YPG IP Limited v Yellow Book.com.au Pty Ltd HC Auckland CIV 2007-404-2839
[2007] NZHC 1947
•13 July 2007
Public Version
Certain passages have been excised on the grounds of commercial confidentiality
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2007-404-2839
BETWEEN YPG IP LIMITED First Plaintiff
ANDYELLOW PAGES GROUP LIMITED Second Plaintiff
ANDYELLOW BOOK.COM.AU PTY LTD First Defendant
ANDDAVID KHOURY Second Defendant
ANDROBERT G COLES Third Defendant
Hearing: 4 July 2007
Appearances: K W McLeod and M Hayes for plaintiffs
No appearance for first and second defendants
Third defendant in person
Judgment: 13 July 2007
JUDGMENT OF ALLAN J
PARTIES
AJ Park PO Box 565, Auckland
R G Coles [email protected]
YPG IP LIMITED & ANOR V YELLOW BOOK.COM.AU PTY LTD AND ORS HC AK CIV 2007-404-2839
13 July 2007
[1] In this proceeding the plaintiffs seek interim injunctions to restrain:
a) Alleged copyright infringement by all three defendants;
b) Alleged trademark infringement by the first and second defendants;
c) Breaches of the Fair Trading Act 1986 by the first and second defendants.
[2] All defendants are based in Australia. They say that this Court has no jurisdiction to hear the proceeding, or alternatively that it should hold that New Zealand is forum non conveniens and that the proceeding ought to be heard in Australia, but that should this Court hold that it has jurisdiction, then it should dismiss the plaintiffs’ application for interim relief on the merits.
Brief background
[3] The proceeding relates to intellectual property rights which are claimed to subsist in the name YELLOW PAGES and in an on-line directory known as the YELLOW PAGES directory.
[4] YELLOW PAGES directories have been available in New Zealand in printed format since 1959. They were originally compiled and published by employees of the New Zealand Post Office. In March 1988 responsibility for the compilation and publication of printed YELLOW PAGES directories was transferred from NZ Post to Telecom. At that time copyright in the printed YELLOW PAGES was assigned to Telecom, as were all rights existing in the YELLOW PAGES’ name and in the colour yellow.
[5] In December 1988 Telecom transferred the telephone directories business including the copyright in the YELLOW PAGES directories, to the second plaintiff (then known as Telecom Directory Services Ltd). The first YELLOW PAGES directories were published by the second plaintiff in 1989. Rights in the YELLOW
PAGES’ name, including a portfolio of registered trademarks, were also transferred to the second plaintiff. In 2003 those rights were transferred to a holding company, Telecom IP Limited, and when Telecom sold its YELLOW PAGES business in
2007, those rights were transferred to the first plaintiff.
[6] A printed YELLOW PAGES directory is published for the calling area covered by each regional telephone book (known as the White Pages) which the second plaintiff publishes. There are 18 regional areas in which printed YELLOW PAGES directories are published at different times throughout the year.
[7] In September 1997 the second plaintiff created the on-line YELLOW PAGES directory in response to the advent of the internet. The printed YELLOW PAGES directories’ database was made available to the public on the internet at the domain name of The on-line YELLOW PAGES directory is a comprehensive guide to products and services offered by New Zealand businesses. A user of the on-line YELLOW PAGES directory can search for businesses from over 200,000 listings, either by business name or business classification. A search can be nation-wide or limited to a particular geographic area.
[8] The plaintiffs say that, on or about 29 March 2007, they became aware that the first defendant was operating an on-line business directory in New Zealand at the domain name That domain name is owned by the second defendant. Following a review of that website, the plaintiffs formed the opinion that the directory listings and business category classifications applied to those listings featured in the YELLOW BOOK directory, had been copied from the on-line YELLOW PAGES directory. Accordingly, on 5 April 2007, a letter was sent by the plaintiffs’ solicitors to the first and second defendants alleging copyright and trademark infringement and breach of the Fair Trading Act. On 10 April 2007, the first and second defendants replied. They denied infringing any of the plaintiffs’ rights.
[9] On 12 April 2007 the plaintiffs became aware of the third defendant’s on-line business directory service operated under the domain name Following a further review the plaintiffs formed the opinion that the content of the
YELLOW DUCK directory had also been copied from the on-line YELLOW PAGES directory.
[10] It is common ground that the YELLOW BOOK and YELLOW DUCK directories are to all intents and purposes identical. The third defendant has the permission of the first and second defendants to copy the content of the YELLOW BOOK directory and indeed the first or second defendants are responsible for the contents of both directories.
[11] The proceeding was commenced on 17 May 2007.
Preliminary matters
[12] The first defendant is a company incorporated in Australia. It has its registered office in Queensland. On the information available to the Court, it appears that the director and major shareholder of the first defendant is a Mr Emmanuel Khoury, who is a 19 year old student. The second defendant is Mr David Khoury who plays a role in the management of the first defendant. He is a bankrupt. The third defendant, Mr Coles, has only a loose association with the first and second defendants; he is an independent businessman who is, he says, of limited means. No defendant has instructed solicitors or counsel. They say they do not have the means to do so.
[13] On 21 June 2007, Mr Emmanuel Khoury filed a memorandum which in effect sought an order granting leave to allow a director of the company to act on its behalf in this proceeding. In a judgment given on 29 June 2007, Harrison J declined that application, in reliance on well settled principles which require corporate parties to be represented by counsel. In that judgment, Harrison J urged the defendants to seek legal advice and to instruct solicitors to act in the proceeding on their behalf. That has however not occurred.
[14] At the hearing before me Mr Coles appeared in person, but there was no appearance by the first or second defendant. Mr David Khoury was apparently unable to come to New Zealand for personal reasons. Nevertheless, the defendants
have filed in Court a significant number of documents, most of which do not comply with the requirements of the High Court Rules. The Court has however allowed the defendants a good deal of leeway with respect to the form and content of documents filed. Counsel for the plaintiffs have likewise adopted a sensible and pragmatic approach to procedural issues.
[15] Included among the documents filed are what amount to submissions on questions related to jurisdiction and to the plaintiffs’ application for interim injunctions. Although the defendants have not filed notices of appearance under r 131, counsel for the plaintiffs was content to argue questions of jurisdiction and forum conveniens, on the basis of the informal papers filed by the defendants.
[16] On 13 June 2007, Clifford J made orders which required the defendants to take certain steps to preserve relevant evidence. The orders included a requirement that the defendants supply certain material to counsel for the plaintiffs, on the footing that such material would, at least in the first instance, be restricted to solicitors and counsel. Although the defendants say that they have sent certain items to the Registrar of the Court (but not to solicitors for the plaintiffs), such material has not yet arrived, nor does it include everything that was detailed in the order made by Clifford J.
[17] The defendants have filed an application for variation of that order. That application was not set down for hearing before me, and in any event could not proceed in the absence of the first and second defendants. It is for them to take steps to bring that application on for hearing if they so desire. In the meantime, counsel for the plaintiffs asks the Court to note that the defendants appear to be in breach of the orders made by Clifford J. It is of course for the plaintiffs to take such steps as they think fit, if they are able to establish a continuing breach of the defendants’ obligations in that regard.
