Asia Television Ltd v Yau's Entertainment Pty Ltd
[2003] FCA 720
At a glance
Source factsCourt
Federal Court of Australia
Decision date
2001-03-08
Before
Rolfe J, Gyles J
Source
Original judgment source is linked above.
Judgment (11 paragraphs)
REASONS FOR JUDGMENT 1 The history of this matter is recorded in the following series of judgments - Asia Television Ltd v Yau's Entertainment Pty Ltd [2000] FCA 254; Asia Television Ltd v Yau's Entertainment Pty Ltd (No 2) [2000] FCA 838; Asia Television Ltd v Yau's Entertainment Pty Ltd (No 3) [2001] FCA 811; Yau's Entertainment Pty Ltd v Asia Television Ltd [2002] FCAFC 78; and Yau's Entertainment Pty Ltd v Asia Television Ltd [2002] FCAFC 378. I shall not reproduce that history, nor endeavour to set out again all of the relevant facts and circumstances which appear from those judgments. In the events which have happened, the principal purpose of this judgment is to assess damages upon the cross-claim by Yau's Entertainment Pty Ltd ("Yau's") for what was described by the Full Court as "for wrongful termination of the licence agreement". 2 On 16 April 1997 ATV Enterprises Ltd ("ATVE") and Yau's entered into a licence agreement for a period of three years, effective from 1 June 1997 to 31 May 2000, with an option to renew for a further year. This was the successor to agreements between Yau's and Asia Television Ltd ("ATV") or ATVE, effective from 1 June 1988 onwards. I shall refer hereafter to ATV and ATVE as ATV/ATVE without distinguishing between them unless the difference is material. Any real differences can be sorted out at the stage of orders. 3 By letter dated 7 April 1999, Gilbert & Tobin, on behalf of ATV/ATVE, said to Yau's: 'Our clients have recently become aware that your company is supplying its Sub-Licensees with video programs bearing the ATV Logo which are not programs produced by or associated with our client, and falsely representing to Sub-Licensees that such programs are ATV product lawfully provided to them under your Distribution Agreement with ATV and, in turn, falsely representing to the general public that such programs are those of our client. … The Sub-Licensees from whom we have statements confirm that they received the above programs from you with the ATV Logo, displayed both on the label and on the video tape. The above programs were not produced, co-produced or otherwise associated with ATV. Many are of inferior quality or below the established production standards of ATV programs. Our client has also ascertained that you have recorded programs broadcast on ATV in Hong Kong and distributed those programs under the ATV label to your Sub-Licensees. These programs were licensed to ATV for broadcast only in Hong Kong and were not the subject of the Agreement.' The solicitors alleged that conduct constituted, amongst other things, a repudiation of the agreement, and they threatened litigation in relation to trade mark infringement, breaches of the Trade Practices Act 1974 (Cth), copyright infringement and passing off. The letter proceeded: 'In relation to the Agreement, your conduct in distributing non-ATV programs with ATV Logos has denied our client the benefit of the whole Agreement. Furthermore, such conduct is a breach of the implied term that the ATV Logos would not be used for another purpose. This breach is not capable of remedy within the meaning of Clause 15(b) of the Agreement as our client has already suffered serious irreparable damage. Such conduct constitutes a repudiation of the Agreement entitling our client to immediately accept such repudiation and terminate it. You should accept this letter as notice of termination. …' 4 On 13 April 1999, ATVE entered into a licence agreement with Chinatown Entertainment (Australia) Pty Limited ("Chinatown"), to commence on 19 April 1999, and this was publicly announced on 19 April 1999. Yau's thereafter supplied ATV/ATVE programmes to its sub-licensees, some having been obtained from Canada and some taped from the ATV/ATVE channel in Hong Kong, and an advertisement was published in the Australian Chinese Daily dated 28 April 1999 which claimed that Yau's Entertainment was the exclusive licensee of the programmes so obtained. This proceeding was commenced on 21 April 1999. 5 It is submitted that, as a result of the decision of the Full Court, I am to assume that the licence would have run its full course, that the option would have been exercised, and that the licence would continue to be renewed into the indefinite future, notwithstanding that the licensee of the intellectual property concerned had persistently and secretly pirated the licensor's programmes, name, logo and reputation. It does seem to follow from the decisions of the Full Court that such conduct was not a breach of the licence agreement entitling the licensor to terminate it. I must loyally accept that conclusion, and will proceed accordingly. Of course, I am not required to pretend that the conduct did not occur. 6 On that basis, it is clear that ATV/ATVE did not comply with its obligations under the licence agreement from 7 April 1999, and therefore was in breach of its obligations from then until at least the expiry of the term of the licence, namely, 31 May 2000. There is a dispute as to the assessment of damages for that period. One of the complicating factors was an agreement reached between the parties as to what should occur commercially during the period of the litigation. Yau's contend that it is also entitled to damages for the option period of one year. This is disputed by ATV/ATVE, as although Yau's did not accept the validity of the termination and maintained that the contract remained on foot, it did not exercise the option. ATV/ATVE also contends that the option was not certain enough to be enforceable. There was also an issue as to the assessment of damage for the option period. On the footing that the likelihood was that the licence would have continued to be renewed for the indefinite future, Yau's make a very substantial claim for damages for destruction of the video business and the goodwill of it. ATV/ATVE challenge the assumption as to renewal, and also challenge the assessment of damage to goodwill. 7 It is convenient to initially decide two important matters of principle: (1) Whether damages should be assessed on the basis that the option would have been exercised; and (2) What assumption should be made as to the renewal of the licence.