Tenderwatch Pty Ltd v Reed Business Information Pty Ltd

Apportionment of revenue 12 In Dart Industries Inc v Décor Corporation Pty Ltd (1993)179 CLR 101 at 121 Mason CJ, Deane, Dawson and Toohey JJ cited with approval what was said by Windeyer J in Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25 at 42-43: The true rule, I consider, is that a person who wrongly uses another man's industrial property - patent, copyright, trade mark - is accountable for any profits which he makes which are attributable to his use of the property which was not his… If one man makes profits by the use or sale of some thing, and that whole thing came into existence by reason of his wrongful use of another man's property in a patent, design or copyright, the difficulty disappears and the case is then, generally speaking, simple. In such a case the infringer must account for all the profits which he thus made. Windeyer J had earlier (at 37) drawn a distinction between patent and trade mark infringement (the instant case being the latter). If a patent infringer sells an article made wholly in accordance with the invention and thereby obtains more than it cost him to acquire or make it, he is accountable for the difference as profit because he has "infringed the patentee's monopoly right to make, use, exercise and vend the invention" (that being the statutory test of infringement then applicable). However, the profit for which a trade mark infringer is accountable is not the profit from selling the article itself but the profit from selling it under the trade mark. 13 Dart itself was a case of patent infringement, the patent being for press button seals used to seal plastic kitchen canisters. The trial judge had allowed for the whole profit on the basis that sales of the canisters were attributable to the invention. The Full Court of the Federal Court reached the same result, reasoning that "what characterised the infringing product was the press button lid, without which this particular canister would neve have been produced at all". The High Court majority (at 121) noted that there was "some divergence" between the trial judge and the Full Court but considered nevertheless the "overall approach" of both was correct. 14 Peter Pan Manufacturing Corporation v Corsets Silhouette Ltd [1964] 1 WLR 96 concerned confidential information as to a particular style of brassiere. Pennycuick J at 108-109 rejected an argument that profits should be limited to the amount by which the profit exceeded the profit the defendant would have made if it had manufactured the article without the use of that information. In his Lordship's view the manufacture of the article in question of itself involved the use of the confidential information and the defendants could not have manufactured that article at all without the use of the confidential information. That case seems closely analogous to the present one. 15 In the present case the presentation of Mr Wallz at the Reed workshop involved blatant and wholesale copying of the Original Manual, particularly of its structure and layout. As already mentioned, participants were each given a copy of the Reed Manual which was substantially the same as the Original Manual. Mr Wallz used slides which contained headings and information the same as that contained in the Original Manual and substantially the same as slides produced and used by Tendersearch. Mr Wallz frequently referred to the content of the Reed Manual as a supplement to the projected slides. Twice during the course of the day Mr Wallz handed out documents containing exercises. Attendees broke into groups and worked on these exercises. These had similarities in content and layout to like documents created and used by Tendersearch although the similarities are not as striking as those between the Reed Manual and the Original Manual. 16 While doubtless Mr Wallz made use of his own knowledge and experience in relation to tender responses when he conducted the Reed workshop, he would not have been able to take up the opportunity to do so had it not been for his use of the Original Manual. That use was fundamental to the presentation of the workshop. The case is similar in that regard to Dart and Peter Pan. The gross revenue received by him should be the starting point for the calculation of profit.

Calculation of profit 17 In Dart at 112 the majority cited a lengthy passage from the judgment of Harvey CJ in Eq in Leplastrier & Co Ltd v Armstrong-Holland Ltd (1926) 26 SR (NSW) 585 at 593 which commences: Under no circumstances can (the patent infringer), in my opinion, deduct interest on his capital employed in the business. Under no circumstances can he claim any remuneration to himself, nor under any circumstances can he claim in my opinion any director's fees for carrying on the business. His Honour goes on to say that the only expenses to be deducted are those "solely referrable to the manufacture of the [infringing] machines". The majority in Dart at 115 et seq discuss this latter part of the statement by Harvey CJ in Eq and point out, referring to a number of United States authorities, that the statement does not take account of opportunity cost suffered by an infringer in certain circumstances, as for example, where there is no excess capacity and the infringer would have been able to manufacture alternative products. In the circumstances which arose in Dart the majority at 119-120 held that some proportion of overheads attributable to the manufacture of the infringing products should be taken into account. 18 However, nothing that the majority said in Dart casts doubt on the opening part of Harvey CJ in Eq's statement quoted above. It would be wrong in principle to allow Mr Wallz a deduction for the time he had spent working up his presentation with the aid of Tenderwatch's Original Manual. This would be tantamount to making a copyright owner pay an infringer for the time and effort spent in infringement. As was said in Sheldon v Metro-Goldwyn Pictures Corp 106 F 2d 45 (1939) at 51, "a plagiarist may not charge for his labour in exploiting what he has taken". 19 For the purpose of an account of profits an infringer can only claim costs in fact incurred (including costs attributable to the infringing work: Dart). The infringer cannot claim costs not actually incurred, even though they might reasonably have been incurred. Thus in LED Builders Pty Ltd v Eagle Homes Pty Ltd (1999) 44 IPR 24 the infringer company had paid salaries to its directors but submitted a report of a consultant purporting to set out a "fair remuneration", which was in the order of three times that actually paid. Lindgren J at [178] rejected this claim, pointing out that the plaintiff must take the business of the infringer as it is. 20 The present case is not precisely on all fours with LED Builders because the infringer Mr Wallz was a sole trader and did not employ anybody. However, as a matter of ordinary business practice the "profit" he made for conducting the Reed workshop was the amount he received from Reed less his actual outlays. If his time spent was truly worth what he says, presumably he would have charged Reed $17,500. By way of example, if a barrister charged $1,000 for an opinion, he or she would not calculate the number of hours spent and determine that there was a "profit" of, say, $300. 21 The cost of printing and GST are properly allowable because they have reduced the actual profit or benefit derived by Mr Wallz from the infringement. 22 Accordingly the profit for which Mr Wallz must account is $2,311.69 being his gross receipt from Reed of $2,711.71 less printing costs of $153.50 and GST of $246.52.

Orders 23 There will be an order that Mr Wallz pay Tenderwatch $2,311.69 plus costs to be taxed, including reserved costs. I certify that the preceding twenty three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey.

Associate: Dated: 19 June 2008 Counsel for the Applicant: A P Trichardt

Counsel for Mr Wallz: Second Respondent appeared in person