FEDERAL COURT OF AUSTRALIA
Peter Vogel Instruments Pty Ltd v Fairlight.Au Pty Ltd
[2016] FCAFC 172
Appeal from: Fairlight.AU Pty Ltd v Peter Vogel Instruments Pty Ltd (No 3) [2015] FCA 1422 File number: NSD 99 of 2016 Judges: BESANKO, EDELMAN AND BURLEY JJ Date of judgment: 9 December 2016 Catchwords: CONTRACT – agreement for development of software and hardware products and trade mark licensing – whether primary judge erred in finding trade mark was used for purposes exceeding the scope of the licence – whether primary judge erred in finding respondent validly revoked the trade mark licence – whether revocation of trade mark licence terminated the entire agreement – whether, if agreement was not validly terminated, the first respondent was in breach for failing to perform obligations under the agreement
COPYRIGHT – whether agreement assigned copyright in software products to appellant – whether first respondent infringed appellant’s copyright
PRACTICE AND PROCEDURE – application for leave to file a notice of contention – application not filed within appropriate time – whether leave should be granted in light of case management principles in Federal Court of Australia Act 1976 (Cth) s 37M
Legislation: Competition and Consumer Act 2010 (Cth) Schedule 2
Copyright Act 1968 (Cth) s 197
Federal Court of Australia Act 1976 (Cth) s 37M
Trade Marks Act1995 (Cth) s 120
Trade Practices Act 1974 (Cth)
Federal Court Rules 2011 (Cth) rr 1.39, 36.05, 36.23, 36.24
Cases cited: Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; (2001) 117 FCR 424
Cement Australia Pty Ltd v Australian Competition and Consumer Commission [2010] FCAFC 101; (2010) 187 FCR 261
Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1
Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; 251 CLR 640
Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Limited [2013] HCA 46; (2013) 250 CLR 303
Fairlight.AU Pty Ltd v Peter Vogel Instruments Pty Ltd (No 3) [2015] FCA 1422
Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61; (2007) 233 CLR 115
SZMTJ v Minister for Immigration and Citizenship (No 2) [2009] FCA 486; (2009) 232 FCR 282
University of Wollongong v Metwally (No 2) [1985] HCA 28; (1985) 60 ALR 68
Date of hearing: 18 August 2016 Date of last submissions: 4 October 2016 Registry: New South Wales Division: General Division National Practice Area: Intellectual Property Sub-area: Trade Marks Category: Catchwords Number of paragraphs: 107 Counsel for the Appellant: Mr M Green SC and Mr G E Babe Solicitor for the Appellant: Clear Lawyers Counsel for the First and Second Respondents: Mr G A Sirtes SC and Mr A Kaufmann Solicitor for the First and Second Respondents: Kalus Kenny Intelex ORDERS
NSD 99 of 2016 BETWEEN: PETER VOGEL INSTRUMENTS PTY LTD
(ACN 140 173 397)Appellant
AND: FAIRLIGHT.AU PTY…
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- Case
- [2016] FCAFC 172
- Decision Date
CaseChat Overview and Summary
The court considered whether the primary judge had erred in finding that PVI had breached the agreement by using the trade mark in a manner that exceeded the scope of the licence. The court found that the agreement did not require PVI to sell the CMI Products under the Fairlight trade mark. The court also found that the primary judge had erred in finding that Fairlight had validly terminated the agreement, and that PVI had not breached the agreement or infringed Fairlight's copyright.
The court allowed the appeal in part and found that Fairlight had wrongly terminated the agreement. The court also found that Fairlight had infringed aspects of PVI's copyright in software that it supplied to third parties. The court made orders restraining Fairlight from using the Fairlight trade mark without authorisation from PVI, and delivering up products and materials bearing the trade mark to PVI for destruction. The court remitted the proceeding to a primary judge to determine damages, an account of profits, and costs.
This case highlights the importance of clearly defining the scope of a trade mark licence in an agreement between parties. It also emphasises the need for parties to perform their obligations under an agreement and the consequences of wrongfully terminating an agreement. Additionally, this case demonstrates the court's willingness to consider whether a party has infringed another party's copyright in software.