Jurisdiction
[18] On 3 July 2007, the defendants filed a notice of interlocutory application for orders, inter alia, that this Court has no jurisdiction to hear the proceeding, and in the
alternative, that it should, in its discretion, decline to assume jurisdiction on the ground that the dispute would more appropriately be resolved in Australia. Written notice had been given to the Court and the plaintiffs of the defendants’ intention to file that application. On its face the defendants’ document appeared to be an application under r 131(3) to dismiss the proceeding on the ground that the Court has no jurisdiction to hear and determine it. Although the defendants ought to have filed a notice of appearance under protest to the jurisdiction as a precondition to the filing of the application, the plaintiffs took no exception to the Court proceeding to hear the application on its merits.
[19] I heard from Mr McLeod for the plaintiffs and from Mr Coles. I also took into account what amounted to legal submissions filed on behalf of the second defendant.
[20] The relief sought by the plaintiffs in this proceeding includes:
a) Declarations that the defendants have infringed the second plaintiff’s copyright;
b)Injunctions to restrain the defendants from reproducing the second plaintiff’s copyright works, and from continuing to host or offering in New Zealand the YELLOW BOOK/YELLOW DUCK on-line New Zealand business directories;
c) Damages for copyright infringements in New Zealand, including additional damages under s 121(2) of the Copyright Act 1994;
d)A declaration that the first and/or second defendants have infringed the first plaintiff’s New Zealand registered trademarks for its YELLOW PAGES’ trademark;
e) Injunctions restraining the first and/or second defendants from using the YELLOW BOOK trademark in New Zealand;
f) Damages for trademark infringements in New Zealand;
g) Injunctions against the first and/or second defendants under s 41 of the Fair Trading Act to restrain the first and second defendants from using in New Zealand the YELLOW BOOK trademark/name and/or the colour yellow and from otherwise trading in New Zealand in a way that breaches the Fair Trading Act.
[21] In serving these proceedings on the defendants, the plaintiffs relied in their notice of proceeding on the following grounds appearing in r 219, namely that:
a) The proceedings concern an act or omission in New Zealand in respect of which damages are claimed, namely the reproduction of the second plaintiff’s copyright work, and the making available in New Zealand of the two on-line directories – r 219(a);
b)The proceedings seek to compel or restrain the performance of any act in New Zealand, the reference being to the injunction sought in the proceeding to restrain the on-going availability of the defendants’ two directories in New Zealand – r 219(d).
[22] In its copyright cause of action the second plaintiff relies upon the provisions of the Copyright Act 1994, and seeks relief including damages arising from the infringement of that copyright in New Zealand. The defendants claim that an Australian Court can and should be the forum in which this proceeding is tried. That submission must fail. No Australian Court has jurisdiction in respect of claims for relief pursuant to a New Zealand statute. The defendants, having chosen to act in such fashion as to bring themselves within the provisions of the Copyright Act 1994, are subject to the jurisdiction of this Court. That arises simply by virtue of the alleged reproduction of the second plaintiff’s copyright works in New Zealand, and the fact that the defendants’ websites are accessible in this country.
[23] Acts done outside New Zealand do not constitute an infringement of New Zealand copyright. Copyright confers a monopoly only within the country which grants it. There can be no infringement in Australia of a New Zealand copyright: Norbert Steinhardt & Son Ltd v Meth (1961) 105 CLR 440 and Atkinson Footwear
Ltd v Hodgskin International Services Ltd (1994) 31 IPR 186 at 190. So the Australian Courts have no jurisdiction to entertain a proceeding alleging the infringement of New Zealand copyright in this country. Likewise of course, the Courts of New Zealand have no jurisdiction to entertain a claim about the alleged infringement of Australian copyright in Australia.
[24] The position is the same in respect of the trademark cause of action. An Australian Court has no jurisdiction in respect of such matters, nor is it able to deal with issues of damages arising from such an alleged infringement.
[25] Similarly, the Fair Trading Act is New Zealand legislation, which targets activities within New Zealand. Foreign parties which trade in New Zealand, or carry on a business which affects New Zealand businesses, become subject to the provisions of the Fair Trading Act 1986. Australian Courts have no jurisdiction to deal with claims brought under that statute: see the discussion in Douglas Pharmaceuticals Ltd v Nutripharm NZ Ltd HC AK CP515/97 23 December 1997 at pp 11-12.
[26] The defendants alternatively argue that this Court is forum non conveniens. The principles applicable to the assessment of such a claim are conveniently set out in Longbeach Holdings Ltd v Bhanabhai & Co Ltd [1994] 2 NZLR 28, which adopted the principles set out in Spiliada Maritime Corp v Cansulex Ltd [1987] AC
460. The defendants carry the burden of showing that the New Zealand Court is not the most suitable to deal with the proceeding. The plaintiffs are plainly right to submit that the defendants’ application falls at the first hurdle, because there is no other available forum having competent jurisdiction to deal with the issues in the proceeding. They are founded on New Zealand statutes and rights, which are necessarily territorial in their existence and effect.
[27] For these reasons I indicated to counsel and Mr Coles at the conclusion of the argument on the jurisdiction point, that I was satisfied that this Court, and only this Court, has jurisdiction to deal with the plaintiffs’ claims, and that the defendants’ challenge to the jurisdiction of this Court must be dismissed.
Interim injunction principles
[29] The principles relevant to the grant of interim injunctions are well established and well known. The Court must make an assessment of where the overall justice of the case lies. Ordinarily it will engage in a two stage inquiry: whether there is a serious question to be tried, and whether the balance of convenience favours the grant of an interim injunction. But the two heads are not exhaustive: Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 129, 142 (CA) where Cooke J added:
Marshalling considerations under them is an aid to determining, as regards the grant or refusal of an interim injunction, where overall justice lies. In every case the Judge has finally to stand back and ask himself that question. At this final stage, if he has found the balance of convenience overwhelmingly or very clearly one way - as the Chief Justice did here - it will usually be right to be guided accordingly. But if the other rival considerations are still fairly evenly poised, regard to the relative strengths of the cases of the parties will usually be appropriate. We use the word "usually" deliberately and do not attempt any more precise formula: an interlocutory decision of this kind is essentially discretionary and its solution cannot be governed and is not much simplified by generalities.
[30] In general an interim injunction will not be granted where damages are an adequate remedy, but in intellectual property cases it will be rare that damages will be held to be sufficient. The Court must guard upon imposing upon a plaintiff a de facto licensing regime by those who infringe a plaintiff’s rights: New Zealand Rugby Football Union Inc v Saint Publishing Ltd HC AK M1458/01 2 October
2001. It is important also to bear in mind the practical effect of the grant or refusal of an injunction. If a grant would be likely to bring the proceeding to an end, then the court should approach the case on the broad principle that it must do its best to avoid injustice, and to balance the risk of doing an injustice to either party: NWL Ltd v Woods [1979] 3 All ER 614 at 625 (HL); Cayne v Global Natural Resources plc [1984] 1 All ER 225 (CA).
[31] I commence with the plaintiffs’ claim of copyright infringement. To support a claim for such infringement the second plaintiff must show:
a) It is the owner of the copyright work; and
b) The defendants have infringed the copyright in that work: Henkel
KGaA v Holdfast NZ Ltd [2007] 1 NZLR 577 (SC) at [34].
