Television Broadcasts Ltd v Tu

Re: TELEVISION BROADCASTS LIMITED; HK-TVB INTERNATIONAL LIMITED; JENRIM PTY.
LTD. and LE MINH HOANG
And: TU CHI HOA; DUNG TO; KHAI DONG LU and THI LINH TO
Nos. V G184 and S G84 of 1989
FED No. 577
Copyright - Trade Marks
19 IPR 307

COURT

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
O'Loughlin J.(1)

CATCHWORDS

Copyright - Assessment of damages - continued use by first and second respondents of applicants' video cassettes and films after expiry of licence to use - limited evidence of "pirating" new releases - evidence mainly established on-going hiring of films that were received whilst licence was current - first and second respondents knew that their conduct was in breach of licence agreement - such conduct was "flagrant" and warranted an award of "additional" damages - measure of damages and how calculated - evidence against third and fourth respondents revealed limited use of offending cassettes - case of flagrancy not made out.

Trade Marks - separate proceedings by first applicant against first and second respondents - some cassettes carried a superimposed label which did not adequately cover applicant's mark - number of such cassettes not clearly established - only one cassette carried the mark without a superimposed label - small award of damages sufficient.

HEARING

ADELAIDE

#DATE 19:10:1990

Counsel for the Applicants: Mr. S. Tilmouth QC

Solicitors for the Applicants: Messrs Wong Lai and Karr

1st and 2nd Respondents: Without Counsel (Mr. Tu Chi Hoa

represented both parties)

3rd and 4th Respondents: Without Counsel (M/s Thi Linh To

represented both parties)

ORDER

1. In Action No. SG84 of 1989, the respondents shall pay $1,000 to the applicants and shall pay the applicants costs up to the commencement of trial and the costs associated with the entry of judgment.

2. In Action No. VG184 of 1989:-

(1) the first and second respondents shall pay $27,000 to the fourth applicant;

(2) the third and fourth respondents shall pay $2,000 to the fourth applicant;

(3) the first and second respondents shall pay 90% of the taxed costs of the applicants;

(4) the third and fourth respondents shall pay 10% of the taxed costs of the applicants.

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

JUDGE1

The first two named applicants, Television Broadcasts Limited and its subsidiary, HK - TVB International Limited are Hong Kong companies; they were incorporated in 1965 and 1975 respectively. They have been referred to from time to time as "TVB" and "TVBI" respectively and I will continue to use those abbreviations where it is appropriate. In most cases however it will be sufficient to refer to them collectively. Various agreements that were tendered in evidence indicate that both these applicants produce television programs, telemovies and films for television in Hong Kong and that TVB appointed TVBI to be its exclusive agent for the purpose of licensing third parties to reproduce and distribute TVB productions throughout the world (see agreement dated 1 June 1981: Ex. A7).

