FEDERAL COURT OF AUSTRALIA
New Aim Pty Ltd v Leung [2021] FCA 1329
File number: VID 547 of 2021 Judgment of: MOSHINSKY J Date of judgment: 26 October 2021 Catchwords: PRACTICE AND PROCEDURE – application for interlocutory injunction – where the applicant was an online retailer of products – where the first three respondents were former employees of the applicant – where the applicant contended that the first three respondents had used confidential information concerning the identity and contact details of suppliers – where the applicant contended that there are thousands of suppliers of products in China producing products in categories corresponding to its product lines; that it undertakes very careful due diligence before selecting products and appointing suppliers; and that it treats the identity of its suppliers as confidential – whether prima facie case established – whether balance of convenience favoured the grant of an injunction – injunction granted Legislation: Corporations Act 2001 (Cth), s 183
Federal Court of Australia Act 1976 (Cth), ss 23, 37P
Federal Court Rules 2011, r 1.32
Cases cited: Australian Competition and Consumer Commission v Pacific National Pty Ltd [2018] FCA 1221
Computershare Ltd v Perpetual Registrars Ltd (2000) 1 VR 626
Norwich Pharmacal Co v Commissioners of Customs and Excise [1974] AC 133
Thomas Marshall (Exports) Ltd v Guinle [1979] 1 Ch 227
Division: General Division Registry: Victoria National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Number of paragraphs: 53 Date of hearing: 22 October 2021 Counsel for the Applicant: Mr LA Merrick Solicitor for the Applicant: Corrs Chambers Westgarth Counsel for the Respondents: Mr N Paterson Solicitor for the Respondents: Jem Lawyers Pty Ltd ORDERS
VID 547 of 2021 BETWEEN: NEW AIM PTY LTD
Applicant
AND: MAN HUNG (JACK) LEUNG
First Respondent
(JENNY) LI YINGXUE
Second Respondent
LEI (RAY) XIAO (and others named in the Schedule)
Third Respondent
ORDER MADE BY:
MOSHINSKY J
DATE OF ORDER:
26 OCTOBER 2021
THE COURT NOTES THAT: the applicant by its counsel has given the usual undertakings as to damages.
THE COURT ORDERS THAT:
Interlocutory injunction
1.In this order, New Aim Supplier Information means the identity and/or contact details of persons who were suppliers of products to the applicant (New Aim) (save for the supplier of the outdoor heating products sold by New Aim under the Devanti brand) as at January 2021 or March 2021.
2.Subject to further order, until the hearing and determination of the proceeding, the respondents, whether by themselves, their officers (in the case of the fourth and fifth respondents), their employees or agents or otherwise howsoever, be restrained from, without the licence or authority of New Aim:
(a)reproducing or disclosing to any third party the New Aim Supplier Information;
(b)using in any manner whatsoever the New Aim Supplier Information, including by:
(i)procuring from suppliers to New Aim products that are the same (or substantially the same) as products in the New Aim product range as it stood at January 2021 or March 2021; or
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- Case
- [2021] FCA 1329
- Decision Date
CaseChat Overview and Summary
In granting the injunction, the Court found that New Aim had established a strong prima facie case of copyright infringement, as the evidence suggested that the respondents had reproduced New Aim's images. The Court also concluded that the balance of convenience favoured the grant of an interlocutory injunction, as New Aim had shown that it treated the identity of its suppliers as highly valuable and proprietary, and had internal controls in place to limit access to supplier details within the company. The Court was not persuaded by the respondents' argument that the injunction was too wide and should be limited to specific and ascertainable conduct.
The Court issued an interlocutory injunction restraining the respondents from reproducing or disclosing to any third party the New Aim Supplier Information, using in any manner whatsoever the New Aim Supplier Information, and reproducing, publishing or communicating to the public any of the images identified as "New Aim raw images". The Court also made orders for discovery and disclosure, confidentiality, case management, and costs. The matter was listed for a case management hearing and the hearing of the proceeding was to be expedited.
Orders
Orders of the court
Interlocutory injunction
1. In this order, New Aim Supplier Information means the identity and/or contact details of persons who were suppliers of products to the applicant (New Aim) (save for the supplier of the outdoor heating products sold by New Aim under the Devanti brand) as at January 2021 or March 2021.
2. Subject to further order, until the hearing and determination of the proceeding, the respondents, whether by themselves, their officers (in the case of the fourth and fifth respondents), their employees or agents or otherwise howsoever, be restrained from, without the licence or authority of New Aim:
(a) reproducing or disclosing to any third party the New Aim Supplier Information;
(b) using in any manner whatsoever the New Aim Supplier Information, including by:
(i) procuring from suppliers to New Aim products that are the same (or substantially the same) as products in the New Aim product range as it stood at January 2021 or March 2021; or
(ii) promoting or selling such products;
(c) reproducing, publishing or communicating to the public any of the images identified as “New Aim raw images” in Annexure A to these orders (which replicates annexure “FL-10” to the affidavit of Fung Lam dated 23 September 2021) or a substantial part of any of those images, including by reproducing, publishing or communicating to the public any of the promotional images appearing in the right-hand column in Annexure A,
provided that nothing in sub-paragraph (a) or (b) shall prevent the respondents from:
(d) disclosing the New Aim Supplier Information or any part of it to their legal advisors for the purpose of defending or seeking advice in relation to this proceeding; or
(e) reproducing (subject to appropriate confidentiality restrictions) the New Aim Supplier Information for the purposes of complying with paragraph 3 below,
and provided that nothing in sub-paragraph (c) shall prevent the respondents from reproducing, publishing or communicating to the public any parts of the images in the right-hand column of Annexure A that are not derived from the corresponding image in the left-hand column of Annexure A.
