Seven Network (Operations) Limited v Endemol Australia Pty Limited

The Interlocutory Application 6 Seven commenced this proceeding late in the afternoon of Friday, 31 July 2015. It alleges that by producing and broadcasting episodes of Hotplate, Nine is infringing Seven's copyright in various original literary and dramatic works which Seven has identified in some points of claim. Seven now seeks an interlocutory injunction restraining Nine from broadcasting or otherwise communicating any further episodes of Hotplate until the final determination of this proceeding. 7 At the conclusion of the interlocutory hearing on 4 August 2015 I indicated to the parties that I would not grant an injunction in relation to Hotplate Episodes 4 and 5 which will have by now already gone to air. This was to allow me to give the evidence and the parties' submissions due consideration. I have now concluded that no interlocutory injunction should be granted in relation to any of the remaining episodes that form part of the first series.

The Relevant Principles 8 There is no dispute between the parties as to the principles to be applied in deciding whether to grant or withhold the interlocutory relief sought by Seven. The principles were discussed by the Full Court in Warner-Lambert Co LLC v Apotex Pty Ltd (2014) 106 IPR 218. The Full Court said at [68]-[70]: [68] … There are two inquiries that must be undertaken when determining whether an applicant should be granted an interlocutory injunction. The first relates to the strength of the applicant's claim to final relief. The second relates to the balance of convenience or, as it is sometimes expressed, the balance of the risk of doing an injustice by either granting or withholding the interlocutory relief sought. [69] The principles to be applied in determining whether or not to grant interlocutory relief were considered by the High Court in Australian Broadcasting Corp v O'Neill (2006) 227 CLR 57; 229 ALR 457; [2006] HCA 46 (O'Neill), including by Gummow and Hayne JJ at [65]-[72]. Gleeson CJ and Crennan J agreed at [19] with the explanation of the relevant principles in those paragraphs. In O'Neill Gummow and Hayne JJ stated at [65]: [65] The relevant principles in Australia are those explained in Beecham Group Ltd v Bristol Laboratories Pty Ltd [(1968) 118 CLR 618; [1968] ALR 469]. This court (Kitto, Taylor, Menzies and Owen JJ) said that on such applications the court addresses itself to two main inquiries and continued [(1968) 118 CLR 618 at 622-623; [1968] ALR 469 at 470-1]: "The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief … The second inquiry is … whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted." By using the phrase "prima facie case", their Honours did not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed; it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial. That this was the sense in which the court was referring to the notion of a prima facie case is apparent from an observation to that effect made by Kitto J in the course of argument [(1968) 118 CLR 618 at 620; [1968] ALR 469 at 468]. With reference to the first inquiry, the court continued, in a statement of central importance for this appeal [(1968) 118 CLR 618 at 622; [1968] ALR 469 at 470]: "How strong the probability needs to be depends, no doubt, upon the nature of the rights [the plaintiff] asserts and the practical consequences likely to flow from the order he seeks." [70] Whether an applicant for an interlocutory injunction has made out a prima facie case and whether the balance of convenience favours the grant of such relief are related questions. It will often be necessary to give close attention to the strength of a party's case when assessing the risk of doing an injustice to either party by the granting or withholding of interlocutory relief especially if the outcome of the interlocutory application is likely to have the practical effect of determining the substance of the matter in issue or if other remedies, including an award of damages, or an award of compensation pursuant to the usual undertaking, are likely to be inadequate. See also Samsung Electronics Co Ltd v Apple Inc (2011) 217 FCR 238 at [52]-[67]. As the Full Court's judgment in that case also emphasised, the apparent strength of an applicant's case may be an important consideration in determining whether the balance of convenience favours granting or withholding interlocutory relief.