[32] As is pointed out in Holdfast ([35]-[37]) the first of these questions can be broken down into further subsidiary issues:
a) Has the second plaintiff clearly and accurately identified the copyright work or works in respect of which it is claiming infringement?
b) Has the second plaintiff established that the work is an original work?
c) Does the copyright work satisfy the requirements for qualification as a copyright work set out in ss 18, 19 or 20 of the Act?
[33] Section 14(a) of the Copyright Act 1994 provides that copyright is a property right that exists in original literary works. Section 2 defines a “literary” work as
any work, other than a dramatic or musical work, that is written, spoken, or sung; and includes:
(a) a table or compilation; and
(b) a computer programme.
[34] The term “compilation” is defined as including a compilation “… of data other than works or parts of works”. The plaintiffs say that the on-line YELLOW PAGES directory comprises literary works that are a compilation of data, namely:
a.an ontology of business classifications used to describe goods and/or services provided by businesses listed in the online YELLOW PAGES directory which is set in a hierarchy;
ba list of geographical classifications used to describe the location of businesses listed in the online YELLOW PAGES directory which is set in a hierarchy; and
c.a database of business listings, detailing names and contact details including addresses, telephone numbers and/or e-mail addresses, where the ontology of business classifications and list of geographical classifications have been applied to each individual business listing listed in the online YELLOW PAGES directory.
[35] For the purposes of this proceeding, the second plaintiff does not rely upon the list of geographical classifications. The focus is upon the ontology of business classifications and the database of business listings to which the business classifications have been applied.
[36] The second plaintiff must establish that the work concerned is original. For copyright purposes the work must originate from its author and must be the product of more than minimal labour and skill. The Court of Appeal in University of Waikato v Benchmarking Services Ltd (2004) 8 NZBLC 101,561 said at [27] that:
The threshold for originality is not high. The determining factor is whether sufficient time, skill, labour or judgment has been expended in producing the work. As confirmed in the Wham-O MFG case, copyright is not concerned with the originality of ideas, but with the form of their expression. As the Court stated:
‘The originality that is required by the Act relates to the manner in which the claimant to the copyright has expressed his thoughts or ideas. The Act does not require that the work be novel in form, but that it should originate from the author and not be copied from another work.’ (P 664)
[37] As the Supreme Court in Holdfast observes at [37], in order to qualify for copyright protection, a work must be original, but it need not be novel. Nor need a literary work have any artistic merit: University of London Press Ltd v University Tutorial Press Ltd [1916] 2 Ch 601.
[38] The Courts have recognised the following as original literary works in which copyright subsisted:
a) A directory of names and addresses of lawyers: Waterlow Directories Ltd v Reed Information Services Ltd (1990) 20 IPR 69; and Waterlow Publishers Ltd v Rose & Anor (1989) 17 IPR 493;
b) White and Yellow Pages directories: Desktop Marketing Systems Pty
Ltd v Telstra Corp Ltd (2002) 55 IPR 1; and
c) Financial data survey results compiled with certain ratios calculated and tabulated for comparison, published for report and sale: University of Waikato.
[39] In his oral submissions, Mr Coles spoke to a brief synopsis prepared by the second defendant, in which reference was made to several Canadian and United States’ authorities, which tended to take a conservative view of the availability of copyright protection in the context of compilations such as telephone and other directories. Some of those cases were considered and contrasted with United Kingdom authorities in Telecom Corporation of New Zealand Ltd v Colour Pages Ltd HC WN CP142/97 14 August 1997. There McGechan J, in considering whether copyright subsisted in the printed Yellow Pages directories, was unable at the interim injunction stage to resolve the differences in approach between the various jurisdictions, and found it unnecessary to do so, because, as he said, a serious question was conceded, in his opinion “quite rightly so”.
[40] Since then the proper approach in this country has been clarified by the University of Waikato case, where the Court at [35], citing with approval the Laws of New Zealand, Copyright, Vol 15A at paragraph 16 said:
In order to fulfil the test of originality, the necessary skill and labour may consist in the compilation of dictionaries, directories, maps, or road books; or in the mere preparation of lists.
[41] At [36] the Court of Appeal ruled that:
… the appellant is not entitled to copyright in the raw accounting information supplied by the client firms in the present case. The only claim can be to copyright in the compilation itself. It must be shown that a sufficient degree of labour, skill, and judgment is involved in preparing the compilation. That may arise, for example, through the manner in which the
information is selected for inclusion in the publication, the format or presentation of the data or, relevantly to the present case, the selection and calculation of the relevant ratios, percentiles, averages, and other details.
[42] A helpful summary of the relevant principles, to the same effect as the judgment in University of Waikato, is to be found in the judgment of Lindgren J in Desktop Marketing Systems Pty Ltd v Telstra Corp Ltd.
[43] Evidence was given for the plaintiff by Ms Tina Miller. She is the Content Manager for the second plaintiff, and in that capacity is responsible for security and policy pertaining to data and content within the YELLOW PAGES business. She described in very considerable detail the expenditure of time, labour, skill and judgment in the preparation of both the business classifications and the database of business listings, which appear in the YELLOW PAGES directories. I reproduce below the summary of the relevant portion of her evidence, prepared by counsel for the plaintiffs.
a. b. c. d. e. f. g. h. i.
j.
k.
[44]
a. b. c. d. e.
[45] This unchallenged evidence establishes that the plaintiffs’ online YELLOW PAGES directory was created in 1996-7 by a process which involved many hundreds of hours of employee time to marry up each business with its appropriate business and geographical classification. That time was spent in collecting, verifying, recording, assembling and maintaining the relevant data. I am satisfied that the plaintiffs have, at least, raised a serious question as to the entitlement of the directories to copyright protection.
[46] Interestingly, despite asserting that the plaintiffs have not established an entitlement to copyright, the defendants’ own online directories each claim copyright in their contents. As Mr Hayes points out, that claim is inconsistent with the contention made that the plaintiffs’ directories do not qualify for protection.
[47] At this point it is necessary to deal with an issue raised in the notice of opposition filed by the first and second defendants and reiterated by Mr Coles. The defendants say that the second plaintiff is no longer the owner of copyright because the copyright works were once owned by the Crown. They say that copyright protection arose in 1959 when the hard copy directories were first published and that it expired after 25 years. They rely on s 26(3)(a) of the Copyright Act which
provides that Crown copyright expires, in the case of a typographical arrangement of a published edition, at the end of a period of 25 years from the end of the calendar year in which the work is made.
[48] Mr Hayes submitted that this argument is misconceived on two separate grounds:
a) The current business classifications and the database of business listings relied upon by the second plaintiff are entirely new copyright works. They are not the same as the work originally created by employees of NZ Post and transferred from the Crown to Telecom in
1988. Accordingly, the copyright works now relied upon have not been created by persons employed or engaged by the Crown.
b)Alternatively, even if the works were considered to be Crown copyright works, then copyright would subsist in the most recent iteration created prior to 1988 for 100 years, and not 25 years as asserted by the defendants. That is because s 26(3)(b) applies to the exclusion of sub-section (a). That section provides that Crown copyright shall expire (in the case of any work other than a typographical arrangement of a published edition) at the end of the period of 100 years from the end of the calendar year in which the work is made.