Discovery and disclosure
3. By 4.00 pm on 5 November 2021:
(a) The respondents each give discovery of all documents (whether in hard copy or electronic form) in their control (as defined in the Federal Court Rules 2011) which contain or refer to the New Aim Supplier Information;
(b) The first to third respondents each file and serve an affidavit identifying any person to whom or which they have disclosed the New Aim Supplier Information since leaving the employment of New Aim;
(c) The fifth respondent (Broers) file and serve an affidavit (made by a duly authorised company officer):
(i) identifying any person to whom or which it has disclosed the New Aim Supplier Information since 1 January 2021;
(ii) setting out details of all products that it has procured from suppliers to New Aim in the period from 1 January 2021 to the date of the affidavit;
(iii) setting out details of all such products that it has sold in the same period.
(d) The fourth respondent (Sun Yee International) file and serve an affidavit (made by a duly authorised company officer):
(i) identifying any person to whom or which it has disclosed the New Aim Supplier Information since 1 January 2021;
(ii) setting out details of all products that it has purchased from Broers in the period from 1 January 2021 to the date of the affidavit that it is aware were procured by Broers from suppliers to New Aim;
(iii) setting out details of all such products that it has sold in the same period.
Confidentiality
4. Subject to further order, until the hearing and determination of the proceeding, pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth), on the ground that it is necessary to prevent prejudice to the proper administration of justice, access to the following documents be restricted to the applicant (and its lawyers) and the external lawyers for the respondents who have signed undertakings as agreed between the parties:
(a) confidential annexures DGF-14, DGF-16, DGF-18, DGF-20 to the affidavit of David Fixler dated 23 September 2021;
(b) confidential annexures FL-2 and FL-12 to the affidavit of Fung Lam dated 23 September 2021;
(c) the affidavit of Richard Liang dated 5 October 2021 (Liang Affidavit) and its annexures (except Annexures RL-4 and RL-5);
(d) confidential annexures FL-14 and FL-15 to the second affidavit of Fung Lam dated 6 October 2021; and
(e) confidential annexures FL-18 and FL-22 to the third affidavit of Fung Lam dated 20 October 2021,
provided that this order does not prevent access to a redacted version of the Liang Affidavit (which has been or is to be filed).
5. Subject to further order, until the hearing and determination of the proceeding, pursuant to s 37AF of the Federal Court of Australia Act, on the ground that it is necessary to prevent prejudice to the proper administration of justice, the following document be kept confidential and access to the document be restricted to the applicant (and its lawyers), the first respondent, and the lawyers acting for the respondents:
annexure ML-6 to the affidavit of the first respondent dated 21 October 2021.
6. The documents and information referred to in paragraphs 4(a)-(e) and paragraph 5 is confidential for the purposes of r 2.32 of the Federal Court Rules 2011.
Case management and other orders
7. By 4.00 pm on 9 November 2021, the respondents file and serve their defences.
8. By 4.00 pm on 16 November 2021, the applicant file and serve any reply.
9. Subject to further order, the hearing of the proceeding be expedited.
10. The matter be listed for a case management hearing on a date to be fixed, not before 17 November 2021.
11. Costs be reserved.
12. There be liberty to apply.
[Annexure A omitted.]
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
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
New Aim contends that if the Court does not accept its submissions on the balance of convenience, the terms of the injunction sought are too wide and ought to be limited to specific and ascertainable conduct.Consideration It is convenient to commence with the aspect of the interlocutory application that concerns the reproduction of images in respect of which New Aim claims copyright. In my view, in respect of this part of the case, at least, there is a strong prima facie case of copyright infringement based on the evidence currently before the Court. The evidence relied on by New Aim on the present application strongly suggests that its images have been reproduced by Broers and Sun Yee International. It is true that, when one compares the images in the left-hand and right-hand columns of annexure “FL‑10”, in some cases, the images look quite different. For example, in item 14, the image on the left is an empty chest with a bare background, while the image on the right is a chest filled with toys and with a garden background. However, according to the current evidence, a close examination of the images establishes that the image of the chest on the right is a reproduction of the image on the left. On the present application, the respondents did not seek to refute the evidence that New Aim’s images had been reproduced in Broers and Sun Yee International’s marketing material. In my view, the balance of convenience favours the grant of an interlocutory injunction to restrain the further reproduction, publication or communication to the public of the relevant images. I do not consider the undertaking offered by the respondents in this regard to go far enough. It is expressed in general and vague terms. In light of the conduct that has occurred, I consider it appropriate that an injunction be granted. I turn now to consider the aspect of the interlocutory application that concerns the use of information that is said to be confidential. As indicated earlier, the information that is said to be confidential is not just the identity and details of the relevant suppliers; it is the identity and details of the relevant suppliers together with the fact that they have proven to be reliable suppliers of high quality products which are suitable for the Australian market. Mr Lam states in his first affidavit that New Aim “treats the identity of its suppliers as highly valuable and proprietary and does not disclose the identity of its suppliers (including to customers)”. Mr Lam explains the reasons for this at paragraphs 27, 36 and 37 of his first affidavit. I refer also to paragraphs 29 to 35 of that affidavit, in which Mr Lam describes the detailed and time-consuming process involved in identifying and vetting suppliers. There is evidence before the Court that New Aim has internal controls to limit access to supplier details within the company. There is also evidence, albeit contested, that New Aim ensures that those employees who do have access to the information are aware of the need to treat it as confidential: see Mr Lam’s first affidavit, paragraph 38; but compare Mr Leung’s first affidavit at paragraphs 9, 14 and 21 to 23.