy Lawyers |
| Counsel for the Respondents: | Mr C.S. Ward |
| Solicitors for the Respondents: | Nath Lawyers |
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 401 of 2005
First Applicant
Second Applicant
Third Applicant
Fourth Applicant
Fifth Applicant And
First Respondent ABIDA KHAN Second Respondent |
REASONS FOR JUDGMENT
Introduction
In this matter an application dated 12 April 2005 was filed by 10 Applicants seeking an ex parte Anton Piller order and other interlocutory restraining orders against the Respondents. Since those proceedings were commenced, the number of Applicants has reduced from 10 to the current five Applicants, namely:
MG Distribution Pty Ltd, First Applicant;
Yash Raj Films Pvt Ltd, Second Applicant;
Yash Raj Films International Ltd, Third Applicant;
Yash Raj Films USA Inc, Fourth Applicant;
Filmkraft Productions (India) Pvt Ltd, Fifth Applicant.
All of the above Applicants were Applicants in the proceedings which had commenced in the application filed 12 April 2005. For reasons which will become apparent, five other Applicants are no longer parties to the proceedings.
The original claim was the subject of an ex parte hearing held on the day proceedings were commenced; that is, 12 April 2005. On that date the court delivered an ex tempore judgment (see MG Distribution Pty Ltd & Ors v Khan & Anor [2005] FMCA 500).
When the Court heard the application for an Anton Piller order on 12 April 2005, the then Applicants relied upon affidavits of Marcus Georgiadis, Richard Harvey and Trevor Choy dated 19 March, 27 March and 29 March 2005 respectively. The Applicants then claimed that the Respondents had infringed and continued to infringe the Applicants' copyright in cinematographic films owned by the Applicants which were then set out in schedule 2 to a Statement of Claim filed 12 April 2005. The breach of copyright had occurred by the Respondents allegedly reproducing, importing and/or selling copies of the Applicants' films in digital video disc (DVD), video compact disc (VCD), or video cassette tape format.
The court made an ‘Anton Piller’ order on 12 April 2005 and further made interim restraining orders purporting to restrain the Respondents from reproducing in a material form the Applicants' films in breach of s.86 of the Copyright Act 1968 (Commonwealth) (the Copyright Act), importing or authorising the importation of the Applicants’ films in breach of s.102 of the Copyright Act and/or selling, or by way of trade offering or exposing for sale or distributing for the purpose of trade, or otherwise dealing with the Applicants' films or substantial part thereof in breach of s.103 of the Copyright Act. It is not necessary to set out in detail the orders made, save to indicate that those restraining orders were made together with an Anton Piller order in the usual form.
It is significant to note that the orders dated 12 April 2005 were made upon undertakings given by the Applicants through their counsel in the usual form in relation to damages and, further, usual undertakings which would normally attach to an Anton Piller order. Again it is not necessary to set out the undertakings in detail.
The number of Applicants has now been reduced from 10 Applicants in the original proceeding to now five Applicants, whose names are set out earlier in this judgment. The current Applicants now rely upon a Second Amended Statement of Claim filed on 31 March 2006. That Second Amended Statement of Claim was filed pursuant to an order made by the court.
The Respondents have filed notices of motion on 19 November 2005, 23 March 2006 and 7 April 2006. It is sufficient to note for present purposes that the Respondents now seek to rely upon the Notice of Motion filed 23 March 2006 which was filed in substitution for the Notice of Motion filed 16 November 2005 and the further Notice of Motion filed 7 April 2006.
At the hearing of the notices of motion which are the subject of this judgment, the Respondents, in summary, now seek the following orders:
1. The Anton Piller orders made by the court on 12 April 2005 be discharged forthwith.
2. The Applicants pay damages in an amount to be assessed to the Respondents in respect of the loss incurred as a consequence of the Anton Piller orders made in the proceedings.
3.The proceedings brought by the first Applicant be struck out on the grounds that:
(a)no reasonable cause of action is disclosed by the pleadings;
(b)the proceedings have a tendency to cause prejudice, embarrassment or delay in the proceedings; and
(c)the proceedings are otherwise an abuse of the process of the court.
4.The proceedings brought by the first to fifth Applicants be stayed pending payment of security for the costs of the Respondents in the sum of $46,000.
5.The costs of the motions be payable to the Respondents by the Applicants on an indemnity basis and/or be payable entirely or in part by the solicitors of the Applicants.
It should be noted that apart from the reduction in the number of Applicants, it is now also common ground that the Anton Piller order made by the court on 12 April 2005 referred to 15 films then claimed to be the subject of copyright ownership by the then Applicants. At this hearing, the number of films now relied upon has been reduced from 15 to five. It is common ground that there are now only five films which are properly the subject of these proceedings. In the Second Amended Statement of Claim, schedule 2 refers to the "Applicants' films" and producers as follows:
1. Film:“Mohabbatein”
Producer - Yash Raj India and Yash Raj USA
2. Film:“Hum Tum”
3. Film: “Dhoom”
4. Film:“Veer-Zaara”
Producer - Yash Raj India and Yash Raj UK
5. Film:“Koi ... Mil Gaya”
Producer - Filmkraft and Yash Raj UK
The applicants’ claims
According to the Second Amended Statement of Claim, the first Applicant, MG Distribution Pty Ltd (MG Distribution) is a company incorporated pursuant to the Corporations Act 2001 engaged in the business of distributing Indian "Bollywood" cinematograph films in Australia and "the sole licensee in Australia of the copyright in the cinematograph films” produced by the second Applicant, third Applicant and the fourth Applicant.
