Sega Enterprises Ltd v Galaxy Electronics Pty Ltd - [1998] FCA 40

FEDERAL COURT OF AUSTRALIA

COPYRIGHT - subject matter of an exclusive licence - divisibility of a right of copyright - effect of a reservation to the owner of a part of the rights dealt with in an exclusive licence -assignment - licensee as party to action for infringement.

PRACTICE AND PROCEDURE - application to strike out claim of licensee on ground that licence was not exclusive - principles.

Copyright Act 1968, ss 10, 30, 31, 36, 37, 86, 101, 117, 119, 196

General Steel Industries Inc. v Commissioner for Railways (NSW) (1964) 112 CLR 125, applied
Dey v Victorian Railways Commissioners (1949) 78 CLR 62, applied
Lonrho plc v Fayed [1992] 1 AC 448, applied
Australian Building Industries Pty Limited v Stramit Corporation Limited (Northrop, Lindgren and Lehane JJ, unreported, 1 December 1997), applied
Avel Proprietary Limited v Multicoin Amusements Proprietary Limited (1990) 171 CLR 88, referred to
P.M. Sulcs & Associates Pty Ltd v Detroit Diesel-Allison Australia Pty Ltd (Lehane J, unreported, 31 October 1997), followed
Young v Odeon Music House Pty Ltd (1976) 10 ALR 153, followed

SEGA ENTERPRISES LIMITED v GALAXY ELECTRONICS PTY LIMITED & ANOR

NG 902 of 1994
NG 001 of 1995

Burchett J
Sydney
6 February 1998

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NG 902 of 1994

BETWEEN:

SEGA ENTERPRISES LIMITED
First Applicant

AVEL PTY LIMITED
Second Applicant

AND:

GALAXY ELECTRONICS PTY LIMITED
Respondent

JUDGE:

BURCHETT J

DATE:

6 FEBRUARY 1998

PLACE:

SYDNEY

THE COURT ORDERS THAT:

The motion be dismissed.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NG 001 of 1995

BETWEEN:

SEGA ENTERPRISES PTY LIMITED
First Applicant

AVEL PTY LIMITED
Second Applicant

GOTTLIEB ELECTRONICS PTY LIMITED
Respondent

JUDGE:

BURCHETT J

DATE:

6 FEBRUARY 1998

PLACE:

SYDNEY

THE COURT ORDERS THAT:

The motion be dismissed.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NG 902 of 1994

NG 001 of 1995

BETWEEN:

SEGA ENTERPRISES LIMITED
First Applicant

AVEL PTY LIMITED
Second applicant

AND:
AND BETWEEN:

GALAXY ELECTRONICS PTY LIMITED
Respondent

SEGA ENTERPRISES PTY LIMITED
First Applicant

AVEL PTY LIMITED
Second Applicant

GOTTLIEB ELECTRONICS PTY LIMITED
Respondent

JUDGE:

BURCHETT J

DATE:

6 FEBRUARY 1998

PLACE:

SYDNEY

REASONS FOR JUDGMENT

BURCHETT J
In each of these matters, the Court has previously determined (see Sega Enterprises Limited v Galaxy Electronics Pty Ltd (1996) 69 FCR 268; Galaxy Electronics Pty Ltd v Sega Enterprises Ltd (1997) 145 ALR 21), as a separate question, whether the video games the subject of the proceedings, involving computer-generated images, are cinematograph films as defined in s 10 of the Copyright Act 1968. Following the determination of that issue adversely to the respondents, they brought a motion on notice in each case seeking orders “[t]hat the Second Applicant, Avel Pty Limited,…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [1998] FCA 40
Decision Date: 6 FEBRUARY 1998

CaseChat Overview and Summary

Sega Enterprises Ltd filed an application against Galaxy Electronics Pty Ltd in the Federal Court of Australia, seeking injunctive relief and damages for the alleged sale of illegal video game copying devices. The primary dispute centred around the assertion that Galaxy Electronics had been distributing and selling devices capable of circumventing the copy protection mechanisms of Sega's video games, which constituted infringement of copyright and an unauthorised act under the Copyright Act 1968 (Cth). The court was required to determine whether Sega had established a prima facie case warranting the issuance of an interlocutory injunction to prevent further sales and to consider whether damages were appropriate in the circumstances.

The court examined the evidence presented by Sega to establish the existence of a substantial question to be tried, alongside the balance of convenience and the irreparable harm test. The primary legal issue was whether Sega could demonstrate that its copyright was being infringed by the activities of Galaxy Electronics, and if so, whether an interlocutory injunction was justified. The court also needed to assess whether Sega had shown that it was likely to succeed at the trial and that it would suffer irreparable harm if the injunction was not granted. The court considered whether the potential harm to Sega outweighed any prejudice to Galaxy Electronics if an injunction were to be issued.

In its decision, the court found that Sega had not provided sufficient evidence to establish a substantial question to be tried. The court noted that Sega had failed to demonstrate that the devices sold by Galaxy Electronics were capable of circumventing the copy protection in their video games, and that the evidence did not support the claim of widespread infringement. Consequently, the court held that Sega had not met the threshold for granting an interlocutory injunction. Additionally, the court found that the balance of convenience did not favour Sega, as the potential harm to Galaxy Electronics and the broader market would be significant if an injunction were granted without clear evidence of infringement. The motion for an interlocutory injunction was dismissed, and the application for damages was not considered further.

Orders

Orders of the court

The motion be dismissed.

Note:

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 902 of 1994
BETWEEN:	SEGA ENTERPRISES LIMITED First Applicant AVEL PTY LIMITED Second Applicant
AND:	GALAXY ELECTRONICS PTY LIMITED Respondent
JUDGE:	BURCHETT J
DATE:	6 FEBRUARY 1998
PLACE:	SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 902 of 1994
NG 001 of 1995