Prodata Solutions Pty Ltd v South Australian Fire and Emergency Services Commission

THE APPLICANT'S PROPOSAL 16 The applicant seeks an order in the following terms: 2. The Court hear and determine the following questions separately from, and before, determination of any other questions in the proceedings (Separate Questions): (1) Whether one or more Works as defined in [30] and pleaded in [30] and [31] of the Fifth Amended Statement of Claim (5ASOC) are an original literary work within the meaning of s 10(1) of the Copyright Act 1968 (Cth) (Copyright Act). (2) Whether at the time or times of their creation, the author or authors of each Work was an employee of the Applicant who made the Work in pursuance of the terms of his or her employment under a contract of service. (3) Whether the Applicant is the owner of the copyright in the Works, or any of them, as defined in [30] and pleaded in [30] and [31] of the 5ASOC. (4) Whether the State of South Australia's notice pursuant to sub-section 183(4) of the Copyright Act (183 Notice) is valid. (5) Whether s 183A(1) of the Copyright Act operates in whole or in part in relation to the 183 Notice, by reason of the declaration made on 18 December 1998 by the Copyright Tribunal declaring the Copyright Agency Limited to be a relevant collecting society for the purposes of Division 2 of Part VII of the Copyright Act in relation to government copies of works. 3. In the alternative to Order 2, an order pursuant to s 54A Federal Court Act 1976 (Cth) that one or more of the Separate Questions be referred to a referee for inquiry and report in accordance with the Rules. 4. After determination of the Separate Questions (or alternatively receipt and adoption of the referee's report) the Court next determine all questions: (a) of liability for the breaches of copyright, breaches of contract and breaches of equitable duties alleged by the Applicant against the Respondents; (b) (if the Court finds that the 183 Notice is valid), concerning the matters pleaded in [3.2] and [3.3] of the Reply to Fourth Defence of the First Respondent and [2.2] and [2.3] of the Reply to Fourth Defence of the Second Respondent; and (c) of the Applicant's entitlement to the non-pecuniary relief sought by it. 5. After determination of the questions referred to in Order 4 above, the Court determine any outstanding issues of pecuniary relief, including: (a) as to the quantum of any damages to be paid by the Respondents or any of them, to the Applicant; or (b) as to the taking of any account of the Respondents' profits. 17 The applicant submits that it is generally thought to be just and convenient in intellectual property cases to hear and determine issues of liability separately and before issues of pecuniary relief because an applicant in such a case should not be compelled to elect between damages and an account of profits before the evidence on liability has been received. So much may be accepted as a general proposition: Fleming's Nurseries Pty Ltd v Hannaford [2008] FCA 591 at [18]; Graham's Factree Pty Ltd v Oak Enterprises (No 1) [2012] FCA 1033 at [9] - [10]; Reading at [9]. 18 In the present case, however, the respondents' liability for any infringement depends upon the application of s 36 and s 115 of the Copyright Act. Importantly, s 36 is expressly subject to the whole of the Copyright Act, including s 183. It follows that if the respondents have not infringed the applicant's copyright because of the operation of s 183(1), the applicant would not be entitled to any remedy under s 115 because there would be no infringement within the meaning of s 36. Moreover, if s 183(1) applies to any use by the respondents of the applicant's copyright, the terms of any such use would be a matter falling within the jurisdiction of the Copyright Tribunal under Pt VII of the Copyright Act, subject to any agreement between the parties under s 183(5). The applicant has contemplated the possibility that this Court might find that the respondents have done acts comprised in copyright owned by the applicant to which Pt VII applies and to which Pt V does not. Should that occur, this Court would not have jurisdiction to assess compensation under Pt VII or to make any other order under s 115: the acts of the respondents would not be infringing acts. 19 Counsel for the applicant submitted that after first hearing and determining the questions identified at [1] of the interlocutory application, the Court should then refer the matter to the Copyright Tribunal for an assessment of compensation, in the event that it were to find that the 183 Notice was "valid". It was submitted that the Copyright Tribunal was uniquely placed to identify whether or not the respondents have done any act or acts comprised in the copyright and, if so, the extent of those acts and the value of any compensation to be paid for them. It was submitted that by issuing the 183 Notice (if valid), the first respondent had elected to have such questions heard in the Copyright Tribunal such that it would constitute an abuse of the Court's processes to insist upon this Court resolving disputes concerning the use (if any) to which the applicant's copyright had been put. 20 I am not satisfied that the issues should be divided in that way. 21 The applicant's proposal appears to be founded on the assumption that the Copyright Tribunal's jurisdiction turns upon the question of whether the 183 Notice is "valid". The submission, as I understand it, is that the 183 Notice is not "valid" because it is expressed to be subject to the contingency that this Court makes certain findings of fact and law adverse to the first and second respondents. In my view, the jurisdiction of the Copyright Tribunal to make an assessment of the value of any use of the applicant's copyright does not depend upon the issue of a "valid" (that is, unconditional) notice under s 183(4). Properly construed, s 183(4) is facilitative in the sense that it brings to the attention of a copyright owner the fact and extent of use, acknowledged by the user, being actual use that might otherwise remain unknown to the owner. 