[49] I am satisfied that Mr Hayes is right on both counts. Ms Miller’s evidence is sufficient to demonstrate that the evolving and continuous process of compiling and maintaining the databases relates to a different copyright work from that upon which servants or agents of the Crown worked until 1988. Further, I am satisfied that the work concerned is not a mere typographical arrangement of a published edition, and that even if Crown copyright did subsist, the relevant period is 100 years and not 25, as claimed by the defendants.
[50] Moreover, the second plaintiff is entitled to the presumption set out in s 126 of the Copyright Act. Notations which appear on every page of the second
plaintiff’s online YELLOW PAGES directory create a presumption that it is the author of the online YELLOW PAGES until the contrary is proved by the defendants. They have produced no evidence sufficient to rebut the presumption.
[51] I turn to the question of alleged infringement and commence by summarising briefly the applicable principles.
[52] Section 16(1) of the Copyright Act provides that the owner of copyright in a work has the exclusive right to copy the work and issue copies to the public, or authorise others to do so.
[53] Section 29 of the Act provides that copyright is infringed by anyone who, other than pursuant to a copyright licence, does any restricted act. The term “restricted act” is defined in s 2(1) of the Act, as any of the acts described in s 16. The acts so described include the copying of the work, and the issuing of copies of the work to the public, whether by sale or otherwise.
[54] Section 29(2) provides that the term “restricted acts” includes acts carried out in relation to the work as a whole, or in relation to a substantial part of the work, either directly or indirectly.
[55] A primary infringement of copyright arises where a person copies the copyright work (or authorises others to do so) or issues infringing copies of the work to the public (or authorises others to do so). A secondary infringement arises where a person, in the course of business, distributes, or authorises others to distribute, an object that is, and the person knows or has reason to believe is, an infringing copy of the work.
[56] In order to establish an infringement of copyright, three matters must be established, that:
a) the alleged infringing work reproduces either the entire copyright work or a substantial part of it; or
b)there is sufficient objective similarity between the infringing work and the copyright work, or a substantial part of it; and
c) there is a causal connection between the copyright work and the infringing work, in that the copyright work is the source from which the infringing work is derived: Wham-O MFG Co v Lincoln Industries at 666.
[57] Whether or not a part is a substantial part of the copyright work is to be decided by reference to its quality, rather than quantity: University of Waikato at [30]-[33]. Where, as here, copyright is claimed to arise by reason of the skill and labour that went into the making of the copyright work, it will usually be important to take into account the degree of such skill and labour. If the skill and labour is not great, then another arrangement of the same unoriginal underlying features may not have to depart greatly from the copyright arrangement in order to avoid infringement: Henkel v Holdfast at [41].
[58] One way of approaching the necessary assessment is to ask whether the effort, skill and judgment of the copyright owner in making the original work has been taken, in the making of what appears on a realistic assessment to be a reproduction of a substantial part: Bleiman v News Media (Auckland) Ltd [1994] 2
NZLR 673 at 678. Assistance is also to be derived from the judgment of Lindgren J in Telstra at 60-61, where he observed that in the case of factual compilations there is no need for visual similarity to exist as a condition of infringement ([234]), and further that there is no requirement for a formal resemblance ([238]).
[59] See also to the same effect: Autospin (Oil Seals) Ltd v Beehive Spinning
[1995] RPC 683 at 697-8.
[60] There is considerable assistance in the authorities as to the level of proof required to establish causation. As is noted in many of the cases, it is rare to find direct evidence of copying. Usually it is necessary to deduce copying by inference from all of the surrounding circumstances, as there is seldom first-hand evidence.
[61] As is noted in Copinger & Skone James on Copyright (15th ed), Sweet & Maxwell, London, 2005 at 7-41:
A defendant is not entitled to make unfair use of the labour or skill which was expended on the production of the claimant’s work. It is in this area that copying can often be detected by the repetition of mistakes, redundant features, and even innocuous material deliberately included to trap pirates (“seeds” or “sleepers”).
[62] In determining whether a defendant has appropriated the whole or a substantial part of the material in which copyright is claimed, it is proper, in a case such as this, to consider the extent to which a defendant has taken the benefit of all or most of the labour involved in building up the collection of headings which attracts copyright: Telstra at [253].
[63] Against that background I move to a consideration of the facts of this case. The second and third defendants accept that the underlying material used to prepare both the YELLOW BOOK and the YELLOW DUCK directories is the same. The third defendant says he has an arrangement with the first defendant for the creation and management of the YELLOW DUCK directory. But he says he has no knowledge as to how the first defendant created its directory, nor does he have a copy of the database which is supplied and serviced by the first defendant.
[64] The second plaintiff says that the defendants have either:
a) Acted together pursuant to a common design; or
b) Acted individually in reproducing and making available in New
Zealand the second plaintiff’s copyright works; or
c) The third defendant has authorised, procured, directed or is responsible for the actions of the first and/or second defendants in relation to the creation of its YELLOW DUCK website and is therefore jointly and severally liable with those other defendants for copyright infringement.
[65] On the evidence, I am satisfied that there is at least a serious question that the third defendant has authorised and directed the actions of the first and/or second defendant in relation to the creation of the YELLOW DUCK website. Indeed, that much was accepted by him at the hearing. It is therefore unnecessary to consider individually the plaintiffs’ claims of copyright infringement against the separate defendants.
[66] The first and second defendants claim in their notice of opposition that they have not reproduced the whole, or a substantial part of the plaintiffs’ database, and that they employed many strategies for the purpose of obtaining relevant information to populate their database from various sources (including international sources on the world-wide web).
[67] The second defendant has filed an affidavit in which he says:
a) There is little visual similarity between the YELLOW BOOK website and the YELLOW PAGES;
b)The first defendant obtained access to every single business name registered in New Zealand and then matched those names with every single domain name in New Zealand, to verify the connection between each business name with a website. Then the second defendant says “spiders” were employed to trawl websites to collect information regarding phone numbers, descriptions, businesses, e- mail addresses and the like.
[68] Ms Miller has given evidence that spiders are simply a means of searching websites for information.
[69] I am satisfied that the point about the alleged lack of visual similarity is irrelevant. The plaintiffs do not need to establish any such similarity in order to establish infringement. Having said that, the plaintiffs allege that there is in fact some visual similarity. I discuss that point below.
[70] As to the second defendant’s claim to having independently undertaken the laborious task of searching every business name registered in New Zealand, it is to be noted that the second defendant provides no detail of the techniques employed, or of the time and labour needed to carry out what, on any view, must have been an onerous task. As Ms Miller points out, the number of names in the YELLOW BOOK approaches the 200,000 and more appearing in the YELLOW PAGES directory, despite the fact that the latter is built on almost 50 years of research and compilation. It is proper to view with a certain amount of caution the defendants’ limited evidence of independent labour, particularly in the light of the plaintiffs’ comparison evidence to which I now turn.
[71] The plaintiffs say that they have established actual copying on the part of the defendants by identifying the repetition of mistakes, the inclusion of identical redundant features, and the repetition of erroneous material deliberately included in the copyright works. Taken as a whole, the plaintiffs say the coincidences are so compelling as to lead to the conclusion that direct copying must have taken place.
