Pioneer Electronics Australia Pty Ltd v Lee
[2000] FCA 1926
At a glance
Source factsCourt
Federal Court of Australia
Decision date
2000-07-01
Before
Sundberg J
Source
Original judgment source is linked above.
Judgment (75 paragraphs)
BACKGROUND 1 This case concerns the importation and sale of a number of Pioneer brand Digital Video Disk (DVD) players by the second respondent ("Alricarben"). The DVD players were acquired from retailers in Hong Kong and Japan and were sold to purchasers in Australia between March and November 1997. The DVD players were manufactured for use in Japan, but those acquired after July 1997 were modified in Hong Kong for use with Australian DVDs, and sold with a transformer for conversion from Australian electricity standards to Japanese electricity standards. The second applicant ("Pioneer") claims that the importation and sale breached its copyright. The applicants also claim that the sales were misleading because they gave the impression that the applicants approved or sponsored them. The first applicant ("Pioneer Australia") claims that Alricarben passed off its business as having Pioneer Australia's approval or sponsorship. There is also a complaint that the DVD players were unfit for sale in Australia, and that the players, or more precisely the transformers with which they were sold, were dangerous.
FINDINGS OF FACT 2 In order to regulate the distribution of DVD players around the world, the manufacturers have developed a system whereby the players will only play discs they have been programmed to play. The discs are programmed in different codes for different geographical regions, and a player is capable of decoding only the DVDs for the region in which it is sold. Japan is region 2 and Australia is region 4. In order adequately to satisfy demand for new technologies, Pioneer staggered its release of DVD players in different parts of the world. At the time the importation of Pioneer players the subject of this proceeding took place, Pioneer had not yet released DVD players onto the Australian market. As a result, Alricarben was bringing into Australia DVD players that had not yet been released here, and would in any case have been inappropriate for any discs that were later sold within the Australian region. 3 In November 1996 the first respondent ("Lee"), a director of Alricarben, read in an electrical goods magazine an advertisement for Pioneer DVD players inserted by an organisation called "Ramsons" based in Osaka, Japan. He contacted Ramsons, and on behalf of Alricarben ordered a Pioneer DVD player, branded "DV-7", to be shipped to him in Sydney. Lee received the DV‑7 player in December 1996, and after using it for about four weeks decided to sell it. On behalf of Alricarben, he placed an advertisement in the Sydney Trading Post which ran for eight to ten weeks. The DVD player was sold to Alex Fiedler ("Fiedler") on 10 March 1997. Fiedler attended Lee's home in Epping to inspect the DVD player. He noted a number of DVD players at the premises, as well as compact disc and laser disc players. The players were made by various corporations including Pioneer, Sony, Panasonic and Toshiba. Lee told Fiedler the DV-7 player was a region 2 player. This meant that when Australian DVD titles were released, the DV-7 player would be unable to play them, unless the player was modified by the installation of a "mod chip", a chip that would overcome the regional coding referred to in par 2. Lee told Fiedler that the player and the transformer had 12 month warranties, and that he should return the player to him if he had any problems. If Lee could not have the player repaired in Australia, he would ship it back to his supplier for repair, and Fiedler would be charged the freight costs. Fiedler purchased the DV-7 player and a transformer for $1050. The player came in a Pioneer branded box with Japanese writing on it. A couple of months later Fiedler exchanged the Pioneer player for a Panasonic DVD player manufactured for the American market. Lee continued to advertise the sale of electrical goods. These included advertisements published between March and December 1997 for Pioneer DVD players coded to the Japanese region. 4 Alricarben also sold imported DVDs. These sales came to the attention of the Australian Film and Video Security Office (AFVSO), which acts on behalf of the Motion Picture Association to prevent film and video piracy in Australia. AFVSO requested one of its agents, James Slater ("Slater"), to investigate Lee's conduct, and if necessary put him on notice that his unauthorised importation constituted an infringement of copyright. After obtaining from Lee a catalogue of the titles Alricarben had for sale, and being informed by him that it was obtaining the DVDs from Japan, Slater was given a demonstration of the DVD players at Lee's dental surgery on 14 April 1997. All subsequent sales and contacts regarding the DVD players on which evidence was led took place in a small room in the surgery. After the demonstration Slater told Lee he worked for AFVSO and had come to warn Lee formally about his parallel importation of film and video products. Lee was then given a standard letter from AFVSO outlining the relevant sections of the Copyright Act that relate to the parallel importation of products that have copyright material on or about them. The letter reads in part: