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[2008] FCAFC 194
Federal Court of Australia (Full Court)
2008-07-01
Sundberg J, Gordon JJ, Finkelstein J
Original judgment source is linked above.
INTRODUCTION 41 The facts and circumstances of this case are sufficiently described in the reasons for decision of Finkelstein J. I need to repeat only so much of those facts and circumstances as is necessary to explain my reasoning. 42 In considering the questions presented by this interlocutory appeal (in my view leave to appeal should be granted) it is necessary to bear the following matters at the forefront of consideration: 1. The claim made in these proceedings is for relief in respect of rights which are alleged to arise under a statute of the Commonwealth Parliament, the Copyright Act 1968 (Cth) ("the Australian Copyright Act"). The rights at issue in the proceedings in Illinois are alleged to arise under the United States Copyright Act (17 USCA ss 101, 201) and the common law of Illinois. 2. The jurisdiction of the Federal Court was regularly invoked by TS Production LLC ("the appellant") in respect of its claims under the Australian Copyright Act. There is nothing to suggest that the jurisdiction of the Illinois Court was not regularly invoked in respect of the claims made in that proceeding. 3. It is not suggested that the trial of the two proceedings will coincide. The Illinois proceedings are set down for trial in March 2009. In the proceedings in this Court, primarily due to the application the subject of this interlocutory appeal, the pleadings have not yet closed. In fact, the appellant informed the Court it intends to amend its pleadings to add additional grounds for relief. The respondents have not yet filed a defence. 43 The primary judge held that the Australian proceeding should be stayed pending the hearing and determination of the Illinois proceedings because Australia was a "clearly inappropriate forum": Voth v Manildra Flour Mills Proprietary Limited (1990) 171 CLR 538, 539. 44 As the appellant rightly submitted, the Federal Court of Australia cannot be said to be a "clearly inappropriate forum" to hear and determine claims for the enforcement of rights said to arise under the Australian Copyright Act. The stay of these proceedings in the Federal Court ordered by the primary judge should be dissolved. The appellant's further submission that the respondents should be restrained from further prosecuting the proceedings they instituted in Illinois should be rejected. That is, this Court should make no order preventing concurrent prosecution of the two proceedings. The competing contentions of the parties that the proceeding in which they were the plaintiff should be the first proceeding to be heard and determined is also rejected. While the factual issues in the two proceedings will likely overlap, the rights in issue in the two proceedings are different and the mere duplication of effort that may result from that partial overlap does not constitute vexation or oppression such as to justify the issuance of an anti-suit injunction.
"CLEARLY INAPPROPRIATE FORUM" 45 The jurisdiction of the Federal Court having been regularly invoked by the appellant, no stay of the proceedings should be ordered by reference to principles of forum non conveniens unless it is demonstrated that this Court is a "clearly inappropriate forum": Voth at 539. 46 As the High Court recently said in Puttick v Tenon Ltd (formerly Fletcher Challenge Forests Ltd) (2008) 250 ALR 582; [2008] HCA 54 at [27]: [A] defendant will ordinarily be entitled to a permanent stay of proceedings instituted against it and regularly served upon it within the jurisdiction, if the defendant persuades the local court that, having regard to the circumstances of the particular case, and the availability of an alternative foreign forum to whose jurisdiction the defendant is amenable, the local court is a clearly inappropriate forum for determination of the dispute. … [T]he focus must be "upon the inappropriateness of the local court and not the appropriateness or comparative appropriateness of the suggested foreign forum". 47 It may well be that one forum is more appropriate than the other, but in Puttick (at [30]), the Court explicitly rejected the invitation to restate the Voth test in this way. Once that is accepted and the Voth test is applied as directed, the conclusion that this Court is the "clearly inappropriate forum" is not open in this case. In bringing this action, the appellant has sought only a declaration that it is the owner of the copyright in the book and film The Secret. In other words, the only rights in issue in the litigation in this Court are rights that are said to arise under the Australian Copyright Act, an Act with no extraterritorial reach, in relation to events that, at least in part, occurred in Australia between parties who were, at the relevant time, resident in Australia. At least so far, this Court is not directly asked to consider any question under US law (although in theory a question of US law might arise if a choice of law analysis was required under Australian law and the Australian choice of law rules as applied to the relevant facts directed the application of substantive US law to determine a particular question). 48 Further, contrary to the premise which underpinned the conclusion reached by the primary judge (see [69]), it is not right to consider the disputes that are being litigated in Australia and Illinois as only a single controversy. No doubt the disputes in each court to some extent share a common substratum of facts, but the rights in issue are different. In the Australian proceedings, the appellant seeks to enforce rights under the Australian Copyright Act; in the Illinois proceedings, the rights sought to be enforced are rights having their origin in US statutory and common law where the consequential relief is undoubtedly governed by US copyright law and Illinois common law. Describing the rights under each statute as 'copyright' must not obscure the differences between the rights as to source and content. Moreover, it should be recognised that the result with respect to the non-copyright claims, such as unjust enrichment, will not necessarily depend on the resolution of the copyright claims. Finally, the parties in each case are not the same, and there is no evidence that personal jurisdiction and service of process could be obtained over all the parties in both jurisdictions. 49 Put another way, the Australian proceeding does not seek to enforce rights having their origin in the legislation of the other jurisdiction and, although the choice of law rule to be applied in the Illinois proceedings is yet to be finally determined, the Illinois proceeding at the very least seeks to enforce rights and obtain relief not sought or available in Australia. 50 The respondent sought to support the stay order made by the primary judge on grounds other than forum non conveniens - namely, that because the anti-suit injunction should not go, the stay should not be lifted so as to prevent the duplication of effort involved in prosecuting parallel and partially overlapping proceedings. It is enough to say that, for the reasons more fully examined in connection with the claim for an anti-suit injunction, the proceedings pending in this Court should not be stayed as vexatious or oppressive and that mere duplication of effort does not change this analysis either with respect to the stay or the anti-suit injunction.