Pursuant to another agreement dated 13 January 1989 (Ex.A8) TVBI licensed the third applicant, Jenrim Pty. Ltd. as its exclusive distributor in Australia. This licence extended to programs, films and telemovies that had been produced by both TVB and TVBI. Having regard to the evidence, I will refer to all productions as "films" and in most cases it will not be necessary to differentiate between the productions of the first and second applicant. But it should be made clear that when reference is made to a "cassette" or to a "video cassette" I will be referring only to the outer covering and not to the film that is within the cassette. Jenrim is an Australian company that was incorporated in New South Wales on 4 October 1988 (Ex.A4); its licence was for a period of twelve months, commencing on 1 February 1989 and expiring on 31 January 1990. Clause 2 of this particular agreement authorised Jenrim, "to permit and authorise the exhibition of the Films on video recording tape replay machines, by way of let or hire for private home use...". The agreement also permitted Jenrim, in certain circumstances, to "duplicate the Films on video recording tapes".
On 18 January 1989, Jenrim entered into a licence agreement (Ex. A1) with the fourth applicant, Le Minh Hoang ("Mr. Le") whereby Mr. Le was given exclusive distribution rights for the films in South Australia. Mr. Le's licence empowered him (inter alia) to "exhibit, permit and authorise the exhibition of the Films on video cassette replay machines, and distribute by way of let or hire of copies of the Films for private home viewing only" (clause 2.1.1). The term of Mr. Le's agreement coincided with Jenrim's term: it was also for a period of twelve months commencing on 1 February 1989 and expiring on 31 January 1990. Item 5 of Schedule 1 to Mr. Le's agreement required him to pay a fee to Jenrim of $22,645.00 payable as to 50% by 31 December 1988; the balance was payable by two further instalments on 15 April and 1 July 1989. On the same day, 18 January 1989, Mr. Le entered into a "Service Agreement" (Ex. A2) with Pal Video Services and Production Pty. Ltd. and an "Advertising Agreement" (Ex. A3) with East Asia Advertising Media Pty. Ltd. Both these companies had the same address in Haymarket, New South Wales and both agreements made reference to Mr. Le being Jenrim's sub-licensee with respect to the distribution of the films. The service fee was $22,645 - exactly the same as the licence fee - and was payable by the same instalments on the same dates. The advertising fee was $19,410 and was payable as to 50% on 31 December 1988. The balance was payable by two further instalments on the same dates, 15 April and 1 July 1989, as the instalments under the other two agreements. Under the service agreement, Mr. Le was entitled to receive expert assistance in the promotion and protection of his business as a sub-licensee and distributor; in particular there was a reference to Pal Video providing assistance and evidence in the "prosecution of the detected video pirates". The advertising agreement called for East Asia to carry out advertising programs for the benefit of Mr. Le's business. There was no evidence to explain whether Mr. Le was compelled to enter into the service agreement and the advertising agreement or whether he did so as a result of commercial decisions that were freely made by him. In any event, it is a fact that his acceptance of exclusive distribution rights in South Australia for the films resulted in him making a total outlay of $64,700. This figure would have been a dominant issue when he considered how much he would seek from intending sub-licencees.
Prior to Jenrim's appointment as the Australian distributor from 1 February 1989, a company called Vacole Pty. Ltd. had held that position and Mr. Le and his wife, Lu Xem, had enjoyed the appointment as South Australian distributor for the preceeding twelve months from Vacole. Their agreement with Vacole was not in evidence and there is no evidence about the fee that was payable to Vacole. But it seems apparent that it gave Mr. and Mrs. Le rights to grant further sub- licences. In any event, I infer that it was in that capacity that Mr. and Mrs. Le entered into an agreement (Ex.A10) on 4 March 1988 with the first respondent Tu Chi Hoa ("Mr. Tu") and his wife, the second respondent, Dung To; they carried on business at 11 Market Street, Adelaide under the registered business name, "Asian Video". Mr. and Mrs Tu had acquired this business in April 1987 from Mr. Lee San. For the balance of 1987, as the new proprietors of "Asian Video", they continued to receive, direct from Vacole, master tapes (i.e. master copies) of various films together with a "block" of ten adhesive labels. These labels were supplied because "Asian Video" was entitled, at its own cost, to reproduce copies of films from master tapes. The labels that were supplied were identical with the label that was on the video cassette that contained the master copy and were for use on the video cassettes that contained the copied films. Each label was self-sticking and oblong in shape; the practice was to place the label on the spine of the video cassette. The distinctive trade mark of TVB or of TVBI (there is little to distinguish them) appeared in a 3 colour circular pattern at the top of the label, and in the examples that were tendered in evidence, the Chinese and English titles of the particular film were printed on the label.
In April 1987, "Asian Video" was also supplied with stocks of films that were produced by another company called "ATV"; the distributor for those films was Peninsula Video Pty. Ltd. Sources of supply changed from time to time and in June 1989, a month that is significant in these proceedings, "Asian Video" was receiving films from, at least, three different business houses.
Such rights as Mr. Tu and his wife enjoyed in 1987 to deal with TVB's films presumably expired in late 1987 or early 1988. Although no evidence was led on this subject, this must have been the case and it explains why it was necessary for them to negotiate, early in 1988, with Mr. Le for a continuation of their rights.
The agreement (Ex. A10) contained the grant from Mr. Le of a sub-licence to Mr. Tu and his wife for a period twelve months expiring on 31 January 1989. The grant was expressed in clause 1 as "the right to reproduce and hire out or let video recordings of the licensed films...". The licensed films were said to be "certain HK - TVB and HK - TVBI cinematographic films in the Cantonese language" but were not otherwise identified. The agreement also contained an express provision that made it clear that the rights granted to "Asian Video" did not extend to films in the Vietnamese language. It would seem that TVB and TVBI both produced films in, at least, the Cantonese and the Vietnamese languages and that Mr. Le's rights covered both languages. He also had a video hire business in Athol Park which he conducted under the name of "Leanne Video" and from that business he hired out films in both languages.
In the agreement (Ex. A10) Mr. Le undertook to cause Vacole Pty. Ltd. to supply to "Asian Video" a copy of the master tape of any film received by Mr. Le from Vacole Pty. Ltd. In turn, Mr. Tu and his wife agreed that they would "obtain TVB films" only from Mr. Le. Clause 13 of the agreement contained a provision that Mr. Tu and his wife would not, after the expiration of the agreement, 31 January 1989, "let or hire out any video cassette tapes of the licensed films... or any copies of those tapes..." unless, of course, the term of the agreement had been extended. It is common ground that the agreement was not extended but the agreement is silent on what Mr. and Mrs. Tu were to do with the cassettes and films that were in their possession on 31 January. As there is nothing in the agreement to suggest that property passed, the inference is that Mr. and Mrs. Tu would have been required to return all video cassettes and films that had come to them from Mr. Le or Vacole Pty. Ltd. forthwith upon demand being made for them (c.f. clause 2 which calls for the immediate return of all "video recordings of the licensed films" in the event of premature termination of the agreement).
Upon the expiration of its licence agreement, "Asian Video" would have been entitled to retain the physical property represented by video cassettes that it had purchased as "blank tapes" for the purposes of making reproductions. But it seems obvious and I specifically find that there would have been a matching obligation to wipe out or "blank" out the films that were then in those cassettes and to remove the original labels from the spines of those cassettes.
The licence fee payable by Mr. and Mrs. Tu to Mr. Le was $26,000. This sum was payable, as to $13,000 upon the signing of the agreement, as to $6,500 on 15 April 1988 and as to $6,500 on 1 July 1988. In consideration of the commitments undertaken by Mr. and Mrs. Tu, Mr. Le agreed that he would not "enter into a sub-licence agreement... with any (other) person" during the period of the sub-licence (clause 14).
The applicants commenced proceedings in this Court on 5 June 1989, claiming breaches of copyright. It was pleaded that Mr. and Mrs. Tu and separately the third and fourth respondents, had unlawfully and improperly traded in TVB films. The third respondent, Khai Dong Lu and his wife, Thi Linh To ("M/s To"), the fourth respondent, carried on business as "Linh Video" at 62 Hanson Road, Woodville Gardens. It was said of them, as well as of Mr. Tu and his wife, that they then had in their possession copies of TVB films. On 6 June 1989 von Doussa J. made "Anton Pillar" orders, authorising the applicants to enter upon the premises of "Asian Video" and "Linh Video" and to seize any offending video cassettes and certain documentary records.
In support of the orders sought by the applicants, there was annexed to the application two lists totalling 300 films. Each film was identified by its English title and the films were numbered sequentially. The first list, comprising 271 titles were said to be works published by TVB; the second list consisted of 29 titles; they were said to be "TVBI Films and Telemovies". These two lists were, in turn, reproduced as a schedule to the Order of the Court which required, inter alia, the respondents to permit the representatives of the applicants:-

