Optical Distributors & Manufacturers Association of Australia Ltd v... [2017] FCA 209 | Case summary

INTRODUCTION 1 On 16 December 2017, the applicant obtained ex parte orders which, amongst other things, restrained the respondent from using certain information. Those orders were slightly varied by consent on 21 December 2016 (orders). Since then the parties have prepared the matter for an inter partes hearing on the question of whether the orders should be discharged. 2 The applicant is the peak body of wholesalers, manufacturers and importers of optical products in Australia. Its members constitute participants in the Australian wholesale optical industry, which includes distributors and manufacturers of prescription spectacle lenses, optical frames, sunglasses, sight testing equipment and optical accessories. The respondent is an events organiser. In 2013 and 2015, the respondent organised a trade event for the applicant, which was an exhibition for the education of the applicant's members and their customers. These events were called ODMA 13 and ODMA 15. The applicant and the respondent were parties to agreements (ODMA Agreements) governing their relationship. Pursuant to the ODMA Agreements, the applicant provided the respondent with a list of member and customer names and details that the respondent imported into a third party software platform called "Ungerboeck" (ODMA Information). The ODMA Information is said by the applicant to be highly confidential. The applicant alleges that the ODMA Agreements required the return of this information to the applicant following the end of their relationship. 3 The respondent did not tender for a contract to assist the applicant in the organisation of the ODMA 2017 trade event which is due to take place in July 2017 (ODMA 17). In February 2016, the Chief Executive Officer of the applicant, Ms Finola Border, became aware that the respondent is the event organiser for SILMO, which is an organisation that brings together French optical and eyewear manufacturers. SILMO has, with the assistance of the respondent, organised an optical exhibition of eyewear suppliers and retailers which is to take place on 9 and 10 March 2017 (SILMO 2017). The target exhibitors at and visitors to SILMO 2017 to some extent overlap with those for ODMA 17. The extent of overlap is a matter of controversy. During 2016, Ms Border monitored the activities concerning preparation of SILMO 2017 and in late November 2016 she discovered evidence that some people wishing to register as visitors to SILMO 2017 via its website (SILMO 2017 website) had their email address details and password pre-populated with the apparent use of the ODMA Information. It was this discovery that, the applicant submits, led to the current application and interlocutory orders. The orders permitted Mr Rodney McKemmish, a partner of PPB Advisory and a computer forensic specialist, to obtain access to the computer databases named in order 2, take one copy and analyse their contents. On 23 December 2016, 18 January 2017 and 24 January 2017, data was obtained from the respondent and on 27 January 2017 Mr McKemmish prepared an extensive report. 4 On 27 January 2017, the applicant filed a Concise Statement of its claim, alleging breach of confidential information, infringement of copyright in the ODMA Information in the form in which it appeared, and breaches of express and implied terms of the ODMA Agreements. It submits that the interlocutory orders are appropriate to restrain further uses of the ODMA Information and is concerned that, unless restrained, the ODMA 17 exhibition will not be a success and that, as a consequence, there is a real possibility that the applicant may cease to exist as an organisation. 5 The respondent submits that the interlocutory orders should be discharged. It submits that the case advanced against it is weak and that the ODMA Information is not confidential. It accepts that some use has been made of the ODMA Information, but not for the purpose of soliciting visitors or exhibitors to SILMO 2017. The respondent submits first, that the applicant acted in breach of its duty of candour to the Court by failing to disclose significant evidence and information on the ex parte application. Secondly, that the timing and conduct of the applicant gives rise to questions as to its true motives in bringing the application. These, it submits, weigh heavily against the continuation of the interlocutory orders. Thirdly, the respondent submits that the injunction should be discharged because the applicant's case is insufficiently strong and the balance of convenience does not favour its continuation. 6 The hearing was conducted on Tuesday 28 February 2017. There is, I was informed, some urgency because the preparation for SILMO 2017 is adversely affected by the orders. I informed the parties that I would give them my decision and, if possible, brief reasons on Friday, 3 March 2017. As a result of this timing, these reasons are necessarily somewhat truncated. 7 I do not consider that the first or second bases of the respondent's objections to the continuation of the interlocutory orders have been made out. Having regard to the evidence of Ms Border and the submissions made by Counsel for the applicant at the ex parte hearing, I consider that the duty of candour required by the authorities has been fulfilled. 8 I turn now to consider the question of whether the injunction should be discharged having regard to the strength of the case advanced by the applicant and the balance of convenience

CONSIDERATION 13 The evidence of Mr Rod Hodgins, who is the Group Manager of the respondent, contains some important admissions concerning the question of whether or not the applicant has an arguable case. Mr Hodgins has extensive experience with the use of the Ungerboeck software which is operated through a web interface. The relevant web interface for present purposes is the SILMO 2017 website. Data in the software is organised in two sections, the first containing visitor information and the second containing exhibitor information. Mr Hodgins understands that the respondent put together its own list of exhibitor information. Evidence about that is given by Ms Dawn Sullivan, the Show Manager responsible for SILMO 2017 at the respondent. For the visitor information, the evidence indicates that the respondent has used third party lists, which it purchased. 14 Mr Hodgins gives evidence that the SILMO 2017 website does not access any exhibitor information in the exhibitors' section of the Ungerboeck software. It does, however, verify any email input into the email box on the registration webpage against the visitor information in the visitor section. This may include checking the email against emails in the ODMA Information. If the email is found to exist in the visitor section and a correct password is entered, then a user is presented with his or her own contact information, which they can check or update. The information (which if available, is taken from the ODMA Information) comprises the visitor's name, position, organisation, physical address, email address and telephone contact number. Registration online in this fashion involves asking a few short questions. Mr Hodgins' evidence is that filling out this information afresh, without the benefit of the ODMA Information, would take less than one minute. If the email is found in the ODMA Information and the password is incorrect, or has been forgotten, then the system sends an email to the putative visitor's email address in order to reset the password. Ms Border gives evidence that in November 2016 she entered an email address taken from the ODMA Information which contained an idiosyncratic, internal error. The SILMO 2017 website prompted the information to which Mr Hodgins refers. It was this discovery that, the applicant submits, enabled the applicant to feel that it was in a position to move the Court for ex parte relief. 15 Against this background it is apparent that the respondent does not deny that it has possession of the ODMA Information or that part of it has been used. It does, however, contest the amount and significance of the use made and the appropriateness of the continuation of the orders. 16 The applicant submits that the ODMA Information is "confidential information" within the terms of the ODMA Agreements and that the use of that information enables ODMA visitors "seamless registration" to the SILMO 2017 event. It submits that this evidence is sufficient to enable a conclusion that there is a strong prima facie case of infringement of copyright, breach of confidential information, breach of the ODMA Agreements (an implied term of which required the deletion of the ODMA Information), and breach of the ODMA Agreements insofar as the respondent has failed to return the ODMA Information to it. 17 Despite the respondent's submission to the contrary, in my view, the admissions contained in Mr Hodgins' evidence are sufficient to provide the basis for a conclusion that an arguable case in one or more of these causes of action is present. I do not here address the matter on any final view. No doubt there are arguments that may test the propositions advanced by the applicant which will be addressed at final hearing. For instance, the respondent strongly contests that the ODMA Information is confidential. However, the substantive question is whether the materials establish an entitlement on the part of the applicant to a continuation of the orders. 18 The evidence of Ms Sullivan, refers to the steps that she took to prepare the exhibitors contact list for that event. She commenced her work in her current role in about March 2016. At that time she was informed by the event manager of SILMO that she could not use the ODMA Information but that the respondent had to develop its own exhibitor lists. She was provided with a contact list for exhibitors prepared by her predecessor which had 320 prospective exhibitors on it. She formed the view that the list did not target the correct audience and reduced it to approximately 150 entries and rebuilt the remainder of the current list herself. The current list includes 363 individuals and companies. The process by which she built the list was by accessing various sites on the internet, magazines, Google searches and the like. 19 I now turn to the question of whether the applicant will suffer irreparable injury for which damages will not be an adequate compensation unless the injunction is continued and whether the balance of convenience favours the continuation of the injunction; Castlemaine Tooheys is at 153. 20 The applicant relies on the evidence of Ms Border in relation to these issues. Her evidence is that ODMA 17 is a critical event for the future of the applicant as it generates the majority of its income. She has been informed by an unidentified person that a company called "CR Surfacing" does not intend to exhibit at ODMA 17 because it is exhibiting at SILMO 2017. She is aware that ODMA's second biggest exhibitor, "Eyes Right Optical", has halved its booking for ODMA 17. She has been informed (again by an unidentified person) that the same number of square metres has been booked by Eyes Right Optical at SILMO 2017, apparently, because there are now two shows. Ms Border also gives evidence of her concerns that others may choose to exhibit at SILMO 2017 instead of ODMA 17, and that if ODMA 17 is not a success, the applicant may cease to exist. 