ANTI-SUIT INJUNCTION 51 In my opinion, although the primary judge did not reach the issue, remittal is not necessary because this Court is in as good a position as the primary judge to consider the question of a grant of an anti-suit injunction against the respondent in relation to the prosecution of the Illinois proceedings. For the reasons that follow, I consider that no such injunction should be granted now. 52 As the High Court pointed out in CSR Limited v Cigna Insurance Australia Limited (1997) 189 CLR 345, 392, the inherent power to grant an anti-suit injunction is not confined to defined and closed categories; "[r]ather, it is to be exercised when the administration of justice so demands or, in the context of anti-suit injunctions, when necessary for the protection of the court's own proceedings or processes." However, it must be remembered that the principles governing whether to grant a stay of the domestic action and whether to enjoin prosecution of a foreign proceeding are not the same: CSR at 390. Therefore, the appellant's contention that if the court set aside the order staying the Australian action, it automatically followed that an order should be made restraining the further prosecution of the Illinois proceeding, must be rejected. 53 Instead, the Court must independently be satisfied of the answer to the question stated in CSR. That is, can it be said that restraining prosecution of the Illinois proceedings is necessary for the administration of justice, whether for protection of this Court's own proceedings and processes (National Mutual Holdings Pty Ltd v The Sentry Corporation (1989) 22 FCR 209, 232) or otherwise? For example, would the litigation in the Illinois proceedings of any controversy about the factual substratum amount to vexation or oppression? See Henry v Henry (1996) 185 CLR 571 at 591 and CSR at 399. Or alternatively, is it demonstrated that the central or dominant purpose of the respondents in instituting the Illinois proceedings was to be prevent continuation of the proceedings in this Court? CSR at 401. 54 In my view, none of the grounds in the preceding paragraph can be established. First, there is no evidence and no submission that the Illinois proceedings have interfered or will interfere with the Australian proceedings; indeed, the Illinois Court declined to issue an anti-suit injunction restraining the appellant's prosecution of this application for leave to appeal. (Although the presiding judge makes reference to National Mutual, there is no discussion of how this Court's processes are threatened, if at all.) Secondly, the primary judge rejected the submission of the appellant that the respondents' purpose in instituting the Illinois proceedings was to prevent the appellant from pursuing the Australian proceedings: [2008] FCA 1110 at [77]. That finding was not challenged by the appellant before this Court. In fact, before this Court all parties accepted that the only court equipped to vindicate the respondents' claims of infringement said to have occurred in the US would be a US Court. 55 Thus the only question which requires further development is whether the overlapping factual substratum concerns could amount to vexation or oppression. For the reasons given earlier, different issues are involved in the present proceedings and the Illinois proceedings, albeit both arise out of a common substratum of facts. The important thing is that because the subject matter of the two proceedings is not identical, this is not case in which "prima facie, the continuation of one or the other should be seen as vexatious or oppressive within the Voth sense of those words": Henry v Henry at 591 and CSR at 399. Indeed, the High Court explicitly stated in CSR (at 393) that "the mere co-existence of proceedings in different countries does not constitute vexation or oppression". The Court in CSR went on to say (at 393) that "foreign proceedings are to be viewed as vexatious or oppressive only if there is nothing which can be gained by them over and above what may be gained in local proceedings." As the presiding judge has noted and as the appellant accepted, "[s]omething more [than mere co-existence of proceedings] is needed": reasons of Finkelstein J at [33]. 56 In my view, the appellant, in claiming an anti-suit injunction, must demonstrate a sufficient case showing that the further prosecution of the Illinois proceedings pending the hearing and determination of the proceedings in this Court would be "productive of serious and unjustified trouble and harassment" or "severely and unfairly burdensome, prejudicial or damaging": Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197, 247 and CSR at 401. 57 In this case, the only "something more" to which the appellant could point was the inefficiency and additional cost that would be incurred if both proceedings were allowed to go ahead. The presiding judge appears to have accepted this submission (see reasons of Finkelstein J at [35]-[37]); however, I cannot. It is not enough to observe that prosecution of the two proceedings may be, even would be, burdensome. The references to "unjustified" and "unfairly" are important. When it is understood that the rights and relief in issue in the two proceedings are different, and that "something … can be gained by [the foreign proceedings] over and above what may be gained" in this Court, it is not arguable that it is either unjustified or unfair to maintain claims based on the US rights in the Illinois proceedings simultaneously with claims based on the Australian rights in the Federal Court. In this respect, this case is not relevantly different from the circumstances so often encountered in the patent field when the validity of different patents relating to the one product is litigated in different jurisdictions. 58 If the view of the appellant and the presiding judge were accepted (ie that an anti-suit injunction should go in any case where there would be an increase in costs due to overlapping issues), then the mere co-existence of parallel foreign proceedings would, in almost every case, be enough to obtain the injunction because by hypothesis there is some overlap of issues in a case where competing stay/anti-suit applications are brought on grounds of vexation or oppression. No doubt it would be desirable to have the overlapping issues resolved in one place at one time, but this Court should not force that outcome simply as a matter of preference. 59 As a matter of law, a more restrictive approach is implicitly mandated by the High Court's statement in CSR that the mere co-existence of parallel foreign proceedings will not justify an anti-suit injunction; it is "only if there is nothing which can be gained by [the foreign proceeding]" - or to put it another way, where there is "complete correspondence between the proceedings" - that the injunction should go: CSR at 393. Again, that is not the case here, where there is only a "limited overlap of issues in each action": reasons of Finkelstein J at [35]. 