Jurisdiction
46 Subsections 202(1) and (4) of the Act provide:
'(1) Where a person, by means of circulars, advertisements or otherwise, threatens a person with an action or proceeding in respect of an infringement of copyright, then, whether the person making the threats is or is not the owner of the copyright or an exclusive licensee, a person aggrieved may bring an action against the first‑mentioned person and may obtain a declaration to the effect that the threats are unjustifiable, and an injunction against the continuance of the threats, and may recover such damages (if any) as he or she has sustained, unless the first‑mentioned person satisfies the court that the acts in respect of which the action or proceeding was threatened constituted, or, if done, would constitute, an infringement of copyright.'
'(4) The defendant in an action under this section may apply, by way of counterclaim, for relief to which he or she would be entitled in a separate action in respect of an infringement by the plaintiff of the copyright to which the threats relate and, in any such case, the provisions of this Act with respect to an action for infringement of a copyright are, mutatis mutandis, applicable in relation to the action.'
47 Unjustifiable threats provisions, generally similar to s 202, are found in the other Australian intellectual property statues; cf Patents Act 1990 (Cth) ss 128-130; Trade Marks Act 1995 (Cth) ss 129-130; Designs Act 2003 (Cth) ss 77-81; Circuit Layouts Act 1989 (Cth) s 46. The legislative genesis and other aspects of s 202 are discussed in Ricketson, The Law of Intellectual Property: Copyright, Designs & Confidential Information (looseleaf, LawBook Co, 2002) at [2.195]-[2.210]; and in Lahore, Copyright and Designs (looseleaf, Butterworths, 2004) at [36.450].
48 The Australian provisions can be traced back to the Patents, Designs and Trade Marks Act 1883 (UK) s 32 and the Patents, Designs and Trade Marks Act 1907-1928 (UK) s 36. Those sections gave a statutory cause of action for groundless threats of infringement proceedings, even if made bona fide (under the previous general law, there was a cause of action only if the threats were not made bona fide). The sections did not apply, however, if an action for infringement was 'commenced and prosecuted with due diligence' (this exception was not continued in s 36 of the Patents and Designs Act 1932 (UK).
49 The current provisions in the United Kingdom are to be found in the Patents Act 1977 s 70; the Trade Marks Act 1994, s 21; the Registered Designs Act 1949, s 26; and the Copyright, Designs and Patents Act 1988, s 253. It should be noted, however, that the provision last noted applies, not to copyright in general, but only to design rights.
50 In the United States of America, intellectual property legislation does not contain unjustifiable threats provisions. Relief in respect of such threats is available in the form of a declaration of non-infringement the Federal Declaratory Judgment Act, 28 USC s2201 (see McCarthy on Trademarks and Unfair Competition (4th ed, Thomson West, 2005) vol 6, p 32-102.3; Nimmer on Copyright (LexisNexis, 2004) vol 6, p 33-7).
51 An unjustifiable threats provision was introduced into Australian copyright legislation when s 41A was inserted into the Copyright Act 1912-1933, by the Copyright Act 1935 (Cth). The provision was modelled on s 91A of the Patents Act 1903 (Cth) and s 100A of the Trade Marks Act 1905-1912 (Cth), which had, in turn, been modelled on the comparable United Kingdom legislation.
52 Section 56 of the Federal Court of Australia Act 1976 (Cth) ('the FCA Act') empowers the Court to order 'an applicant' in a proceeding in the Court (or an appellant in an appeal to the Court) to give security for the payment of any costs that may be awarded against him or her. The words 'an applicant' replaced the words 'a plaintiff' in s 56(1): Law and Justice Amendment Act 1990 (No 115 of 1990) s 49, Schedule. Similarly, s 1335 of the Corporations Act 2001 (Cth) ('Corporations Act') provides that where a corporation is 'plaintiff' in any action or other legal proceeding, the court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the corporation would be unable to pay the costs of the defendant if successful in his, her or its defence, require sufficient security to be given for those costs. Although Nine did not rely on s 1335, that section would not raise any different issue as to the foundation of the Court's jurisdiction to make the order which it seeks. The question under s 56 of the FCA Act is whether Ninox is 'an applicant' and the question under s 1335 is whether Ninox is 'plaintiff'.
53 In Townsend Controls Pty Ltd v Gilead (1989) 14 IPR 443 ('Townsend') von Doussa J held that word 'plaintiff' in s 56 in its then form included a party who, in substance, was the party invoking Court's jurisdiction for the purpose of establishing rights or obtaining relief in the sense laid down in Neck v Taylor [1893] 1 QB 560 and Willey v Synan (1935) 54 CLR 175. Townsend was similar to the present case. Townsend Controls Pty Ltd, the first applicant, sought injunctive relief and damages pursuant to s 121 of the Patents Act 1952 (Cth) (now see s 128 of the Patents Act 1990 (Cth)) which was an 'unjustifiable threats' provision similar to s 202. The first respondent was the patentee. He and the other respondents contended that his threats were justified, and he cross-claimed seeking relief for patent infringement. Von Doussa J concluded that the cross-claimants were in substance the 'attackers' and 'should have commenced' an infringement proceeding. His Honour found that the cross-respondents had made out a case for an order for security against the cross-claimants.