The second Applicant Yash Raj Films Pvt Ltd ("Yash Raj India") is claimed to be a company duly incorporated pursuant to the laws of India, engaged in the business of distributing Indian "Bollywood" cinematograph films in Australia. The third Applicant Yash Raj Films International Ltd ("Yash Raj UK") is claimed at all relevant times to be a company duly incorporated pursuant to the laws of the United Kingdom and also engaged in the business of distributing Indian "Bollywood" cinematograph films in Australia.
The fourth Applicant Yash Raj Films USA Inc ("Yash Raj USA") though its proper name is "", is a company incorporated pursuant to the laws of the United States of America and engaged also in the business of distributing Indian "Bollywood" cinematograph films in Australia.
The fifth Applicant Filmkraft Productions (India) Pvt Ltd (“Filmkraft") at all relevant times is claimed to be a company duly incorporated pursuant to the laws of India and engaged in the business of producing and distributing Indian "Bollywood" cinematograph films around the world.
Again for convenience, the Second Amended Statement of Claim appears to combine the second, third and fourth Applicants under what may be described as the generic name of "Yash Raj". It is asserted that Yash Raj and Filmkraft are the owners or exclusive licensees of the copyright in the five "Bollywood" cinematograph films set out above and that ownership comprises -
the right to reproduce, import and sell the Applicants' films in Australia in digital video disc ("DVD"), video compact disc ("VCD") and video cassette tape format ("exclusive rights").
The particulars subjoined to the Second Amended Statement of Claim provide the following in relation to exclusive rights under the heading of each relevant film:
“Mohabbatein”
(a)The cinematograph film "Mohabbatein" was produced by Yash Raj India in India in about October 2000.
(b)By written agreement dated 29 September 2000, Yash Raj India assigned to Yash Raj USA the Exclusive Rights in the film referred to in subparagraph (a) above for the period of 10 years from the date of delivery of the film to Yash Raj USA.
(c)A copy of the cinematograph film referred to in subparagraph (a) above in DVD format is in the possession of the solicitors for the Applicants and may be inspected by prior appointment.
(d)A copy of the agreement referred to in subparagraph (b) above is in the possession of the solicitors for the Applicants and may be inspected by prior appointment.
“Hum Tum”
(a)The cinematograph film "Hum Tum" was produced by Yash Raj India in India in about May 2004.
(b)By written agreement dated 25 February 2004, Yash Raj India granted Yash Raj UK an exclusive licence to distribute the film referred to in subparagraph (a) above in video format throughout the whole world (excluding India, Nepal, Bhutan and Sikkim) for the period of 10 years from the date of first release of the film in DVD format.
(c)A copy of the cinematograph film referred to in subparagraph (a) above in DVD format is in the possession of the solicitors for the Applicants and may be inspected by prior appointment.
(d)A copy of the agreement referred to in subparagraph (b) above is in the possession of the solicitors for the Applicants and may be inspected by prior appointment.
“Dhoom”
(a)The cinematograph film "Dhoom" was produced by Yash Raj India in India in about August 2004.
(b)By written agreement dated 12 July 2004, Yash Raj India granted Yash Raj UK an exclusive licence to distribute the film referred to in subparagraph (a) above in video format throughout the whole world (excluding India, Nepal, Bhutan and Sikkim) for the period of 10 years from the date of the first release of the film in DVD format.
(c)A copy of the cinematograph film referred to in subparagraph (a) above in DVD format is in the possession of the solicitors for the Applicants and may be inspected by prior appointment.
(d)A copy of the agreement referred to in subparagraph (b) above is in the possession of the solicitors for the Applicants and may be inspected by prior appointment.
“Veer-Zaara”
(a)The cinematograph film "Veer-Zaara" was produced by Yash Raj India in India in about October 2004.
(b)By written agreement dated 12 October 2004, Yash Raj India granted Yash Raj UK an exclusive licence to distribute the film referred to subparagraph (a) above in video format throughout the whole world (excluding India, Nepal, Bhutan and Sikkim) for the period of 10 years from the date of first release of the film in DVD format.
(c)A copy of the cinematograph film referred in subparagraph (a) above in DVD format is in the possession of the solicitors for the Applicants and may be inspected by prior appointment.
(d)A copy of the agreement referred in subparagraph (b) above is in the possession of the solicitors for the Applicants and may be inspected by prior appointment.
“Koi ... Mil Gaya”
(a)The cinematograph film "Koi ... Mil Gaya" was produced by Filmkraft in India in about July 2003.
(b)By written agreement dated 7 July 2003, Filmkraft granted Yash Raj UK and exclusive licence to distribute the film referred to in subparagraph (a) above throughout the whole world (excluding India, Nepal, Sikkim, Bhutan, Bangladesh and Pakistan) for the period of 3 years from the date of first release of the film in video format.
(c)A copy of the cinematograph film referred to in subparagraph (a) above in DVD format is in the possession of the solicitors for the Applicants and may be inspected by prior appointment.
(d)A copy of the agreement referred to in subparagraph (b) above is in the possession of the solicitors for the Applicants and may be inspected by prior appointment.
The Applicants' Second Amended Statement of Claim pleads that -
“For many years, the Applicants have distributed Indian "Bollywood" cinematograph films in Australia and throughout the world produced by Yash Raj and Filmkraft in cinema, DVD and video cassette tape formats.”
It is claimed in the pleading that the Indian "Bollywood" cinematograph films distributed by the Applicants in all formats:
“(a)have been widely advertised and promoted by the Applicants by way of print advertising in newspapers, Internet advertising, promotional posters, film festivals and mailing lists with some or all of the following features:
(i)the title of the film in a distinctive font and colouring;
(ii)the names and/or images of the 'star' actors in the film;
(iii)the names of the producer, director, musical director and lyricist of the film;
(iv)promotional catch-phrases for the film;
(v)still images from the film or images prepared by the Applicants for the purpose of promoting the film; and/or
(vi)the name and logo of the Applicant that produced the film; and
(b)contain the name and/or logo of the Applicant that produced the film in the text displayed at the beginning of the film and in the credits displayed at the end of the film.”
It was further pleaded that the films distributed by the Applicants in DVD and video cassette tape formats are distributed in cases bearing some or all of the features set out above. The films distributed by the Applicants in DVD format are distributed as discs bearing some or all of the features set out above. The Applicants claim that they have acquired “substantial goodwill and reputation in Australia in the Indian ‘Bollywood’ cinematograph films they distribute and ‘in the features’ set out above.”
It is pleaded that by reason of the goodwill and reputation of the Applicants, persons who acquire copies of the Applicants' films in DVD and video cassette tape formats with some or all of the features set out above would expect to acquire DVDs and video cassette tapes manufactured and distributed by or on behalf of the Applicants.
The claim against the Respondents essentially relies upon them carrying on the business of selling "Bollywood" cinematograph films in DVD, VCD and video cassette tape format at a Dandenong shop under the unregistered business name of "Shalimars Videos".
The pleadings then refer to alleged breaches of copyright by the Respondents and notes that pursuant to the orders made by the court on 12 April 2005, the Applicants seized DVDs and VHS tapes from the Respondents.
It is noted that the five films now the subject of the pleadings are referred to amongst others in the pleadings. The other films, it is conceded, should be returned to the Respondents, and apart from noting the reduction in the number of Applicants, the pleadings now seek to assert copyright infringement in relation to five rather than 15 films, and to that extent at least it is understood that the Applicants concede that at the very least consequential orders need to be made, modifying the interim restraining orders made by the court on 12 April 2005.
Orders sought
The Respondents submit that the orders made on 12 April 2005 should be discharged with consequential costs orders and an assessment of damages. In the alternative, damages should be assessed and costs ordered, having regard to the reduction in the number of Applicants, and more importantly the reduction in the number of films for which copyright infringement is being claimed from 15 to five. Hence, as I understand it, the Respondents in the notices of motion referred to earlier in this judgment at the very least seek orders that there be an assessment of damages in relation to the 10 films seized pursuant to the orders made by the court on 12 April 2005 and that there be an appropriate costs order.
Although an order has been sought for security for costs against the Applicants, it seems common ground that the court should first deal with a discrete issue as to whether or not the claim now made by the first Applicant should be struck out.
It is appropriate to deal with the Notice of Motion requesting that the claim brought by the first Applicant be struck out and to then deal with whether or not the Anton Piller order made on 12 April 2005 should be discharged and/or whether subsequent restraining orders should be made. It is then appropriate to consider whether the court should direct that an assessment of damages be made concerning those films which are now not subject to the Second Amended Statement of Claim. The court would deal later with the issue of costs and the claim for security for costs.
Obviously, if the claim by the first Applicant, which, it is agreed, is the only Australian resident company, is struck out, then that would leave four remaining Applicants, all of which are overseas corporations. That will clearly have a significant impact on the issue of security for costs. Likewise, if the first Applicant's claim is struck out, then that may have a further bearing on the issue of costs, though it may well be the case that even if the claim against the first Applicant is struck out, then the surviving claim by the second to fifth Applicants may be relevant in considering whether the Anton Piller orders made on 12 April 2005 should be discharged and/or may also be relevant in the broader consideration of the question of costs together with, of course, security for costs.
Whether the claim brought by the first applicant should be struck out
In the Second Amended Statement of Claim, the first Applicant along with other Applicants is claimed to have suffered damage and to be entitled to an account of profits made by the Respondents as a result of their wrongful conduct, that is, the claimed copyright infringement. In the alternative, all Applicants rely upon the conduct of the Respondents as constituting an infringement of the Fair Trading Act 1999 (Victoria) and passing off.
Particulars are given in relation to the alleged breach of the Fair Trading Act and common law passing off action in relation to each film and different formats. It is not necessary to recite the claims in further detail, save to note that all Applicants claim to have suffered and, unless the Respondents are restrained by the court, will continue to suffer loss and damage, and/or it is claimed the Respondents have made profits by their conduct.
In support of the application for an order that the proceedings brought by the first Applicant be struck out, it was submitted for and on behalf of the Respondents that the court should refer to the affidavit evidence filed on behalf of the Applicants, and in particular it is noted that in that material there is no suggestion that at any time the first Applicant held an "exclusive licence" within the meaning of s.10 of the Copyright Act which defines "exclusive licence" as follows:
“Exclusive licence means a licence in writing, signed by or on behalf of the owner or prospective owner of copyright, authorising the licensee, to the exclusion of all other persons, to do an act that, by virtue of this Act, the owner of the copyright would, but for the licence, have the exclusive right to do, and ‘exclusive licensee’ has a corresponding meaning.”