60 Imagine if courts in other jurisdictions took the contrary approach (ie that foreign proceedings ought to be stayed where there is a partial overlap of issues giving rise to additional cost due to duplication of effort). Under that rule, what would then stop the Illinois court in this case from enjoining the Australian proceedings on the basis that it would be inefficient to allow them to proceed? Should the rule be that the first party to have an anti-suit application heard and determined ought to prevail? The only way out of the chaos that would follow from such a state of affairs is to recognize the importance of the principle of comity (although a precise definition of comity is elusive, it is in many ways a restatement of the Golden Rule of "do unto others as you would have done unto you": see Black's Law Dictionary, 261-62 (7th ed 1999)) and due respect for judicial proceedings regularly instituted in a foreign jurisdiction. That is to say, adopting the restrictive approach is necessary to avoid jurisdictional disputes and decisions based solely on an arbitrary consideration (ie who was first in the race to the courthouse) rather than on a point of principle such as completeness of relief, protection of the court's jurisdiction, and so forth. 61 Strictly speaking, I need go no further. However, it is illuminating to review the US cases on anti-suit injunctions - not for the purpose of determining the law in the US (in fact, as will soon be illustrated, there is no single agreed approach) but in order to inform the analysis of what the law in Australia is or should be. The review is particularly useful because there are a multitude of US cases which have squarely confronted the precise proposition put forth by the appellant and accepted by the presiding judge - namely, whether the duplication of effort that results from a partial overlap of proceedings is enough to warrant the issuance of an anti-suit injunction. 62 Some US jurisdictions take the restrictive approach that I consider the High Court to require in this country, holding that mere duplication of effort is not enough to justify the injunction. In TSMC North America v Semiconductor Manufacturing Corporation International 161 CalApp4th 581, 589-92 (Cal Ct App 2008) the Court acknowledged that although an anti-suit injunction is technically directed to a party to the foreign proceedings and not the foreign court itself, the power to issue such an injunction must be used sparingly because a parallel action in a foreign state presents sovereignty concerns that compel the exercise of judicial restraint and recognition of the principle of comity. In so holding, the Court of Appeals in TSMC followed Advanced Bionics Corporation v Medtronic Inc 59 P3d 231 (Cal 2002), where the California Supreme Court held (at 236) that the possibility of inconsistent judgments or any preclusive effect of a foreign judgment was not enough "to outweigh the respect and deference owed to independent foreign proceedings" (quoting Auerbach v Frank 685 A2d 404, 407 (DCApp 1996)). "An antisuit injunction is not issued 'merely because of inconvenience or simultaneous, duplicative litigation, or where a litigant simply wishes to avail himself of more favorable (sic) law'": Advanced Bionics at 240 (Moreno J concurring) quoting Pfaff v Chrysler Corporation 610 NE2d 51, 62 (Ill 1992) (emphasis added). In other words, courts following the restrictive approach consider that: the mere duplication of parties and issues is not a sufficient basis for the issuance of an antisuit injunction. They reason that factors such as 'vexatiousness' or 'oppressiveness' and a 'race to judgment' are likely to be present whenever parallel actions are proceeding concurrently and therefore are not sufficient grounds for issuance of an antisuit injunction. Advanced Bionics at 241 (Moreno J concurring) (internal citation and some quotation marks omitted). 63 It is true that the US cases are not uniform in this restrictive approach to anti-suit injunctions. Some jurisdictions have adopted the approach (known as the "liberal approach") proposed by the appellant and presiding judge - namely, "a duplication of the parties and issues, alone, is generally sufficient to justify the issuance of an antisuit [sic] injunction": Advanced Bionics at 241 (Moreno J concurring) (collecting cases). The Seventh Circuit Court of Appeals (in which the Illinois court sits) falls somewhere in the middle - although it "inclines" toward the liberal approach, it has stated that a foreign proceeding will be so vexatious and oppressive as to justify an anti-suit injunction only if it is "gratuitously duplicative": Allendale Mutual Insurance Company v Bull Data Systems, Inc 10 F3d 425, 431 (7th Cir 1993) (Posner J) (emphasis added). 64 Judge Posner's approach to duplication, which appears to fit well with the High Court's approach in CSR (ie something closer to complete correspondence rather than partial duplication is required), is of further interest as this was the test applied by the trial judge in the Illinois proceedings. Just prior to the hearing of this application for leave to appeal, the respondents attempted to enjoin the appellant from prosecuting this appeal. However, the judge in the Illinois proceedings declined to grant the injunction out of respect for the appellate processes of this Court and because the Australian proceedings could not be said to be gratuitously duplicative under Allendale. In particular, the judge said in her ex tempore reasons: This is an anti-suit injunction, an international anti-suit injunction, and it's highly disfavored [sic] to interfere or presume upon the processes of a foreign court. ... [T]he review process in Australia is an orderly one, and the issues relating to this case to a certain degree, particularly some factual issues, are pending before both courts…. I don't think the [the Australian case] meets the duplicative requirement of Allendale for several reasons. There are substantial differences between the two cases. There are differences in remedies requested. There are differences in parties. But more important, I think, is the issue of international comity, and a request to intrude by a court order, to intrude upon the appellate processes of the Australian court is inappropriate in the circumstances of this case. (Paragraph breaks omitted.) 65 Needless to say, had the judge followed the liberal approach suggested by the appellant here and considered that only partial duplication of effort were enough, quite possibly this appeal would never have been heard. In those circumstances, and absent any evidence or submission on the appellant's part establishing that serious prejudice or unfairness (as opposed to mere duplication of effort and issues in part) to it would arise from the simultaneous prosecution of the US and Australian proceedings, it would be unseemly to take advantage of the respect shown by the US court and grant an anti-suit injunction here. 66 To be clear, I am not suggesting that, when considering whether to grant an anti-suit injunction, there is or should be a legal obligation on the Australian court to take into account the response of the foreign court to a similar motion brought there. Indeed, I have not relied and do not rely on the reasons of the Illinois court or the result of the respondents' US anti-suit injunction application in determining whether such an injunction should go in this Court. Rather, I raise the case only to illustrate the problems of the liberal approach, and why it is not consistent with the High Court authority. 67 Finally, although there is nothing about the current state of the respective proceedings (see [42(3)] above) that shows any other fact or matter currently exists which would arguably alter this conclusion, of course, the position might change. If it does, application can then be made for appropriate relief: see eg Allendale at 433 (noting that a renewed request for injunctive relief could be brought if there were any change in the material circumstances).