"...to search for and locate any copies and/or reproductions of the video recordings the original or present titles of which are set out in the Schedule annexed hereto."

Searches of the premises of "Asian Video" and "Linh Video" commenced shortly after mid-day on 7 June 1989 under the supervision and control of Mr. Wong, the solicitor for the applicants. He attended first at "Linh Video" and then went to "Asian Video". In an affidavit that was sworn on 8 June 1989, Mr. Wong listed the titles of all films that had been located and seized at the two premises. This list included a cross reference to the number of the same title in the schedule to the order made by von Doussa J. on the previous day. Six hundred and sixty seven video cassettes were seized from "Asian Video" and 92 from "Linh Video". In some cases there were multiple copies of a particular film; in other cases there was only one or two copies of a particular title.
In all, copies of 79 different films were seized from "Asian Video" and copies of 13 films were taken from "Linh Video". No evidence was led to identify how many (if any) of these films were first released by the applicants after the expiration of "Asian Video's" sub-licence.
On 11 July 1989, the first named applicant, Television Broadcasts Limited, instituted further proceedings in this Court; those proceedings named only Mr. Tu and his wife as respondents. It was alleged that, in the continuing operation of the business of "Asian Video", they were infringing the first applicant's four Australian Registered Trade Marks. It was also alleged that "Asian Video" was passing off video recordings as and for the first applicant's video recordings but no evidence was led to support any passing off allegation. On the same day, 11 July 1989, von Doussa J. made another "Anton Pillar" order that authorised the first applicant's representatives to enter and search the premises of "Asian Video" at 11 Market Street, Adelaide for the purposes, inter alia, of seizing and removing video cassettes bearing a mark which was the same as, or substantially identical with, or deceptively similar to any trade mark of the first applicant. The order also extended to any documents relating to, or packaging connected with, the manufacture, sale, hire, importation, ordering, distribution, or other dealing with, or in relation to infringement of the trade marks. It should be noted that no similar action was instituted by the second applicant; the significance of this fact will become apparent in due course.
On 12 July 1989, the first applicant's representatives attended at "Asian Video" and exercised the powers of search and seizure as set out in his Honour's order. Thanh Chi Tran was one of the first applicant's representatives; another was Mr. Karamountzos, a solicitor who was then, if not now, a partner of Mr. Wong. Only Mr. Thanh was called as a witness for the first applicant. He required the services of an interpreter but the effect of his evidence was reasonably clear. Twenty one video cassettes were seized because they bore the trade mark of either TVB or TVBI. However, on checking the contents of these cassettes, only one contained a film that was TVB's property. A second contained a film that carried on the spine of the cassette the trade mark of TVBI. In addition, Mr. Thanh examined the cassettes on the shelves of the shop and listed the titles of twenty two films that he thought might be the property of the first applicant. None of these were seized as none of the cassettes carried the applicant's mark. On checking the names of the titles, Mr. Thanh found that only four films belonged to the first applicant.
Mr. Thanh further said in evidence that whilst he was in the premises of "Asian Video" he saw Mrs. Tu removing labels that bore TVB's mark from other cassettes; he said that "the solicitor" told her to stop; she did so, but as soon as the solicitor was not looking she resumed her activities. None of those cassettes were seized.
When the case was called on for hearing the respondents admitted liability and the matter proceeded on assessments of damages. These admissions resolved some difficulties that the fourth applicant, Mr. Le, might otherwise have faced about his role as a proper litigant in these proceedings. There were some deficiencies in the statement of claim but I will proceed on the basis that they could have been remedied by appropriate amendments if liability had been disputed. As the trial progressed, the basis upon which liability was admitted became confused. This confusion arose because the respondents were unrepresented and were unable to speak English. Mr. Tu appeared, representing himself and the interests of his wife; M/s To appeared for herself and for her husband. I was greatly assisted by Mrs. Oldfield who was sworn as an interpreter but the two respondents, and Mr. Tu in particular, repeatedly showed difficulties in comprehending Court procedures. During the afternoon of the second day of the hearing, Mr. Tilmouth QC counsel for the applicants, informed me that a measure of agreement had been reached between the parties with respect to the basis upon which liability was admitted. Even so, it took a matter of some hours before I was able to extract from the respondents their acknowledgment of the actual details which were relevant to their admission of liability. I can now however state those in summary form having regard to certain concessions that were made by Mr. Tilmouth.
As to "Asian Video", it was admitted that upon the termination of its licence on 31 January, 1989, it continued to let out on hire some of the applicants' films which remained in its possession. However, it was accepted by the applicants that certain cassettes, which were the property of "Asian Video", and which had earlier been used for the lawful purpose of making reproductions, were subsequently used as "stock" by "Asian Video" for the purpose of reproducing different films which had been made available by other suppliers. Ultimately, a compromise was struck between the parties and it was agreed that of the 667 tapes that had been seized from Asian Video, 15% of them had been used by "Asian Video" for the purposes of reproducing films that were not the property of any of the applicants. The same concession was made with respect to Linh Video - that is, of the tapes seized, 15% had been re-used for other lawful purposes.

