TICA Default Tenancy Control Pty Ltd v Datakatch Pty Ltd

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FEDERAL COURT OF AUSTRALIA

TICA Default Tenancy Control Pty Ltd v Datakatch Pty Ltd [2016] FCA 815

File number: NSD 102 of 2015
Judge: PERRAM J
Date of judgment: 15 July 2016
Catchwords:

COPYRIGHT – infringement – ownership of copyright

EQUITY – breach of confidence

EQUITY – breach of fiduciary and related duties – use of information
Legislation:

Copyright Act 1968 (Cth) ss 10, 31(1)(a), 35, 36(1), 126B(2)

Corporations Act 2001 (Cth) ss 181(1), 182(1), 183(1)

Criminal Code Act 1995 (Cth)

Evidence Act 1995 (Cth) s 140(2)(c)

Crimes Act 1900 (NSW) s 308M
Cases cited:

Autodesk Inc v Dyason (1992) 173 CLR 330

Banque Commerciale S.A. en liquidation v Akhil Holdings Ltd (1990) 169 CLR 279

Briginshaw v Briginshaw (1938) 60 CLR 336

CA Inc v ISI Pty Ltd (2012) 201 FCR 23

Coco v A.N. Clark (Engineers) Ltd (1968) 1A IPR 587

Faccenda Chicken v Fowler [1984] IPR 155

Johns v Australian Securities Commission (1993) 178 CLR 408

Palmer v Dolman [2005] NSWCA 361

Re Belhaven and Stenton Peerage (1875) 1 App Cas 78

Robb v Green [1895] 2 QB 315

Siegwerk Australia Pty Ltd (In Liquidation) v Nuplex Industries (Aust) Pty Ltd [2013] FCAFC 130

University of Western Australia v Gray (2009) 179 FCR 346

Wheatley v Bell [1982] 2 NSWLR 544
Date of hearing: 21 March 2016 to 23 March 2016
Registry: New South Wales
Division: General Division
National Practice Area: Intellectual Property
Sub-area: Copyright and Industrial Designs
Category: Catchwords
Number of paragraphs: 165
Counsel for the Applicant: Mr K Smark SC
Solicitor for the Applicant: Tomaras Lawyers
Counsel for the Respondents: Mr B Katekar
Solicitor for the Respondents: Bartier Perry

ORDERS

NSD 102 of 2015
BETWEEN:

TICA DEFAULT TENANCY CONTROL PTY LTD ACN 087 400 379

Applicant
AND:

DATAKATCH PTY LTD ACN 601 884 806

First Respondent

REGINALD JOSHUA

Second Respondent

ANTHONY NOUNNIS (and others named in the Schedule)

Third Respondent

JUDGE:

PERRAM J

DATE OF ORDER:

15 July 2016

THE COURT ORDERS THAT:

1.The parties bring in orders giving effect to these reasons by Friday, 29 July 2016.

2.The matter be stood over for further directions on Tuesday, 9 August 2016 at 9.30am.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

PERRAM J:

1.  Introduction

  1. For many years now Mr Philip Nounnis has conducted a business providing information to interested persons about tenants, such as whether they have defaulted on prior leases and what applications for previous tenancies they have made.  This business has been conducted by him through various corporate entities, the most recent of which is, and has been since 1999, the present applicant (‘TICA’).

  2. TICA’s business is conducted online via a website, and is provided to members who pay a yearly fee.  Most of these members are real estate agencies.  The service is also provided to members of the public who pay a one-off fee.

  3. This case is chiefly about the software and databases which together underpin and constitute TICA’s…

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Details
Case
[2016] FCA 815
Decision Date

CaseChat Overview and Summary

In the case of TICA Default Tenancy Control Pty Ltd v Datakatch Pty Ltd, the plaintiff, TICA, alleged that Datakatch had infringed its copyright in the TICA system and had breached confidence by using usernames and passwords obtained by TICA's former employees, Mr Joshua and Mr Nounnis Jnr. The court was required to determine whether there was infringement of copyright, whether there was a breach of confidence, and whether the defendants were liable under the Corporations Act. The court examined the similarities between the TICA system and the Datakatch system, the access of the defendants to the TICA system, and the ownership of the copyright.

The court held that the circumstantial case presented by TICA was sufficient to establish that the Datakatch system had been copied from the TICA system. The court found that there were similarities in the schema of the databases, the stylesheets, and the presence of unique elements of data in both systems. The court also found that Mr Joshua and Mr Nounnis Jnr had accessed the TICA system after they had ceased working for TICA, using the usernames and passwords of certain of TICA's clients. The court held that the defendants were liable to be restrained in an action for breach of confidence from using the usernames and passwords taken by Mr Nounnis Jnr in respect of TICA's clients.

The court held that the copyright infringement claim failed because the defendants were not found to have used the copyright work directly or indirectly. The court also held that Mr Nounnis Jnr and Mr Joshua were liable to be restrained from using the usernames and passwords sourced from Mr Nounnis Jnr, and that Datakatch was liable to be restrained from using the usernames and passwords sourced from Mr Nounnis Jnr. The court ordered the parties to bring in short minutes of order giving effect to these reasons and listed the matter for further directions.