It was submitted on behalf of the Respondents that the first Applicant does not have any "licence in writing". Indeed, it was noted that in the Second Amended Statement of Claim reference is made to what is described as a licence agreement which was made in approximately 2002 and "was partly oral and to be implied by conduct". It arose from a discussion held on or about 6 April 2002 between Marcus Georgiadis and Yash Chopra of Yash Raj in Malaysia where it is claimed that Yash Chopra stated that Yash Raj would appoint Marcus Georgiadis as a sole distributor of Yash Raj's cinematograph films in all formats in Australia.
The conduct pleaded to be implied was the incorporation of the first Applicant by Marcus Georgiadis on or about 27 September 2002 -
for the purpose of distributing Bollywood cinematograph films, including films produced by Yash Raj and Yash Raj distributing its cinematograph films in all formats in Australia solely through MG Distribution between approximately December 2002 to the present.
It was submitted by the Respondents' counsel that those particulars relied upon in the Second Amended Statement of Claim are insufficient to constitute evidence of an exclusive licence for the purpose of s.10 of the Copyright Act. In the absence of a licence in writing between the copyright owners and the first Applicant, it is submitted that the first Applicant has no standing to bring this application.
It was further submitted that the first Applicant, in the absence of any standing to bring a claim in copyright, could not then obtain the benefit of the accrued or associated jurisdiction of the court. It was submitted the court should find, therefore, that the claim by the Applicant should be struck out on the ground that no reasonable cause of action is disclosed by the pleadings.
The associated or accrued jurisdiction found in the claim arising under the Fair Trading Act and/or in passing off cannot be relied upon by the first Applicant where there is a failure by the first Applicant to disclose on the pleadings a cause of action under the Copyright Act given the absence of any evidence of a licence in writing between the first Applicant and the owners of copyright in the films.
When considering the issue of summary dismissal, which is relevant in considering the application to strike out the claim by the first Applicant, it is relevant to note that recently a new s.17A has been inserted in the Federal Magistrates Act 1999 (the FM Act) which provides as follows:
“17A Summary judgment
(1) The Federal Magistrates Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a) the first party is prosecuting the proceeding or that part of the proceeding; and
(b) the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding.
(2) The Federal Magistrates Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a) the first party is defending the proceeding or that part of the proceeding; and
(b) the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.
(3) For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:
(a) hopeless; or
(b) bound to fail;
for it to have no reasonable prospect of success.
(4) This section does not limit any powers that the Federal Magistrates Court has apart from this section.”
It will be noted that the new provision appears to lower the threshold whereby the court may be satisfied that it is appropriate to summarily dismiss a claim. Section 17A(3) specifically removes from the court's consideration the concept of a proceeding otherwise needing to be ‘hopeless’ or ‘bound to fail’ for it to have ‘no reasonable prospect of success’. To that extent, it seeks to modify the principles set out in well-known authorities including Dey v Victorian Railways Commissioners (1949) 78 CLR 62 (Dey).
The new provision clearly provides in s.17A(2) that this court may give judgment for the Respondents against the first Applicant for the whole or any part of the proceeding if the court were to be satisfied that the Respondents are defending the proceeding or part of the proceeding and the court is further satisfied that the first Applicant in this case has "no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding".
However, the new statutory provision in my view does not necessarily detract entirely from the principles in relation to summary dismissal which were described by Dixon J in Dey as being "well settled". It is relevant in my view to have regard to the following passage from the decision of Dixon J in Dey as follows:
“The principles upon which that jurisdiction is exercisable are well settled. A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. The fact that a transaction is alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process.”
The present application seeking to summarily dismiss the proceedings by the first Applicant, whilst subject to the new s.17A of the FM Act, otherwise still relies upon the factors identified in Rule 13.10 of the Federal Magistrates Court Rules 2001 which provides as follows:
“13.10 Disposal by summary dismissal
The Court may order that a proceeding be stayed, or dismissed generally or in relation to any claim for relief in the proceeding, if it appears to the Court that:
(a) no reasonable cause of action is disclosed in relation to the proceeding or claim for relief; or
(b) the proceeding or claim for relief is frivolous or vexatious; or
(c) the proceeding or claim for relief is an abuse of the process of the Court.”
It will be noted that the factors set out in that rule are similar, though not identical to the factors relied upon by the Respondents in the Notice of Motion. A factor in common is the concept of "an abuse of the process of the court" and there being "no reasonable cause of action disclosed". The rules provides for summary dismissal if the proceeding or claim for relief is "frivolous or vexatious", which in the present case I take to be relied upon by the Respondents, albeit the Respondents in their Notice of Motion refers to the proceedings having a "tendency to cause prejudice, embarrassment or delay in the proceedings".
In any event, the concept of an abuse of process or there being no reasonable cause of action disclosed on the pleadings, when considered in the light of s.17A, still requires the court to be satisfied that the first Applicant in this case has "no reasonable prospect of successfully prosecuting the proceeding". Hence the principles set out by Dixon J may still have application to the extent that when considering whether the court is satisfied that a party has no reasonable prospect of successfully prosecuting the proceeding, the court is entitled to consider whether there is a real question to be determined, whether of fact and law, and that the rights of the parties depend upon it.
If the court were to find that there is a real question to be determined, whether it be of fact and law, and that the rights of the parties depend upon that real question, then it seems to me that it would not be competent for the court to dismiss the action as frivolous and vexatious and an abuse of process, nor would it be competent for the court to make a finding that it is satisfied that a party has no reasonable prospect of successfully prosecuting the proceeding.
If there is a real question to be determined, whether it be of fact and law, and if the rights of the parties depend upon that, then it is difficult to see how the court on a summary dismissal application could be satisfied that a party has no reasonable prospect of successfully prosecuting the proceeding. To make that finding, in a sense, "begs the question" to be determined at trial.