Mr. Wong said in evidence that when the search was conducted at the premises of "Asian Video" on 7 June 1989 he observed, in a back room, a master recording unit for the copying of films onto video cassettes and 27 recording machines that were connected to the master unit. The machines were not operational at the time of the search and Mr. Wong did not think to check the identity of the film that was in the master unit at the time of the search. Having regard to the number of cassettes that were seized, the space of time between the termination of the licence (31 January 1989) and the date of the search (7 June 1989) and the existence of the 27 recording machines, Mr. Tilmouth asked me to find, that in that period of time, Mr. Tu and his wife had made "pirate" copies of films belonging to the first two applicants. I decline to make that finding on the basis of the evidence to which I have just referred. As a matter of speculation, it would be as much open to make a finding that the 27 machines were then being used to make lawful reproductions of films supplied by other suppliers as it would be to make a finding that they were being used, unlawfully, to make "pirate" copies of films belonging to the first two applicants. Mr. Wong missed his opportunity to check the contents of the master unit. In the absence of any other evidence and in light of Mr. Tu's denials, the circumstances do not warrant such a serious finding. I have come to this conclusion despite a somewhat startling disclosure that was made by Mr. Tu during the course of his evidence and to which I will return in due course.
Mr. Tilmouth asked me to find that Mr. Tu and his wife had deliberately and knowingly breached the copyright of the applicants by their continued trading in the licensed films after the termination of the licence agreement. I am prepared to make this finding. Everything points to the fact that Mr. Tu well knew that he was not entitled, upon the expiration of his agreement, to continue using and trading in the applicants' films.
The evidence with respect to "Linh Video" is in an entirely different category. It is a fact that on 7 June 1989 92 video cassettes representing 13 films were seized from those premises. It is also a fact that each of those cassettes had a direct relationship to the first two applicants either by virtue of the title of the film or the presence of the logo of one or other of the first two applicants on the label that was affixed to the spine of the cassette. However, for the purposes of these reasons only 85% of those cassettes are to be deemed to contain films belonging to the applicants. The degree of their guilt must be rated substantially lower than that of Mr. Tu and his wife. M/s To did not give evidence and the applicants were unable to lead any evidence that would point to the means by which TVB films came into the possession of "Linh Video".
Mr. Tu claimed that when he and his wife purchased the business of "Asian Video" from Mr. Lee San, he did not understand the specific terms of the agreement. Rather, he relied on what he described as "the trade practice" with which he was accustomed. He said that the Chinese practice was to rely on trust and word of mouth. I am prepared to accept this evidence and so I will consider Mr. Tu's evidence based on what he said in the witness box and without calling in aid the contents of various agreements to which he was a party. They were all in English and I will accept that Mr. Tu can neither speak nor read English. If it had been the case, the applicants could have called evidence to the effect that the terms of various agreements had been translated by them or their representatives to Mr. Tu or his wife. Likewise, if it had been the case, they could have called evidence to the effect that Mr. Tu or his wife were proficient in English to a greater degree than that represented by him in his evidence.
This apparently generous attitude towards Mr. Tu leaves me free to assess what he said in the witness box. That may be summarised as follows:- he knew from 1987 that he had to pay to someone a licence fee for the right to hire out the applicants' films from "Asian Video". He and his wife had paid about $100,000 to Mr. Lee San to acquire the business and he volunteered that this sum was not only for the stock and plant but was also for the licence. Whether he did or did not understand the contents of the documents that he and his wife signed, there is sound common sense in Mr. Tilmouth's comment that no one would pay out such a large sum of money without making some inquiry about his rights and obligations. In March 1988, he had agreed with Mr. Le, the fourth applicant, to pay him $26,000 for the licence for the period 1 February 1988 to 31 January 1989. In late 1988, he had negotiated with Mr. Liu of Jenrim, the third applicant, about taking a licence direct from Jenrim, thereby bypassing Mr. Le, but nothing came of this. Instead Jenrim gave the licence, once more, to Mr. Le. This was a source of complaint by Mr. Tu as he felt that Mr. Liu had gone back on his word. Even so, he knew, as a result, that he had to negotiate with Mr. Le for an extension of his licence for another twelve months as from 1 February 1989.
Mr. Tu did in fact approach Mr. Le about the renewal but Mr. Le wanted a fee of $60,000 and Mr. Tu and his wife were not prepared to pay so much. The price was dropped to $45,000 but Mr. and Mrs. Tu still thought this was too much. Mr. Le had his accountant write Mr. and Mrs. Tu by letter dated 6 January 1989 (Ex. A24). It provided in part:-

"Our client has reqested (sic) for us to advise you that your copyright ends on 15th January, 1989 (sic) and that should you wish to continue the renting of the tapes associated with this copyright, you can contact them on (08) 268 4937. However, should you wish not to acquire the said copyright, then any rental of tapes associated with the said licence would be a breach of the rights related to the said licence. If this should occur, our client will undertake any such legal rights as are required."

