Oraka Technologies Ltd v Geostel Vision Ltd - [2018] NZHC 769

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2005-419-000809

[2018] NZHC 769

BETWEEN
ORAKA TECHNOLOGIES LIMITED

First Plaintiff

ORAKA GRADERS LIMITED
Second Plaintiff

MICHAEL WILLIAM SCHWARZ
Third Plaintiff

AND

GEOSTEL VISION LIMITED

First Defendant

PAUL DAYNES AND GORDON ROBERTSON

Second Defendants

NAPIER TOOL & DIE CO LIMITED

Third Defendant

Hearing:
10-14 July 2017 and 1 August 2017

15 November 2017 - joint memorandum of defendants

Appearances:

B Henry and C S L Foster for the Plaintiffs

K Glover for the First and Second Defendants
P Skelton QC and C D Herbert for the Third Defendant

Judgment:

23 April 2018

JUDGMENT OF HINTON J

ORAKA TECHNOLOGIES LIMITED v GEOSTEL VISION LIMITED [2018] NZHC 769 [23 April 2018]

This judgment was delivered by me on 23 April 2018 at 10.00 am pursuant to Rule 11.5 of the High Court Rules

…………………………………………………………………… Registrar/Deputy Registrar

Counsel/Solicitors:
Brian Henry, Barrister, Auckland Le Pine & Co, Putaruru
Kevin Glover, Barrister, Auckland Malloy Goodwin Harford, Auckland
Philip Skelton Queens Counsel, Auckland Hudson Gavin Martin, Auckland

[1] The question to be determined in this judgment is the quantum of damages payable to the first plaintiff as owner of a copyright, for infringing use by the defendants based on a notional licence fee or royalty.

Background

[2] The facts as set out below are taken largely from the Court of Appeal judgment of 28 November 2016.1

[3] During the 1980s the third plaintiff, Mr Michael Schwarz, invented an asparagus grading machine with a unique cup assembly (the Oraka grader). In March 1993, he formally assigned the copyright in the cup assembly to the first plaintiff, Oraka Technologies Ltd (Technologies). Mr Schwarz and his wife were the sole shareholders and directors of Technologies.

[4]The defendants infringed the copyright from mid-2001 to March 2009, when

Technologies’ copyright expired.

[5] The defendants were familiar with the Oraka grader, having been involved by Mr Schwarz in various aspects of its development and/or marketing. In 2001, Mr Daynes and Mr Robertson established their own company – the first defendant, Geostel Vision Ltd (Geostel) – and through that vehicle started manufacturing and selling a grading machine in competition with the Oraka grader.

[6] The Geostel grader incorporated a cup assembly that was a copy of a substantial part of the Oraka grader’s cup assembly. The infringing cup assembly was manufactured and sold to Geostel by the third defendant, Napier Tool & Die Ltd (Napier).

[7] During the infringement period (mid-2001 to March 2009), Technologies was no longer manufacturing and selling the Oraka grader. It had stopped trading in 1996 after running into financial difficulties. Instead, from 1996 to early 2001, the manufacturing and sale of the Oraka grader was undertaken by another company,

1 Napier Tool & Die Ltd v Oraka Technologies Ltd [2016] NZCA 554.

Oraka Technologies Holdings Ltd (Holdings). Mr and Mrs Schwarz were directors and shareholders of Holdings. Minority shares were also held by two outside investors, a Mr Kinder and…

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: [2018] NZHC 769
Decision Date: 23 April 2018

CaseChat Overview and Summary

In the case of Oraka Technologies Limited v Geostel Vision Limited, the Court was required to determine the quantum of damages payable to the plaintiff, Oraka Technologies Limited, for the infringing use of their copyright by the defendants. The Court of Appeal had previously remitted the case back for the assessment of damages on the basis of a notional licence fee or royalty. The court was tasked with identifying a reasonable price that the defendants would have paid for the use of the plaintiff's property, taking into account various factors such as the alternatives available to both parties, the importance of the infringed property, and the parties' respective bargaining positions. The court considered evidence from both parties and expert witnesses, as well as relevant case law, before determining a notional licence fee of $6.00 per cup assembly, representing approximately 40% of the defendants' anticipated profit margin on the non-machine cup assemblies. The total licence fee for the 85,000 cup assemblies supplied over the period 2001 to 2009 was assessed at $510,000. Judgment was entered against all defendants in favour of the first plaintiff for $510,000, with the plaintiff also entitled to interest and costs.

Orders