In the present case, in response to the submissions made for and on behalf of the Respondents that the claim by the first Applicant should be summarily dismissed, it was submitted for and on behalf of the first Applicant that it is entitled to remain a party to the proceedings. Reference was made to obiter dictum of Burchett J in Sega Enterprises Ltd and Another v Galaxy Electronics Pty Ltd (1998) 39 IPR 577 (Sega) and in particular the following passage which appears at page 581:
“It is unnecessary to reach a conclusion on two other matters which were debated at the hearing of the motions. These are the question whether, under each amended application and statement of claim, Avel was also entitled to resist the attempt to strike out the proceedings on the basis of an exclusive licence relating to an artistic work reproduced on the games’ cabinets, and the question whether, in any case, if only a non-exclusive licensee, Avel would have been entitled to remain a party to claims in which it was joined with the owner of the copyright. Had it been necessary to rely on these matters, I would have held that they too raised arguable contentions which Avel should not be summarily prevented from maintaining. The second matter, indeed, is the subject of a considered dictum of Bowen CJ in Eq (as he then was) in Young v Odeon Music House Pty Ltd at 161, where, referring to Halsbury’s Laws of England, his Honour said:
I do not see why a non-exclusive licensee is not a proper plaintiff in proceedings for breach of copyright provided he joins the owner of the copyright.
The passage cited from Halsbury is to be found in the fourth edition, vol 9, para 880:
A licensee, unless he is an exclusive licensee, cannot sue for infringement of copyright unless he joins the copyright proprietor as co-plaintiff in the action.”
Counsel for the Applicants further referred the court to the obiter dictum of Bowen CJ in Young and Another v Odeon Music House Pty Ltd and Another (1976) 10 ALR 153 (Young) where the court states at page 161-162 the following:
“(1)Whether the first plaintiff was a proper party to the proceedings
The defendants submitted that the plaintiff should not be a party to the proceedings and was not entitled to any relief. The argument submitted was that the first plaintiff was not an exclusive licensee.
I do not see why a non-exclusive licensee is not a proper plaintiff in proceedings for breach of copyright provided he joins the owner of the copyright (see Halsbury’s Laws of England 4th ed, vol 9, par 880. However, as the matter has been argued on the basis that to have a right to the orders sought the first plaintiff must show he is an exclusive licensee, I will deal with this question.”
It is submitted by the Applicant that applying the dictum of the court in both the Sega and Young cases, the court should find in the present case that the first Applicant, as a co-Applicant with the copyright proprietors and at least arguably as a non-exclusive licence holder, can properly be joined and continue to proceed with a claim in these proceedings despite not being the holder of a licence in writing for the purpose of s.10 of the Copyright Act.
It should be noted that in both the Sega and Young cases the court dealt with parties who were properly regarded as exclusive licence holders, and hence the discussion relating to non-exclusive licence holders was obiter. Both cases, however, referred to s.10 of the Copyright Act and the definition of "exclusive licence" which appears to be the same as the current version. Reference was not made to the document being "in writing" but rather emphasis was placed on the effect of the provision and the exclusivity concept. The court has dealt with the right conferred by the grant of an exclusive licence.
In my view the submissions made for and on behalf of the First Applicant are correct in the sense that there at the very least an arguable case which should not be precluded by an order for summary dismissal. I note that summary dismissal as indicated in the authorities referred to still remains a matter for careful consideration. There is a primary obligation on Courts to permit parties to be heard even though there may appear to be strong arguments which have the potential to effectively defeat a claim or a defence.
Whilst arguably the standing of the first Applicant may not be strong to the extent that it is required to depend on s.10 of the Copyright Act, I am satisfied that it is at least arguable for the reasons advanced by the first Applicant to a sufficient degree to refuse the application for summary dismissal of the first Applicant’s claim. It would not be appropriate for the Court to further analyse that issue as clearly the matters will be agitated at trial. However, I conclude that the application for summary dismissal should be refused.
Whether the Anton Piller order should be discharged
The Respondents submitted that the evidence placed before the court at the ex parte hearing was sufficient to constitute misleading behaviour of a kind which should encourage the court to discharge all the orders made on 12 April 2005. To understand the Respondents' submissions it is appropriate to set out extracts from the affidavit evidence relied upon by the Applicants at the ex parte hearing held on 12 April 2005.
In the affidavit of Marcus Georgiades sworn 19 March 2005 relied upon at the ex parte application for Anton Piller orders by the first Applicant, it is noted the deponent states in part the following:-
“3.Since about December 2002, the First Applicant has been a distributor of cinematograph films produced in Mumbai, India, which are colloquially referred to as “Bollywood” films. …
…
11.As well as the rights to screen Bollywood films at cinemas in Australia, the First to Fifth Applicants also obtain distribution (including copyright) rights to Bollywood films in DVD, VCD and video cassette tape formats in Australia. Among others, the First to Fifth Applicants have obtained such rights in relation to the following Bollywood films.
(a) ‘Kuch Na Kaho’;
(b) ‘Munna Bhai MBBS’;
(c) Masti;
(d) ‘Kyun Ho Gaya Na’;
(e) ‘Deewar’;
(f)‘Saathiya’;
(g) ‘Kal Ho Na Ho’;
(h) ‘Main Hoon Na’; and
(i) ‘Khushi’.