Three months later, on 5 April 1989, Mr. Le had his accountant write again to Mr. and Mrs. Tu (Ex.A23). The letter was as follows:-

"We refer to our previous correspondence and wish to confirm that our client has the copyright to hire out video tapes in relation to Vascole (sic) Pty. Ltd's copyright. As you have not responded, we wish to advise that legal action will be instigated should you continue hiring out video tapes relating Vascole (sic) Pty. Ltd's copyright. Accordingly, you should cease such action immediately." (The letter should have referred to Jenrim - not Vacole - but nothing turns on this).

Not only did Mr. Tu admit receiving these letters, he admitted taking them to his solicitor, Miss Cream. Miss Cream, who was called as part of the respondents' case, confirmed in evidence that she spoke Cantonese and that she read and explained the contents of these letters to Mr. Tu. I have no doubt therefore that Mr. Tu well knew and understood the contents of both letters. It was his evidence that in this three month period (Feb-April 1989) he considered that he was still negotiating with Mr. Le for a renewal of the licence. Yet he also claimed that in that same period Mr. Le was prepared to allow him to continue trading as before - knowing that "Asian Video" was hiring out the applicants' films - without asking for any amount of money on account of the ultimate licence fee. Mr. Le's evidence was difficult to comprehend at times but it was clear that he did not agree with such a proposition. After making every allowance for an unrepresented litigant who can not speak or understand English, I must say that I cannot accept Mr. Tu's evidence; I do not believe that he told me the truth. He said, more than once, that up until the search of his shop, he thought he was still negotiating with Mr. Le. But when he was asked to identify the last occasion when he had spoken to Mr. Le he said it was in April following the receipt of the letter (Ex. A23).
I find that Mr. Tu and his wife continued to trade in the applicants' films after the expiration of their licence on 31 January 1989 and that this trading proceeded in the ordinary course of business through to June 1989. They knew that this was wrong but they were prepared to take the risk, probably in the belief that they might be able to force Mr. Le to agree a price for a renewal of the licence that was acceptable to them. The conduct of Mr. Tu and his wife in the period February - June 1989 was made more reprehensible by an unsolicited disclosure that was surprisingly made by Mr. Tu during the course of his evidence. He volunteered that in this period, one or two of his friends, having obtained from a rival shop a recent release of an unspecified number of the applicants' films, would lend them to Mr. Tu for copying. He claimed that he saw nothing wrong in this conduct as he regarded it as a necessary adjunct to his need to have recent releases of new films available to maintain the viability of his business. I am quite satisfied that Mr. Tu well knew and understood the impropriety of his conduct. He admitted as much when later he conceded that all cassettes bearing the logo of either of the first two applicants were hidden from sight - they were not displayed on the shelves of his shop.
Among the documents that were seized from "Asian Video" on 7 June 1989 were its membership records; these records showed, inter alia, details of the titles of various films that had been hired on specified dates by different customers. From these records, the applicants compiled a list or schedule of titles of films showing, where appropriate, the number of cassettes (if more than one) that made up the film, the date of the hiring and the hire charge. This schedule was examined by Mr. Tu and certain titles were marked by him with the letters "A" or "B" to indicate that the relevant film was hired out whilst "Asian Video" had a licence to deal in TVB films or to indicate that, notwithstanding the date, the film came from a supplier other than TVB. Mr. Tilmouth advised the Court that the applicants were now prepared to accept the "A" and "B" lists. Mr. Tu admitted in cross-examination that after deleting the titles marked "A" and "B" all remaining titles in the schedule originated from TVB and that the schedule correctly listed them as TVB films that had been hired out by "Asian Video" in the period 1 February 1989 to 7 June 1989. Given the opportunity to count the number of entries in the schedule during the lunch adjournment Mr. Tu, on resumption, agreed that there were about 2,500. Based on the business of "Asian Video" operating seven days a week, this indicates about 20 daily hirings of TVB video cassettes in the period from 1 February to 7 June 1989. What is more, an examination of these schedules does not show any significant reduction in the rate of hiring after the April letter from Mr. Le's accountant.
Mr. Tu's evidence was that the gross revenue derived by "Asian Video" from hiring TVB films in the February - June 1989 period was $8,485, a figure that coincided with (and was probably obtained from) his solicitor's letter of 19 October 1989 to Mr. Wong. I intend to accept this figure as it is the claimed total of certain entries in documents that were prepared by the applicants. The applicants have not sought to challenge it.
It being a fact that when the search was made of "Linh Video" in June 1989, TVB films were found on their premises, Mr. Tilmouth asked Mr. Tu in cross-examination whether he had any knowledge about those cassettes. His reply was clear and unaffected by language problems. He said that he had absolutely no knowledge about the subject. Even though M/s To was the elder sister of Mr. Tu's wife, he repeatedly maintained that he did not know anything about the business of "Linh Video". The accusation was made that "Asian Video" had been unlawfully supplying "Linh Video" with copies of TVB films. This was strongly denied by Mr.Tu. It was not a new accusation - Mr. Le, when giving evidence, said that he had raised this complaint in late December 1988 but that Mr. Tu had then denied any unlawful supply to "Linh Video". Mr. Tu agreed that Mr. Le had made the accusation and also agreed that he had denied the accusation.
Mr. Tu agreed that he had had business dealings with "Linh Video" in 1988; he claimed that "Asian Video" had lawfully provided "Linh Video" with video films from sources other than TVB. First, he said he did not know whether "Asian Video" was the sole source of supply but later in his evidence, he listed four sources of supplies to "Linh Video"; this suggested that his knowledge of the operations of the business of "Linh Video" was far more than he originally led me to believe. Although the relationship between the two businesses remained ethereal, cheque butts of "Linh Video" (Ex. A19) revealed that in the period February-December 1989 "Linh Video" wrote numerous cheques in favour of "Asian Video" for various reasons. These payments, according to Mr. Tu, were for shared licence fees that were payable to other suppliers and for stocks of copy tapes that he lawfully supplied to "Linh Video". I remain gravely suspicious but I feel compelled to conclude that the evidence is insufficient to find that "Asian Video" supplied copies of TVB films to "Linh Video".
So far as "Linh Video" is concerned, it does not really matter that the source of the TVB films is unidentified. They had them in their shop in circumstances where they have admitted that they had no right to their possession. Their cheque butts, combined with Mr. Tu's evidence enables me to find that the third and fourth respondents well knew and understood that the practice of the trade required video shops to pay fees to suppliers for the right to reproduce and hire out films.