The Strength of the Case 9 Seven contends that it owns the copyright in the following original literary works: (a) the format pitch for MKR in Confidential Exhibit RP1; (b) the format presentation for MKR in Confidential Exhibit RP2; (c) the Production Bible for MKR in Confidential Exhibit RP3; (d) the Interview Overview for MKR in Confidential Exhibit RP4; and (e) the Instant Restaurant Producers Shooting Guide in Confidential Exhibit RP5 ("the MKR literary works"). 10 Seven also alleges that it is the owner of copyright subsisting in the following original dramatic works: (a) the combination and series of incidents (including situations, events and scenes), plot, images and sounds reduced to material form in Series 1, Episode 1 of MKR; (b) the combination and series of incidents (including situations, events and scenes), plot, images and sounds reduced to material form in Series 1 of MKR including in Series 1, Episode 1; (c) the combination and series of incidents (including situations, events and scenes), plot, images and sounds reduced to material form in Series 5 of MKR, including in Series 5, Episode 3; and (d) the combination and series of incidents (including situations, events and scenes), plot, images and sounds reduced to material form in Series 6 of MKR, including in Series 6, Episode 42 ("the MKR dramatic works"). 11 It is common ground that, for the purposes of the Copyright Act 1968 (Cth) ("the Act"), each episode of Hotplate constitutes a cinematograph film that Nine has communicated, or proposes to communicate, to the public. 12 According to Seven, each episode of Hotplate produced by or on behalf of Nine reproduces in a material form a substantial part of each of the MKR literary works and the MKR dramatic works. In particular, Seven alleges that each episode of Hotplate: reproduces key elements of each series of MKR (or one or more episodes of MKR) or a combination of key elements sufficient to constitute a substantial part of one or more of the MKR literary works; and substantially reproduces the combination and series of incidents (including situations, events and scenes), plot, images and sounds embodied in the MKR dramatic works. 13 For the purposes of its interlocutory application, Seven placed emphasis upon its contention that there is a serious question to be tried that Nine has, by broadcasting episodes of Hotplate, infringed Seven's copyright in the MKR dramatic works, and that the broadcast by Nine of further episodes will similarly involve an infringement of Seven's copyright in such works. 14 The first task for the applicant in copyright proceedings is to identify the copyright work it alleges the respondents to have infringed. Only then can the Court determine whether copyright subsists in that work and, if so, whether it has been infringed by the respondents. 15 So far as the MKR dramatic works are concerned, Seven has identified a number of works consisting of the combination and series of incidents, plot, images and sounds that make up: (a) MKR Series 1, Episode 1; (b) the whole of MKR Series 1; (c) the whole of MKR Series 5; and (d) the whole of MKR Series 6. There may be a difficulty in framing the case in this way. My understanding of Seven's case is that it claims copyright in the dramatic work that constitutes the format for the MKR television program which was first reduced to material form in Series 1, Episode 1 (see Seven's outline of submissions para 11). If that is correct, then one would expect subsequent episodes of MKR merely to reproduce the dramatic work (ie. the format) first seen in Series 1, Episode 1. The alternative approach involves treating every subsequent episode of MKR as an original dramatic work that has its own original format. This seems inconsistent with the way in which Seven has argued its case. In any event, it is not necessary to explore this issue in any detail for present purposes. In due course Seven will need to explain precisely how it puts its case. 16 I have viewed a copy of MKR Series 1, Episode 1 and proceeded on the basis that this episode best exemplifies the dramatic work that Seven says has been infringed. I have also, at the request of Seven, viewed MKR Series 5, Episode 3 and MKR Series 6, Episode 42. I have also viewed Hotplate Episodes 1, 2 and 3, each of which is said by Seven to have been made and broadcast in breach of Seven's copyright. 17 In order to succeed at trial, it will be necessary for Seven to show that the relevant MKR dramatic work is an original work and that the relevant episodes of Hotplate reproduce a substantial part of the work or, alternatively, that Nine has made an adaption of such work or any substantial part of such work: see s 31 and s 14 of the Act and the definitions of "adaptation" and "dramatic work" that appear in s 10 of the Act. 18 Reproduction for the purposes of the relevant provisions of the Act involves two distinct elements. First, there must be a sufficient degree of objective similarity between the copyright work and the alleged infringement. Secondly, there must be a causal connection between the copyright work and the alleged infringement. In particular, the copyright owner must show that the alleged infringer has copied the copyright work. Such copying need not be either intentional or direct. Indirect and unconscious copying will suffice provided the alleged infringing copying can be traced back to the copyright owner's work. 19 In his affidavit evidence, Mr Brad Lyons, the Seven Director of Network Production, says that each series of MKR comprises the following key elements: (a) A cooking competition amongst multiple pairs of contestants, each pair coming from a different state of Australia; (b) Teams take turns to cook in 'Instant Restaurants' in their homes; (c) In the Instant Restaurant rounds, the other teams travel (interstate) to the home of the team whose turn it is to cook; (d) The "host team" prepares and serves a three course meal for their fellow contestant "guest teams" and two expert judges; (e) The