Paramount Design v Awaba Group
[2003] FMCA 336
•8 August 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| PARAMOUNT DESIGN v AWABA GROUP & ORS | [2003] FMCA 336 |
| COPYRIGHT – Interlocutory injunction – whether substantial reproduction – whether damages would be an adequate remedy – whether serious question to be tried – balance of convenience – whether undertaking as to damages effective – injunction granted. |
Copyright Act 1968 (Cth), ss.10. 31(1), 36(1), 37, 38
Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148
Australian Coarse Grain Pty Ltd v Barley Marketing Board of Queensland (1995) 46 ALR 398
Martin Engineering Co v Trison Holdings Pty Ltd (1988) 11 IPR 611
CBS Records Australia Ltd v Telmak Teleproducts (Aust) Pty Ltd (1987) 8 IPR 473
Wood & Ors v Kempe & ors (1995) 32 IPR 37
Waterflow Directories Ltd v Reed Information Services Ltd (1990) 20 IPR 69
Francis Day & Hunter Ltd v Twentieth Century Fox Corp Ltd [1940] AC 112 Exxon Corp v Exxon Insurance Consultants [1982] Ch 199
| Applicant: | PARAMOUNT DESIGN GROUP PTY LTD (ACN 091 684 347) |
| First Respondent: | AWABA GROUP PTY LTD (ACN 084 100 872) |
| Second Respondent: | BELLA PRODUCTS PTY LTD (ACN 104 531 491) |
| Third Respondent: | PAUL TONIOLO |
| Fourth Respondent: | MARY TONIOLO |
| File No: | MZ 636 of 2003 |
| Delivered on: | 8 August 2003 |
| Delivered at: | Melbourne |
| Hearing Date: | 26 July 2003 |
| Judgment of: | McInnis FM |
REPRESENTATION
| Counsel for the Applicant: | Ms G Hubble |
| Solicitors for the Applicant: | Brand Partners |
| Counsel for the Respondents: | Mr A Ryan |
| Solicitors for the Respondents: | Deacons |
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MZ 636 of 2003
| PARAMOUNT DESIGN GROUP PTY LTD (ACN 091 684 347) |
Applicant
And
| AWABA GROUP PTY LTD (ACN 084 100 872) |
First Respondent
And
| BELLA PRODUCTS PTY LTD (ACN 104 531 491) |
Second Respondent
And
| PAUL TONIOLO |
Third Respondent
And
| MARY TONIOLO |
Fourth Respondent
REASONS FOR JUDGMENT
This is an application by Paramount Design Group Pty Ltd (the Applicant) by way of Notice of Motion filed 23 July 2003 seeking an interlocutory injunction arising out of what is claimed to be a breach of copyright.
In its Notice of Motion the Applicant seeks to join other Respondents and at the commencement of the proceedings leave was granted to the Applicant to join three other Respondents. The Respondents to the Application are Awaba Group Pty Ltd (the First Respondent), Bella Products Pty Ltd (the Second Respondent), Paul Toniolo (the Third Respondent) and Mary Toniolo (the Fourth Respondent).
The Applicant was further granted leave to file and serve an Amended Statement of Claim incorporating the new Respondents and making consequential amendments.
In the Amended Statement of Claim the Applicant asserts that at all material times it was the owner of copyright subsisting in Australia within the meaning of the Copyright Act 1968 (Cth) in an original artistic and literary work developed by the Applicant around the product known as “Bella Ballerina” (the artistic and literary work).
There is no dispute in the present case that “Bella Ballerina” is a trademark owned by the First Respondent. A range of ballet related products incorporating the trade name have been produced and marketed.
It is claimed by the Applicant that it had entered into a contract with the First Respondent in or about December 2002 whereby the Applicant agreed to provide what is described as “project management, visual communication and brand guardianship services in respect of the Bella Ballerina product”. The contract for services is claimed to be partly oral and partly to be implied. The oral agreement consisted of alleged conversations between representatives of the First Respondent and representatives of the Applicant with terms and conditions of the contract claimed to include the provision of services by the Applicant to the First Respondent for an agreed price of $10,000 per month for 40 hours work, an hourly rate for work completed above 40 hours at the applicable rate and payment of disbursements incurred by the Applicant. It is claimed that a critical term of the agreement is that the Applicant would grant to the First Respondent a licence to use the Applicant’s copyright as long as its fees were paid by the First Respondent.
A written document purporting to be a contract for services has been relied upon by the Applicant and referred to in the Amended Statement of Claim as “variation of contract”. The contract provides terms and conditions, amongst others, as follows:-
“2.1Any intellectual property created by Paramount during the course of this agreement for and on behalf of the client or in the course of the providing the services is and shall remain the property of Paramount at all times.
2.2Subject to payment of all fees due to Paramount under clause 4, Paramount grants to the client an exclusive licence to use the intellectual property in the ordinary course of the client’s business in connection with the Bella Ballerina brand.”
The contract between the Applicant and the First Respondent has not been executed.
Nevertheless it is claimed that pursuant to the contract for services the Applicant performed services which it agreed to provide and that the First Respondent has failed to pay outstanding invoices said to be due to the Applicant and amounting to $104,301.80.
In the Applicant’s Further and Better Particulars of Statement of Claim filed 22 July 2003 reference is made to the following Bella Ballerina products claimed to have been designed by the Applicant subject to allegations of infringement:-
(a)IP3 – Business Cards;
(b)IP8 – Bella Ballerina sales kit;
(c)IP9 – Bella Ballerina CD;
(d)IP14 – Hobby Fair kit including plastic bag design, stickers, business cards, color guides, retail box mock up, graphics for trade show video, T-shirt art work, talent hire for trade show video;
(e)IP15 – Bella Ballerina booth;
(f)IP17 – Bella Ballerina Retail Card;
(g)IP21 – Bella Ballerina box.”
It is claimed that those products had been marketed by the Respondent at the Melbourne Exhibition Centre Australian Toy and Hobby Fair conducted between 21 and 25 March 2003. Further attempts have been claimed to market the products and arrangements made by the Second Respondent and/or the Third and Fourth Respondents to arrange for the manufacture of certain of the products in China.
In paragraph 11 of the Amended Statement of Claim the Applicant specifically alleges the following:-
“The first and second respondents have infringed the Applicant’s copyright in the artistic and literary work by, without the licence or authority of the Applicant, doing and/or causing or authorising the doing of the following acts:
(a)reproducing and/or adapting the artistic work or a substantial part of that artistic work in material form; and
(b)publishing the artistic work or a substantial part of that artistic work.”
In general terms the infringements are claimed in the Amended Statement of Claim to involve or by way of trade offering or exposing for sale the infringed products where it is said that the First and Second Respondents or their servants and/or agents knew or ought reasonably known that the making of the First and Second Respondents products bearing the artistic and literary work or a substantial part of the artistic and literary work on products infringes the copyright of the Applicant in the artistic work.
There is a degree of urgency about the current application on the grounds that at least some of the products are apparently the subject of arrangements with various retailers for delivery in or about mid August 2003.
In the Notice of Motion the Applicant claims an injunction in the following terms:-
“3.That until the final hearing of this proceeding, or until further order, the Respondent whether by themselves, their servants or agents or otherwise howsoever, whether directly or indirectly, be restrained from:
(a)infringing the Applicant’s copyright in the artistic and literary work;
(b)manufacturing, importing for sale, selling or by way of trade, offering and/or exposing for sale of distributing or exhibiting in public, any product, article or document reproducing and/or adapting the artistic and literary work, including the manufacture, distribution or sale of the Bella Ballerina products referred to in the folders annexed to the applicant’s further and better particulars filed 22 July 2003 or authorising the said conduct, and
(c)representing that any product, article or document manufactured, sold or distributed by it, and reproducing and/or adapting the artistic and literary work, or any substantial part of the artistic and literary work has the approval or licence of the Applicant.”
Relevant law
It is common ground that in considering whether to grant an interlocutory injunction the Court must determine whether there is a serious issue to be tried and whether the balance of convenience favours the granting of the injunction (see Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148 at 153; Australian Coarse Grain Pty Ltd v Barley Marketing Board of Queensland (1995) 46 ALR 398). The Court must weigh the balance of risk of doing an injustice (see Martin Engineering Co v Trison Holdings Pty Ltd (1988) 11 IPR 611 at 616 per Gummow J).