[72] First the plaintiffs argue that the first and second defendants have copied the second plaintiff’s business classifications “wholesale”. Ms Miller has produced a print out of the first defendant’s list of business classifications arranged alphabetically under the letter “A”. For comparison, she provides a copy of the second plaintiff’s business classifications, also arranged alphabetically under the letter “A”. She says that almost every single business classification listed in the second plaintiff’s list appears in the first defendant’s list, in the same order and format.
(a) (b)
[73] Notably, she points out, following the letter of 5 April 2007 from the plaintiffs’ solicitors to the first defendant, all ampersands and hyphens were removed from the first defendant’s business classifications. Further, following that letter, the first defendant altered the format of those classifications to some degree. For
example, the YELLOW PAGES directory features the following business classifications:
a) Accommodation – booking;
b) Accommodation – rental;
c) Accountants – Chartered; and d) Accountants – general.
[74] Prior to 5 April the YELLOW BOOK/YELLOW DUCK directories also featured those same categories. Following the letter of 5 April 2007 the format of those classifications was changed in the YELLOW BOOK and YELLOW DUCK directories to read:
a) Accommodation Reservations;
b) Accommodation for Rental; c) Accountants Chartered; and d) Accountants.
Ms Miller provides a number of similar examples; I simply refer to the foregoing as one instance among many.
[75] A further example of direct copying is to be found, the plaintiffs say, in the organisation of material under a particular category. For example in the YELLOW PAGES directory there are the following adult categories:
a) Adult Entertainment;
b) Adult Products – Mail Order;
c) Adult Shops; and
d) Adult Supplies – Wholesale.
Exactly the same categories appear in the YELLOW BOOK directory.
[76] An example of the reproduction of an apparent error in the YELLOW PAGES directory is to be found under the directory classification for
[77] In the business listings themselves there is further material which the plaintiffs argue is suggestive of direct copying.
[78] In reviewing the YELLOW BOOK and YELLOW DUCK directories, Ms Miller observed that their listings used an identical format for
[79] By way of explanation, the second defendant says only that the listings were in that format when submitted to the YELLOW BOOK directory, that they constituted a relatively small proportion of the total number, and they were accepted
by an inexperienced staff member. That evidence is in conflict with the evidence of Ms Miller, whose evidence I prefer. It is not sufficient for Mr Khoury to blame an “inexperienced staff member”. In my view, it was incumbent upon the defendants to explain in a credible fashion how such a coincidence could have happened without unlawful copying, but that has not occurred. There is no evidence as to who submitted the listings, nor is there any supporting documentary evidence to corroborate Mr Khoury’s claims. Neither is there any independent evidence to support the proposition that the apparent replication of the plaintiffs’ material arose by reason of the inexperience of a staff member.
[80]
[81] The plaintiffs also say that a number of typographical mistakes, appearing in the YELLOW PAGES directory have been replicated in the YELLOW BOOK and YELLOW DUCK directories. Ms Miller provides some examples. The online YELLOW PAGES listing for a newspaper known as reads “ ”. That is simply a mistake. But the same error appears in the YELLOW BOOK and YELLOW DUCK directories listing for .
[82] Another example arises from the listing for “ .”. In the YELLOW PAGES listing there is a full stop after the word Ltd. That is a mistake. The YELLOW PAGES directory does not use full stops after citing a name. Precisely the same error appears in the YELLOW BOOK and YELLOW DUCK directories.
[83] The second defendant says that a website search using Google indicates that a number of websites display the name as “ ”; however he does not identify any such websites, but instead provides a half page reproduction of an unidentified document which appears to comprise a list of newspapers, including
, in which the word “ ” appears at the end. Moreover, Mr Khoury
does not explain the replication of the error in the YELLOW PAGES directory involving the stray full stop. None of the other YELLOW BOOK or YELLOW DUCK listings featured in Ms Miller’s evidence have a full stop at the end of a business name; nor have the defendants put in evidence anything to show that full stops are used after business titles in their listings. Accordingly, the evidence is that the directories of both plaintiffs and defendants each contain the same stray full stop. In the absence of a proper explanation - and there is none - that coincidence is such as to justify an inference of copying.
[84] Ms Miller further refers to what seems in the industry to be called a “seeded listing”; that is a listing that is not genuine. Her evidence is that the YELLOW PAGES includes a listing for a under “Plumbing and Gasfitting” classifications. is not a plumber or gasfitter; he is an employee of YELLOW PAGES. However, an identical listing for appears in both the YELLOW BOOK and YELLOW DUCK directories.
[85] The second defendant says in evidence that “our spiders collect a large range of information” and claims that the listing could have been accepted by an experienced staff member of the first defendant. He also claims that a website known as “TradeFinder” has the same listing. The fact that another website carries the same material does not assist the defendants. There is no satisfactory explanation for the replication of this material, which provides further evidence of copyright infringement.
[86] Ms Miller has identified further erroneous entries in the YELLOW PAGES which are replicated in the defendants’ directories. For example, the YELLOW PAGES directory listing for “ ” is listed correctly under the “Financial Services” and “Mortgages & Loans” business classifications. However, it has also erroneously been assigned the business classification for “Alarms”.
does not provide alarm services.
[87] A second example is that of a listing for “ ”. In the YELLOW PAGES listings this business is classified under “Holiday Accommodation” “Mobile Mechanics” and “Automotive Repairs”. The latter two classifications are incorrect.
is a rental holiday home business. The same incorrect classifications appear in both of the defendants’ directory listings for , where it is classified under “Mobile Mechanics”.
[88] No explanation is offered by the defendants for the apparent replication of the errors involving and . I accept the submission of counsel for the plaintiffs that the incorrect classifications can have appeared in the defendants’ directories only by reason of copying from the YELLOW PAGES directory. There would be nothing in the Companies Office or on either of the websites operated by those businesses (if indeed there are any such websites), which could have led the defendants to allocate those business classifications if they had been acting independently as claimed.
[89] I move to another point. The second defendant claims that the spiders utilised by the defendants to acquire listing information would not have been able to obtain access to the YELLOW PAGES directory because technology is available to prevent such access. In other words, Mr Khoury says, the plaintiffs would have been able to so configure their website so as to prevent access by such search vehicles.
[90] Ms Miller rebuts that evidence.
[91] I accept the plaintiffs’ submission that there is a sufficient multiplicity of coincidences to suggest that the first and/or second defendants have at some stage copied the business listings featured in the YELLOW PAGES directory. In copying those listings they have also copied the business category classifications that have been applied to those listings, thereby trading on the skill and labour expended by the staff of the second plaintiff in creating its directory listings and business classifications.
[92] In the light of that finding, it is necessary to consider whether the plaintiffs have demonstrated a sufficient objective similarity between the infringing work and the copyright work, or a substantial part of it. There is no requirement that there be an exact reproduction of the copyright work, or a substantial part of it, but there must be a sufficient degree of resemblance. Whether there is objective similarity is largely a matter of impression for the Court: Thornton Hall Manufacturing Ltd v Shanton Apparel Ltd (No.2) [1989] 1 NZLR 239 at 246. There must be a sufficient degree of similarity between a substantial part of the copyright work and the alleged infringing copy: Wham-O MFG at 666. The focus is on the similarities – upon what has been taken. Differences are of less moment. The fact that separate original work has been added to an infringement does not make it any less an infringement: Bleiman at 679.