two expert judges are established professionals within the restaurant/food industry; (f) The meal is prepared "against the clock" - there is a 3 hour preparation time-limit; (g) The judges have one on one discussions with the "host team" about their menu choices and the challenges involved as well as separately filmed interviews with the judges on food choice and preparation; (h) The judges are seated at the head of the dining table and from there they critique each course to the host couple who stand opposite them at the other end of the dining table; (i) After each course is served, the host team returns to the kitchen to prepare their next course; (j) At the end of the evening the host team receives scores from the judges, and separately, a combined score from the guest teams; (k) All scores are tallied and the team score is added to a "leader board"; and (l) The best performing teams from the Instant Restaurant rounds progress to additional round(s) where they participate in elimination challenges and the overall winners are determined. 20 There is also affidavit evidence given by Mr Frederik (Rikkie) Proost to much the same effect. Mr Proost, Seven's Executive Producer of Reality Television and the Executive Producer of MKR, says that in 2009 he and Mr Lyons were part of a team of people employed by Seven that developed the format for MKR including its key elements. Others on the team included Mr Tim Worner and Ms Lisa Fitzpatrick. Mr Proost says that when developing MKR, the team worked to create a new and original format and did not copy existing formats. He says that the combination of elements and the format of MKR is, to the best of his knowledge, original and not replicated in any other reality television cooking program. 21 Mr John Butt, Head of Legal and Business Affairs of Endemol, made an affidavit in which he identifies some of the differences between Hotplate and MKR. According to Mr Butt: (a) The Hotplate is based on professional restaurateurs, and established restaurant businesses, whereas MKR involves amateur cooks in their kitchens. (b) The restaurants and contestants for The Hotplate were selected because they were varied examples of different restaurant styles and the best characters, not because they are from a particular State (as is the case for MKR) - as a result, two restaurants are in Sydney, one is in Brisbane, one is in Perth, one is in Mandurah (in Western Australia) and one is in regional Victoria. (c) The restaurant businesses featured in The Hotplate focus on different cuisines in order to show different cooking styles, including Italian, Japanese, French, seafood, modern Australian and Asian fusion. (d) In Round 1 of The Hotplate, the contestants are required to cook meals from their existing menu, and must be prepared to cook anything on the menu since they are not given advance notice of which two entrees, two mains and two desserts will be ordered by the judges, whereas in MKR the contestants select their own menu of one entree, one main and one dessert. The Hotplate shows the contestants preparing meals, but does not show them shopping for ingredients as for MKR. (e) When their restaurant is featured, the contestants in The Hotplate wear what they generally wear in their day-to-day business - they are not provided with a branded apron as they are for MKR or for Masterchef (another well-known cooking program). (f) In Round 1 of The Hotplate, the other restauranteur contestants provide their scores to the judges in a bill folder, but in Round 2 (after the restaurant makeovers), the other contestants must deliver their scores directly to the contestants whose restaurant is being featured on the night. (g) The judges in The Hotplate give feedback to the contestants about everything from the ambiance and decor of the restaurant to the service to the overall menu to the specific dishes they serve - this is aimed at assisting the restaurateurs with how they can improve their businesses as a whole, not just the cooking. This is not an element of MKR since the program does not involve actual restaurant businesses. (h) In Round 2 of The Hotplate, the contestants are given an amount of money to undertake renovations and makeovers of their restaurant's furniture, colour scheme and decor in addition to updating of the restaurant's menu. Again, this is not an element of MKR since the program does not involve the renovation or makeover of restaurant businesses. This information may be confidential to Nine. I have not had time to check while preparing this affidavit. (i) In Round 3 of The Hotplate, the contestants cook meals from their newly renovated restaurants for diners. This is not an element of the MKR program since it does not involve restaurants or their diners. Mr Butt's description of Round 1 episodes of Hotplate is broadly consistent with my own observations in the course of viewing Episodes 1, 2 and 3. 22 There is also affidavit evidence from Ms Kiah Officer, Corporate Counsel for Nine, (including, in particular, KHO6) which is relied upon by Nine to show that many of the key elements of MKR's format identified by Mr Lyons and Mr Proost are commonplace, and have been used in other food reality television programs (eg. Come Dine with Me, Masterchef, The Chopping Block) and other non-food reality television programs (eg. The Block, The Biggest Loser, Farmer Wants a Wife). Nine relied on this evidence to show that the MKR format is largely derived from unoriginal material. 23 Section 10 of the Act relevantly defines "dramatic work" to include a scenario or script for a cinematographic film. It is not disputed by Nine that a scenario for a television program or a series of related programs may qualify as a dramatic work. The choice and arrangement of plots, characters and situations may create their own dramatic effect independent of the language in which such matters are ultimately conveyed in the finished product. 