54 An earlier case, Amalgamated Mining Services Pty Ltd v Warman International Ltd (1988) 19 FCR 324 ('Amalgamated Mining'), was an unjustifiable threats proceeding under s 202 of the Act. As in the present case, the application also relied on alleged contravention of s 52 of the TP Act, and, also as in the present case, that claim did not raise any separate factual issue. Although it was the respondents who moved for security, Wilcox J dismissed their motion on the ground that they were in substance the 'party attacking', and the applicant the 'party attacked'. His Honour referred to Maatschappij voor Fondsenbezit v Shell Transport & Trading Co [1923] 2 KB 166 at 176-178; Willey v Synan, above at 179-180, 184-185; and Re Travelodge Australia Ltd (1978) 21 ACTR 17 at 18-19.
55 Wilcox J was not dissuaded from regarding the respondents as the attackers by the absence of a cross-claim for infringement, and his Honour dismissed their motion on the sole ground that they were in substance the attackers and the applicant, the attacked. His Honour remarked that the first attack came in the form of a letter from the respondents' solicitors which, 'in a commercial sense', probably left the applicant with little alternative other than to launch proceedings.
56 (His Honour did not have to address the question whether an applicant could obtain an order for security in the absence of a cross-claim. Neither do I, but I suggest that in those circumstances the respondent would not be 'an applicant' for the purposes of s 56(1) of the FCA Act, or 'plaintiff' for the purposes of s 1335 of the Corporations Act.)
57 Order 28 of the Federal Court Rules, which contains rules governing applications for security for costs, provides (in r 1) that the reference in O 28 r 2 to 'applicant' extends to any person who makes a claim for relief in any proceeding, and reference to a respondent extends to any person against whom such a claim for relief is made. Rule 3(1) of O 28 provides, relevantly:
'When considering an application by a respondent for an order for security for costs under section 56 of the Act, the Court may take into account the following matters:
(a) that an applicant is ordinarily resident outside Australia;
(b) that an applicant is suing, not for the applicant's own benefit, but for the benefit of some other person and the Court has reason to believe that the applicant will be unable to pay the costs of the respondent if ordered to do so; ...'
According to this rule, each of Nine and Ninox is both an 'applicant' and a 'respondent'. If the rule gave jurisdiction, it would allow the Court to order security against and in favour of each party, and the 'attacker/attacked' question would go only to discretion. This, as I understood it, was the position taken by counsel for Ninox on the hearing of the motion. But the Court's rules do not confer jurisdiction and cannot enlarge or diminish its jurisdiction under s 56 of the FCA Act (or s 1335 of the Corporations Act) (cf Thunderdome Racetiming and Scoring Pty Ltd v Dorian Industries Pty Ltd (1992) 36 FCR 297 ('Thunderdome') at 309-310).
58 The approach of looking to the substance of the roles (offensive or defensive) played by the parties rather than their formal designations has been followed not only in the cases cited by Wilcox J in Amalgamated Mining, by his Honour in that case, and by von Doussa J in Townsend, but also in later cases in this Court; cf Thunderdome at 310; Unilever Australia Pty Ltd v RFC Nominees Pty Ltd [2000] FCA 1021 ('Unilever') at [9].
59 Is it right to regard Ninox as 'an applicant' for the purposes of s 56(1)? In my opinion it is. In the first place, the terms of s 202(1) themselves place on the party making the threats the onus of satisfying the Court that the acts in respect of which the action or proceeding was threatened constitute, or, if done would constitute, an infringement of copyright. The provision affords a facility by which a threatened party may require the threatener either to undertake the onus of establishing that copyright exists and that the acts in question constitute or would constitute an infringement of it, or, in the alternative, to cease to making the threats.
60 In the second place, the field of contest is the same on the application and the cross-claim, and Nine seeks no relief other than declarations, injunctions and damages based on Ninox's threats. The case is unlike Unilever in which the first respondent had threatened to sue the applicant for infringement of its registered trade mark; the applicant sought rectification of the Register of Trade Marks by expungement of the mark; and the first respondent cross-claimed for infringement. Hill J rejected the applicant's submission that it had filed its application simply as a defence to the threatened action for infringement, pointing to the fact that it sought expungement of the mark.
61 Does the substantial lapse of time between the making of the last threat by it and the commencement of this proceeding by Nine, signify that Ninox should not be regarded as the attacker, and Nine the attacked? Ninox's last threat was made on 11 March 2004. On 8 April 2004, Nine's solicitors wrote to Ninox's solicitors demanding that their client either launch proceedings or cease threatening to do so. Nine did not commence this proceeding until 7 December 2004. Apparently Nine did not feel in March 2004 that it had no alternative but to bring an 'unjustifiable threats' proceeding (cf Amalgamated Mining at 328).
62 So far as the evidence reveals, there was a cessation of hostilities between Ninox and Nine until Ninox launched its United States proceeding against Nine's licensees on 5 October 2004. The evidence does not reveal what happened during the intervening seven months.