[93] I accept the plaintiffs’ submission that they have established that a substantial part of the second plaintiff’s copyright works has been copied, and that there is a sufficient objective similarity between the copyright works and the YELLOW BOOK and YELLOW DUCK directories to give rise to an inference of copying.
[94] The similarities are:
a) The wholesale copying of business classifications;
b) The common use of in the business classifications;
c) …;
d) The incorporation of the same unexplained typographical errors;
e) The incorporation of the same incorrect business classifications; and f) The incorporation of the same seeded listing.
[95] From that finding it is a short step to a finding that there is a causal connection between the copyright work and the infringing work. As was said by the Supreme Court in Holdfast at [43]:
[43] The ultimate issue in a breach of copyright case concerns derivation not similarity, albeit the degree of similarity between the copyright work and the allegedly infringing work has evidentiary significance. Proof of copying will seldom be direct; in most cases the court will rely on inference. The closer the similarity between the two works the stronger the inference is likely to be that the one was copied from the other. If the alleged infringer has had access to, and therefore an opportunity to copy, the copyright work, and the similarity between the works supports an inference of copying, it may well be appropriate for the court to conclude, on the balance of probabilities, that there was indeed copying. This of course is subject always to the evaluation of any evidence there may be that no copying actually took place.
[96] In determining whether there is proof of the requisite causal connection, it is appropriate to step back and consider certain undisputed evidence. The YELLOW PAGES directory is one of New Zealand’s leading directory databases. It comprises over 200,000 listings. The directory has grown to that size over a 50 year period. It is accessible by any party on the world-wide web. As Ms Miller says, the YELLOW PAGES directory receives over 30,000 searches a day. That is 10 million searches a year.
[97] The first and second defendants commenced work on an online directory only in about 2000 (when Mr Emmanuel Khoury was 12 years of age), and yet have been able to develop a directory with over 200,000 listings. The third defendant’s YELLOW DUCK directory had been operational for just three weeks before he became aware of the plaintiffs’ concern about his activities.
[98] The fact that the defendants have been able, within a very short span, to achieve much of what the plaintiffs have achieved over 50 years, is of itself quite remarkable. Their success suggests either sustained hard work on a large scale (of which the defendants have provided very little evidence), or alternatively, resort to the hard work of others. Of itself, that situation gives rise to a degree of cynicism about the defendants’ claims to have created their databases without reference to those of the plaintiffs.
[99] I am satisfied that there is a serious question to be tried in respect of the second plaintiff’s claim of copyright infringement against all three defendants. Although the third defendant took no direct steps himself to compile the YELLOW DUCK directory, he authorised the first and second defendants to do so on his
behalf, and for present purposes is in the same position as the first and second defendants.
Trademark infringement
[100] The first plaintiff is the registered proprietor of the following trade marks for
YELLOW PAGES:
a) Trade Mark 181347 for “advertising and business services relating to business directories and associated advertising material”;
b)Trade Mark 181351 for “communication services in this class relating to business directories and associated advertising materials”:
c) Trade Mark 270590 for “information services for businesses including investigation services, commercial and industrial management assistance, direct marketing services, inquiry services, information provided online from computer databases or from computer networks, all being services in this class”;
d) Trade Mark 270591 for “Communication services”.
(the YELLOW PAGES trade marks).
[101] Section 89(1)(c) of the Trade Marks Act 2002 provides:
89 Infringement where identical or similar sign used in course of trade
(1)A person infringes a registered trade mark if the person does not have the right to use the registered trade mark and uses in the course of trade a sign—
…
(c) similar to the registered trade mark in relation to any goods or services that are identical with or similar to any goods or services in respect of which the trade mark is registered, if that use would be likely to deceive or confuse;
[102] Section 89(2) provides:
(2)Subsection (1) applies only if the sign is used in such a manner as to render the use of the sign as likely to be taken as being used as a trade mark.
[103] The term “use” is defined in s 6 of the Trade Marks Act as “use of the sign, or in physical or other relation to” goods or “use of the sign in relation to the provision or availability of services”. I agree, as counsel for the plaintiffs submits, that the definition encompasses both use on the goods themselves, and in advertising or promotional materials. There is no suggestion that the first or second defendant has the right to use the YELLOW PAGES trade marks. Further, the use of the name YELLOW BOOK by the first and second defendants on the website plainly falls within the definition of “use” in relation to services in s 6 of the Trade Marks Act. Those services are business directory services which are similar, if not identical, to the services covered by the YELLOW PAGES trade marks.
[104] The next question is whether the use by the first and second defendants of the YELLOW BOOK mark is likely to deceive or confuse, for the purposes of s 89(1)(c) of the Trade Marks Act. The leading decision on that point remains that of the Court of Appeal in Pioneer Hi-Bred Corn Co v Hy-Line Chicks Pty Ltd [1978] 2 NZLR 50, which, although decided under the Trade Marks Act 1953, remains applicable to a consideration of the question of infringement under the 2002 Act. The Court in Pioneer distinguished between the terms “deceive” and “confuse”. At p 62
Richardson J explained that “deceived” implies the creation of an incorrect belief or mental impression while causing “confusion” may go no further than perplexing or mixing up the minds of the purchasing public. Moreover, where the deception or confusion alleged is as to the source of the goods, “deceived” is equivalent to being misled into thinking that the goods bearing the applicant’s mark come from some other source, and “confused” is equivalent to being caused to wonder whether that might not be the case.
[105] In an assessment of whether deception or confusion is likely to arise, the Court must consider the use of the first plaintiff’s mark in a normal and fair manner in relation to the goods for which it is registered, then to assess the likelihood of
confusion arising from the way the defendant actually uses its mark. The proper approach is illustrated by the judgment of Gault P in Anheuser-Busch Inc v Budweiser Budvar National Corporation [2003] 1 NZLR 472 at 491. At [74] of his judgment the learned President said, in a case involving competing marks related to beer:
The marks are to be compared as they would be encountered in the usual circumstances of trade. That contemplates wholesale and retail transactions, knowledgeable and uninformed purchasers, purchases for on–premises consumption, and for subsequent consumption bearing in mind the varying conditions that may prevail from noisy bars and clubs to self–service stores. Purchases will be made by oral requests (including telephone) and on appearance alone. The products will not necessarily be presented side by side. There may be prospective purchasers who have previously encountered one product and imperfectly recalling its mark, then see or hear of the other.
[106] More recently in Platinum Homes (NZ) Ltd v Golden Homes (1988) Ltd HC WN CIV 2005-485-1870 11 August 2006, Miller J articulated the test in the following way:
The appropriate question is whether the Court is satisfied, having regard to the actual use of the GOLDEN HOMES mark in October 2003, that PLATINUM HOMES, if used in a normal and fair manner in connection with its goods and services, would be reasonably likely to deceive or cause confusion among a substantial number of persons. The test for comparing trade marks is to be found in NZ Breweries Ltd v Heineken’s Beier Browerij Maatschappij [1964] NZLR 115, following re Pianotists Co’s Application (above)
You must take the two words and judge of them both by their look and by their sound,
You must consider the goods to which they are to be applied and the nature and kind of customer who is likely to buy these goods.