24 For the purposes of this application, the following extract from Copinger and Skone James on Copyright (16th ed, eds Garnett K, Davies G and Harbottle G, Sweet & Maxwell, 2011) Vo1 1 at 7-63 provides useful guidance as to the circumstances in which a dramatic work may be infringed including, in particular, where there has been no use or imitation of language: A dramatic work may be infringed by a second dramatisation which reproduces dramatic incidents without using or imitating language. It is thus not necessary that the words in the dialogue should be the same, for the situations and incidents and the way in which the ideas are worked out and presented, may form a part of the real value of the whole work. Regard should be had to the dramatic value and importance of what has been taken, even though the part may in fact be small and the actual language not copied. (footnote omitted) 25 In the present case Nine does not admit that copyright subsists in any of the alleged copyright works. Nor does it admit that it has copied, directly or indirectly, any such work or any substantial part of such work. Nevertheless, for the purposes of this application, I infer that the team within Nine that conceived and developed Hotplate would have been well acquainted with Seven's MKR and very familiar with the format it employed. 26 To reproduce in a material form elements of a dramatic work which are in themselves not original will not normally constitute an infringement of copyright because what has been taken will not be a substantial part of the copyright work: Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 WLR 273 per Lord Pearce at 293; IceTV Pty Ltd v Nine Network Australia Pty Ltd (2009) 239 CLR 458 per French CJ, Crennan and Kiefel JJ at [32] and [37]. Both those cases concerned copyright in compilations but the position in relation to unoriginal parts or elements of dramatic works is in principle no different. 27 Of course, as with a compilation, a dramatic work consisting of a combination of stock elements brought together by the exercise of skill, judgment or labour may constitute an original dramatic work even though some, or perhaps even most, of the elements would themselves be unprotectable due to lack of originality. But where only some of the elements are taken, or where they are combined with different elements, the question whether there has been an infringement of copyright in the original dramatic work can be particularly difficult to answer. 28 There is one obvious difference in the format of the episodes of MKR and Hotplate that I have viewed. The contestants in MKR are not professional restaurateurs but amateur chefs who prepare and serve the meals in their homes. In Hotplate, the contestants are professional restaurateurs who prepare and serve the meals to the other contestants and the judges. They do this in their restaurants albeit at a time when the restaurant is closed to the general public, as part of what is referred to as a "private dining experience". 29 Seven pointed to a number of episodes of MKR that refer to the contestants' homes as "instant restaurants". For example, in MKR Series 5, Episode 3 the contestants ("Paul and Blair, the Q'ld Surfer Dads") transform their home (or at least the dining area) into a restaurant they call "Swell" featuring a blend of tropical and Asian décor. They also use printed menus as if they were working in a restaurant. Similarly, the contestants in MKR Series 6, Episode 42 ("Eva and Debra, WA Workmates") transform their dining area into a restaurant called "Spice Market". 30 The dramatic effect achieved in Hotplate through the use of professional restaurateurs providing meals chosen from their restaurant's menus is arguably different from what one experiences in MKR. The fact that the contestants in Hotplate are restaurateurs (many of whom are highly experienced professionals) is a circumstance around which much of the dialogue is constructed. Nevertheless, this difference aside, the format of the two programs seem to me to be very similar, and each of the "key elements" referred to by Mr Lyons seems to be common to both formats. 31 I am satisfied that Seven has a reasonably arguable case that the formats of MKR and Hotplate are very similar. I am also satisfied that Seven has an arguable case that this close similarity is (at least to some extent) the result of copying. I should emphasise that this is not a finding that copying has occurred but merely that there is a reasonable basis for Seven to argue that, directly or indirectly, the team responsible for developing the Hotplate format has copied the format, or a large part of the format, used in MKR. 32 Whether or not a substantial part of the relevant dramatic work has been reproduced in episodes of Hotplate will (for reasons already explained) depend on the quality of the elements, or combination of elements, alleged to have been taken. Nine says that the MKR format is largely unoriginal. For example, it says there is nothing new about having contestants in a reality television cooking program in which couples or pairs compete against other couples or pairs (it refers, by way of example, to Come Dine with Me Couples and Ready Steady Cook), where competitors travel to the other competitors' homes to compete (it refers to Come Dine with Me Australia) or where there are two expert judges (it refers to The Chopping Block and The Great Australian Bake Off). 33 The nature of the argument that Nine proposes to advance at trial, as I understand it, is that Seven's dramatic work is a successful but nonetheless unimaginative collection of unoriginal ideas and situations found in earlier reality television programs identified in Ms Officer's evidence. Because Sevens's evidence does not specifically address these matters, I am unable to dismiss Nine's argument as weak or inherently unlikely to succeed. 34 While I am satisfied that Seven has a reasonably arguable case, I do not accept Seven's submission that it has a strong prima facie case. This is an important consideration when considering the balance of convenience.