Before proceeding to assess damages, I will dispose of the consequences of the search of the premises of "Asian Video" on 12 July 1989 for I consider them relatively insignificant. When Mr. Tu used video cassettes bearing the logo or trade mark of either TVB or TVBI as "stock", he should have removed the original label from the spine; but he did not do so. Instead, he fixed another blank label on the spine and wrote, in Chinese characters, the name of the new film which had been copied over the previous film. The blank label was smaller than the printed label and invariably it failed to cover the trade mark. Hence, the trade mark was visible and appeared on the spine of the cassette at a time when Mr. Tu and his wife had no right to use the mark. But it was abundantly clear from the presence of the blank label and the handwriting that the "old" label had been replaced by the "new" label.
As I have already pointed out, only Television Broadcasts Ltd. instituted trademark proceedings. But it would seem that this was overlooked when the search was conducted for some of the seized cassettes carried the mark of the second applicant. What is more, the evidence did not specify how many of the seized tapes carried the logo of the first applicant. With one exception, this was the extent of the impropriety of Mr. Tu and his wife. The exception related to one cassette which still carried its original label on the spine - that label carried the trademark of Television Broadcasts Ltd. It remains significant that Mr. Tu admitted that these offending cassettes were not on the shelves for public display; they were out of sight. Hence, his conduct and that of his wife cannot be excused on the grounds of mere oversight. They knew that it was wrong of them to maintain those original labels. I decline to draw a further adverse inference from the evidence of Mr. Thanh about Mrs. Tu removing labels. He did not state whether they were labels with or without the superimposed blank labels; he did not state the number of cassettes and he did not state whether they belonged to the first or to the second applicant. If they were without the superimposed labels, the conduct of Mr. and Mrs. Tu would have been more serious; but if they had the superimposed labels then the addition of a few more similar offending cassettes does not carry the matter much further. In those circumstances, the only remaining matter which is relevant to an assessment of any award is the important fact that this Court had, by its orders in the preceding month, in the most forceful terms, brought home to Mr. and Mrs. Tu that they had no right to make any use of TVB films. Weighing these circumstances up, I am led to conclude that it would be appropriate to order that the first and second respondents pay to the first applicant damages in the sum of $1,000.00 for the unlawful use of its trade mark.
I return to a consideration of the claims that have been made by the four applicants with respect to the admitted breaches of copyright. Having regard to the chain of agreements that were tendered in evidence, it was acknowledged by Mr. Tilmouth that the substantial claimant was the fourth applicant, Mr. Le. For my part, I think that the circumstances of this case are such that it is appropriate to compensate Mr. Le only. It may be that the conduct of the respondents have impaired the value of the rights of the other applicants but, if that is the case, no evidence was led on the subject. I therefore do not intend to award the first three applicants any damages; I will limit my attention to the rights of Mr. Le.
A factor which I consider most material in determining the award of damages in favour of Mr. Le is the very small market in South Australia for films in the Cantonese language. The evidence was that there were only 3 shops or so specialising in such films. When one of those, "Asian Video" does not renew its licence (for whatever reason) but continues, unlawfully, to trade in the films that Mr. Le distributes, it stands to reason that Mr. Le's opportunity of finding an alternative outlet is severely impaired. With some modifications, the same principles can be incorporated to the detriment of "Linh Video". Mr. Le gave some evidence about his attempts to find another sub-licensee but it was vague and imprecise and I do not consider that I can make any use of it one way or the other.
So far as "Asian Video" is concerned, I make the following findings:- first, I reject Mr. Tu's evidence that he had an honestly held belief that he was negotiating for the renewal of his licence with Mr. Le. He full well knew that Mr. Le was asking $45,000 or thereabouts and he and his wife were not prepared to pay that sum. Secondly, I reject Mr. Tu's evidence that Mr. Le told him that the April letter (Ex. A23) was written by the accountant, Mr. Robert Lee, without instructions. Both Mr. Le and Mr. Robert Lee denied that and I accept their evidence. Thirdly, I find that Mr. Tu and his wife continued trading in TVB films after 31 January 1989 deliberately but, no doubt, in the hope that they might force Mr. Le to accept a licence fee lower than $45,000. Mr. Tu said that he would have paid an extra 20% (i.e. over and above $26,000) and in that concession there is a clue to his determination to hold out against the demands of Mr. Le. Undoubtedly, the most serious aspect of the conduct of Mr. and Mrs. Tu is the last finding that they knowingly and deliberately "pirated" some TVB films that were released after the expiration of their licence. Fortunately for them, the evidence does not disclose the number of occasions or the number of films that were involved in this illegal copying.
In the interests of Mr. and Mrs. Tu, I record that I have come to the conclusion that Mr. Tu was more stupid than consciously dishonest in his conduct. It is a matter of great difficulty to form an assessment of the character of a witness when he gives evidence through an interpreter. In this case, I received great help from Mr. Tilmouth. He was scrupulously fair in his questioning of Mr. Tu and was at pains to avoid any misunderstandings occurring. The apparent gaps in some parts of the applicants' case were no fault of his for it transpired, in answer to my direct question, that his brief had only been delivered some three or four days before the listed date for the commencement of the trial. I was also materially assisted by the honesty and integrity of Mrs. Oldfield, the interpreter. Accepting her translations as accurate in all respects I am able to make the following comments, all of which assist me in coming to the conclusion that Mr. Tu's gravest shortcoming was his stupidity:- first, his unsolicited confession that it was essential for the continuity of his business to copy, illegally, new releases from TVB: this showed an abysmal lack of understanding of the gravity of his actions; secondly, the simplest of questions was often met with long, irrelevant answers on disassociated subjects; thirdly, the many contradictory answers showed a real lack of comprehension of the seriousness of the accusations that had been levelled against him. For example, he would maintain that he regarded negotiations with Mr. Le as still alive and then offer the comment that he kept the offending cassettes out of sight so as to hide his guilt. These particular comments and answers were repeated to a sufficient degree that his evidence could not have been lost in the translation. In my opinion, these matters will achieve a measure of relevance when a determination is made of the "additional damages" that should be awarded in favour of Mr. Le.

The relevant provisions of the Copyright Act 1968 are those contained in s.115 of that Act:-

"(1) Subject to this Act, the owner of a copyright may bring an action for an infringement of the copyright.

(2) Subject to this Act, the relief that a court may grant in an action for an infringement of copyright includes an injunction (subject to such terms, if any, as the court thinks fit) and either damages or an account of profits.

(3) Where, in an action for infringement of copyright, it is established than an infringement was committed but it is also established that, at the time of the infringement, the defendant was not aware, and had no reasonable grounds for suspecting, that the act constituting the infringement was an infringement of the copyright, the plaintiff is not entitled under this section to any damages against the defendant in respect of the infringement, but is entitled to an account of profits in respect of the infringement whether any other relief is granted under this section or not.

(4) Where, in an action under this section:

(a) an infringement of copyright is established; and

(b) the court is satisfied that it is proper to do so, having regard to:

(i) the flagrancy of the infringement;

(ii) any benefit shown to have accrued to the defendant by reason of the infringement; and

(iii) all other relevant matters;

the court may, in assessing damages for the infringement, award such additional damages as it considers appropriate in the circumstances."

For the reasons that I have already canvassed, I am satisfied that Mr. and Mrs. Tu were well aware that their actions constituted an infringement of copyright. It is significant that, on more than one occasion, Mr. Tu gave an answer or made a comment that was translated with the word "copyright" included. Hence the provisions of sub-s. 115(3) cannot afford them any assistance. The position with respect to M/s To and her husband is more circumstantial but I have also concluded that there should be a finding that they were also aware that their conduct constituted an infringement. The applicants have met the test of proving that the third and fourth respondents actually knew that they were guilty of infringement (Young v Odeon Music House Pty. Ltd. (1976) 10 ALR 153; RCA Corporation v Custom Cleared Sales Pty. Ltd. (1978) 19 ALR 123 at 125). I am prepared to infer from the contents of their cheque butts that they were aware of the need to pay licence fees and the reasons why licence fees were payable. In particular I am prepared to infer that they knew that they could not trade in video films unless they paid the appropriate person an appropriate fee. This finding can easily be converted into more formal language: viz:- that they were aware that the act (that is, their conduct in trading in TVB films) constituted an infringement of copyright. Hence I have concluded that they cannot rely on the provisions of sub-s. 115(3) of the Copyright Act.
The inter-relationship between sub-s. (2) and (3) of s.115 requires some consideration. In sub-s. (2), in addition to the power to injunct, the Court may either award damages or order an account of profits. However, sub-s. (3) provides that a claimant is not entitled to damages; if the respondent was not aware, and had no reasonable grounds for suspecting, that the act constituting the infringement was an infringement of copyright, the claimant is only entitled to an account of profits. Hence I have concluded that my first task is to determine whether I should assess damages or order accounts and enquiries. If the applicants are entitled to make an election as to the proper form of relief (Z.S. Projects Pty. Ltd. v G. and R. Investments Pty. Ltd. (1987) 9 NSWLR 686), they have not done so; if the form of relief is that which the Court, in its discretion, deems most appropriate (Concrete Systems Pty. Ltd. v Devon Symonds Holdings Ltd. (1978) 20 SASR 79) then I have no hesitation in concluding that an award for damages is the appropriate remedy. To order an account of profits would not pay sufficient attention to the lossess that the claimant has suffered as a result of the infringement (c.f. Prior v Lansdowne Press (1976-77) 12 ALR 685 at 690 per Gowans J.). Even so, there is, in the case of "Asian Video" some evidence of its "profits" for the period February - June 1989. I do not think that I am compelled to ignore this information. On the contrary, I consider that it will be of some use in determining the quantum of the damages that should be awarded.
In the case of "Asian Video" the following evidence is material in considering the quantum of the award of damages:- Mr. and Mrs. Tu had previously paid a licence fee of $26,000 for a period of 12 months; they traded without a licence for a period that was slightly in excess of 4 months. I am not influenced by Mr. Le's demand for $60,000 and then $45,000 for a renewal of the licence. There is nothing to suggest that any businessman would have been prepared to pay either of these sums (c.f. Autodesk Australia Pty. Ltd. v Cheung (1990) 94 ALR 472). I am more impressed by Mr. Tu's concession, as an admission against his own interests, that he would have been prepared to pay a licence fee of an extra 20% - that would have been an annual fee of about $31,200. The next matter of importance is the very small market and the few outlets for films in the Cantonese language. Finally, by whatever names that were given to the services, Mr. Le had to pay $64,700 to different parties as part and parcel of his exclusive right to distribute TVB films in South Australia for the period 1 February 1989 to 31 January 1990. Commercially, he would be looking to recoup that outlay when granting sub-licences to businesses such as "Asian Video" - (making due allowance for his own business of "Leanne Video" which would, of course, be a competing outlet).