ORDERS 68 For the foregoing reasons, I would set aside the order staying the Australian proceedings. I would not grant an anti-suit injunction restraining the respondents from continuing with the United States action until the Australian proceedings are concluded. The appellant's costs of the application for leave to appeal (and the resulting appeal) should be paid by the respondent. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon.
Associate: Dated: 19 December 2008 Counsel for the Appellant: C M Scerri QC D J Batt
Solicitor for the Appellant: Arnold Bloch Leibler
Counsel for the Respondents: W Houghton QC S Rebikoff
Solicitor for the Respondents: Mallesons Stephen Jaques
TS Production LLC
Drew Pictures Pty Ltd
REASONS FOR JUDGMENT FINKELSTEIN J 1 The central issue in this interlocutory appeal (in my view leave to appeal should be granted) is whether an action which was instituted by the appellant against the respondents and is pending in the Federal Court should be stayed on forum non conveniensgrounds. The remaining issue, which is no less important to the parties, is whether an anti-suit injunction should be granted to prevent the respondents from prosecuting an action against the appellant and related parties in the United States District Court for the Northern District of Illinois, Eastern Division. 2 Both proceedings arise out of a dispute concerning the ownership of the copyright in a film known as "The Secret" and a book of the same name which is based on the film. The film is a documentary-style narrative presentation of a philosophy known as the "law of attraction". It is told through a series of interviews with authors and inspirational speakers. The message is that positive thinking will improve one's health, wealth and love life. The film was reviewed in the New York Times. The reviewer said it was "the biggest thing to hit the New Age movement since the Harmonic Convergence". Obviously he had in mind the film's staggering commercial success: gross revenue from the sale of the film has exceeded USD$69.9 million and book sales have brought in more than USD$215.55 million. 3 The facts giving rise to the dispute can be stated briefly. Prime Time Productions Holdings Pty Ltd, an Australian company, produces film for television. Between July 2004 and January 2006 Prime Time produced "The Secret". At the time Ms Byrne, an Australian citizen, was the principal shareholder of Prime Time. Prime Time asserts that it created the concept for the film, wrote the screenplay, retained the talent, organised the finance for the film's promotion through the Nine Network (in return for broadcasting rights), organised the filming (20 days in the United States and 35 days in Melbourne), did the editing and carried out all the production work. If true, Prime Time would own the Australian copyright in the film and book. It purported to transfer that copyright to Ms Byrne who in turn assigned it to the appellant, TS Production LLC. 4 The film was directed by Drew Heriot, the second respondent. Mr Heriot is also an Australian citizen who has been living in the United States since March 2006. Prime Time contends that Mr Heriot directed the film on its behalf pursuant to a contract of service. Mr Heriot disputes this. He says that he directed the film on behalf of his own company, Drew Pictures Pty Ltd, the first respondent, another Australian company. Mr Heriot contends that his company (by his input) is a co-owner of the film and book. 5 The Australian action was brought by TS Production to establish its right to the Australian copyright. In Australia copyright is created by statute. The relevant statute is the Copyright Act 1968 (Cth). This statute has no extraterritorial effect. TS Production seeks a declaration that it is the owner under the Copyright Act of the copyright in the film and book. Additionally, it asks for an injunction restraining the respondents from asserting any claim to copyright under the Copyright Act. 6 The Australian action was issued in the Federal Magistrates Court on 18 October 2007. The respondents applied to transfer the action to the Federal Court on 8 February 2008. That application was based on several grounds. One was that the respondents intended to file a cross-claim for the infringement of their copyright and other causes of action. The quantum of the relief sought for those infringements was likely to exceed the jurisdictional limit of the Magistrates Court. Another ground was that if the matter was transferred, it could be placed into the Federal Court's Fast Track list, which fixes a trial date between two and five months after an action has begun. 7 The action was transferred to the Federal Court on 21 February 2008. Prior to making that order the magistrate had ordered that TS Production file an amended statement of claim by 15 November 2007 and the respondents deliver their defence by 14 December 2007. TS Production filed its amended statement of claim on 11 February 2008, somewhat out of time. The respondents did not deliver a defence. Instead they commenced the United States action naming TS Production, Ms Byrne and related parties as defendants. Their complaint asserts claims to the copyright in the film, the screenplay for the film and the book under the United States Copyright Act (17 USC s101 and 201) and the common law of Illinois. The basis for the claims is that Mr Heriot was the primary author of the screenplay and film, and that Mr Heriot and Ms Byrne collaborated on the works between 2005 and 2006 and independently contributed copyrightable content with the intention that their respective contributions be merged into inseparable or interdependent parts of the whole. 8 The plaintiffs in the United States action seek a declaratory judgment that Mr Heriot is a co-author, and that Drew Pictures is a joint owner, of the works under United States copyright laws. They also seek an account of the profits received by the defendants through the exploitation of the works, as well as damages for copyright infringement. 9 There is an argument as to whether the United States court will apply Australian law for the purpose of determining ownership of copyright under the United States copyright laws. To date, the District Court judge to whom the case has been docketed, Judge Conlon, has declined to rule on this issue, despite having heard submissions from the parties. 10 Shortly after they commenced the United States action, the respondents applied for a stay of the Australian action. The judge granted the stay. He did so because he found that the Federal Court was "a clearly inappropriate forum" to deal with the appellant's claim. There were two steps in the judge's reasons. First he dealt with the appropriateness of the respondents having begun their action in the United States. Then he considered how the United States action affected the Australian action. On the first step the judge held that the respondents had issued their proceeding in the most appropriate place. His reasons were: "Given the first publication of the Film in the United States, the substantial exploitation of the Film in that country, that United States law clearly provides for joint ownership of copyright in motion pictures, that the declaration sought by the plaintiffs [in the United States action] are available under the United States law, and that that law governs ownership and infringement issues, the plaintiffs have in my view issued their proceeding in the most appropriate place. A United States Court is the most obvious and natural forum in which to litigate their claims. I attach great importance to the fact that United States law will apply to the ownership as well as the infringement and relief issues." The judge then considered the consequences. He said: "[H]aving regard to the dispute between the parties as a whole, the Australian proceedings are vexatious and oppressive, in that they are productive of serious and unjustifiable trouble and harassment to the respondents. Having regard to the existence of the Illinois proceeding and the circumstances considered above [the Federal Court] is a clearly inappropriate forum [for the appellant to litigate its claim]." 11 No purpose will be served in spending much time discussing the principles that govern forum non conveniens applications. They have been stated and restated in several recent decisions of the High Court including Henry v Henry (1996) 185 CLR 571; CSR Limited v Cigna Insurance Australia Limited (1997) 189 CLR 345; Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491; BHP Billiton Limited v Shultz (2004) 221 CLR 400 and, most recently, in Puttick v Tenon Ltd (formerly Fletcher Challenge Forests Ltd) (2008) 250 ALR 582; [2008] HCA 54. Nonetheless a word or two must be said. 12 In England the leading case is Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460. There Lord Goff said (at 476) that a stay will "be granted on the ground of forum non convenienswhere the court is satisfied that there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the action, i.e. in which the case may be tried more suitably for the interests of all the parties and the ends of justice". This test involves two inquiries: (1) is there some available forum with competent jurisdiction that can deal with the dispute; and (2) is it more appropriate in the interests of the parties and the ends of justice that the dispute be tried in that other forum. If both inquiries yield a positive answer the proceeding with be stayed unless the plaintiff in the local proceeding establishes that substantial justice will not be done in the appropriate forum: Connelly v RTZ Corporation Plc [1998] AC 854, 872-874; Lubbe v Cape Plc [2000] 1 WLR 1545, 1554-1555. 13 The High Court has adopted a different approach, albeit one that will yield the same result in most cases: Voth v Manildra Flour Mills Proprietary Limited (1990) 171 CLR 538, 558. The test in this country is whether the forum selected by the plaintiff is clearly inappropriate, rather than whether there is another forum that is clearly more appropriate: Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197, 247-248 per Deane J. One reason Deane J gave (at 252) for departing from the English position was that: "[W]here jurisdiction exists, access to the courts is a right. It is not a privilege which can be withdrawn otherwise than in clearly defined circumstances". That is to say, the emphasis is on the need to justify a refusal to exercise jurisdiction. 14 The application of the "clearly inappropriate forum" test to intellectual property cases is not without its difficulties. The common law in England and the common law in Australia have adopted a principle based on the comity of nations that, subject to certain limited exceptions, the court has no jurisdiction to entertain an action to determine title to, or the right to possession of, immovable property situated outside the jurisdiction. This is the so called Moçambique rule, after British South Africa Company v The Companhia De Moçambique [1893] AC 602. See also Hesperides Hotels Ltd v Muftizade [1979] AC 508. 15 The Moçambique rule was applied by the High Court in Potter v Broken Hill Proprietary Company Ltd (1906) 3 CLR 479, a patent infringement case. In Potter the plaintiff commenced an action in Victoria alleging infringement of a New South Wales patent. The High Court held that the action was not justiciable in Victoria. Griffiths CJ said (at 500) that "the substantial question sought to be raised by the defendant is the validity of the act of the governing power of New South Wales in granting the patent sued on and that such a question can only be dealt with by the proper Courts of that State." One reason given for this conclusion (at 494) was that a patent right was in "the nature of an immoveable". The Court said (at 499) that the Moçambique rule applied. Interestingly, it was observed that the rule was the same in the United States. Reference was made to the following passage in Underhill v Hernandez 168 US 250, 252 (1897): "Every sovereign State is bound to respect the independence of every other sovereign State, and the Courts of one country will not sit in judgment on the acts of the government of another done within its own territory. Redress of grievances by reason of such acts must be obtained through the means open to be availed of by sovereign powers as between themselves." 16 There are cases that have extended the Moçambique rule to actions for the infringement of foreign intellectual property rights: see for example Atkinson Footwear Ltd v Hodgskin International Services Ltd (1994) 31 IPR 186 (copyright); Tyburn Productions Ltd v Conan Doyle [1991]Ch 75 (patent, copyright and trade mark); Tritech Technology Pty Ltd v Gordon (2000) 48 IPR 52 (patent). But in Pearce v Ove Arup Partnership Ltd [2000] Ch 403 the Court of Appeal drew a distinction between actions involving the title to intellectual property and infringement actions, holding that the Moçambique rule only applied to the former. 17 As I have said, in Potter the High Court said that the United States has adopted a similar role. This issue was not, however, canvassed by the judge, no doubt because it was not raised by the parties. It is, nonetheless, a matter of some importance. In the absence of evidence, United States law is deemed to be the same as in Australia: Neilson v Overseas Projects Corporation of Victoria Ltd (2005) 223 CLR 331, 372 per Gummow and Hayne JJ ("If there is thought to be some deficiency in the evidence, the "presumption" that foreign law is the same as the law of the forum comes into play"); Damberg v Damberg (2001) 52 NSWLR 492, 505 per Heydon JA ("The proposition that where foreign law is not proved it will be presumed to be the same as the lex fori is amply supported"); Dicey and Morris, The Conflict of Laws, (14th ed, 2006), 268-269. I propose to proceed on that assumption. 