The Balance of Convenience 35 The evidence shows that Seven sent letters of demand to the respondents late in the afternoon of 29 July 2015. By that time only the first episode of Hotplate had been broadcast. I am satisfied that Seven has moved promptly. 36 Seven submitted that Nine embarked upon its plans to produce and broadcast Hotplate with its eyes open to the risk that it might be sued by Seven and that it might be restrained (including by interlocutory injunction) from broadcasting any episodes, or any further episodes, of the program. This is most likely correct and I take it into account. However, I do not think this is a matter that carries much weight in the circumstances of this case. The position might be different if I had come to the view that Seven had a strong prima facie case. 37 Mr Lyons says in his affidavit that an important part of his responsibility as Nine's Director of Network Production is to identify, develop and secure program content for broadcast on the Seven Network in competition with its competitors, especially the Nine and Ten Networks. He also says that the loss of exclusive rights in television content affects Seven's ability to compete because it diminishes the value of the Seven Network in general as well as the value to Seven of the affected program. I accept this is likely to be the case. Nevertheless, it seems to me that any loss of exclusivity - if it is truly attributable to Nine having infringed Seven's copyright in the MKR format - could be remedied reasonably quickly (certainly before any new series of Hotplate is broadcast) if there is an early final hearing of this proceeding. I do not understand there to be any reason why a final hearing could not take place either late this year or early next year before any second series of Hotplate is launched. 38 Seven also submitted that it has important and valuable licensing arrangements in place pursuant to which it authorises television producers and broadcasters in overseas territories to produce and broadcast their own versions of MKR. Seven submitted that the refusal of the interlocutory injunction it seeks has the potential to interfere with these commercial relationships and diminish the strength and value of these arrangements and, more generally, its intellectual property in MKR. Mr Lyons gave evidence to this effect. 39 It seems to me that Seven's commercial arrangements with other producers and broadcasters are unlikely to suffer merely because this Court has refused Seven an interlocutory injunction. Seven will have the opportunity to vindicate its rights at an early final hearing. 40 Seven also submitted that it will be difficult for it to quantify its damages in the event that an interlocutory injunction is withheld. I fully accept that it can be difficult for a copyright owner to prove damages in a case such as this. In particular, I accept that it may be difficult for Seven to quantify any loss of revenue suffered by it as a result of Nine's alleged copyright infringement. Nevertheless, the Court is often required to assess damages in circumstances where, through no fault of the applicant, such difficulties exist. Moreover, if as Seven's submissions suggest, there has been a clear breach of copyright, persisted in by Nine after it was put on notice of Seven's rights, then there may be a case to be made for an award of additional damages pursuant to s 115(4) of the Act. 41 During the course of argument it was suggested by Senior Counsel for Seven that if Nine was restrained from broadcasting further episodes of Hotplate, it would be able to resume broadcasting them at a later date on the assumption that no permanent injunction was granted. I doubt that this would be as simple as the submission seemed to suggest. Presumably it would be necessary for Nine to re-broadcast the first three or more episodes. I think it would be difficult for Nine to re-establish the program's momentum after it was abruptly halted by injunction and then "shelved" for however many months it takes to determine the proceeding and any subsequent appeal. 42 There is evidence from Ms Officer to show that Nine considers Hotplate to be a key piece of its programming that Nine has decided to broadcast in prime-time slots not only with a view to achieving high ratings for Hotplate itself, but also with a view to boosting the ratings of some of Nine's other programs. 43 I do not think Seven's difficulties in proving its damages would be any greater than those that would be experienced by Nine in the event that Nine was required to prove its damages in connection with any claim it may need to make on the usual undertaking as to damages. Nine stands to suffer losses that, by their nature, would be particularly difficult to quantify if it was ordered to cease broadcasting further episodes of a television series that it has already commenced to broadcast in prime-time slots. 44 In my opinion, the balance of the risk of doing an injustice by either granting or withholding the interlocutory relief sought by Seven weighs in Nine's favour.

Disposition 45 The application for interlocutory relief will be dismissed. I will reserve the question of costs. I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholas.