Keshi Pty Ltd v Firefly Press

REASONS FOR JUDGMENT 1 There are forty‑four individual speech sounds in the English language. The individual speech sounds are referred to as "phonemes". A phoneme may be represented by a letter, or one or more combinations of letters of the alphabet, which are referred to as "graphemes". For example, the words "moon", "screw" and "glue" contain a common phoneme represented by the combination of the letters "oo", "ew" and "ue". 2 Ms Denyse Ritchie, a retired teacher and director of the applicant, developed a chart to be used in literacy teaching which depicted words and pictures incorporating the phonemes and graphemes on a chart. The chart is known as the "THRASS Picturechart" and is published in two formats, as a wall chart and "tumble turn" desk chart. These charts were first published in 1996 and released for sale in both the United Kingdom and Australia that year. In 2005, Ms Ritchie became aware of a chart published by the respondent which also depicted words and pictures incorporating phonemes and graphemes. The respondent's chart is called the "Sound Waves Sound Chart". 3 The applicant is the licensee of the copyright in the THRASS Picturechart and has applied under O 15A of the Federal Court Rules (the Rules) for an order that the respondent make an affidavit giving discovery of such of the following documents as are in its possession, custody or control: Originals, drafts and copies of all documents comprising, recording or evidencing the research and development of the Sound Waves Chart, from the inception or creation stage through to its present form, as made available by the respondent to members of the public by way of sale or supply. Background 4 On 9 March 2006 the applicant's solicitors sent a letter of demand to the respondent. The letter described the THRASS Picturechart as the "Works", and went on to say: Our clients further instruct us that it has come to their attention that you and/or your servants or agents have infringed our client's copyright by reproducing the Works in a chart known as "Sound Waves Sound Charts" in both wall and "tumble turn" desk sizes and selling and distributing the same in Australia without the licence of our client. By reason of your infringement of our client's copyright in the Works, our client has suffered loss and damages. 5 The letter also demanded that the respondent take a number of steps including giving an undertaking not to infringe the copyright in the Works, delivering up the charts and agreeing to pay damages, failing which their client would "have no option but to commence legal proceedings against you including proceedings for an injunction to be issued to prevent your continued breach of our client's copyright in the Works". 6 The respondent replied by its solicitors' letter of 24 March 2006 disputing that there had been a breach of copyright and pointing out a number of differences between the "THRASS Charts" and the "Sound Waves Sound Charts". The solicitors also said that the THRASS Charts and the Sound Waves Sound Charts were both premised on the "phonemic teaching approach" which was a concept unoriginal to the applicant. The letter went on to say that: There has also been a significant amount of labour, time and effort expended in creating the Sound Waves Charts. There is copyright in the Sound Waves Charts. The Sound Waves Charts were developed as a result of the work of the authors, as primary school teachers, in their own classrooms dating back as far as 1995, when they began using a phonemic approach to assist children to learn to spell. There is a fundamental difference between the THRASS Charts and the Sound Waves Charts in the implementation of the Phonemic Approach. After much deliberation and a number of revisions the authors developed icons (small, easily recognisable pictures) to represent the phonemes of the English Language. 7 By letter of 12 July 2006 the applicant's solicitors responded to the respondent's solicitors' letter of 29 March 2006. They said that the statements in their letter referred to in [6] above, amounted to: an evidentiary obstacle to our client's capacity to take appropriate legal advice, and thereby enable or otherwise assist it to make a decision as to whether to commence a proceeding against your client in relation to our client's concern that copyright in its THRASS Charts has been infringed by your client's Sound Waves Charts. 8 The applicant's solicitors' letter went on to request that the respondent provide discovery of all documents in the respondent's possession, custody or control relating to the research and development of the Sound Waves Charts from the inception or creation stage through to its present form, failing which they would apply for pre‑action discovery pursuant to O 15A r 6 of the Rules. 9 By letter of 18 August 2006, the respondent's solicitors set out details of the development of the Sound Waves Charts. The solicitors' letter included the following statement: In 1995, one of the authors, Barbara Murray, began using a phonemic approach to children's literacy, in her classroom. Ms Murray re‑organised the school's spelling lists and grouped them according to the sound or phoneme, rather than alphabetically, to assist her students who were struggling to read and write. Rudimentary forms of the Sound Charts were developed in table form for consonants and vowels. These were the precursors to the Sound Waves Charts. Ms Murray developed this approach independently of any source, and without being aware of any formal studies surrounding the phonemic approach to literacy. 10 The letter went on to say that the Sound Waves program was formulated based on the previous classroom experience of the authors. It was said that in 2000 "Sound Boxes" were developed independently representing 43 sounds by icons, icon names and samples of the more common graphemes. These Sound Boxes were then grouped together to form the Sound Waves Charts. 