In determining whether there is a serious question to be tried the Court must consider not only the issues of fact between the parties but also questions of law (see CBS Records Australia Ltd v Telmak Teleproducts (Aust) Pty Ltd (1987) 8 IPR 473 at 487 per Bowen CJ). In considering whether there is a serious question of law to be tried it is not necessary for the Court to make a final determination regarding the facts or the law but it is necessary to consider the matters raised by the parties on the interlocutory application. It is recognised that in some copyright applications the interlocutory decision of the Court may effectively become a final determination of the issues. In the present case it is not suggested that the interlocutory decision of this Court would result in a final determination of the dispute between the parties. The Court is required to consider the balance of convenience issues as they relate to the parties.
It is necessary for the Court to identify the work which was claimed to be the subject of copyright infringement and then determine whether that work can properly regarded in the present case as a literary or artistic work as defined by the Copyright Act. The Court further needs to determine whether it could properly be concluded that the Applicant owns the copyright. The further task of the Court involves a comparison then between the items claimed to be the subject of copyright ownership and the alleged infringed items to determine whether there has been reproduction (see Wood & Ors v Kempe & ors (1995) 32 IPR 37; Waterflow Directories Ltd v Reed Information Services Ltd (1990) 20 IPR 69).
Section 10 of the Copyright Act provides the following relevant definitions:
“Part II - Interpretation Interpretation
10 (1) In this Act, unless the contrary intention appears:
…
adaptation means:
(a)in relation to a literary work in a non - dramatic form a version of the work (whether in its original language or in a different language) in a dramatic form;
(b)in relation to a literary work in a dramatic form a version of the work (whether in its original language or in a different language) in a non - dramatic form;
(ba) in relation to a literary work being a computer program - a version of the work (whether or not in the language, code or notation in which the work was originally expressed) not being a reproduction of the work;
(c)in relation to a literary work (whether in a non - dramatic form or in a dramatic form):
(i)a translation of the work; or
(ii) a version of the work in which a story or action is conveyed solely or principally by means of pictures; and
(d) in relation to a musical work - an arrangement or transcription of the work.
…
artistic work means:
(a)a painting, sculpture, drawing, engraving or photograph, whether the work is of artistic quality or not;
(b)a building or a model of a building, whether the building or model is of artistic quality or not; or
(c)a work of artistic craftsmanship to which neither of the last two preceding paragraphs applies;
but does not include a circuit layout within the meaning of the Circuit Layouts Act 1989.
Australia includes the external Territories.
…
infringing copy means:
(a)in relation to a work - a reproduction of the work, or of an adaptation of the work, not being a copy of a cinematograph film of the work or adaptation;
(b)in relation to a sound recording - a copy of the sound recording not being a sound-track associated with visual images forming part of a cinematograph film;
(c)in relation to a cinematograph film - a copy of the film;
(d)in relation to a television broadcast or a sound broadcast - a copy of a cinematograph film of the broadcast or a record embodying a sound recording of the broadcast; and
(e)in relation to a published edition of a work - a facsimile copy of the edition; being an article the making of which constituted an infringement of the copyright in the work, recording, film, broadcast or edition or, in the case of an article imported without the licence of the owner of the copyright, would have constituted an infringement of that copyright if the article had been made in Australia by the importer, but does not include:
(f)a non-infringing book whose importation does not constitute an infringement of that copyright; or
(g)a non-infringing accessory whose importation does not constitute an infringement of that copyright; or
(h)a non-infringing copy of a sound recording whose importation does not infringe that copyright; or
(i)a non-infringing copy of a computer program whose importation does not infringe that copyright; or
(j)a non-infringing copy of an electronic literary or music item whose importation does not infringe that copyright.
…
literary work includes:
(a)a table, or compilation, expressed in words, figures or symbols; and
(b) a computer program or compilation of computer programs.”
Section 31(1) of the Copyright Act provides for the exclusive rights of a copyright owner as follows:
“Nature of copyright in original works
31(1) For the purposes of this Act, unless the contrary intention appears, copyright, in relation to a work, is the exclusive right:
(a)in the case of a literary, dramatic or musical work, to do all or any of the following acts:
(i) to reproduce the work in a material form;
(ii) to publish the work;
(iii) to perform the work in public;
(iv) to communicate the work to the public;
(vi) to make an adaptation of the work;
(vii) to do, in relation to a work that is an adaptation of the first-mentioned work, any of the acts specified in relation to the first-mentioned work in subparagraphs (i) to (iv), inclusive; and
(b)in the case of an artistic work, to do all or any of the following acts:
(i) to reproduce the work in a material form;
(ii) to publish the work;
(iii) to communicate the work to the public; and
(c)in the case of a literary work (other than a computer program) or a musical or dramatic work, to enter into a commercial rental arrangement in respect of the work reproduced in a sound recording; and
(d)in the case of a computer program, to enter into a commercial rental arrangement in respect of the program.”
Sections 36(1), 37 and 38 provide the following:-
Division 2 - Infringement of copyright in works Infringement by doing acts comprised in the copyright
36(1) Subject to this Act, the copyright in a literary, dramatic, musical or artistic work is infringed by a person who, not being the owner of the copyright, and without the licence of the owner of the copyright, does in Australia, or authorizes the doing in Australia of, any act comprised in the copyright.
Infringement by importation for sale or hire
37(1) Subject to Division 3, the copyright in a literary, dramatic, musical or artistic work is infringed by a person who, without the licence of the owner of the copyright, imports an article into Australia for the purpose of:
(a)selling, letting for hire, or by way of trade offering or exposing for sale or hire, the article;
(b)distributing the article:
(i)for the purpose of trade; or
(ii)for any other purpose to an extent that will affect prejudicially the owner of the copyright; or
(c)by way of trade exhibiting the article in public;
if the importer knew, or ought reasonably to have known, that the making of the article would, if the article had been made in Australia by the importer, have constituted an infringement of the copyright.
(2)In relation to an accessory to an article that is or includes a copy of a work, being a copy that was made without the licence of the owner of the copyright in the work in the country in which the copy was made, subsection (1) has effect as if the words "the importer knew, or ought reasonably to have known, that" were omitted.
Infringement by sale and other dealings
38(1) Subject to Division 3, the copyright in a literary, dramatic, musical or artistic work is infringed by a person who, in Australia, and without the licence of the owner of the copyright:
(a)sells, lets for hire, or by way of trade offers or exposes for sale or hire, an article; or
(b)by way of trade exhibits an article in public;
if the person knew, or ought reasonably to have known, that the making of the article constituted an infringement of the copyright or, in the case of an imported article, would, if the article had been made in Australia by the importer, have constituted such an infringement.
(2)For the purposes of the last preceding subsection, the distribution of any articles:
(a)for the purpose of trade; or
(b)for any other purpose to an extent that affects prejudicially the owner of the copyright concerned;
shall be taken to be the sale of those articles.
Whether there is a serious question to be tried
It was submitted on behalf of the Applicant that there is a serious question to be tried in the present application. The Applicant relied upon affidavits by Steve Kimonides sworn on 12 June 2003, 22 July 2003 and 27 July 2003, Penny Reiner sworn 22 July 2003, Joel Ruffles sworn 22 July 2003 and Sam Campisi sworn 30 July 2003.
In addition the Applicant relied upon Further and Better Particulars of the Statement of Claim and attached two annexures. Annexure
1 itemised what is described as artistic and literary work developed by the Applicant in relation to the product known as Bella Ballerina. It is clear that a number of products referred to in the annexure are not necessarily the subject of claims of infringement. Annexure 2 to the Further and Better Particulars of the Applicant set outs items claimed by the Respondent to be examples whereby the First and Second Respondents are said to be reproducing and/or adapting the artistic work or a substantial part of that artistic work in material form and publishing the artistic work or a substantial part of that artistic work.
Reference is made in the further particulars to attempts made by the Respondents to market or supply the Bella Ballerina product range which the Applicant alleges bears artistic and literary work created by the Applicant to a number of major retail outlets.
In relation to the contract the Applicant relied upon the affidavit of Ms Reiner, a former employee of the Respondent who referred to alleged conversations concerning copyright in the products produced by the Applicant. She alleges that Mr Steve Kimonides of the Applicant had been present when the Fourth Respondent and Mr Steve Kimonides of the Applicant had a discussion concerning the issue of intellectual property. In her affidavit Ms Reiner who deposes to being employed as Marketing Manager of the Respondent and on whose behalf she conducted negotiations with the Applicant states that Mr Steve Kimonides said words to the effect, “we cannot sign over the IP, as retaining our copyright is standard practice” and “provided everything is paid for Awaba will have the exclusive right to use the IP”. In her affidavit Ms Reiner goes on to state, “I also recall Steve explaining that it is the only way they can protect themselves if they are not paid”. Ms Reiner otherwise deposes that although the contract was not executed the Applicant commenced performance of the work. In relation to the contract she states that the Fourth Respondent had “read the contract” and said words to the effect, “I am happy with it” and indicated she would sign it.
Hence, It was submitted that there is a contract in existence which though not executed was performed and that it accurately reflects the terms and conditions acceptable to the parties.
For the purpose of this interlocutory application and for the sake of simplicity Counsel for the Applicant referred to exhibits of the affidavit of Mr Kimonides sworn 22 July 2003. In that affidavit the deponent by exhibit SK 1 attached six A3 size sheets of paper which are said to show on the left hand side of the page an example of the artistic and literary design, designs developed by the Applicant and on the right hand half of the page an example of the changed design. It is sufficient to perhaps refer to two of those pages. The first is what is described as a picture of a ballerina in a particular pose said to show a blurring effect on the legs to give the impression that the ballerina is gliding or flying through the air. There are stars around it and the Court was invited to look carefully at that work said to be created by the Applicant and a copy of a work said to be used by the Respondents and described as “infringed design”. I set out, albeit in a black and white version, the respective designs.
PARAMOUNT DESIGN INFRINGED DESIGNFurther reference was made to the Applicant’s design and what is purported to be an infringed design on other pages attached to the Kimonides affidavit. The Court’s attention was drawn to what is described as a “beige colored pattern” appearing on the alleged infringed design. That pattern was described as having a particular swirl design with stars incorporated around the swirl designs at the top. It is claimed that that particular feature of the design, that is the beige design, had emanated from the Applicant’s design of what is described as the Bella Ballerina booth (IP 15).
The Court’s attention was further drawn to the design of the logo by the Applicant compared with what is claimed to be the infringed design which again, although in black and white, I incorporate in the judgment as follows:
PARAMOUNT DESIGN INFRINGED DESIGN
It was submitted by the Applicant that an analysis of the two logo designs reveal a number of similarities that are apparent to the naked eye. For example, reference is made to the use of the star, the positioning of the word “Bella” in relation to the positioning of the word “Ballerina”, and the particular configuration of upper case and lower case. The affidavit material filed in support of the application referred in further detail in relation to the comparison between the two logos. The Court had by way of exhibits a color version of the exhibits. In general terms I am prepared to find that the coloring and shading is of a similar pink color scheme with certain items including similar beige-colored pattern referred to earlier in this judgment.
It was submitted that when considering the examples provided in the affidavit material there has been a substantial reproduction of the design of the Applicant and that changes made allegedly by the Respondents are what might be described as small with the similarities outweighing the dissimilarities to at least provide a basis where the Court should accept on an interlocutory application that there is a serious case to be tried in terms of copyright infringement.
In relation to the logo it was submitted that the affidavit material demonstrates that the logo was developed by the Applicant and that very basic sketches were provided to the Applicant by the Fourth Respondent. The Court was taken to what might be described as the evolution of the logo design by the graphic designers of the Applicant in order to determine at this interlocutory stage that there had been a design developed primarily by the Applicant. The development of what is described as the artistic work ultimately became the logo.
It was submitted that the proper analysis of the material would demonstrate that there has been a substantial reproduction of the logo designed by the Applicant. This follows what is described as a situation where “the parties have fallen out” and where the Respondents wish to distribute the products without spending another six months re-designing from “scratch” so that all that has occurred is an attempt to “modify what was already done in the hope that they could introduce efficient dissimilarities to not be an infringement”. Specific reference was made to an email exchange between a graphic designer subsequently engaged by the Respondent, namely a Ms Byron and the Fourth Respondent. In the Fourth Respondent’s affidavit she deposes that, “The logo presently used for Bella Ballerina product the new logo was designed by Liga Byron of Vizkidz after the relationship with Paramount had ended”. An email exhibited to the affidavit of Ms Byron notes as follows:-
“Dear Mary,
thanks for your email. The shoot went well. The kids were gorgeous.
Re branding. I made up the letter style myself by modifying the existing letters. I do not recall what Paramount looks like but if its similar and your not comfortable with it, I’ll get back to the drawing board today. Hopefully I can crack it sooner rather than later. As you no doubt know, logo development is a process that can take time to refine.”
The Fourth Respondent by way of reply to that email stated,
“… The Brand you sent was too close to Paramounts … and I could have an issue with that I’d prefer to get away from this. I do not think it is that well known that we cannot change it. Perhaps the font should be different; I will leave the suggestions up to you.”
It was in the context of the email exchange to which I have referred that submissions were made that the Respondent had simply sought to modify the Applicant’s design of the logo and indeed other examples of what are described as the artistic work of the Applicant.
The Respondent in the affidavit material had referred to design originating from the Respondent and in relation to that issue the Court was invited by the Applicant to consider the material and it was submitted that the similarity between the infringed design and the Applicant’s design outweighs any similarity in artistic terms between the infringed design and sketches allegedly drawn by one of the Respondents.
Emphasis was also placed on what is described as the heroine figure in the designs and what is described by Counsel for the Applicant as being an idea formed by Mr Kimonides of the Applicant in relation to the positioning of the ballerina, with the stars, the positioning of it on the product together with the blurring of the white legs to give the effect of flying. It is these aspects of the literary works generated by the Applicant which are said to have been substantially reproduced by the alleged infringed versions.
During the course of submissions reference was made to other designs on certain products. For the present purposes it is not necessary to otherwise analyse those in any further detail save that it is conceded that copyright in any photographs is not the subject of ownership by either party in these proceedings.
The Respondent after referring to the relevant principles to be applied submitted that there is no serious question to be tried. He specifically invited the Court to conclude that the copyright claim was “completely misconceived”. There has been no adaptation as defined in s.10 and therefore no breach of exclusive rights provided by s.31(1) of the Copyright Act. The real issue, it was submitted, relates to the assertion that the work has been reproduced and without licence in contravention of s.31(1)(a)(i) of the Copyright Act and that the articles bearing the alleged reproduction are being imported and sold. Reliance is otherwise placed on ss.36(1), 37 and 38 of the Copyright Act.
It was submitted that it is necessary for the Court to identify the work which is alleged to be the subject of the infringement and to then determine whether that is in fact a literary or artistic work. If copyright subsists in the work then the Court needs to determine whether the Applicant is the owner of that copyright. A comparison then needs to be undertaken to determine whether there has been a reproduction.
I accept that that is a correct procedure to be followed by the Court though note in an interlocutory application that it is not necessary for the Court to reach a final determination about the matter but rather to pursue the process in order to determine whether there is a serious question to be tried.
During the course of submissions Counsel for the Respondent relied upon affidavits sworn by Mary Toniolo on 30 June 2003 and 28 July 2003, an affidavit sworn by Paul Toniolo sworn 28 July 2003 and
31 July 2003, and an affidavit sworn by Nigel David Jones on 29 July 2003.
In general terms it was submitted that an examination of the works identified as the Applicant’s works reveals that not all are alleged to have been infringed. Those works which are alleged to have been infringed contain what is submitted to be a level of exaggeration and speculation in the claim. Strong objection was taken to any alleged copyright in photographs which as I have indicated was conceded by Counsel for the Respondents for the present purposes.
In relation to the logo it was submitted that claim should fail because of the insubstantial nature of the work and it could be regarded as a literary work (see Francis Day & Hunter Ltd v Twentieth Century Fox Corp Ltd [1940] AC 112 and Exxon Corp v Exxon Insurance Consultants [1982] Ch 199). In the alternative it was submitted that the evidence suggests that the title in fact was first adopted by the Respondents and there is no original contribution made by the Applicant.
In relation to the logo it was submitted that the evidence suggested that this had been created by Ms Byron of Vizkidz who had designed it deliberately to avoid similarity with the Applicant’s design on the basis that there may be a danger that the letter “B” in that logo may give rise to a dispute with the owners of the product referred to as a “barbie doll”.
In relation to the booth design it was submitted that the design was created by the Respondents, an interior designer and set design company. Other reference was made to the item claimed to be infringed and in general it was submitted that any claims to copyright infringement must fail.
In a matter of this kind it is not necessary for the Court to examine in minute detail each and every claim and counterclaim by the parties.
I am satisfied however on a proper analysis of the logo and the booth that there are similarities of a kind which would at least give rise to a claim for copyright infringement.
I am satisfied that in each example it is arguable that there is a work which could be described as a literary or artistic work. The design features in each of the logo and the booth have sufficient substance in my view to arguably constitute literary or artistic work of a kind sufficient to fall within the definition provided in s.10 of the Copyright Act. I am satisfied that the design, layout, coloring albeit in some instances including a photograph would appropriately fall within the definition of artistic work as it is clear that in each and every case there is an element of drawing and/or painting and inclusion of a photograph of a kind which would satisfy the definition. In the alternative I am satisfied that the works may arguably constitute artistic craftsmanship. This applies to the other products referred to by the Applicant in Annexure 1 of the Further and Better Particulars of the Statement of Claim. It is noted not all of those items are claimed to be the subject of copyright infringement.
I am satisfied that the real issue in the present case is the extent to which it may be argued that the Respondents and/or each of them have reproduced without licence the artistic or literary works of the Applicant. On a proper analysis of the items which have been the subject of comparison in the affidavit of Mr Kimonides sworn 22 July 2003 I am satisfied that there are similarities of a kind described in the submissions made for and on behalf of the Applicant. It is at least arguable that there is therefore a copyright infringement.
Evidence concerning the originality of the design, the creation of the design or the evolution of that design together with issues as to the extent to which the design may constitute artistic or literary work are all matters which could be subject of further evidence and assessment of that evidence at the trial of the action. For the present purposes the exchange of submissions by the parties in the present application demonstrates to some extent that there is serious issue to be tried in relation to those issues.
It is my conclusion that there is serious issue to be tried having regard to the principles of law to which I have referred earlier.
Balance of convenience
In assessing the balance of convenience it was submitted for and on behalf of the Applicant that in the circumstances where there is an amount owing for the works undertaken by the Applicant on behalf of the Respondents and at least a serious issue to be tried as to whether those works have been the subject of copyright infringement that the Court should, upon receipt of the usual undertaking as to damages, grant the injunction. It was submitted that the balance of convenience favours the Applicant as damages alone would not be a satisfactory remedy. It is further submitted that in circumstances of this kind where the creators of material which is the subject of copyright have created those works without payment there is very little other protection available to those persons other than the protection afforded by the Copyright Act.
The Respondents submitted that the balance of convenience weighs heavily in their favour and reliance was placed on the evidence of the disastrous impact an injunction may have upon the Respondents’ business. Reference was made to contracts to the value of $456,000 being placed with major retailers with delivery to take place in mid August. The consequence of any injunction would be that the third party manufacturers and retailers would suffer loss and damage, the Respondents would suffer enormous loss and damage and the good will of the Respondents business “may well be destroyed”. It was further submitted that even if an undertaking was given it would be very unlikely that the Applicant could make good the undertaking as to damages in the event that the claim fails at trial.
At the conclusion of the hearing I permitted the Respondents to rely upon further affidavit material and allowed both parties to make submissions arising out of that material. The affidavit to which I have referred sworn by Mr Toniolo on 31 July 2003 refers to what are described as significant orders being placed by the Respondent for a large quantity of “Bella Ballerina products”. It was noted that orders with manufacturers have been placed in early June and that the Respondents have acted potentially to their detriment while the Applicant delayed in applying for interlocutory relief. In his affidavit Mr Toniolo refers to purchases from suppliers for delivery on 1 August 2003 to storage facilities owned by Target stores and Kmart stores in Shanghai China. Other reference is made to orders being placed for delivery to the storage facilities on 1 August 2003. Letters of credit have been issued which set out in some detail the quality of the orders placed by the First Respondent for a variety of goods. Further evidence in the affidavit referred to retail sales with orders being placed by major retail outlets. It is claimed that the work involved in developing the Bella Ballerina product to the stage where it could be sold to retailers has cost the Respondents $654,353.52 as calculated on 30 July 2003.
In the supplementary submissions it was submitted on behalf of the Respondents that subsequent affidavit material “speaks for itself” and supports the matters previously submitted to the Court regarding the significant orders being placed and the consequences of the injunction.
The Applicant in supplementary submissions filed 31 July 2003 refers to e-mails exhibited to Mr Toniolo’s recent affidavit and notes that exhibits to orders provide for confirmation and that the evidence does not reveal that the orders have been confirmed. The evidence is therefore said to be incomplete. It was further submitted that the estimate of the development costs does not include reference to those costs which could be described as costs “thrown away” or indicate why they would be costs thrown away if the injunction were granted. It was submitted that in the circumstances only a portion of those costs would be wasted if the injunction was granted. It was further submitted that whilst orders will be affected by an injunction, it would be unlikely that the orders will be lost in their entirety.
It should be noted that part of the reason for the permission being granted to the Respondents to file and serve a further affidavit was the lack of information concerning the financial circumstances of the First Respondent having regard to a submission by the Respondents that damages would be an appropriate remedy if copyright infringement could be established at trial. It was submitted that the material produced by way of a balance sheet from the First Respondent confirmed the Applicant’s submission that the Applicant may never be able to recover an award of damages if such an award was granted as part of final relief in the proceedings. It was submitted that the financial circumstances of the Second Respondent are unknown.
An analysis of the balance sheet annexed to the affidavit of Mr Toniolo reveals that the First Respondent’s trial balance as at 30 June 2002 provides a net loss of $9,030.68 and that work in progress is said to be $37,410.00.
It was submitted on behalf of the Applicant that there is no evidence of any loss to be suffered by the Third and Fourth Respondents as a consequence of the injunction. The Court should further take into that orders placed by the Respondents and entering into contracts had been taken in the full knowledge of the claim for copyright infringement by the Applicant. The Respondents had been informed, according to the affidavit evidence, by a letter dated 11 April 2003 and thereafter took steps to incorporate a new company on 28 April 2003 and on 7 May 2003 engaged a new designer with the placement of orders occurring approximately one month later. All that conduct occurred, It was submitted, with the full knowledge of the Applicant’s claim. The Applicant refutes the suggestion that delay in applying for interlocutory relief could be held against the Applicant in circumstances where it was not aware of the Second Respondent until the attendance, according to the affidavit evidence of the Applicant’s solicitors, at the Melbourne Exhibition Centre on 11 July 2003. Notice was duly given to the Second Respondent on 17 July 2003 with undertakings being sought failing which the injunctive relief would be pursued.
In my view the balance of convenience issue is perhaps more significant than determination of whether there is a serious question to be tried.
There is a competing tension between on the one hand the Applicant seeking to protect claimed copyright against alleged infringements in circumstances where payment for at least part of its work remains outstanding compared with the desire on the part of the Respondents to pursue business and not be exposed to significant potential losses.
On a proper analysis of the material the potential loss to the Respondents, whilst superficially appearing significant, may not ultimately be “disastrous” as asserted by the Respondents. I am not satisfied on the material before me that the total potential loss suggested by the Respondents will necessarily occur as a significant portion of the potential loss would not be loss properly characterised as costs “thrown away”.
In matters of this kind it is significant to ensure that the copyright asserted is at least protected by way of maintaining claimed rights over the copyright on an interim basis until the matter is finally determined at trial. On the material before me I accept that the financial circumstance of the Respondents are not sufficient to encourage the Court to conclude that there may be an adequate remedy in damages for the Applicant should it prove to be successful at the final hearing. Having already found that there is a serious question to be tried it is my view that the granting of an injunction would be consistent with protecting the rights of the Applicant in the circumstances of this application.
It is relevant to take into account the conduct of the Respondents after becoming aware that the claim for breach of copyright had been made by the Applicant. In particular I refer to the establishment of a new corporation and the placing of orders. It is not appropriate in my view where there is a disputed claim on copyright for one party to simply be allowed to pursue the marketing and sales of products which at the very least are alleged to constitute copyright infringement. To do so has the potential at least to permit the Respondents to disregard the claimed copyright interest of the Applicant. Conduct of that kind should not then be used to the advantage of the party alleged to have infringed the copyright when the Court considers the issue of balance of convenience in deciding whether to grant interlocutory relief.
In the present application I am satisfied that the Respondents have not demonstrated on the material before me sufficient evidence which would encourage the Court to conclude that damages may be paid if awarded at final trial and have otherwise conducted themselves in a manner which in my view demonstrates an intention to pursue sales and marketing of the disputed item without first resolving or attempting to resolve the copyright claim.
Conclusion
In my view there is a serious question to be tried and I am satisfied that the balance of convenience favours the Applicant in that it preserves the asserted claim to copyright which of course will be subject to final determination by the Court at trial. In the meantime it is appropriate that an interlocutory injunction be granted and as indicated at the hearing of this application I shall determine the form of the order after hearing submissions from the parties. The usual undertaking of damages will be required from the Applicant and I am satisfied on the material before me that the Applicant conducts a significant business and that the undertaking, if given, will be appropriate protection in all the circumstances and of sufficient value to enable the Court to proceed to grant an interlocutory injunction.
I certify that the preceding sixty-six (66) paragraphs are a true copy of the reasons for judgment of McInnis FM
Associate:
Date: 8 August 2003
11