…
14.The First Applicant was incorporated in December 2002 as a specialist, authorised distributor of Bollywood films in Australia, New Zealand and Fiji. The First Applicant set up business on the urging of the leading Indian Bollywood production companies, including the Sixth to Tenth Applicants, so as to attempt to establish an authorised network of Bollywood films in Australia.
…
20. As a result of the above matters, the Australian market for Bollywood DVDs has a ‘culture of piracy’ that the Applicants have found difficult to change. In this regard, the First Applicant has attempted to notify the various traders of the Applicants’ ownership of the copyright of their Bollywood films and to work with the traders to sell authorised copies at a price that is affordable to consumers but still profitable to the traders. These efforts have been largely unsuccessful and the difficulties of making ‘trap’ purchases from wary traders and the large number of traders each selling a relatively small number of DVDs means that it is not viable for the Applicants to individually pursue the traders.”
An affidavit of Trevor Choy sworn 29 March 2005 was also relied upon which in part provides:-
“5.The Sixth to Tenth Applicants produce Bollywood cinematograph films in Mumbai, India, including the Applicants’ Films, as defined in paragraph 11 of the Statement of Claim. The First to Fifth Applicants distribute the Applicants’ Films in Australia.
6.I have reviewed the following written agreements in relation to the Applicants’ Films by which the Sixth to Tenth Applicants license of assign their rights in the Applicants’ Films in Australia to the First to Fifth Applicants.
(a)Agreement dated 5 July 2003. by which RS Entertainment assigned to the Second Applicant the Exclusive Rights, as defined in paragraph 11 of the Statement of Claim, in the cinematograph film ‘Kuch Naa Kaho’ for a period of 10 years from the date of delivery of the film to the Second Applicant. Exhibit ‘TC-1’ is a true copy of the agreement.
(b)Agreement dated 9 December 2003, by which Vinod Chopra Productions assigned to the Second Applicant the Exclusive Rights in the cinematograph Film ‘Munna Bhai MBBS’ for a period of 10 years from the date of delivery of the film to the Second Applicant. Exhibit ‘TC-2’ is a true copy of the agreement.
(c)Agreement dated 30 March 2004, by which Maruti International assigned to the Second Applicant the Exclusive Rights in the cinematograph film ‘Masti’ for a period of 7 years from the date of delivery of the film to the Second Applicant. Exhibit ‘TC-3’ is a true copy of the agreement.
(d)Agreement dated 23 June 2003, by which Marsimha Enterprises assigned to the Second Applicant the Exclusive Rights in the cinematograph film ‘Kyon Ho Gaya Na’ for a period of 7 years from the date of delivery of the film to the Second Applicant. Exhibit ‘TC-4’ is a true copy of the agreement.
(e)Agreement dated 18 October 2002, by which VR Pictures assigned to the Second Applicant the Exclusive Rights in the cinematograph film ‘Deewar’ for a period of 10 years from the date of delivery of the film. Exhibit ‘TC-5’ is a true copy of the agreement.
(f)Agreement dated 29 September 2000, by which the Seventh Applicant assigned to the Third Applicant the Exclusive Rights in the cinematograph film ‘Mohabbatein’ for the period of 10 years from the date of delivery of the film to the Third Applicant. Exhibit ‘TC-6’ is a true copy of the agreement.
(g)Agreement dated 17 October 2002, by which the Seventh Applicant assigned to the Third Applicant the Exclusive Rights in the cinematograph film ‘Saathiya’ for the period from 20 December 2002 to 20 December 2012. Exhibit ‘TC-7’ is a true copy of the agreement.
(h)Agreement dated 25 June 2003, by which the Eighth Applicant granted a licence to the Third Applicant of the Exclusive Rights in the cinematograph film ‘Kal Ho Naa Ho’ for the period up to 31 December 2008. Exhibit ‘TC-8’ is a true copy of the agreement.
(i)Agreement dated 2 April 2004, by which the Tenth Applicant granted a licence to the Fourth Applicant of the Exclusive Rights in the cinematograph film ‘Main Hoon Na’ for a period of 5 years from the date of delivery of the film to the Fourth Respondent. Exhibit ‘TC-9’ is a true copy of the agreement.
(j)Agreement dated 1 February 2002, by which Narasimha Enterprises assigned to the Fifth Applicant the Exclusive Rights in the cinematograph film ‘Khushi’ for a period of 5 years from the date of delivery of the film to the Fifth Applicant. Exhibit ‘TC-10’ is a true copy of the agreement.
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11.On the basis of the information contained in the above agreements and the information provided to me by Marcus Georgiades, I consider that copyright subsists in each of the Applicants’ Films and that the Applicants are the owners or exclusive licensees of the copyright comprising the Exclusive Rights in Australia.”
During the course of the hearing the court brought to the attention of counsel the relevant principles to be applied in considering the responsibilities of parties seeking ex parte orders, which for convenience I had set out in a recent decision in Lamb v Ariss & Anor [2006] FMCA 510 (Lamb) as follows:
“33. … Reference was made to the decision of the High Court of Australia in Thomas A. Edison Ltd v Bullock (1912) 15 CLR 679 (Edison v Bullock) where in that case the court relevantly states the following:-
‘… The law in such a case is well established. There is a primary precept governing the administration of justice, that no man is to be condemned unheard; and therefore, as a general rule, no order should be made to the prejudice of a party unless he has the opportunity of being heard in defence. But instances cover where justice could not be done unless the subject matter of the suit were preserved, and if that is in danger of destruction by one party, or if irremediable or serious damage be imminent, the other may come to the Court, and ask for its interposition even in the absence of his opponent, on the ground that delay would involve greater injustice than instant action. But, when he does so, and the Court is asked to disregard the usual requirement of hearing the other side, the party moving incurs a most serious responsibility.
