Oraka Technologies Ltd v Geostel Vision Ltd - [2016] NZHC 1188

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2005-419-000809 [2016] NZHC 1188

BETWEEN
ORAKA TECHNOLOGIES LIMITED

First Plaintiff

ORAKA GRADERS LIMITED Second Plaintiff

MICHAEL WILLIAM SCHWARZ Third Plaintiff

AND

GEOSTEL VISION LIMITED First Defendant

AND

P DAYNES AND G ROBERTSON Second Defendants

AND

NAPIER TOOL & DIE LIMITED Third Defendant

Hearing: 11, 12 and 13 April 2016

Appearances:

B P Henry and A M Dunlop for the Plaintiffs

No appearance by or for First and Second Defendants P G Skelton QC, M J Gavin and C D Herbert for the Third Defendant

Judgment:

2 June 2016

JUDGMENT OF HINTON J

This judgment was delivered by me on 2 June 2016 at 5.00 pm pursuant to Rule 11.5 of the High Court Rules

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

Counsel/Solicitors:
Brian Henry, Barrister, Auckland
P G Skelton, QC, Auckland
Hudson, Gavin, Martin, Solicitors, Auckland

ORAKA TECHNOLOGIES LIMITED v GEOSTEL VISION LIMITED [2016] NZHC 1188 [2 June 2016]

[1] This judgment deals with a question of damages. There is only one issue, but it is a significant one: is this a case where a party can recover “third party” losses?

[2] The third plaintiff, Michael Schwarz, developed the Oraka Grader, the first automatic asparagus sorter in the world.

[3] The Oraka Grader has a unique tip cup assembly.

[4] After many years of litigation, the Court of Appeal determined in its second judgment,1 that copyright in the cup assembly is held by the first plaintiff, Oraka Technologies Ltd (upholding Allan J) and that copyright had been infringed by the defendants (reversing Allan J). Judgment was entered for Oraka Technologies Ltd, as the owner of the copyright, against all defendants, and the matter remitted back to this Court for an inquiry into damages.

[5] However, during the infringement period, the Oraka Grader was exclusively manufactured and sold, under an informal arrangement, by the second plaintiff, Oraka Graders Ltd. Oraka Graders Ltd suffered the loss, but it had no cause of action for breach of copyright as it did not hold a written exclusive licence, required by the Copyright Act 1994.

[6] Can Oraka Technologies Ltd recover losses directly suffered by

Oraka Graders Ltd?

A brief history of the Oraka Grader

[7] The matter has an extensive background, but the facts can be limited to those relevant to the remaining issue.2

[8] Mr Schwarz began developing the Oraka Grader in the early 1980’s. He and his wife, Janet Schwarz, were growing asparagus commercially in Tirau. He became interested in mechanisation of the grading process. World-wide, asparagus was still
being sorted by hand. As Mr Schwarz put it:

1 Oraka Technologies Ltd v Geostel Vision Ltd [2013] NZCA 111.
2 For a detailed factual history, refer to Oraka Technologies Ltd, above n1.

Sorting asparagus is one of the most difficult crops to work with in the agricultural world. It won't roll like a lot of fruit; it is reluctant to behave well in water, as many crops will; and, it is much more…

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: [2016] NZHC 1188
Decision Date: 2 June 2016

CaseChat Overview and Summary

This case concerns a dispute over damages in a copyright infringement case. Oraka Technologies Ltd (OTL) owns the copyright for the Oraka Grader, an automatic asparagus sorter, which was infringed by the defendants. The key issue before the court was whether OTL could recover the losses suffered by Oraka Graders Ltd (OGL), a company that manufactured and sold the Oraka Grader under an informal arrangement with OTL. The court considered various legal precedents and policy considerations, ultimately finding that OTL could recover the losses suffered by OGL as a loss of opportunity. The reasoning was based on the concept that OTL had lost the opportunity to cause OGL to generate profits due to the infringement. The court awarded compensatory damages of $4.1 million to OTL, representing the loss of opportunity suffered by OGL. The claim for additional damages under the Act was dismissed due to the lack of flagrancy in the infringement. The court entered judgment for OTL against the first to third defendants, awarding compensatory damages of $4.1 million, with costs reserved for further negotiation between the parties.

Orders