Microsoft Corporation v Wordsworth
[2007] FMCA 2071
•27 November 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| MICROSOFT CORPORATION v WORDSWORTH | [2007] FMCA 2071 |
| COPYRIGHT – Application for summary judgment – importation of counterfeit computer programs – where respondent continued to import after providing undertaking – whether injunctive relief appropriate – whether damages should be awarded under s.115(2) Copyright Act 1968 – whether damages should be awarded under s.115(4) Copyright Act 1968. |
| Copyright Act 1968, ss.115(2), (4) Trade Marks Act 1995 Trades Practices Act 1974 Fair Trading Act (NSW) 1987 Federal Magistrate Court Rules 2001 |
| Microsoft Corporation & Others v PC Club Australia Pty Ltd and Others (2005) 67 IPR 262 Raben Footwear v Polygram Records (1997) 75 FCR 88 |
| Applicant: | MICROSOFT CORPORATION |
| Respondent: | GARRY WORDSWORTH |
| File Number: | SYG 481 of 2007 |
| Judgment of: | Raphael FM |
| Hearing date: | 27 November 2007 |
| Date of Last Submission: | 27 November 2007 |
| Delivered at: | Sydney |
| Delivered on: | 27 November 2007 |
REPRESENTATION
| Counsel for the Applicant: | Mr P Flynn |
| Solicitors for the Applicant: | Mallesons Stephen Jaques |
| For the Respondent: | No appearance |
ORDERS
An order pursuant to section 115(2) of the Copyright Act 1968 that the Respondent, whether by his servants, agents or otherwise be restrained from:
(a)reproducing or authorizing the reproduction of the whole or a substantial part of any of the Microsoft Programs without the licence of the First Applicant;
(b)selling, offering for sale, supplying, offering to supply, importing or distributing any Infringing Microsoft Program;
(c)authorizing, directing or procuring any other company or person from engaging in any of the conduct sought to be restrained by sub-paragraphs (a) and (b) above.
An order pursuant to sections 115 and 116 of the Copyright Act 1968 that within 7 days of the making of this order the Respondent deliver up to the solicitors of the Applicants on oath each Infringing Microsoft Program which is in the possession, power, custody or control of the Respondent.
An order that the Respondent, whether by his servants, agents or otherwise, be permanently restrained from infringing the Microsoft Trade Marks by:
(a)manufacturing, procuring the manufacture of, importing, purchasing, selling, offering to sell, supplying, offering to supply or distributing any Infringing Microsoft Products;
(b)authorising, directing or procuring any other company or person from engaging in any of the conduct sought to be restrained by subparagraph (a) above.
An order that within 7 days of the making of this order the Respondent deliver up to the solicitors of the Applicants on oath all Infringing Microsoft Products and any equipment used or intended to be used for making Infringing Microsoft Products in the possession, custody or control of the Respondent.
The Third Applicant be awarded damages pursuant to section 115(2) of the Copyright Act in the sum of $18,944.00.
The Third Applicant be awarded damages pursuant to section 115(4) of the Copyright Act in the sum of $20,000.00.
Interest be awarded pursuant to section 67 of the Federal Magistrates Act 1999 on the award of damages made pursuant to 115(2) of the Copyright Act. Schedule to be provided.
The Respondent pay the Applicants’ costs of the proceedings, such costs to be calculated by reference to Part 21 Rule 21.02(2)(b) and Schedule 1 of the Federal Magistrates Court Rules 2001.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 481 of 2007
| MICROSOFT CORPORATION |
Applicant
And
| GARRY WORDSWORTH |
Respondent
REASONS FOR JUDGMENT
I have before me an application for disposal by summary judgment pursuant to Part 13 Rule 13.07 of the Federal Magistrate Court Rules 2001. The application is in respect of proceedings commenced by way of application on 14 February 2007 seeking relief under the Copyright Act 1968, the Trade Marks Act 1995, the Trades Practices Act 1974 and the Fair Trading Act (NSW) 1987. The activities which were sought to be injuncted by that application were the importation from China of counterfeit Microsoft programs.
When the proceedings were first commenced they were served on the respondent who instructed a firm of solicitors, Roderick B Harris & Co., to act for him. On 8 August 2007 the matter was given a first directions hearing before me but the respondent failed to appear. I made some orders requiring the respondent to provide discovery to the applicants and stood the matter over until 19 September 2007. On
15 August 2007a notice to admit facts was served by the applicants upon the respondent's solicitors. About a week later the respondent’s solicitors advised the applicant's solicitors that their instructions had been withdrawn.
The applicants then served a copy of the discovery orders on the respondent by e-mail on 3 September. On 4 September the respondent provided certain documents to those solicitors in part compliance with the orders for discovery. On 17 September 2007 a further notice to admit facts was served and on 19 September 2007 the matter was brought back into this court for further directions.
The respondent failed to appear at the directions hearing and I set out a timetable providing orders for the hearing of this particular application. Those orders were served upon the respondent by e-mail on 20 September. On 9 October the respondent was served with this application and the supporting affidavits by e-mail and post. On 17 October 2007 a further notice to admit facts was served.