You must consider all the surrounding circumstances and what is likely to happen if each of the marks is used in a normal way as a trade mark for the goods of the respective owners of the marks.
[107] That was a case under s 17(1)(a) of the Trade Marks Act 2002, but the principles are the same as those arising out of s 89.
[108] Ultimately the issue is one of fact for the court to determine as a matter of impression: NZ Breweries Ltd at 133. All relevant similarities between the marks must be assessed, having regard to the fact that some aspects of the mark will be
more distinctive and dominant than others. Its not the differences between the two trade marks, but the similarities which are the most significant: V B Distributors v Matsushita Electric Industrial Co (1999) 9 TCLR 349 at [52].
[109] Mr Hayes submits that the YELLOW BOOK and YELLOW PAGES are clearly similar marks. In particular, he says:
a) Both marks have the same prefix (YELLOW) which makes them visually similar;
b)Although the suffix is different (BOOK v PAGES) they both have a similar idea/meaning behind them; and
c) As a whole consumers are likely to recall the mark by reference to the adjective YELLOW which is the distinctive part of the mark.
d)Both marks are used in relation to the same kind of services, namely business directory services, which are likely to be accessed by all types of consumers. Accordingly, the market for the services is the general public.
e) Deception or confusion is likely to arise between the two marks. The word YELLOW is an essential feature of the first plaintiff’s mark, and the plaintiff has an extremely strong reputation in the name YELLOW PAGES.
f) Neither the stylisation of the YELLOW BOOK mark, nor the use of the word BOOK can neutralise the use of the essential feature of the first plaintiff’s mark.
g) Confusion is likely to arise if the first and second defendants are permitted to continue to use the YELLOW BOOK name in relation to their online business directory in that:
i)Business directory users may think, or have cause to wonder whether, there is some relationship or affiliation between the YELLOW BOOK and YELLOW PAGES directories when there is not;
ii)Unfamiliar or new internet users may think that, or have cause to wonder whether, YELLOW BOOK is an online version of the YELLOW PAGES;
iii)Internet users may think that, or have cause to wonder whether, the YELLOW PAGES directory has been rebranded as YELLOW BOOK.
h)A disclaimer is incapable of sufficiently distinguishing between the marks if there is initial confusion of any kind as to the source of services.
[110] Having applied the principles set out in the cases to which I have referred, I am satisfied that Mr Hayes’ submissions are correct, and that there is a serious question to be tried in relation to trade mark infringement, in that the first and second defendants, have adopted a similar mark for use in relation to the same services, and that the use by them of their mark is likely to lead to deception or confusion in the market.
[111] In reaching the conclusion that the plaintiffs have established a serious question to be tried, I have taken into account the fact that the whole of the general public is the class likely to be affected, given the virtual universality of internet use and the high degree of utilisation of online directory services. The plaintiffs enjoy a very strong reputation in the goodwill of the name YELLOW PAGES in this country, but of its nature the act of using their directory service is focused upon the desired outcome – so anyone using a directory is likely to pay little more than fleeting attention to branding and trade marks, with the result that there is a significant likelihood that a substantial number of persons would be deceived or
confused about the provenance of the YELLOW BOOK in relation to business directory services.
Breach of the Fair Trading Act
[112] Section 9 of the Fair Trading Act 1986 provides:
No person shall, in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
[113] The Act contains no definition of the terms “mislead” or “deceive” and no assistance is to be found in the cases. Indeed in Taylor Bros Ltd v Taylors Group Ltd [1988] 2 NZLR 1 at 39, Cooke P said:
The essential requirement of s 9 is simply misleading or deceptive conduct
… if the court is satisfied (on the balance of probability) that some consumers will wonder, it may at times not be difficult to take the further step of concluding that some are likely to be misled; but of course that is not necessarily so.
[114] As to when conduct is to be characterised as deceptive when applied to the particular facts, it is plain that a state of wonder or doubt in the minds of people is not a sufficient circumstance to constitute misleading or deceptive conduct: Taylor Bros Ltd at 39.
[115] In AMP Finance NZ Ltd v Heaven (1997) 8 TCLR 144, 152, the Court of Appeal mandated the following three stage approach to the assessment of a s 9 breach:
a) The first step, which focuses upon the conduct in question, is to ask whether that conduct was capable of being misleading;
b)The second step is to consider whether persons were in fact misled by the relevant conduct. That step focuses on the effect of the relevant conduct on the minds of the persons concerned;
c) The third step requires a consideration of whether it was, in all the circumstances, reasonable for the persons concerned to have been misled.
[116] Mr Hayes submits that if, as I have found, the Court concludes that there is a serious question that the YELLOW BOOK mark is likely to cause deception or confusion under s 89(1)(c) of the Trade Marks Act 2002, then that ought to lead to a finding that there is a serious question for trial that the use of the YELLOW BOOK mark in relation to business directory services is misleading and/or deceptive for the purposes of s 9 of the Fair Trading Act.
[117] I think that must be so. There is a distinct correlation between the evidence needed to give rise to a finding that there is a serious question of deception under s
89 of the Trade Marks Act 2002, and a similar finding in respect of misleading or deceptive conduct under s 9 of the Fair Trading Act.
[118] Accordingly, I hold that the plaintiffs have made out a serious question to be tried under the latter Act, although in practical terms, that finding adds little to my earlier conclusions as to the existence of a serious question to be tried.
The balance of convenience
[119] In assessing the so-called balance of convenience a number of matters arise. I consider first the question of the adequacy of damages. On ordinary Cyanamid principles an interim injunction will not normally be granted where damages are an adequate remedy and the defendants are in a financial position to pay them. I am satisfied that damages do not represent an adequate solution for the plaintiffs in this case.
[120] In the first place there is no indication that the defendants would be able to pay any damages at all if an interim injunction is refused and the plaintiffs later succeed at trial. The first defendant is said to be in a relatively small way of business without access to significant capital. Its director and shareholder is a 19 year old student. It derives no revenue from its directory. Upon making a tentative inquiry of
counsel for the plaintiffs as to why a defendant might go to all the trouble and expense of setting up an online directory which derived no revenue, I was told that there was a distinct likelihood that the ultimate plan was that the plaintiff would simply sell its database. Apparently there is a strong market for such databases. Some verification of that is provided by the figure of $2.4 billion recently paid for the plaintiffs’ directory business. But even if the first defendant’s directory may ultimately be worth a significant sum, there is no evidence of a present ability by the first defendant to pay damages. Moreover, of course, the plaintiffs, if successful at trial, would be unable to extract any value from the defendants’ databases.
[121] The second defendant, for his part, is bankrupt. Mr Coles, the third defendant said that he is a businessman of limited means. He volunteered no information to suggest that he was in a position to pay damages either.
[122] I am not therefore satisfied that the defendants are able to pay damages at the level the plaintiffs might recover, having regard to the large scale nature of their business.