21 In submissions, the applicant contends that there is a likelihood that the use of its confidential information will cause at least some persons who have previously exhibited with it to exhibit at SILMO 2017. It submits that the consequence of a finding of a prima facie case permits the inference that the respondents will take advantage by "smoothing the path of registrants on their website" using the ODMA Information. It submits that wrongful access to the list of the people who have previously shown an interest in registering as exhibitors gives the respondent a springboard in its competition for spaces at SILMO 2017. It further contends that the quantification of adequate damages in cases concerning intellectual property rights of this type is extremely difficult. The loss of patronage arising from SILMO 2017's exhibiting exhibition may have a "ripple effect" across the entire ODMA 17 exhibition. 22 The respondent submits that the orders are prejudicial to it. It submits that they ought not to have been made and ought not to be continued. In relation to prejudice to the respondent, it submits that the order prevents the respondent from using all of the lists that it had independently prepared for SILMO 2017, which includes its exhibitors lists. This, the respondent submits, arises from the definition of "Consumer Database and Information" which includes every database over which the respondent has control containing consumer or prospective consumer information for the SILMO 2017 exhibition. Accordingly, the respondent is inconvenienced by not being able to communicate with its exhibitors in an efficient and clear manner by using its own customer databases. 23 In this regard Mr Gary Fitz-Roy, a director of the respondent, gave evidence that the effect of the interlocutory orders was such that since 16 December 2016 the respondent has not broadcast or emailed in bulk anything to its exhibitors, of which there are about 70. Nor has it sent mail and email to its prospective exhibitors despite wishing to offer space at SILMO 2017. The applicant responded to this evidence (which was filed very late, and over objection) by submitting that the injunction could be limited to the use of the applicant's confidential information found in or obtained from six particular sources which had been identified by its expert, Mr McKemmish, when he obtained access to the respondent's databases. There is a difficulty with the form of the orders as drafted. It provides that the respondent is restrained from using any confidential information of the applicant "including, but not limited to" the defined customer database and information. The difficulty with the use of the definition is that it also catches every database over which the respondent has control which contains "customer or prospective information" for the SILMO 2017 event. 24 The final relief sought by the applicant is in the form of injunctions restraining the reproduction of the literary work comprising the ODMA Information, an injunction restraining the use of the ODMA Information, orders for the deletion of that information from the respondent's servers, and damages or an account of profits. 25 The harm that the applicant contends that it will suffer in the event that the interlocutory orders are not continued has been summarised above. It is primarily said to lie in a concern that there will be a loss in income for ODMA 17 because "exhibitors" will take their business to SILMO instead of ODMA 17. This concern has a tenuous connection with the breaches alleged, and appears to be more steeped in the fact that SILMO 2017 represents a competitive challenge to ODMA 17. I do not accept the contention that the two instances of exhibitors taking their business to SILMO 2017 are, or are likely to be, because of the breaches alleged. Certainly the hearsay evidence given by Ms Border does not establish that. A more likely explanation is that the loss in business identified is because SILMO 2017 is a competitive event and, for their own reasons, CR Surfacing and Eyes Right Optical chose to attend SILMO 2017. The fact that an exhibitor prefers to exhibit at one rather than the other is more likely to be based on the respective competitive advantages of one over the other. No evidence suggests that the confidential information played a role in the decision of these businesses to divert their business. 26 The applicant also submits that the use of the ODMA Information will cause at least some persons who have exhibit at ODMA exhibitions to exhibit at SILMO 2017 because exhibitors and/or visitors may be solicited by the respondent making use of the ODMA Information. 27 In the case of exhibitors, the evidence did not establish a likelihood that the ODMA Information was used for that purpose. This was despite the fact that Mr McKemmish was provided with extensive access to the respondent's databases over several weeks and produced an extensive report concerning his analysis. The evidence adduced by the respondent suggest the contrary position. Ms Sullivan gave evidence that a list of 363 prospective and actual exhibitors was independently created from publicly available sources. The evidence indicates that exhibitor lists were published by the applicant itself on its own website, and a directory of numerous businesses and industries in the optical industry is published on the "Eye-Talk" website. That is not to say that all of the ODMA Information is necessarily contained in these sources. That is a question for another day. However, this evidence supports the veracity of the respondent's submissions that exhibitors have not been solicited to attend SILMO 2017 by making use of the ODMA Information. That, coupled with the absence of affirmative evidence from the applicant, leads to the conclusion that the applicant's submission to the effect that the ODMA Information will cause a diversion of business to SILMO 2017 lies in the realm of speculation. 