Dalglish v Jarvie (1), a case of high authority, establishes that it is the duty of a party seeking for an injunction ex parte to bring under the notice of the Court all facts material to the determination of his right to that injunction, and it is no excuse for him to say he was not aware of their importance. Uberrima fules is required, and the party inducing the Court to act in the absence of the other party, fails in his obligation unless he supplies the place of the absent party to the extent of bringing forward all the material facts which that party would presumably have brought forward in his defence to that application. Unless that is done, the implied condition upon which the Court acts in forming its judgment is unfulfilled and the order so obtained must almost invariably fail. I add the word ‘almost’ in defence to such an exceptional case as Holdren v Waterlow (1). The obligation is stated by Turner LJ in that case (2) to be to ‘state their case fully and fairly,’ and so by Sugden LC in Deuse v Plunkett (3), where he said: - ‘The Plaintiff had not fully and fairly disclosed the entire facts of the case.’ Lord Cottenluon LC in Brown v Newall (4), observes that the power to grant such an injunction should exist in indispensable, but, from the liability to injustice, must be exercised with caution. Then he says (5): - ‘The Court can have no ground upon which it can proceed, in granting an ex parte injunction, but a faithful statement of the case.’ The learned Lord Chancellor distinguishes between mis-statement, or suppression likely to influence the Court in acceding to the application, and that which is immaterial.’
34. Reference was further made to the application of similar principles when considering an Anton Piller order found in the Federal Court decision of Davies J in Milcap Publishing Group AB & Ors v Coranto Corporation Pty Ltd & Ors (1995) 32 IPR 34, and in particular the following extract:-
‘Whether, if that disclosure had been made, the Anton Piller would not have been granted, is not something I can say. To be material, a fact does not have to be such as would have caused the application to be refused. I have myself sat on a full court which has set aside an ex parte order because of a non-disclosure and the matter has then been remitted back to the trial judge or to a judge and the application for an injunction heard again.
The relevant point is simply that a matter was not disclosed which ought to have been disclosed. The affidavit of Mr Collins gave a false impression. It gave the impression that Mr Lark and Mr Collins were selling the Milcap products as new products, and it said nothing whatever about the fact that in their shops which carry on an exchange business, the taking in of cassettes and the exchange of cassettes is part of the ordinary course of business. If that had been disclosed, I think that further attention would have had to have been given by the court to a number of matters.’”
In Lamb I also stated, relevantly, the following at paragraph 40:
“In my view, the making of ex parte orders by any court is a significant and serious process to be undertaken, and it should be undertaken with due care.”
I further stated at paragraph 42 the following:
“42. As indicated by the High Court in Edison v Bullock, uberrima fides is required. If a party induces a court to act in the absence of another party, and in doing so fails in its obligation, in my view, to paraphrase the words of the High Court, unless he supplies the place of the absent party to the extent of bringing forward all the material facts which that party would presumably have brought forward in his defence to that application.”
The principles set out by this court in Lamb, applying as it did the well known principles from Edison v Bullock and Milcap Publishing Group and Others v Coranto Corporation Pty Ltd apply equally to the present application.
Counsel for the Respondents submitted that in this instance, apart from the fact that there were 10 Applicants in the original application now reduced to five, and claims were made to 15 films now reduced to five, in any event, at no stage on the material currently before the court could it be suggested that the first Applicant was a copyright owner and/or an exclusive licence holder. The court accordingly was misled at least in that respect, and further misled in relation to the nature and extent of the copyright ownership by other Applicants. So much is clear from the concession made in the most recent affidavit filed for and on behalf of the Applicants by Mr Choy. In his affidavit sworn 18 April 2006, Mr Choy deposes as follows:
“13. Paragraph 6(f) of my affidavit refers to an agreement dated 29 September 2000 by which Yash Raj Films Pvt Ltd assigns certain rights in the film ‘Mohabbatein’ to Yash Raj Films International Ltd. I have reviewed that agreement and note that the rights granted were confined to the United Kingdom.
14. Sub-paragraph (c) and (h) of the particulars to paragraph 11 of the statement of claim dated 29 March 2005 states that Eros Multimedia Pvt Ltd assigned certain rights to MG Distribution Pty Ltd. I have reviewed that agreement and note that the party assigning rights was Eros Multimedia (Europe) Limited.
15. Other than the matters referred to above, I believe that my affidavit and the other material put before the Court on 12 April 2005 was accurate.”