Orders
Orders of the court
6. The Respondents and each of them, whether by themselves, their servants or agents or howsoever otherwise, are restrained from:
(a) representing in the course of the First Respondent’s business and in connection with the supply or possible supply of the First Respondent’s goods or services that any such goods or services have the sponsorship or approval of the Applicant and/or from representing that the First Respondent has the sponsorship or approval of or is affiliated with the Applicant in the supply of the First Respondent’s goods or services;
(b) manufacturing, distributing, offering for sale, supplying, selling or causing to be manufactured, distributed, offered for sale, supplied or sold in Australia any goods or services for which the FAIRLIGHT trade mark is registered unless authorised by the Applicant; and
(c) using, in the course of trade and commerce, the FAIRLIGHT trade mark without the authority or consent of the Applicant.
7. The Respondents provide the Applicant with all necessary books, records and other information to enable an independent accountant of the Applicant’s choosing to calculate the profits which should be accounted to it for the First Respondent’s breach of the FAIRLIGHT trade mark and for the First Respondent to account to the Applicant for such profits within 21 days of their calculation.
8. The Respondents deliver up to the Applicant for destruction all products, materials and documents in the possession custody or control of the Respondents bearing the FAIRLIGHT trade mark or any mark that is substantially identical with or deceptively similar thereto other than CMI Products already supplied under the Agreement.
9. That the proceeding be remitted to a primary judge for the purpose of determining:
(a) on the evidence adduced at the trial held in December 2014, and subject only to any order of the primary judge allowing further evidence to be adduced, any damages to which the cross-claimant is entitled for repudiation of the Agreement by the cross-respondent and infringement of copyright;
(b) taking an account of profits to which the applicant may be entitled for infringement of the FAIRLIGHT trade mark;
(c) the entitlement of the parties to costs on the claim and cross-claim; and
(d) the disposition of the proceedings.
10. The Court directs that the parties confer about whether, in light of [88] of the reasons for judgment, any submissions in relation to the costs of the appeal will be made and, if so, then within seven (7) days of the date of these orders, the parties file and exchange any submissions of no more than three (3) pages as to their entitlement to costs of the appeal.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
There was no dispute on appeal regarding the correct approach as to the construction of the Agreement. We respectfully adopt the approach set out in Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; 251 CLR 640 at [35] (citations omitted):Both Verve and the Sellers recognised that this Court has reaffirmed the objective approach to be adopted in determining the rights and liabilities of parties to a contract. The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding “of the genesis of the transaction, the background, the context [and] the market in which the parties are operating”. As Arden LJ observed in Re Golden Key Ltd, unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption “that the parties… intended to produce a commercial result”. A commercial contract is to be construed so as to avoid it “making commercial nonsense or working commercial inconvenience”.Consideration of the Agreement The section of the Agreement entitled “Background” recites the wish on the part of PVI to produce two products (clause 3): (1) a 30 year anniversary model of the Fairlight CMI referred to as the CMI-30A, and (2) a PC compatible version known as the “Series IV”. These two products are referred to collectively as the “CMI Products”. In our view the defined term does not compel the conclusion that the “CMI Products” are branded with the FAIRLIGHT Trade Mark. Contrary to Fairlight’s submission, the identification in (1) of a 30 year anniversary model of the Fairlight CMI does not do so, and nor does the reference in (2) to the “Series IV”. In this context the Background recites that Fairlight will provide PVI with three things (Clause 4): (1) certain hardware and technologies including customised software development for the CMI Products; (2) a licence for the use of the name “Fairlight” for the CMI Products; and (3) supply of core components including sound library. The grant of a licence to use the FAIRLIGHT Trade Mark for the CMI Products in (2) is indicative that the CMI Products are not necessarily to be sold under that name. It indicates that CMI Products may be sold bearing the FAIRLIGHT Trade Mark, but that this is optional. In this context, items (1) and (3) indicate that separately, and in addition to a trade mark licence, the Agreement will involve the supply to PVI of products and technology. Within the “Operative Provisions”, clause 6 requires PVI to pay a total of $200,000 (plus GST) for two things: (1) the development of the customised software for the CMI Products; and (2) the worldwide use of the “Fairlight” name and brand for marketing purposes. It then imposes two limitations upon PVI’s rights so acquired. It cannot sell or transfer the right without Fairlight’s consent (clause 6(3)) and, by clause 6(4):[Fairlight] reserves the right to withdraw the right for [PVI] to use the Fairlight name and brand, should the name and brand be used in any way which [Fairlight] deem [sic] to be damaging to the Fairlight Brand reputation.