28 The evidence of misuse of the ODMA Information advanced by the applicant lies in the pre-population of the data fields in the SILMO 2017 website. As noted above, the use of the website by a proposed registrant (or visitor) involves use of the Ungerboeck software which, in turn, interrogates the ODMA Information. The evidence indicates that this applies only to visitors seeking to register, but not exhibitors. That use is admitted by the respondent, although it denies that the use amounts to any infringement of the applicant's rights. 29 The respondent contends that the relevant status quo to consider is that which existed prior to the ex parte orders of 16 December 2016. The applicant has since early 2016 been aware that the respondent was organising SILMO 2017. The respondent used the Ungerboeck software for visitors to register to attend the exhibition. The respondent adduced evidence that to change the functionality of this software would cost over $120,000 and take four to six months. The respondent submits that the effect of the use of the Ungerboeck software in the context of the applicant's case is trivial. Of the 594 people who have registered as visitors for SILMO 2017 only 45, or about 7.50 per cent, appear in the ODMA Information. 30 The applicant contends that the status quo to be considered is at the present date, and this should take into account the fact that the interlocutory orders are already in place. It contends that the admitted use via the SILMO 2017 website smooths a way for registration of visitors and thereby gives the respondent a competitive advantage. It disputes the cost or time that it would take to alter the functionality of the software, referring to the evidence of Mr McKemmish. 31 In an application of this type, it is common for parties to agree to an interim regime whereby orders are agreed whilst evidence is prepared for a contested application. That is what occurred in the present case. In such circumstances, it is not appropriate to punish the respondent for reaching a sensible interim accommodation, especially in circumstances where, as here, it is not disputed that the respondent reserved its position such that it may seek to set aside the interim orders if longer term accommodation could not be reached. 32 The use of the ODMA Information arises only after a visitor has already formed the view that he or she wishes to register for SILMO 2017. There is no evidence to suggest that the ODMA Information has been utilised in order to solicit visitors. Indeed, evidence given by three witnesses for the respondent is to the effect that the respondent purchased and used third party lists for that purpose. Mr McKemmish's evidence does not suggest otherwise. In these circumstances, the evidence does not indicate that any significant or material harm in the form of diverted business would be suffered by the applicant if the use is permitted to continue. On the other hand, the respondent would be unable, in practical terms, to alter the software in the short time prior to the commencement of the SILMO 2017 on 8 March 2017. No doubt the immediate lead up to the exhibition is a significant time for the organisers and to a third party, being SILMO. The unavailability of access to the SILMO 2017 website for use by the respondent and visitors to the respondent is also a relevant consideration. 33 On the other hand, if the applicant ultimately establishes its causes of action, loss demonstrated to have arisen from the use of the Ungerboeck software in conjunction with the SILMO 2017 website will be compensible in damages. At present the evidence of harm, assuming the causes of action to have been made out, suggests that it is slight. 34 Ultimately, the evidence does not support the applicant's contention that there has been a use of the ODMA Information in relation to exhibitors. The evidence adduced by ODMA raised concerns that somehow the possession of the ODMA Information would divert exhibitors from ODMA 17. That concern does not rise above speculation. The applicant has demonstrated the use of some of the ODMA Information in relation to visitors. However, whilst that assists the applicant in demonstrating an arguable case, the harm that such use is likely to cause lies at the low end of the spectrum, assuming that the information is confidential. 35 In my view, the applicant has not discharged its onus of establishing that it will suffer irreparable injury for which damages will not be an adequate compensation unless the injunction is maintained or that the balance of convenience favours the granting of the injunction. Accordingly, order 5 made on 16 December 2016, as varied by order 2 made on 21 December 2016, should be discharged. The costs of the interlocutory application should be reserved. The parties should confer as to appropriate orders to bring the matter to an early final hearing. To that end, a case management conference will be listed for 31 March 2017. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Burley.

Optical Distributors & Manufacturers Association of Australia Ltd v Expertise Events Pty Ltd

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Judgment (5 paragraphs)

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Cases Cited (6)

Cited By (1)