Microsoft Corporation and Ors v CPL Notting Hill Pty Ltd and Anor (No.3)

[2017] FCCA 1839

FEDERAL CIRCUIT COURT OF AUSTRALIA

MICROSOFT CORPORATION & ORS v CPL NOTTING HILL PTY LTD & ANOR (No.3) [2017] FCCA 1839

Catchwords:
COPYRIGHT – Application in a case – extent of the discovery request is both reasonable and proper – making of an order for discovery will contribute to the fair and expeditious conduct of the proceedings – no further order made for compliance of orders of 7 September 2016 – matter to remain before the current Court – application in a case dismissed.

Legislation:
Federal Circuit Court of Australia Act 1999 (Cth), s.45(1)
Federal Circuit Court Rules 2001, r.14.02

First Applicant:

Second Applicant

Third Applicant

MICROSOFT CORPORATION

MICROSOFT PRT LTD (ACN 002 589 460)

MICROSOFT REGIONAL SALES CORPORATION

First Respondent: CPL NOTTING HILL PTY LTD

Second Respondent: WEI LEI

File Number: SYG 1205 of 2016

Judgment of: Judge Street

Hearing date: 4 August 2017

Date of Last Submission: 4 August 2017

Delivered at: Sydney

Delivered on: 4 August 2017

REPRESENTATION

Counsel for the Applicants: Mr A Fox

Solicitors for the Applicants: Harris & Company

Counsel for the Respondents: Mr R Webb SC

Solicitors for the Respondents: Smith & Associates

ORDERS

THE COURT DECLARES THAT:

1. It is appropriate in the interests in the administration of justice to allow and require verified discovery by the respondents, including any further respondent joined to the proceedings in accordance with order 4 below, pursuant to s.45(1) of the Federal Circuit Court of Australia Act 1999 (Cth) as identified below.

THE COURT ORDERS THAT:

1. Grant leave to the applicant to file and rely upon the amended application in a case and the Court dispenses with the need for the electronic filing of the same.

2. The application in a case filed by the respondents on 22 June 2017 is dismissed.

3. The applicants file and serve a further amended statement of claim on or before 24 August 2017.

4. Grant leave to the applicants to join any further party or parties to that further amended statement of claim.

5. Directs the respondents to file and serve a defence to the further amended statement of claim on or before 14 September 2017.

6. That pursuant to regulation 14.02 of the Federal Circuit Court Rules 2001 (Cth) and subsection 45(1) of the Federal Circuit Court of Australia Act 1999 (Cth) the Respondents to give verified discovery in respect of the following categories of documents:-

   (a)copies of all purchase orders issued by any of the Respondents to any person or entity for the importation into, purchase or distribution in Australia, of any Microsoft Windows 7 Professional and Microsoft Windows 7 Home Premium programs in the period 1 January 2014 to date;

   (b)copies of all invoices issued to any of the Respondents by any person or entity in relation to the sale or supply by such person or entity in Australia, of any Microsoft Windows 7 Professional and Microsoft Windows 7 Home Premium programs in the period 1 January 2014 to date;

   (c)copies of all sales ledgers and invoices which evidence the sale or supply of any Microsoft Windows 7 Professional and Microsoft Windows 7 Home Premium programs (with or without a computer system) by any of the Respondents to any person or entity in Australia in the period 1 January 2014 to date;

   (d)copies of all invoices issued to any of the Respondents by any person or entity in relation to the importation into, purchase or distribution in Australia by such person or entity, of certificates of authenticity for any Microsoft Windows 7 Professional and Microsoft Windows 7 Home Premium programs for the period 1 January 2014 to date; and

   (e)copies of all invoices which evidence the sale or supply of certificates of authenticity for Microsoft Windows 7 Professional and Microsoft Windows 7 Home Premium programs by any of the Respondents to any person or entity in Australia for the period 1 January 2014 to date; and

   (f)copies of ledgers and bank statements evidencing the receipt and deposit of the sales of Microsoft Windows 7 Professional and Microsoft Windows 7 Home Premium programs and/or certificates of authenticity for Microsoft Windows 7 Professional and Microsoft Windows 7 Home Premium programs identified in category 1. c. and 1. e. above.

7. The applicants to file and serve any affidavit evidence in respect of liability, damages or additional damages on or before 1 February 2018.

8. Directs the respondents to file and serve any affidavit evidence on which they wish to rely on or before 29 March 2018.

9. Directs the applicants to file any affidavit evidence in reply on or before 27 April 2018.

10. Directs the applicants file and serve a list of objections to the respondents’ evidence on or before 27 April 2018.

11. Directs the respondents to file and serve any objections to the applicants’ affidavit evidence on or before 11 May 2018.

12. The matter is stood over for directions at 9:30am on 25 May 2018.

13. Upon completion of the affidavit evidence, the Court grants leave to either party to ascertain from the Court the range of potential hearings dates and the parties have leave to provide consents orders in relation to the hearing dates if they are agreed.