It was submitted for and on behalf of the Applicants that the orders made on 12 April 2005 should not be discharged; instead some variation should be made to ongoing restraining orders with appropriate provision for the return of those films which were seized pursuant to the Anton Piller orders and where no copyright is asserted by any of the Applicants. It was submitted that the undertaking as to damages was specifically designed to address the circumstances presently before the court where some modification to the claim has been made upon receipt of further instructions clarifying the true extent and nature of the copyright ownership. Reliance was placed upon the decision of Goldberg J in Dart Industries Inc and Another v David Bryar & Associates Pty Ltd and Others (1997) 38 IPR 389 (Dart) where at page 419 the court states the following:
“The relevant principles to take into account in determining whether there has been relevant non-disclosure and, if so, whether any consequences should follow were set out in some detail by Ralph Gibson LJ in Brink's Mat Ltd v Elcombe [1988] 1 WLR 1350, 1356-1357. It is clear that material non-disclosure does not mean that discharge of the order follows as a matter of course. On the facts before me, it is denied that there was material non-disclosure and this issue needs to be investigated further. However I consider it premature for this issue to be finally determined at this early stage. There is a balance to be achieved between giving parties the opportunity for urgent interlocutory hearings and leaving for later determination issues which do not have any urgency in relation to their determination. I would accept the tentative view expressed by Sir Nicolas Browne-Wilkinson VC in Tate Access Floors Inc v Boswell (supra) at 534 that investigations of the circumstances in which an ex parte Anton Piller order was granted should be restricted to those cases where there has been a serious failure to make a material disclosure (cf: (1993) 109 LQR 432, 438). In Dormeuil Frères SA v Nicolian Ltd [1988] 1 WLR 1362 the Vice-Chancellor said at page 1369:
"In my judgment, save in exceptional cases it is not the correct procedure to apply to discharge an ex parte injunction on the grounds of lack of full disclosure at the interlocutory stage of the proceedings. The purpose of interlocutory proceedings is to regulate the future of the case until trial. Where an Anton Piller order has been made ex parte, in the vast majority of cases the order has been executed before the inter partes hearing. Setting aside the Anton Piller order cannot undo what has already been done. As to the injunction contained in the ordinary Anton Piller order, that is directed to last only until the inter partes hearing of the motion. The correct course, as the Court of Appeal decisions show, is to regulate the matter for the future on the basis of the evidence before the judge on the inter partes hearing. The sole relevance of the question 'Should the ex parte order be set aside?' is, so far as I can see, to determine the question whether the plaintiff is liable on the cross-undertaking in damages given on the ex parte hearing. That is not an urgent matter. It is normally much better dealt with at the trial by the trial judge who knows all the circumstances of the case and is able, after cross-examination, to test the veracity of the witnesses."
In my opinion those observations apply with equal force to the matters presently before me.
A contrary view was taken in Ali and Fahd Stobokski Group Ltd v Moneim [1989] 1 WLR 710, 722 but in that case the judge took the view that exceptional facts were involved. (See also Bank Mellot v Nikopour (1985) FSR 87; Lloyds Bowmaker Ltd v Britannia Arrow Holdings Plc [1988] 1 WLR 1337).
Having regard to the nature of the allegations of material non-disclosure I consider it more appropriate that the application based on those allegations be put over to the trial of the proceeding. Even if the application was to succeed, it would not result in the interlocutory relief now sought by the applicants not being granted having regard to the basis upon which I have determined that there is a serious question to be tried, namely the issues arising from the MS drawings. …”
Applying the principles set out by Goldberg J in Dart, it was submitted for the Applicants that any material non-disclosure in the present case does not require discharge of the orders as a matter of course. It was submitted that the appropriate modification should be made to restraining orders and that any issue of damages could be referred to for assessment rather than simply discharging the orders.
Clearly, the issue of security for costs becomes far more relevant if all of the Applicants are off-shore companies having no business interest in Australia. In this decision, having permitted the first Applicant to remain in the proceedings, in my view it is appropriate to defer the issue of security of costs and grant liberty to the Respondents to make further application for security of costs prior to the trial of the action. That application can be made upon further material provided, which may include an assessment of the financial resources of the first Applicant to determine whether it has the resources to meet any costs order should the claim by the Applicant fail.
Applying the principles referred to by this Court in Lamb and having regard to the correction made by Mr Choy in his later affidavit of
18 April 2006 referring to the earlier affidavit, I am satisfied that in relation to the Applicants’ purported ownership of 10 films that the Court was misled at least to that extent when making the Anton Piller ex parte orders.
I accept however the principles set out by Goldberg J in Dart that the existence of non disclosure does not automatically mean that there should be discharge of the orders. In the present case I accept that it would be premature to discharge the orders finally but clearly there is a need to vary those orders and the form of variation should be the subject of agreement between the parties failing which the Court shall make orders consistent with the reduction in the number of Applicants and the further reduction in the number of films now sought to be the subject of copyright.
I otherwise accept the submissions made for and on behalf of the Applicants that a discharge of the orders is not required as a matter of course in the present case. Modification would be preferable though of course at the trial of the action further material may become evident which may lead to significant orders in relation to damages and/or costs which will be dealt with at the trial.
It would be appropriate in my view for modified restraining orders to be made specifically relating to the Applicants and the claimed interest in the remaining 5 films with those orders to be made in substitution for previous orders. Clearly the Respondents will have rights to seek the assessment of damages arising out of at the very least those parts of the ex parte Anton Piller orders where films were seized and where other Applicants no longer are parties to the action relating to those goods and/or no claim is made by the surviving Applicants in relation to any copyright over those films. That matter can be referred in due course for assessment but in my view the referral would be more appropriate at the conclusion of the trial regardless of the outcome of the trial. Likewise the issue of costs arising in relation to both the Notices of Motion before the Court and costs of and incidental to the Anton Piller orders in relation to the application of those orders to films over which copyright clearly did not exist and/or where orders were made in favour of Applicants no longer parties to the proceedings can be determined.
I shall make consequential orders to be agreed by the parties and in the absence of agreement the Court shall list the matter for further directions hearing and make appropriate orders in readiness for the trial of the action. If required I shall deal with the application for security for costs after further material has been filed.
I certify that the preceding sixty-six (66) paragraphs are a true copy of the reasons for judgment of McInnis FM
Associate:
Date: 12 May 2006
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