18 Nonetheless, to ensure that the parties are not disadvantaged by the adoption of the presumption, I have checked the position to satisfy myself that the assumption which the cases require me to make is well founded. In the United States the leading case on point is London Film Production Limited v Intercontinental Communications Inc 580 F Supp 47 (SDNY 1984). The plaintiff, the British copyright owner, brought an action in New York for copyright infringement that allegedly occurred in several South American countries. The action was brought in New York because that forum was likely to be the only forum where the allegedly infringing party was subject to personal jurisdiction for all of the alleged copyright violations. Judge Carter held that in light of the court's diversity jurisdiction (28 USC s1332(a)(2)) the foreign infringements were within jurisdiction. It was observed that in intellectual property cases a United States court would not exercise jurisdiction to determine the validity of a foreign copyright. For example, in Vanity Fair Mills, Inc v T Eaton Co Limited 234 F2d 633 (2d Cir 1956), the court stated (at 647) that: "[W]e do not think it the province of the United States district courts to determine the validity of trade-marks which officials of foreign countries have seen fit to grant. To do so would … welcome conflicts with the administrative and judicial officers [of the foreign jurisdiction]". In London Film Productions Judge Carter distinguished those cases. He said (at 49) that in an infringement case "no 'act of state' is called into question". He observed (at 49) there was "no danger that foreign courts will be forced to accept the inexpert determination of [a United States] court, nor will the United States court create 'an unseemly conflict with the judgment of another country'". Judge Carter added (at 49-50) that the "litigation will determine only whether an American corporation has acted in violation of a foreign copyright, not whether such copyright exists, nor whether such copyright is valid". This position has been adopted in many later cases: see for example Voda v Cordis Corporation 476 F3rd 887, 889, 901-903 (Fed Cir 2007) (where the court declined to exercise jurisdiction over a foreign patent claim because, inter alia¸ doing so "could prejudice the rights of foreign governments") and Stein Associates, Inc v Heat & Control, Inc 748 F2d 653, 658 (Fed Cir 1984) (where the court declined to exercise jurisdiction over a claim regarding the validity of a foreign patent, stating that "only a British Court applying British law can determine the validity … of British patents"). 19 The refusal by Australian and United States courts to deal with questions of validity and ownership of foreign copyright is the background against which the judge's reasons must be considered. When the judge said that a United States court "is the most obvious and natural forum in which to litigate [the respondents] claims", he was plainly correct, but not for the reasons he gave. In the United States action the respondents seek to establish joint ownership of the United States copyright and seek relief based on that ownership. This is a claim they could not, because of a lack of jurisdiction, bring before an Australian court. It is a claim over which only a United States court has jurisdiction. 20 The issues that the judge did not confront were that: (a) the Australian action was concerned with the ownership of Australian copyright; and (b) only an Australian court can resolve that dispute. It does not, however, follow that the action cannot be stayed on forum non conveniens grounds. That is one consequence of the refusal by the High Court to follow Spiliada. The test laid down in Spiliada makes it necessary to show that there is another available forum to determine the parties' dispute. If there is no other available forum that is the end of the matter. When Deane J rejected the Spiliada test he appreciated that the same result would not follow. He noted that the onus lay with the defendant to show that the Australian court was an inappropriate one: Oceanic Sun 165 CLR 97, 248. He then said (at 248): "Ordinarily, the defendant will be unable to discharge that onus unless he can identify some appropriate tribunal to whose jurisdiction the defendant is amenable and which would entertain the particular proceeding at the suit of the plaintiff". It is, therefore, possible that an Australian court will be a clearly inappropriate forum even though no other tribunal can resolve the dispute: Voth 171 CLR 538,558. In Voth, the majority gave the following example (171 CLR 538,558-559): [A] claim for damages for injury in a road accident in circumstances where the courts of the only country with which the parties or the accident had any real connection were denied jurisdiction to entertain any such claim by reason of the express provisions of a general legislative scheme providing for limited benefits and compensation for all road accident victims from public funds. Another example was given by Campbell JA in Garsec v His Majesty The Sultan of Brunei [2008] NSWCA 211, [141]: If the subject matter of dispute had a tenuous connection with Australia such that an Australian court would have jurisdiction concerning it, but all of the witnesses and documents were in another country and the transaction was governed by the law of that other country it would be easy to reach a conclusion that the Australian court was a clearly inappropriate forum, regardless of whether there was another place that could hear the dispute. 21 I have not come across any case which suggests, either directly or indirectly, that an Australian court can be a clearly inappropriate forum to resolve a dispute between Australian persons (citizens and corporations) about the ownership of copyright in works under the Copyright Act that were, or were alleged to be, substantially produced in Australia. As the judge acknowledged, it was necessary for him to find that the continuation of the Australian action was vexatious and oppressive in the Voth sense. For reasons I have explained the factors which the judge identified as leading to the conclusion that the United States court is the "most appropriate place" to bring the respondent's United States copyright claims are not to the point. It is, with respect, an error to suggest that those factors establish that the Federal Court is a clearly inappropriate forum to determine ownership of copyright under Australian law. This conclusion is consistent with the High Court's reasoning in Cigna. In that case, in the context of a discussion about the grant of an anti-suit injunction, the court observed that "neither principle nor authority supports the view that [existing] foreign proceedings become vexatious or oppressive … in the event that the party against whom they are brought later commences proceedings with respect of the same subject matter in this country": Cigna 189 CLR 345, 395. The reverse must also be true: a local proceeding does not become vexatious or oppressive (or, in the context of a stay application, a clearly inappropriate forum) because the defendant brings a foreign proceeding in respect of the same, or partly the same, subject matter. For the Australian action to be a clearly inappropriate forum there must be something more. 22 There were two additional factors that the respondents relied upon in support of their application to stay the Australian action: (1) the cost of litigating two actions in different jurisdictions; and (2) that the United States action has been set down for trial in March 2009 and may go some way toward resolving the factual dispute about Mr Heriot's role in the creation of the works. 