11 The letter also said that the process of determining the style and layout of the Sound Waves Charts was "iterative" with changes in layouts and colours. 12 The applicant was not satisfied with the response from the solicitors for the respondent and commenced this proceeding. 13 Order 15A r 6 of the Rules provides: Where - (a) there is reasonable cause to believe that the applicant has or may have the right to obtain relief in the Court from a person whose description has been ascertained; (b) after making all reasonable inquiries, the applicant has not sufficient information to enable a decision to be made whether to commence a proceeding in the Court to obtain that relief; and (c) there is reasonable cause to believe that that person has or is likely to have or has had or is likely to have had possession of any document relating to the question whether the applicant has the right to obtain the relief and that inspection of the document by the applicant would assist in making the decision - the Court may order that that person shall make discovery to the applicant of any document of the kind described in paragraph (c). 14 The respondent did not contend at the hearing that the applicant had failed to comply with the provisions of O 15A r 6(a) and 6(c) of the Rules. The ground on which the respondent opposed the application was that the applicant had not complied with O 15A r 6(b) of the Rules. It was contended that the applicant had not shown that it did not have sufficient information to enable a decision to be made whether to commence a proceeding in the Court to obtain the relief. Does the applicant have sufficient information? 15 At the hearing the applicant relied upon a number of affidavits from Ms Ritchie. These affidavits exhibited the correspondence between the solicitors referred to above. Ms Ritchie also deposed that THRASS Charts had been distributed and sold to schools in Queensland since 1996. Further, Ms Ritchie said that Queensland was historically the biggest state market for THRASS educational material in Australia and that the authors of the Sound Waves Charts, Ms Barbara Murray and Ms Teresa Watson, were both teachers at Cooroy State School in Queensland in 1999. Ms Ritchie also exhibited documents to her affidavit which showed that THRASS material had been sold to the Cooroy State School in 1999 and that in May 1999 Ms Watson attended a two day course at the Cooroy State School on THRASS methodology and THRASS Charts and how to use them. 16 The respondent relied upon four affidavits in opposition to the application. These affidavits were sworn by Ms Barbara Murray, a retired teacher, Ms Teresa Watson, a teacher, and Ms Ann Smales, a director of the respondent. 17 Ms Murray deposed that in 1995 she was teaching students aged 9 years to 11 years at Cooroy State School and that she was very committed to teaching phonemic skills. She said that in that year she reorganised the school's spelling list according to sound, and in 1996 began making rudimentary charts showing the various combinations of letters for each sound. The charts were very simple and were hung on classroom walls and students began using them as a reference for spelling and reading unfamiliar words. In 1996, she said that, the charts were expanded with word examples of graphemes, including graphemes in bold print to jog the students' memories as to how each grapheme worked to represent the particular sound. Ms Murray also began creating class team games and a small group of card games along with worksheets for each sound to accompany the classroom wall charts that she had already developed. 18 Ms Murray said that she discussed with Ms Watson, a colleague who was also implementing a phonemic approach to literary skills in her classroom, the lack of written resources available for the teaching of the phonemic approach and the need for such resources to be available for use in the classroom. 19 Ms Murray said that in late 1999 she met Ms Ann Smales at a social function. In the course of her conversation with Ms Smales, Ms Murray described the phonemic approach and what she had been doing in the classroom. Ms Smales then invited Ms Murray and Ms Watson to meet with her and a co‑director of the respondent, Mr Peter Stannard. This led to the respondent asking Ms Murray and Ms Watson to produce materials for publication by the respondent. In 2000, Ms Watson and Ms Murray started to write the first drafts of the Sound Waves student activity books. 20 Ms Murray went on to depose that the Sound Waves Charts evolved from the first resources used in her classroom in 1995 and the Sound Waves student activity books. 21 Ms Murray said that the development and layout of the Sound Waves Charts was the result of an expansion of the horizontal banners which had been used in the early worksheets and the more developed worksheet banners in the Sound Waves activity‑sheet books. She concluded by saying: All of the key elements found in the current Sound Waves Sound Charts are derived directly from the earliest charts that I developed and used in my classroom from 1995 until my retirement in 2001. 22 Ms Murray annexed a number of documents to her affidavit, including copies of the spelling lists which she had amended, and deposed that to the best of her knowledge, she did not any longer have in her possession or control, any documents falling within the category in respect of which discovery was sought, other than the documents annexed to the affidavit. She said that all of the documents falling into the category of documents requested by the applicant were either thrown out or destroyed some years ago. 23 Ms Teresa Watson said that she had begun working as a part‑time teacher at the Cooroy State School in 1998. Ms Watson taught the phonic component of the curriculum of the year 2 and year 3 class that she taught. She discussed with Ms Murray, in 1999, the idea of developing a resource to assist in extending the phonemic approach to the spelling area of the curriculum. Ms Watson said that in 2000, she and Ms Murray met with Ms Smales and another director of the respondent and agreed to create a series of student workbooks to be used in teaching a phonemic approach. 