Although this is an application for summary judgment I have in fact heard all the evidence put by the applicant in support of its claim. The applicant relies on the three affidavits filed in this matter and the non-response of the respondent to the notices to admit facts to establish its copyright and the infringement.
I have been provided by Mr Flynn, who appears on behalf of the applicants, with a very helpful outline of submissions. This document has been filed and will be kept with the papers. It would be idle of me to repeat those submissions verbatim in this judgment but I would confirm that I have read them and that I have checked the references to documents contained in them. I am satisfied that those references are correct and that the admissions claimed to have been made by the respondent pursuant to his failure to respond to the notices to admit facts are admissions which he can properly be held accountable for.
The evidence shows that Mr Wordsworth imported from China some Microsoft programs in or around March of 2006. Those programs were intercepted by the Australian Customs who considered them to be counterfeit and advised the second applicant, the Australian company. The second applicant contacted the respondent and obtained from him undertakings, a copy of which is found annexed to the affidavit of Giselle Kirsty Grazier. The undertaking provided that Mr Wordsworth would not import, offer for sale or supply or offer to supply, any infringing Microsoft products, which term was defined in the undertaking document. One would have thought that what he had agreed to do was fairly clear but it seems that Mr Wordsworth was not prepared to honour those obligations and he continued to import counterfeit Microsoft products throughout 2006 unbeknownst to the applicants.
On 17 January 2007 another importation was seized by the customs and Microsoft were again informed. It was as a result of this seizure and information that the proceedings before me were commenced. The discovery provided by the respondent showed a course of dealing throughout 2006 which was not otherwise known to Microsoft.
The evidence establishes the applicant's right to commence these proceedings and the third applicant's right to the licence fees, the loss of which are claimed in the application. The notices to admit facts and the other evidence also establish Mr Wordsworth's knowledge of the importations and that the supply of infringing copies constituted an infringement of the first applicant's copyright. As Mr Flynn says at paragraph 26 of his submissions this knowledge would also be inferred from the fact that Mr Wordsworth executed a deed of undertaking on 21 April 2006.
As I am satisfied that there has been an infringement for which the respondent is responsible, and as the respondent has put on no defence to these proceedings and is taken to have made admissions pursuant to the notices to admit facts, I am satisfied that he has no answer to the claim as required by Part 13 Rule 13.07(1)(b)(i) and I would give judgment in favour of the applicants as requested.
The applicants require three things from this proceeding. They require injunctions, they require damages under s.115(2) of the Copyright Act and they require damages under s.115(4) of the Act. They have chosen to seek damages under s.115(2) based on what is known as a “licence fee” approach discussed by Conti J in Microsoft Corporation & Others v PC Club Australia Pty Ltd and Others (2005) 67 IPR 262 at [212].
I agree that this is the appropriate method of proceeding for the reasons provided by Mr Flynn in his submissions. The amount lost to Microsoft on that basis extracted through the notices to admit totals $18,944,00 and I will give judgment to the applicant for that sum.
In regard to the injunctions the applicant submit that they are necessary because of the behaviour of the respondent and in particular his flagrant breach of undertakings voluntarily entered into. To this must be added his failure to attend court or to do anything in connection with the proceedings other than to provide Microsoft with some scant details of his importation activities. It is appropriate that permanent injunctions should be given in this case. Mr Flynn has provided me with some short minutes of order which detail the injunctions required by reference to the original application. I propose to follow that wording.
Finally, damages under s.115(4) are sought. Damages under this section of the Copyright Act are provided to punish a copyright infringer and to deter similar infringements of copyrights. The court is required to take into account a number of matters set out in the subsection of which the most important in relation to this case can be said to be the flagrancy of the breach, the need to deter similar infringements and the conduct of the defendant after the act constituting the infringement was made known to him.
Insofar as the first importation is concerned it is possible that Mr Wordsworth thought he was undertaking a parallel import rather than the import of a counterfeit product. But once the infringement had been drawn to his attention and he had signed the undertakings he had no further excuse. His conduct thereafter was flagrant and brash. Any award of damages under s.115(4) must reflect this.
The need for deterrence is also important. This matter has been discussed in judgments of this court and of the Federal Court.
Mr Flynn has referred to some of the cases in his written submissions and they are also considered by Conti J in Microsoft v PC Club.
The conduct of the defendant has already been referred to but the court also takes into account his total failure to appear or to take part in any meaningful way in the proceedings brought against him.
Additional damages are frequently awarded that do not appear to have much relationship with the amount of actual damage suffered. In many cases the actual damage suffered by way of lost licence fees or cost of product is small, yet the s.115(4) damages are very substantial: Raben Footwear v Polygram Records (1997) 75 FCR 88. In this case the applicants seek damages under s.115(4) that do have some relation to the value of the loss suffered. To my mind they would be entitled to no less. Having read the submissions of the applicants I independently came to a view that the appropriate amount to award was $20,000.00 and was pleasantly surprised to see that that was the amount that Mr Flynn had also suggested. It is the amount I propose to award. There will be judgment for the applicants. The respondent shall pay the applicant’s costs. Such costs to be calculated by reference to Part 21 Rule 21.02(2)(b) and Schedule 1 of the Federal Magistrates Court Rules 2001.
I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of Raphael FM
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