[123] Moreover, a significant component of the plaintiffs’ likely losses, if it succeeds at trial, will take the form of lost advertising revenue. The plaintiffs do not charge their customers for a basic listing in the YELLOW PAGES directory. Beyond that however, a range of listings are available, and there is a scale of charges for listings under various categories and for cross-referencing, as well as separate advertisements which form an adjunct to the listing service itself.
[124] Ms Miller says that the level of advertising in the YELLOW PAGES directory fluctuates from year to year depending on the state of the economy. Accordingly, it would be impossible to attribute any reduction in advertising solely to one factor, such as the presence of the YELLOW BOOK or YELLOW DUCK directories, in assessing damages.
[125] Nor will it be possible readily to quantify the damage caused to the plaintiffs’ goodwill and reputation in the YELLOW PAGES’ name, a reputation which has been built up over 50 years. There would be a necessary element of speculation in
the assessment of damages, although of course the Court does not shrink from making such assessments if necessary.
[126] But there is a further consideration, which I referred to earlier in this judgment. The directories maintained by the defendants (and particularly the first and second defendants) offer free listing services, for which the plaintiffs impose a charge, so there must be an inevitable tendency for some customers to migrate (possibly permanently) from the plaintiffs to the defendants. That would result in an erosion of the goodwill and reputation which the plaintiffs’ intellectual property rights are designed to protect. That consideration prompted the observation of Williams J in the NZ Rugby Football case at [76] to the effect that, in general, it would not be appropriate to refuse an interim injunction in an intellectual property case on the ground the damages would be an adequate remedy. A plaintiff which has made out a serious question to be tried, ought not nevertheless to suffer a permanent erosion of the goodwill built up over a very long period.
[127] I need to consider also whether damages might be an adequate remedy for the defendants – by that I mean if an interim injunction is granted, but the plaintiffs later fail at trial, whether the defendants would be adequately compensated in damages for the period during which they are unable to carry on their directory business, wholly or in part. There is no doubt that the plaintiffs would be good for the damages. There is evidence of substantial earnings and significant assets.
[128] Mr Coles said that the likelihood would be that customers would go elsewhere and never be regained, but that submission must be judged against the available evidence, which, from the defendants, is somewhat sparse. Although it seems that there may be an element of personal contact between associates or staff of the first defendant on the one hand, and respective customers on the other, the central thrust of the affidavit sworn on behalf of the first defendant is that the listings appearing in the YELLOW BOOK and YELLOW DUCK directories were built up by means of electronic searches, conducted by the use of spiders and other electronic techniques. There is little evidence of the sort of personal attention which the plaintiffs give to their customers. That being so, the level of likely erosion of the defendants’ databases if an interim injunction is granted is likely to be very limited.
Given that the defendants currently derive no revenue from their directory services, there is unlikely to be any significant direct financial detriment.
[129] I am satisfied therefore, that an award of damages would not be a sufficient remedy for the plaintiffs, and, on the other hand, that damages would provide sufficient recompense to the defendants in the event an interim injunction was granted but the plaintiffs subsequently failed at trial.
[130] It is not suggested on the defendants’ behalf that the plaintiffs have delayed in making their present application. They became aware of the defendants’ activities only in late March/April 2007. Their solicitors wrote to the first and second defendants on 5 April 2007, and when no satisfactory arrangements could be negotiated, this proceeding was commenced on 17 May 2007.
[131] I have considered whether the grant of an interim injunction might have the effect of putting an end to the defendants’ businesses, in the sense that any interim injunction might in effect become permanent, but the defendants have not raised that contention. I was informed from the bar that even if it is necessary to remove the defendants’ directories from the worldwide web for a period, they can be reinstated quickly and without difficulty.
[132] In accordance with the settled approach, I conclude by stepping back and considering the overall justice of the case. Having done so I am satisfied it is appropriate to grant the injunctions sought. The plaintiffs have established, with something to spare, that there is a serious question to be tried. The balance of convenience also clearly favours the plaintiffs in my view.
[133] I propose therefore to make the orders sought. Mr Hayes produced a draft form of order, a copy of which was provided to Mr Coles who had no submissions to make on it. The draft as produced incorported a restraint upon the use by the defendants of the colour yellow in connection with their directory businesses, and it also sought to restrain the use by the first and second defendants not only of the name YELLOW BOOK, but also of any other name which includes the word
“Yellow”. I was not prepared to accede to that suggestion. The plaintiffs’ case was not run on any basis which would have justified restraints of that sort.
Result
[134] There will be orders in the following terms:
A. That pending judgment in this proceeding or further order of the Court, whichever shall first occur, the first defendant, its directors, servants or agents, and the second defendant, personally and by his servants or agents, be restrained from hosting on the internet, using, publishing, promoting, or otherwise dealing in or with the electronic business directory hosted at
which features or comprises:
(i) the name “YELLOW BOOK” or
(ii)an ontology of business classifications used to describe goods or services provided by businesses listed in the directory; and/or
(iii)a database of business listings, detailing their name and contact details including addresses, telephone numbers and/or e-mail addresses, where the ontology of business classifications has been applied to each individual business listing
which reproduces the whole or a substantial part of the second plaintiff’s ontology of business classifications, and database of business listings.
B. That pending judgment in this proceeding or further order of the court whichever shall first occur, the first defendant, its directors, servants or agents, and the second defendant, personally and by his servants or agents, be restrained from hosting on the internet, using, publishing, promoting, or otherwise dealing in or with the electronic business directory hosted at which features or comprises:
(i)an ontology of business classifications used to describe goods or services provided by businesses listed in the directory; and/or
(i)a database of business listings, detailing their name and contact details including addresses, telephone numbers and/or e-mail addresses, where the ontology of business classifications has been applied to each individual business listing
which reproduces the whole or a substantial part of the second plaintiff’s ontology of business classifications, and database of business listings.
c. That pending judgment in this proceeding or further order of the court whichever shall first occur, the third defendant personally and by his servants or agents, be restrained from hosting on the internet, using, publishing, promoting, or otherwise dealing in or with the electronic business directory
hosted at which features or comprises:
(i)an ontology of business classifications used to describe goods or services provided by businesses listed in the directory; and/or
(ii)a database of business listings, detailing their name and contact details including addresses, telephone numbers and/or e-mail addresses, where the ontology of business classifications has been applied to each individual business listing
which reproduces the whole or a substantial part of the second plaintiff’s ontology of business classifications, and database of business listings.
Costs
[135] The plaintiffs, having succeeded, are entitled to costs. Counsel may file memoranda if agreement cannot be reached as to quantum.
Case management issues
[136] It is important that this proceeding be advanced as rapidly as possible. It is obviously desirable in the interests of all parties that their rights and obligations be finally determined as soon as possible. There is an outstanding application by the defendants for variation of the orders made by Clifford J on 13 June 2007. Mr McLeod has also indicated that the plaintiffs are dissatisfied at the defendants’ delays in complying with that order. Those are matters which, in the first instance, it is for the parties to bring before the Court.
[137] However, more widely, the case ought to be placed in the ordinary case management lists. The Registrar is accordingly directed to ensure that the proceeding is referred to an Associate Judge with a view to allocating a fixture for a first case management conference.
Leave
[138] Leave is reserved to all parties to apply in respect of any matters arising from this judgment.
C J Allan J
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