The court's decision was based on a careful examination of the evidence and the law. The court found that the circumstantial case presented by TICA was sufficient to establish that the Datakatch system had been copied from the TICA system. The court also found that the defendants were liable to be restrained in an action for breach of confidence from using the usernames and passwords taken by Mr Nounnis Jnr in respect of TICA's clients. The court's decision was consistent with the principles of copyright law and the law of confidence.

Orders

Orders of the court

1. The parties bring in orders giving effect to these reasons by Friday, 29 July 2016.

2. The matter be stood over for further directions on Tuesday, 9 August 2016 at 9.30am.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

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Evidence

Evidence Before The Court

A simple case. It is now useful to turn to how the case was actually run.(c) How TICA’s case was actually run – a case of circumstantial evidence At trial, counsel for TICA, Mr Smark SC, opened a case which differed very substantially from the pleaded case. It was now said that the fact that Mr Joshua and Mr Nounnis Jnr had taken the TICA system would be proved, in effect, by a circumstantial case. Not all of the elements of the circumstantial case were identified in opening. Many of them, in fact, emerged only during the evidence and some were touched upon only in closing address. Indeed, at no point during the trial were all of the elements of this case conveniently collected in a single location. However, by the time judgment was reserved, the circumstantial case seemed to my observation to have, at least, the following elements:(i)the alleged copying of TICA’s source code;(ii)similarities in the schema of Datakatch’s databases and those of TICA;(iii)similarities in the stylesheets (a term explained later in these reasons);(iv)the presence of unique elements of data in Datakatch’s databases which were also found in TICA’s databases;(v)the fact that Mr Joshua and Mr Nounnis Jnr accessed the TICA system after they had ceased working for TICA, using the usernames and passwords of certain of TICA’s clients;(vi)the letter of 10 May 2012 (which purported to give Mr Joshua, inter alia, the right to work for other clients apart from TICA);(vii)the poor relationship between Mr Nounnis Snr and Mr Joshua and Mr Nounnis Jnr;(viii)the fact of Datakatch having TICA’s mailing list; and(ix)the allegedly dishonest nature of Mr Joshua and Mr Nounnis Jnr’s evidence. It will be observed that this case involved a substantial departure from the case as pleaded. When I first began to prepare these reasons, I was concerned about the procedural consequences of the case being pleaded on one basis and then run on another. However, no objection was taken to this course being adopted, and it was clear that the respondents were aware that the case they were facing was indeed a circumstantial one: see, e.g., T277.34-T278.11 and paragraph 37 of the respondents’ closing submissions (‘The case put by TICA is a circumstantial one’). This is, therefore, one of those cases where the parties have chosen to conduct the case on a different basis to the way in which it has been pleaded: Banque Commerciale S.A. en liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at 286-287 (‘...the circumstances in which a case may be decided on a basis different from that disclosed by the pleadings are limited to those in which the parties have deliberately chosen some different basis for the determination of their respective rights and liabilities.’) Before turning to the elements of TICA’s circumstantial case, it is necessary to refer to three further matters. The first of these is to note that what the circumstantial case seeks to prove is that the Datakatch system has been copied from the TICA system. In this context it has been pointed out that where a plaintiff and defendant’s work are similar:…there are four possible explanations: the defendant’s work was copied from the claimant’s; the claimant’s from the defendant’s; both from a common source; or mere chance or coincidence. It is only in the first case that an infringement of the claimant’s work can have occurred. Although the concept of copying is expressed differently in relation to the different categories of work, the underlying principle is that there can be no infringements unless use has been made, directly or indirectly, of the copyright work. Copyright is not a monopoly right and no infringement occurs by an act of independent creation. This is often expressed as saying there must be a causal connection between the copyright work and an infringing work. This is one of the ways in which copyright differs from true monopoly rights such as patents and registered designs. In the case of the latter rights, a person can infringe even though he has arrived at his result by independent creation.(Footnotes omitted.) (Copinger and Skone James on Copyright, 16th Ed, 2011 at p.426)

Decision

Reasons for decision

After the hearing concluded, an application was made to join Mr McCoy, Mr Nounnis Snr and Mrs Nounnis. The respondents’ defence at trial, and their cross-examination of various witnesses, was conducted on the basis of an attempt to prove that the applicant did not own the copyright because others did. It would be quite unfair to turn the fruits of their efforts upon them by joining those parties. Further, allowing such an application would further delay the proceedings which ought not, I think, in this case to occur. The application will be refused.9. Conclusions The copyright infringement claim fails. However, Mr Nounnis Jnr and Mr Joshua are liable to be restrained in an action for breach of confidence from using the usernames and passwords taken by Mr Nounnis Jnr in respect of TICA’s clients. The applicant should succeed against Mr Nounnis Jnr under s 183(1) of the Corporations Act. Datakatch is liable to be restrained from using the usernames and passwords sourced from Mr Nounnis Jnr. The parties are to bring in short minutes of order giving effect to these reasons. The matter will then be listed on Tuesday, 9 August 2016 at 9.30am to resolve any outstanding issues in relation to those orders and to make directions to prepare the next phase of the hearing. I will hear the parties on costs if necessary, a matter which can be scheduled at that time, too.

Ratio Decidendi

Legal Principle Established

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