As I have earlier said, the calculations of the applicants established that in the period 1 February to 7 June 1989, the gross receipts of "Asian Video" from the unlawful hirings of TVB films was $8,485. This figure gives some indication of the extent to which "Asian Video" engaged in acts that constituted infringements of copyright. Another indicator is the figure of approximately 2,500 hirings in that period.
Mr. Tu instructed his accountant to prepare a calculation of the likely net profit that "Asian Video" might have earned in the same period from trading in TVB films. The calculation (Ex. A22) postulated an apportionment of all business expenses in the ratio that the number of TVB cassettes bore to the total name of cassettes in the stock of "Asian Video". The fallacy in this calculation was, as Mr. Tilmouth pointed out, that most, if not all these expenses were constant; they would have been incurred even if there had been no illegal trading in TVB films. In assessing the damages that Mr. and Mrs. Tu should pay I am therefore of the opinion that the greater part of the figure of $8,485 should be regarded as moneys that were retained by these respondents as a result of their unlawful activities.
Viewed through the eyes of Mr. Le, his opportunity to grant a sub-licence as from 1 February 1989 was substantially impaired because of the conduct of Mr. and Mrs. Tu. I am unable to quantify his loss exactly but it could not have exceeded (say) $35,000. As I have said, he had made some efforts to find another sub-licence but his evidence lacked particularity. I am not satisfied from his evidence that he made all reasonable efforts to mitigate his losses. Nevertheless, it seems to me that it would be reasonable to infer that the opportunity of Mr. Le to find another sub-licensee would have been made far more difficult by the continuation of the conduct of "Asian Video".
The measure of damages for a breach of copyright will vary from case to case. In Sutherland Publishing Co. Ltd. v Caxton Publishing Co. Ltd. (1936) 1 Ch 323 Lord Wright M.R. at p 336 related it to the depreciation of "the value of the copyright as a chose in action". But it is clear that this is but one method of assessment (see the discussion on this subject by Wilcox J. in Autodesk Australia Pty. Ltd. v. Cheung (supra), where his Honour collects and discusses the authorities and, having regard to the facts of that case, concluded that he should adopt the juryman approach and treat the damages "at large").
In the circumstances of this case I believe that there is evidence which points to a "range" within which the award of damages is to be found. They should be not less than the fees generated by the unlawful hirings - $8,485 and not more than the likely annual fee that Mr. Le might have reasonably expected to receive; I would assess that as being $35,000. I have concluded that an appropriate figure would be $20,000.
The case against the third and fourth respondents calls for a jury approach. Little is known of their activities. Mr. Le said that prior to the search he had on earlier occasions stood outside their shop and observed customers leaving with TVB films. When he did this - how many customers he saw - how many films were involved - I do not know. There is nothing to suggest that these respondents engaged in any pirating of tapes. All in all, their conduct, as disclosed by the evidence, was far less reprehensible than that of Mr. and Mrs. Tu. In addition the number of cassettes involved was substantially less. In my opinion an award of $2,000 would be sufficient.
The last matter to be addressed is the claim for additional damages pursuant to the provisions of sub-s. 115(4). I have concluded that the evidence does not warrant a finding of "flagrancy" against the third and fourth respondents. However the facts that I have recited clearly show "flagrancy" on the part of Mr. and Mrs. Tu. They benefitted substantially by reason of the infringement and I respectfully agree with Wilcox J. that a relevant matter is the difficulty that owners of copyright face in trying to protect themselves from this type of infringement (Autodesk Australia Pty. Ltd. v Cheung at p 479). Damages under sub-s. 115(4) are intended to be punitive and, were it not for my finding that Mr. Tu was basically a stupid man, I would have awarded a much greater sum. As it is, I think that he has now learnt a very bitter lesson. I award further damages against the first and second respondents in favour of the fourth applicant in the sum of $7,000.
Accordingly there will be judgment as follows:-

(1) In Action No. SG84 of 1989, there will be judgment for Television Broadcasts Ltd. against Tu Chi Hoa and Dung To in the sum of $1,000 and those respondents shall pay that applicant's costs up to the commencement of trial and the costs associated with the entry of judgment.

(2) In Action No. VG184 of 1989:-

(a) There will be judgment for the fourth applicant Le Minh Hoang against Tu Chi Hoa and Dung To in the sum of $27,000.

(b) There will be judgment for the fourth applicant Le Minh Hoang against Khai Dong Lu and Thi Linh To in the sum of $2,000.

(c) The costs of all four applicants shall be taxed and paid as to 90% by the first and second respondents and as to 10% by the third and fourth respondents.

[1990] FCA 577

19 OCTOBER 1990