22 Where, as here, the parties are in dispute as to whether one of them has done an act comprised in a copyright owned by the other, and where that dispute forms a part of a controversy in a proceeding pending in this Court, it is difficult to comprehend how a party in the first respondent's position could prepare and issue a notice other than in the contingent terms it has employed. If the Copyright Act does not contemplate or permit a notice to be issued in such terms, then in my view it would remain open to the first respondent to issue a notice as soon as possible, that is, as soon as possible after this Court's resolution of the controversy. Such a notice may properly reflect the facts as found by the Court in resolving that controversy. 23 There may be cases in which it is necessary and appropriate for the Copyright Tribunal to resolve disputed facts so as to determine whether s 183(1) applies and so satisfy itself that it has jurisdiction to assess the value of the Crown's use of a copyright. However, I do not consider this to be an appropriate case for the Copyright Tribunal to ascertain the limits of its own jurisdiction. Rather, it is the task of this Court is to determine whether s 115 of the Copyright Act is enlivened. 24 The controversy on the pleadings includes the critical question of whether the respondents have infringed the applicant's copyright. That question turns, among other things, on whether s 183(1) applies. If s 183(1) does apply, it would follow that the Court would have no jurisdiction to make the orders sought under s 115 of the Copyright Act. Nor would it have jurisdiction to assess compensation in accordance with Pt VII of the Copyright Act, such an assessment being wholly within the jurisdiction of the Copyright Tribunal. Whilst the application founded in infringement of copyright must in that event be dismissed, the applicant's success in establishing ownership and use would, in the ordinary course, weigh heavily in the Court's discretion on the question of costs. In other words, costs would not necessarily follow the event of dismissal in this Court if it could be shown that the applicant was in a position to approach the Copyright Tribunal for an assessment of a financial remedy. 25 As to the application of r 30.01 of the Rules, the applicant's proposal would see the matter referred to the Copyright Tribunal without this Court first ascertaining whether the respondents have done any act comprised in a copyright owned by the applicant. Assuming that such a referral could be made, it is difficult to conceive what efficiencies might be achieved by adopting such a course. The proposal gives rise to a real risk that the Copyright Tribunal would conclude that s 183(1) does not apply with the result that it has no jurisdiction, including because there has been no use of the copyright owned by the applicant or because the second respondent did not have written authorisation or because of the non-existence of any other factual matter preconditioning the exercise of its powers. There is a further risk that a party aggrieved by the Copyright Tribunal's assumption or denial of jurisdiction might appeal from the Copyright Tribunal's determination on that question to the Full Court. All the while, this proceeding would remain on foot and undetermined, including in relation to significantly overlapping claims founded on breach of confidence. That is clearly undesirable. 26 As to the issue identified at [2(5)] of the interlocutory application, I am not satisfied that the application and operation of s 183A of the Copyright Act is an issue that arises before this Court on the SOC or the defence of either respondent as presently pleaded. 27 The suggestion at [3] of the interlocutory application that the Court refer certain matters to a referee for inquiry and report in accordance with the Rules was not the subject of forceful oral submissions. I do not consider there to be a clear basis for any such referral. 28 The second stage of the trial proposed by the applicants at [4] of the interlocutory application introduces for the first time the issue of whether the respondents have an equitable obligation of confidence. In my view, the facts alleged in support of that aspect of the claim overlap significantly with the facts alleged in support of the copyright claim or would otherwise involve consideration of testimony from the same lay or expert witnesses. There is no efficiency to be gained by severing off the breach of confidence question from questions of ownership and use arising on the copyright claim. 29 The third stage of the trial proposed at [5] of the interlocutory application is more reflective of a conventional approach by which questions of liability on an intellectual property claim or a claim founded on breach of confidence are determined before questions of remedy. That approach is especially appropriate in cases where the applicant asserts an entitlement to elect an account of profits, as is the case here. There is even more reason in the present case to determine questions of liability before remedy, given the potential application of Pt VII of the Copyright Act as explained above. 30 At the hearing of the application the Court proposed of its own motion a division of issues so as to isolate questions of remedy from all other issues. Whilst it is true that the applicant has pleaded and particularised some facts relevant to the assessment of an award of damages, I consider that there are efficiencies to be gained by enabling the parties to present their cases as to remedies by reference to the Court's factual findings on questions of liability.