14. Directs any further application for a transfer be heard and determined on 25 May 2018 if such application is filed.

15. Directs the respondents to file and serve any further application for transfer on or before 11 May 2018.

16. Liberty to apply on 2 days’ notice.

17. The applicants pay the respondents’ costs of the occasion by reason of the amendment.

18. The Court reserves the issue of costs in respect of the application in a case on which the order for partial discovery has been made and reserves the question of costs in relation to the application of in a case that has been dismissed.

THE COURT NOTES THAT:

1. The applicants’ solicitor has produced pursuant to the notice to produce, a box and the box is to be made available to the solicitor for the respondents by the solicitor for the applicants.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 1205 of 2016

MICROSOFT CORPORATION & ORS

First Applicant

MICROSOFT PTY LTD (ACN 002 589 460)
Second Applicant

MICROSOFT REGIONAL SALES CORPORATION
Third Applicant

And

CPL NOTTING HILL PTY LTD

First Respondent

WEI LEI

Second Respondent

REASONS FOR JUDGMENT

1. The Court has before it two competing applications in a case. The first deals with an alleged non-compliance by the respondents with the order made by this Court on 7 September 2016. The second is an application for discovery to be given by the respondents under s.45(1) of the Federal Circuit Court of Australia Act 1999 (Cth).

2. Substantial evidence has been put on by both parties in relation to the subject matter of both applications and in relation to alleged invoices the subject of alleged infringement of the applicants’ copyright in respect of Windows 7 software the subject of a refurbisher program.  The evidence identifies that the refurbisher program products have an identifying product key. 

3. The respondents in their defence, take issue with the alleged infringement and assert a want of knowledge in relation to the products the subject of the refurbisher program. The respondents records in relation to the sale of Microsoft Windows software with or without a computer do not distinguish between the Microsoft Windows refurbisher products and the non-refurbisher products. 

4. There is dispute between the parties as to the extent to which there has been alleged infringement, and the respondents have criticised the pleadings in relation to the proposed discovery orders.

5. The Court proposes to make a timetable permitting the applicants to amend the pleadings in light of the evidence that has been adduced identifying another entity as a respondent, in respect of which leave will be granted to join that entity, as well as to identify the alleged contraventions based on the further invoices that have emerged in the course of the evidence to date. 

Consideration of an order for limited discovery 

1. This Court does not ordinarily order discovery in proceedings before the Court and the Court must be satisfied and make a declaration that is appropriate in the interests of administration of justice to allow discovery. On the evidence before the Court, the Court is satisfied that this is an appropriate case for limited discovery to be made in accordance with the amended application in a case filed by the respondent. 

2. The Court is satisfied that it is appropriate for the orders to extend to both Microsoft Windows 7 Professional and Microsoft Windows 7 Home Premium Programs, and that the extent of the discovery requested is both reasonable and proper, taking into account the apparent issue in respect of the ability of the respondents to distinguish between alleged infringing sales and non-infringing sales. 

3. Taking into account r.14.02 of the Federal Circuit Court Rules 2001 (“the Federal Circuit Court Rules”), the Court is satisfied that this is an appropriate case in which there should be a declaration to allow the limited discovery identified in the amended application in a case filed by the applicant.

4. The Court has taken into account the matters identified in s.45(2) Federal Circuit Court of Australia Act 1999 (Cth) in determining whether this application should be granted, and the Court is satisfied that the making of the order for discovery in the circumstances of the present case, will contribute to the fair and expeditious conduct of the proceedings.

5. The Court has taken into account the burden placed on the respondents in that regard, and proposes to allow the time requested for compliance with the obligation. The Court is satisfied it is appropriate in the interests of the administration of justice to make the orders sought in the amended application in a case filed by the applicants. 

Applicants’ compliance with orders made by the Court on 7 September 2016

1. In relation to the application in a case brought by the respondents, the respondents seek to complain about the applicants’ compliance with the orders made by the Court on 7 September 2016.  It is apparent that further steps were taken in purported compliance with that order by the applicants following criticism by the respondents of the extent of compliance. 

2. The order made by the Court on 7 September 2016 was in general intended by the Court to put the parties in a position where the parties were able to meaningfully explore resolution, as well as to put the Court in a position where the Court more fully understood the nature of the issues between the parties, and to ensure that the parties had an adequate understanding of the respective case.

3. I am not satisfied that the respondents have any relevant lack of understanding of the case that is being advanced. I see no utility in making any further order for compliance with the order I made on 7 September 2016 in the present case. 

Transfer of proceedings

1. The respondents have also sought a transfer of the proceedings under r.8.01 of the Federal Circuit Court Rules to Melbourne. At this stage, the Court is not satisfied that it is appropriate to transfer the proceedings. The Court takes into account the considerations identified in r.8.01(2) of the Federal Circuit Court Rules. The Court does not propose to determine the matter on a final basis, and it is open to the respondents to bring a further application for transfer after the evidence in the case has been concluded.

2. At the present time, the Court is satisfied for the convenience of the parties, limiting expenses, the cost of proceedings and in relation to preparation of the matter, that it is appropriate that the matter remain before the current Court in Sydney. Accordingly, the Court proposes to dismiss the application in a case

I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of Judge Street

Associate: 

Date:  30 August 2017