23 As regards the costs, if the Spiliada test were to apply, they would be taken into account when balancing the advantages and disadvantages of each forum. There is no case, however, where costs have been determinative. The case in which costs assumed most significance is Lubbe. There over 3000 plaintiffs claimed damages in an English court for personal injuries suffered as a result of exposure to asbestos and related products in South Africa. The defendants sought a stay, arguing that the case should be heard in South Africa. The plaintiffs opposed a stay. They relied on many grounds. One was that South Africa had no appropriate procedures for managing group actions. Another was that the plaintiffs could not fund proceedings in South Africa because legal aid had been withdrawn for personal injuries claims, and there was no reasonable likelihood of any local group of lawyers being able or willing to fund the proceedings in South Africa. Lord Bingham said that the lack of group action procedures, standing alone, was not a compelling objection because "[i]t involves the kind of procedural comparison which the English court should be careful to eschew": [2000] 1 WLR 1545, 1559. But he did say (at 1560) that "the absence, as yet, of developed procedure for handling group actions in South Africa reinforces the submissions made by the plaintiffs on the funding issue. It is one thing to embark on and fund a heavy group action where the procedures governing the conduct of the proceeding are known to and understood by experienced judges and practitioners. It might be quite another where the exercise is novel and untried". 24 My own view is that funding is a distraction. First, while the respondents relied upon the expense of running two actions, no evidence was tendered on that point. In the absence of evidence all I can do is form some impression about the costs of the Australian action. It is likely to be a two to three day case. The respondents' costs will be in the order of $75,000 to $100,000. I reject out of hand that those costs could justify a stay on forum non conveniens grounds. What is at stake is intellectual property worth hundreds of millions of dollars. In relative terms the costs are insignificant. Additionally, although the United States action may be capable of resolving many of the factual dispute about Mr Heriot's role in the creation of the works, it is likely that, irrespective of the outcome in the United States action, the appellant will be required to pursue the Australian action. It follows that the respondents will be required, at some stage, to incur the costs of the Australia action and, as such, little weight can be given to the costs involved in litigating two actions in different jurisdictions. 25 This brings me to the trial date. This is a point without substance. In Henry the High Court said (185 CLR 571, 581): [We] do not regard the stage which the wife's proceedings in Monaco have reached to be material to the resolution of [the] case … [It is not appropriate to undertake an] analysis of the comparative advantages of continuing the proceedings in the respective fora … [T]he Voth test requires that the focus be on the advantages and the disadvantages of proceeding in the selected forum. 26 There is something more to be said about the comparatively advanced stage of the United States action. It will be recalled that one reason for having the case transferred to the Federal Court was to take advantage of the Fast Track list. Even if not placed in the Fast Track list, this case, properly managed, will be ready for trial within a short timeframe. The only reason the action is still pending is the judge's stay order. Ordinarily this case would have been disposed of months ago. It would be an unjust outcome if the practical effect of the judge's erroneous decision to grant a stay proved a decisive factor in the case. 27 The second issue raised by this appeal is whether the respondents should be restrained, by what is now called an anti-suit injunction, from prosecuting the United States action. This issue was not considered in any depth by the judge, he having decided that the Australian action should be stayed. If the stay order is set aside (as I think it should be) the anti-suit injunction issue arises for consideration. It is, in my view, in the interest of the parties that it be resolved by the Full Court rather than remitting it to judge for further argument. 28 The jurisdiction to grant an anti-suit injunction is not in doubt. It has been exercised as far back as 1821 in Boothby v Munday (1821) 5 Madd 297; 56 ER 908. There Leach VC said (at 307; ER at 913): "Where parties Defendants are resident in England, and brought by subpoena here, this Court has full authority to act upon them personally with respect to the subject matter of the suit, as the ends of justice require; and with that view, to order them to take, or to omit to take, any steps and proceedings in any other Court of Justice, whether in this country, or in a foreign country." That is, according to Leach VC the question is whether the ends of justice require an anti-suit injunction. 29 The principles upon which anti-suit injunctions are now granted in England were authoritatively stated by the House of Lords in Société Nationale Industrielle Aerospatiale v Lee Kui Jak [1987] AC 871. The leading speech was given by Lord Goff. He observed (at 892) that: (1) the jurisdiction is to be exercised when the ends of justice require it; (2) the order is directed not against the foreign court but against the parties proceeding in that court; (3) the injunction will only be issued to restrain a party who is amenable to the jurisdiction; and (4) since the order indirectly affects a foreign court the jurisdiction must be exercised with caution. Lord Goff then propounded the following test (at 896): In the opinion of their Lordships, in a case such as the present where remedy for a particular wrong is available both in the English (or, as here, the Brunei) court and in a foreign court, the English or Brunei Court will, generally speaking, only restrain the plaintiff from pursuing proceedings in the foreign court if such pursuit would be vexatious or oppressive. This presupposes that, as a general rule, the English or Brunei Court must conclude that it provides the natural forum for the trial of the action; and further, since the Court is concerned with the ends of justice, that account must be taken not only of injustice to the defendant if the plaintiff is allowed to pursue the foreign proceedings, but also of injustice to the plaintiff if he is not allowed to do so. So the Court will not grant an injunction if, by doing so, it will deprive the plaintiff of advantages in the foreign forum of which it would be unjust to deprive him. 30 The principles were restated by Lord Goff in Airbus Industrie GIE v Patel [1999] 1 AC 119. There he said (at 133): "The broad principle underlying the jurisdiction is that it is to be exercised when the ends of justice require it. Generally speaking this may occur when the foreign proceedings are vexatious or oppressive. … But, as was stressed in the Aerospatiale case … in exercising the jurisdiction regard must be had to comity, and so the jurisdiction is one which must be exercised with caution". 