24 Ms Watson went on to say that, while conducting workshops promoting the Sound Waves resources, she received requests from teachers for a wall chart to complement the student activity books. She said that it was as a result of those requests that she and Ms Murray decided to develop charts which were suitable for a wall chart and could also be reproduced in the student activity books. 25 Ms Watson also said that she was involved in the design of the Sound Waves Charts. She said that she initially designed two draft layouts for Sound Waves Charts which are exhibited to her affidavit. She went on to depose that in conjunction with a designer and artist they subsequently developed a number of different drafts of the Sound Waves Charts which were deemed unsuitable for teaching purposes. She exhibited to her affidavit the charts which she said she retained in her possession. Ms Watson deposed that the shortcomings in the draft charts were met by the artist choosing a landscape orientation for the page and then enlarging the size of the grapheme word and graphics. A prototype of that chart was then developed and refined with various style changes, and many test colours were trialled. 26 Ms Watson deposed that she did not copy the THRASS Picturechart or any part of it in developing the Sound Waves resources nor the Sound Waves Charts. The development, she said, was the direct result of collaboration with Ms Barbara Murray in further developing the phonemic method she began in her classroom in 1995, and her collaboration with Ms Smales in developing a suitable layout and design for the Sound Waves wall charts. 27 Ms Watson also said that, other than the documents which were annexed to her affidavit, she did not have in her possession or control, any other documents falling within the category of documents in respect of which discovery had been requested. 28 Ms Smales swore two affidavits. In the first affidavit, sworn on 9 November 2006, after referring to the category of documents in respect of which the applicant sought discovery, Ms Smales deposed: I have made reasonable enquiries and to the best of my knowledge, other than copies of documents annexed to the affidavit of Barbara Murray sworn 8 November 2006 and the affidavit of Teresa Watson sworn 7 November 2006, the Respondent no longer has in its possession or control any such documents. Any other drafts, prototypes and/or "mock‑ups" of the category of documents requested by the Applicant, and held by the Respondent have either been thrown out or destroyed in the course of time. 29 Later, on 30 November 2006, Ms Smales swore a further affidavit saying that since making her first affidavit certain documents had "come to her attention". One of these documents was an email dated 8 February 2005 from Ms Watson to Ms Smales together with an attachment. The attachment contained a draft consonant sound chart and vowel sound chart which Ms Watson said that she had produced on her computer. 30 Another of the documents attached to the affidavit, was a copy of a handwritten page which, Ms Smales said, was one of over 100 pages which comprised two manuscripts ‑ being the precursors to the published version of the corresponding pages in the student activity books. 31 Ms Smales also deposed that the respondent had two electronic files in its possession. The first electronic file contained documents relating to the design and cover of the charts. Ms Smales said that these documents were substantially in the form of the charts annexed to the affidavit of Ms Watson, save for the fact that they were differently coloured. The second electronic file contained icons created by the designer for the Sound Waves student activity books and used in the Sound Waves Charts. 32 Senior counsel for the respondent submitted that the applicant already had sufficient information in order to decide whether to commence proceedings against the respondent. Ms Murray and Ms Watson had deposed at some length to the development of the Sound Waves Chart, and they said that they had not copied the THRASS Picturechart. Further, said senior counsel, all the deponents had deposed that they were not in possession of any documents falling within the category of documents in respect of which discovery was sought, save for those documents already annexed to their affidavits. Senior counsel went on to submit that there was no further material which the respondent could reasonably expect to obtain before making a decision whether to commence a proceeding against the respondent. He contended that the applicant's decision whether to proceed, depended upon its own assessment of the veracity of the evidence of the authors, and its view of the objective similarity or otherwise between the Sound Waves Chart and the THRASS Picturechart. 33 Counsel for the applicant contended that the denials of the existence of further documentation which was contained in the affidavits relied upon by the respondent, could not be taken at face value. In particular, counsel referred to the fact that notwithstanding that Ms Smales had deposed to the fact that after having made reasonable inquiries, the respondent was not in possession of any documents in the category in respect of which discovery was requested, Ms Smales had sworn a second affidavit in which she accepted that the respondent was in possession of documents which did fall into the relevant category. Further, counsel for the applicant referred to the fact that there was no reference in either of the affidavits of Ms Murray or Ms Watson to the existence of any electronic files that may have been created and stored on their computers. 34 Whether a party has sufficient information for the purpose of O 15A r 6(b) of the Rules is to be determined objectively. In Alphapharm Pty Ltd v Eli Lilley Australia Pty Ltd (unreported, Lindgren J, 26 May 1999), Lindgren J observed at 29: The rule is…directed to aiding an applicant who is having real difficulty, and reasonably so, in deciding whether to litigate because of a lack of key information, whether relating to its own case or to that of the proposed respondent, which is in the possession of the respondent. 35 Lindgren J went on to observe at 30: Having regard to the extensive scientific research which has been carried out by or on behalf of Alphapharm and its strong prima facie case, it is difficult to avoid the conclusion that in seeking pre‑action discovery, it is seeking to eliminate a possibility, rather than to obtain key information without which it is not able to decide whether to commence a proceeding. 36 In Minister for Health & Aged Care v Harrington Associates Limited [1999] FCA 549, Sackville J at [46] accepted that the assessment as to whether the applicant had "sufficient information" within the meaning of O 15A r 6(b), could be made by reference to the information which had been provided after the commencement of the application for relief under O 15A of the Rules. 37 In my view, there is substance in the applicant's criticism of the respondent's evidence in relation to the existence of further documentation in its possession, custody or control. 38 Firstly, there is no explanation given by Ms Smales for the failure to refer, in her first affidavit, to the existence of the documents which were subsequently disclosed in her second affidavit. All that Ms Smales said in her second affidavit, was that those documents had "come to her attention" since swearing the first affidavit. There is no explanation as to the extent of the inquiries which she made, prior to swearing the first affidavit, nor to the extent of the inquiries that she made prior to swearing the second affidavit, nor to the circumstances which led to the documents in question "coming to her attention". 39 Secondly, Ms Smales in her second affidavit, has deposed to the existence of a class of documents, namely, the handwritten draft pages of the student activity books, which fall within the category in respect of which discovery is sought. However, only one of those handwritten draft pages is annexed to the affidavit. There is also, of course, a reference in that affidavit to the existence of electronic files in the respondent's control. The documents comprising those files were also not annexed to Ms Smales' affidavit. 40 Thirdly, the second affidavit of Ms Smales refers to, and contains as an annexure, an email written by Ms Watson in 2005 referring to development of the Sound Waves Charts. The email contained its own electronic attachment which was a draft of the chart. In the email, Ms Watson says that she had produced the draft chart on her computer. 41 Ms Watson does not refer in her affidavit to having created any files on her computer in the course of working on the development of the Sound Waves Charts, nor does she refer to any email communications with Ms Smales. 42 Further, in deposing that, other than the documents annexed to her affidavit, she did not have any other relevant documents in her possession, Ms Watson did not refer to having made any search of the files that may have been on her computer, nor to having deleted the same. 43 I am of the view, therefore, that when swearing her affidavit, it is likely that Ms Watson misapprehended the nature of the documents which were relevant, and overlooked any electronic files she may have created and stored on her computer, in relation to the development of the charts. The same may be true in respect of Ms Murray but there is no evidence of Ms Murray having used a computer in developing the charts. 44 It follows that I am not satisfied that the respondent has by means of the affidavits relied on, disclosed all of the relevant documents in its custody, possession or control which may assist the applicant in making the requisite decision. In light of the uncertainty arising from the matters referred to at [38] to [43] above, the applicant's contention that it does not have sufficient information to make the requisite decision is founded on reasonable grounds. In the circumstances, I am of the view that the applicant does not have "sufficient information" within the meaning of O 15A r 6(b). The applicant has, therefore, satisfied the only contested condition under O 15A r 6, and the respondent should give discovery in respect of the documents falling within the category referred to in [3] above. Further orders sought by the applicant 45 I also record that, at the hearing counsel for the applicant submitted that the Court should make further orders in terms of a minute of proposed orders dated 30 November 2006. These orders included orders for discovery by third parties and also orders for oral examination of the directors of the respondent and Ms Murray and Ms Watson. I decline to make orders in terms of the minute of proposed orders. 46 Firstly, the proposed orders extend beyond the scope of the relief which was sought in the application. The only relief sought in the application was that set out in the schedule to the application and referred to in [3] above. 47 Secondly, the evidence does not support the making of those orders. Counsel for the applicant submitted that the proposed orders were needed to obtain information in order to consider whether to commence a proceeding against the directors of the respondent and/or other persons who may have authorised or aided and abetted the alleged infringement of the applicant's copyright. The applicant's evidence did not support the submission by the applicant's counsel that the applicant was contemplating bringing a proceeding against third parties, and so required further information in order to make the requisite decision. The only potential proceeding referred to in the applicant's solicitors' correspondence, which was relied upon as comprising the fulfilment of the obligation under O 15A r 6(b) to make reasonable inquiry, was a proceeding against the respondent.