REASONS FOR JUDGMENT
FINKELSTEIN J
1 This appeal raises what in Australia is a novel and important question about the subsistence of copyright in film recorded on DVDs and in the associated artwork. The films are not the usual kind of commercial film one expects to find on a DVD. A list of the more than 200 titles of the works in suit indicates that they are all hard-core pornography: they are usually referred to as "adult films". We were not asked to view any of the DVDs. Nonetheless I have proceeded on the basis that the films depict explicit details of actual sexual activity, have little by way of plot and not much dialogue. Ever since Deep Throat, one of the most popular pornographic films ever made, producers of adult films have reaped millions of dollars in profits. There is a price. Linda Lovelace, the "star" of Deep Throat described in great detail the abuse inflicted on her both before and during the production of Deep Throat: see Linda Lovelace's Ordeal (1980). Many people find these kinds of films obscene. Does that prevent them from attracting copyright? If copyright, is the owner entitled to the usual remedies for infringement?
2 The facts are straightforward. Fraserside Holdings Ltd (the first respondent), a company incorporated in Cyprus, is engaged in the business of producing and distributing adult films in DVD and VHS format. Fraserside is the owner of copyright in 'Private' label adult films, which include the 200 plus works in suit. Calvista Australia Pty Ltd (the second respondent) has a licence to distribute Fraserside's films in Australia. The appellants also trade in pornography. The corporate appellants own the Venus Adult Shops and have outlets in New South Wales and Queensland. Adult films may be purchased or exchanged at those outlets. To obtain stock at the lowest possible cost, the corporate appellants imported several dozen Fraserside DVDs and made counterfeit copies. They also purchased directly from Fraserside more DVDs and made counterfeit copies of them as well. The pirated DVDs were then sold through or exchanged at the Venus outlets.
3 The Magistrate made orders by consent restraining the corporate appellants from infringing Fraserside's copyright and restraining the individual appellants (the directors of the corporate appellants) from authorising any further infringements. Orders for delivery up were also made. Following a contested hearing the Magistrate awarded the respondents damages of $150 000 comprising $65 000 by way of conversion damages and $85 000 additional damages. This appeal is confined to the damages awards.
4 There are legislative restrictions on dealings in adult films in Australia. At one time these restrictions were modelled on the Obscene Publications Act 1857 (UK) which made it an offence to keep "obscene books, prints drawings and other obscene articles" for the purpose of sale, distribution, exhibition for gain or lending on hire. There was no definition of obscenity. The common law courts soon developed one. In R v Hicklin (1868) LR 3 QB 360 at 371 Cockburn CJ said that a publication was obscene if had a tendency to deprave and corrupt those whose minds were open to immoral influence and into whose hands it might fall. Interestingly, but not surprisingly, this definition did not confine obscenity to sex (John Calder (Publications) Ltd v Powell [1965] 1 QB 509) much less to publications which depict the sexually explicit.
5 In the last decade or so Parliament has moved away from banning obscene publications. Now every State and Territory has enacted legislation which imposes restrictions in the case of publications that offend against generally accepted standards of moral decency and propriety. The legislation attempts to strike a balance between on the one hand the rights of adults in a free society to see what they wish and on the other hand to impose some constraints on those rights for the good of society as a whole. All film for public exhibition and all film on DVD or VHS format must be classified by the Censorship Board, a Commonwealth body. Dependent upon its classification, the film may either be exhibited or sold to the public at large or it may be subject to some restriction in relation to the audience to whom the film may be shown. For example some films may not be shown to children, or to children not in the company of their parents or guardians.
6 Special provision is made for films that depict, express or otherwise deal with matters of sex, drug misuse or addiction, crime, cruelty, violence or revolting or abhorrent phenomena in a way that offends against the standards of morality, decency and propriety. These films are given an RC classification. Films (except RC films) that contain real depictions of actual sexual activity between consenting adults in which there is no violence, sexual violence, sexualised violence, coercion, sexually assaultive language, or fetishes or depictions which purposefully demean anyone involved in that activity for the enjoyment of viewers, in a way that is likely to cause offence to a reasonable adult are given an X 18+ rating. In every State and Territory it is an offence to produce or possess for sale an RC rated film. In every State, but not in any Territory, it is an offence to possess for sale an X 18+ rated film. It is, however, lawful to sell X 18+ rated films in the Australian Capital Territory and the Northern Territory. It may be supposed that they are sold by mail order or internet purchase to residents of the States.
7 The Copyright Act 1968 (Cth) does not expressly deny copyright to a work that is pornographic. Nevertheless, there is longstanding authority for the view that works that are blasphemous, seditious, libellous or obscene cannot be copyright. The doctrine can be traced back to Burnett v Chetwood (1720) 2 Mer 441; 35 ER 1008 and to observations made by Eyre CJ in Dr Priestley's Case, which is not reported but noted in Southey v Sherwood (1817) 2 Mer 435 at 437; 35 ER 1006 at 1007. Dr Priestly brought an action against a municipality for property damage, including the loss of an unpublished manuscript, that had been destroyed during a riot. By way of defence the defendant claimed that Dr Priestly published works injurious to the government. But it produced no evidence. Eyre CJ said that such evidence would have been admissible if produced, meaning, no doubt, that if proven, there would be a defence to the claim. Eyre CJ's statement is wrong: the evidence would not be admissible unless it was concerned with the specific work. Be that as it may, the dictum appears to be the foundation of the rule that the author of an immoral or obscene publication could not obtain copyright protection.
8 When he was Chancellor, Lord Eldon, applied the rule to immoral or obscene publications in several cases in the Chancery. The first is Walcot v Walker(1802) 7 Ves 1; 32 ER 1. There the plaintiff sought to prevent the defendant from publishing an allegedly libellous work. Relying on Dr Priestley's case, Lord Eldon refused an injunction and an account of profits. He claimed that he was "in total ignorance of the nature of [the] work" but said that he would grant no remedy where the work is "of such nature, that the author can maintain no action at law for the invasion of that, which he calls his property, but which the policy of the law will not permit him to consider his property": Walcot 7 Ves 1, 2; 32 ER 1 at 1).
9 Lord Eldon's stance was severely criticized by Lord Campbell in his "Lives of the Chancellors" 5th ed vol 10 at 252. Lord Campbell went so far as to suggest that Lord Eldon was in truth well acquainted with Walcot's book but that, when Attorney-General, he had been afraid to prosecute Walcot before a jury for his libel. According to Lord Campbell, when the case came on Lord Eldon "thought it a more convenient cause to unite in his own person the functions of prosecutor and of judge."
10 Blasphemous publications were also denied protection by Lord Eldon. In Murray v Benbow (1822) 4 State TR NS 1409 he refused to restrain the publication of a pirated edition of Lord Byron's poem, Cain, a poem that had been dedicated to Sir Walter Scott. Lord Eldon said (at 1410) that the poem was "intended to vilify and bring into discredit that portion of the Scripture history to which it relates". Lord Eldon also refused protection to Sir William Lawrence's Lectures on Physiology, Zoology and the Natural History of Man. Sir William was an eminent surgeon, but Lord Eldon said his lectures were hostile to natural and revered religion and to the doctrine of the immortality of the soul: Lawrence v Smith (1822) Jac 471.
11 Lord Eldon explained his views more fully in Southey v Sherwood. Southey was then and still is a highly regarded poet. He sought an injunction to restrain the defendant publishing his poem, Wat Tyler. The injunction was opposed on the ground that the poem had "libellous tendency". Lord Eldon said that if the publication was innocent the plaintiff would get his injunction. But if it were not "that is if it could not have lawfully been published by the author, the injunction would be refused": 2 Mer 435 at 437; 35 ER 1006 at 1007. Lord Eldon said (2 Mer 435 at 439; 35 ER 1006 at 1008) that "Lord Chief Justice Eyre… has expressly laid it down that a person cannot recover in damages for a work which is, in its nature calculated to do injury to the public. Upon the same principle, this Court refused an Injunction, in the case Walcot v Walker, inasmuch as he could not have recovered damages in an action." On my reading, Lord Eldon seems to be saying that the common law would deny copyright recognition to the work in question, so he would deny equitable relief. Presumably the common law would deny recognition because the publication of the work was illegal as being an obscene libel, as to which see R v Curl (1727) 2 Stra 788; 93 ER 849.
12 It was not only the Chancery Court that denied relief. In Stockdale v Onwhyn (1826) 5 B&C 173 the question was whether the plaintiff could recover damages for the unauthorised publications of a book entitled Memoirs of Harriette Wilson. The work, which professed to be the history of "the amours of a courtezan" contained "in some parts matter highly indecent, and in others matter of a slanderous nature upon persons named in the work": Stockdale at 176. The publication of the work was a criminal act. Abbot CJ said (at 176) that for the plaintiff to establish his claim to recover damages he had to "show a right to sell; for if he has not that right, he cannot sustain any loss by an injury to the sale." The other judges agreed, with one of them, Bayley J, basing his reasoning on Southey v Sherwood.
13 The true basis for denying protection to obscene works is not clear. One possibility is that there can be no copyright in an obscene work. Another is that there is copyright but the court will not lend its assistance to the owner because of the nature of the work, that is the court will not interfere on public policy grounds. This latter approach is well and good in a case where the court is being asked to grant discretionary relief, for example, an injunction or an account of profits. It is an oft stated principle that when a plaintiff seeks equitable relief he must have clean hands.