31 By and large these principles were accepted by the High Court in Cigna. The majority said that the power to grant an anti-suit injunction "is to be exercised when the administration of justice so demands or, in the context of anti-suit injunctions, when necessary for the protection of the court's own proceedings or processes": 189 CLR 345, 392. Later, the majority said (at 394) that the limits of the power are "determined by the dictates of equity and good conscience". Accordingly, an anti-suit injunction may be granted if the continuation of a foreign proceeding is, "according to the principles of equity, vexatious or oppressive": 189 CLR 345, 393. 32 There is a passage in Cigna which, on one view, may be seen as a departure from the English approach. In their judgment the majority said (at 393): "[F]oreign proceedings are to be viewed as vexatious or oppressive only if there is nothing which can be gained by them over and above what may be gained in local proceedings." This has led to the suggestion that the Australian approach to anti-suit injunctions is "narrower" than the English approach: Dicey and Morris at504. I do not think that the High Court intended to establish a different approach. The majority made clear (especially at 392-394) that their reasoning was founded on the English cases, in particular on what was said by Goff LJ (as he then was) in Bank of Tokyo Ltd v Karoon [1987] AC 45 and later, by Lord Goff in Aerospatiale. In the result, the only relevant enquiry is whether the foreign proceeding is "vexatious" or "oppressive". If, prima facie, oppression is made out an anti-suit injunction will ordinarily be granted. However, if the respondent can show that there is some juridical advantage to be gained in the foreign proceeding (which is not available in the local proceeding) then the injunction will be refused. 33 Moving on, in Henry, Dawson, Gaudron, McHugh and Gummow JJ said "the fact that there are or, even, that there may be simultaneous proceedings in different countries with respect to the same controversy is highly relevant to the question whether the local [being the subsequent] proceedings are oppressive in the sense of "seriously and unfairly burdensome, prejudicial or damaging", or, vexatious, in the sense of 'productive of serious and unjustified trouble and harassment'": 185 CLR 571, 591. The existence of simultaneous proceedings alone does not, however, establish that a subsequent action is vexatious. Something more is needed; the applicant must "shew that there is vexation in point of fact, that is to say, that there is no necessity for harassing the Defendant by double litigation": Peruvian Guano Company v Bockwoldt (1883) 23 Ch D 225, 232. Although Henry and Peruvian Guano concern stay applications, the comments cited are instructive in determining when a proceeding will be vexatious or oppressive in the strict sense. 34 There is another relevant factor. In National Mutual Holdings Pty Ltd v The Sentry Corporation (1989) 22 FCR 209, 232 Gummow J, in a judgment cited with approval by the High Court in Cigna (189 CLR 345, 392), said that: The conduct of proceedings which have a tendency to interfere with the due processes of the domestic court may, in the circumstances of a particular case, generate the necessary equity to enjoin those foreign proceedings as vexatious and oppressive … In Australia, there is the further consideration that where a court has begun to exercise the judicial power of the Commonwealth in relation to a particular matter, it has the exclusive right to exercise or control the exercise of the functions which form part of that power or are incidental to it. 35 I accept that this is an unusual case in which to seek an anti-suit injunction. It is unusual because there is only a limited overlap of issues in each action. The Australian action is concerned with the ownership of Australian copyright, and the United States action is concerned with the ownership of United States copyright. The overlap is in the facts in dispute. All things being equal it would be desirable if the factual dispute between the parties could be resolved by one court. That is the course which commends itself to the parties. It goes without saying that it is undesirable to allow a factual dispute to be argued twice over in separate proceedings. The decision that confronts this court is whether to allow both actions to go ahead or to restrain the respondents from prosecuting the United States action. 36 While the courts in Henry and Peruvian dealt with simultaneous litigation concerning the same issue, there is no reason why the underlying rationale of those decisions should not apply to cases which have only partially overlapping issues. At any rate, in Cigna the majority confirmed that an anti-suit injunction could lie in respect of a "matter in issue or, at least, that aspect of [the matter] involved in the application for an injunction": 189 CLR 345, 397. 37 In the Australian action and the United States action there is a significant overlapping factual dispute (namely, Mr Heriot's role in the creation of the works). Many witnesses will need to be called. Some of those witnesses reside in Australia; others reside in the United States. A vast number of documents will need to be reviewed and considered. The process of preparing to litigate, and then litigating, on the factual dispute (potentially simultaneously) will be burdensome. There is nothing for either party to gain from this process. The only sensible course is to grant an anti-suit injunction to ensure that the parties avoid the inconvenience of having two trials to resolve the one issue. To put it in the language in Peruvian, there is no necessity for harassing the parties by double litigation on the one factual dispute. As the Australian action was first in point of time (see the observations cited from Henry above) and in light of the comments made by Gummow J in National Mutual Holdings, I think that the Federal Court, rather than a United States court, should rule on the factual dispute. 38 Once this has occurred, the United States action can then proceed, that being the only forum where the validity of the United States copyright can be determined. This will ensure that the respondents do not lose any substantive or procedural rights they may have under United States law. Only this outcome can be described as consistent with the "ends of justice". 39 For the foregoing reasons I would set aside the order staying the Australian action. I would also grant an anti-suit injunction restraining the respondents from continuing with the United States action until the Australian action is concluded, with liberty to apply in the meantime. I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein.
(1994) 31 IPR 186
(2004) 221 CLR 400
(1997) 189 CLR 345
(2001) 52 NSWLR 492
(1996) 185 CLR 571
(1989) 22 FCR 209
(2005) 223 CLR 331
(1988) 165 CLR 197
(1906) 3 CLR 479
(2008) 250 ALR 582
(2002) 210 CLR 491
(2000) 48 IPR 52
(1990) 171 CLR 538