14 It seems to me that the only sound basis for the rule, if there be any rule, which is a basis that finds some support in the cases, is that when the plaintiff cannot turn his work to profit (as would be the situation if its publication were illegal), the plaintiff has not suffered any compensable loss. That would be an answer to a claim in law, but not when the plaintiff is seeking equitable relief. Then the doctrine of clean hands would apply. On the other hand, if the plaintiff is able to profit from his work (that is when dealings in it are not unlawful) what then? It seems to me there is no basis for denying him the usual relief whether it be in law or in equity.
15 The position has not been clarified by any of the recent English cases. In Glyn v Weston Feature Film Company [1916] 1 Ch 261 Younger J refused protection to a novel which advocated free love and justified adultery. It is not clear whether he founded his decision in the absence of copyright or whether he simply refused to allow copyright to be enforced on the basis that the novel was "of a tendency so grossly immoral". There are passages in his judgment which support each position. In British Oxygen Company Ltd v Liquid Air Ltd [1925] Ch 383 Romer J granted an injunction to prevent rival manufacturers publishing a letter written by the plaintiff manufacturer to a trade customer. In the reasons of his decision he had to consider whether the writing and sending of the letter (albeit a fairly rude letter) offering the plaintiff's goods at a low price "was an act contrary to public policy, as being in restraint of trade" and therefore disentitled the plaintiff's to copyright protection: British Oxygen at 392. First, he found (at 391) that the plaintiff had copyright in the letter. He then held that the plaintiff should be entitled to protection because sending the letter was not unlawful or contrary to public policy. In the process he referred to Glyn v Weston. Lord Keith also referred to Glyn v Western in his speech in the Spycatcher Case, Attorney-General v Guardian Newspapers Ltd (No2) [1990] 1 AC 109 at 262. He said that "the Courts of [England would not] enforce a claim by them to the copyright in a work the publication of which they had brought about contrary to the public interest". Accordingly, "Mr Wright [the author] was powerless to prevent anyone who chooses to do so from publishing [his work] in whole or in part in this country, or to obtain any other remedy against them". Again it is not clear whether Lord Keith was of opinion that there was no copyright in the work or whether it was copyright, but the court would not protect it.
16 Finally, so far as the English cases are concerned, in Hyde Park Residence Ltd v Yelland (CA) [2001] Ch 143, Aldous LJ suggested that the rule could be justified on the basis that courts have an inherent jurisdiction to refuse to allow their processes to be used in certain circumstances. He noted (at 160), that "the courts will not give effect to contracts which are, for example, illegal, immoral or prejudicial to family life because they offend against the policy of the law". He then referred to s 171(3) of the Copyright Act 1988 (UK) which provides that: "Nothing in this Part affects any rule of law preventing or restricting the enforcement of copyright, on grounds of public policy or otherwise." He said this made it clear that the jurisdiction to decline hearing a case could be exercised in a copyright case. The Australian Copyright Act, however, has no equivalent provision.
17 Where does this leave us? For my own part, I do not accept that there is no copyright in a pornographic work. There is no such exception in the Copyright Act. In my opinion the court does not have power to create the exception. I am prepared to assume, in conformity with the early cases, that, in some circumstances, public policy may require a court to deny to a pornographer the relief that Parliament has provided to all copyright owners, but then only when the relief is discretionary. Even so, prima facie at least, the owner is entitled to discretionary relief, for example, an injunction to restrain the unauthorised publication of his work. The pornographic nature of the work will be of relevance in a claim for damages only when it is illegal to sell the work. If an author cannot sell his work he cannot suffer damage.
18 I take this approach because, to my mind, there are insurmountable difficulties standing in the way of denying copyright or copyright protection to works that may be regarded as obscene or pornographic. For one thing there is no satisfactory definition of what is obscene or pornographic. The inquiry will inevitably involve both moral and political considerations. The inquiry will be complicated because the question will often depend upon the audience which the publication is likely to reach. If Parliament requires such an issue to be considered by a judge then, of course, the judge must consider it. But, in truth, a judge is not well suited to the task and, as often as not, will reach the wrong result.
19 Here I have in mind that in Australia there have been many ill-considered decisions about which works are obscene. The list of obscene works includes (in no particular order): Lawrence's Lady Chatterley's Lover, Joyce's Ulysses, Nabakov's Lolita, Huxley's Brave New World, Balzac's Droll Stories, Reed's Ten Days that Shook the World, Stead's Letty Fox: Her Luck and A Little Tea, a Little Chat, Winsor's Forever Amber and Roth's Portnoy's Complaint. Inevitably a list of non-copyright works will, at some point, contain more great literary works.
20 True it is that the decisions to judge these works as obscene may be explained by the fact that the standard as to whether a work is obscene varies from time to time. But that merely identifies another problem. How will one know when a work is or is not protected. Ought we have a rule which in its operation denies copyright protection on one day but permits it the next? What, in any event, is the jurisprudential foundation for a rule that gives this kind of ambulatory effect to a copyright statute? A rule that is required to work in this way is, in my view, too arbitrary for it to be adopted.
21 The position which I think is correct is that adopted by courts in the United States and Canada. In the United States the leading case is Mitchell Brothers Film Group v Cinema Adult Theater604 F2d 852 (5th Cir 1979). The Court held that there is no obscenity defence to a copyright infringement claim. Several reasons were put forward, some of which do and others do not have application here. First, the court pointed out that there was nothing in the Copyright Act 17 USC ss 1-216 which restricted copyright in obscene or non-obscene works that otherwise met the requirements of that Act. This indicated that Congress did not have in mind the worth of the work in assessing whether it was copyright. Second, such a defence would be unconstitutional, as being contrary to the First Amendment. Third, although the obscenity defence had been allowed in English cases, this approach was said (at 861) to be the "vestige of a bygone era". The US courts said that it was wrong "in the absence of some guidance or authorization from the legislature, to interpose its moral views between an author and his willing audience". The court also rejected what it described as a "judicially-created doctrine", namely the theory that a person could have no property in obscene works. It rejected this doctrine because it "merely expresses by means of a legal fiction the underlying judicial moral conclusion that the work is not worthy of protection": Mitchell Brothers at 861. The court dismissed out of hand another "judicially created doctrine" namely that of unclean hands, pointing out that, for the most part, this was an English theory not adopted in any American copyright infringement action. See also Jartech Inc. v Clancy 666 F2d 403 (9th Cir 1982).
22 It is, however, interesting to note that in Devils Films, Inc v Nectar Video 29 FSupp2d 174 (SDNY 1998) a district court judge refused an interlocutory injunction to restrain the publication of pirated copies of pornographic material on the basis that the plaintiff was likely to be acting in breach of a local statute by selling obscene material in the course of interstate commerce. The plaintiff's works were also subject to forfeiture under that Act. The judge concluded (at 175) that "[G]iven the clearly criminal nature of the plaintiff's operation, it is self-evident that the Court should not use its equitable power to come to the plaintiff's assistance and should invoke the doctrine of unclean hands and leave the parties where it finds them".
23 The Canadian courts accept that copyright subsists in an obscene work. In Pasickniak v Dojacek (1928) 2 DLR 545 an obscenity defence was taken to a book printed in the Ukrainian language whose title, when translated into English, meant "Large Dream Book", the contents of which were offensive to some people. Fullerton JA said that under Canadian copyright law, copyright could not be denied to an obscene work. He held (at 548) that unless there was something which made the sale of the work an offence, the plaintiff had the right to restrain the defendant from infringing his copyright. Dennistoun JA added (at 554) that the court would refuse the plaintiff's damages if it was illegal for him to publish his work, but otherwise the usual remedies including an injunction could be available. There will be occasions when certain relief might be refused. For example, in Aldrich v One Stop Video Ltd (1987) 39 DLR 362 the judge refused to order an account of profits where the defendant had sold an obscene work contrary to certain provisions in the Canadian Criminal Code. He said that by taking an account, the owner would condone the infringement and profit from the unlawful conduct.
24 The second issue raised by this appeal concerns the manner in which the Magistrate went about the assessment of damages. This is not the occasion upon which to discuss in detail the kinds of damages that can be awarded for copyright infringement. The general principle is that damages are awarded for the depreciation in the value of the plaintiff's copyright: Caxton Publishing Company Ltd v Sutherland Publishing Company [1939] AC 178; Prior v Lansdowne Press Pty Ltd [1977] VR 65. That statement of principle is not as helpful as it might be. A better approach is to proceed on the basis that, speaking generally, the damages to which a plaintiff is entitled are those that flow directly from the infringement. In the case of a work which has a market in which the plaintiff sells or otherwise deals, the plaintiff will be entitled to the profit he would have made had he made the sales that were made by the defendant: General Tire and Rubber Co v Firestone Tyre and Rubber Co Ltd [1976] RPC 197. If the plaintiff could not have made all the sales, then the plaintiff's damages will be assessed on the basis of the sales he actually lost with a notional royalty for the rest: Watson, Laidlaw & Co Ld v Pott, Cassels and Williamson (1914) 31 RPC 104. In an appropriate case, instead of claiming damages the plaintiff may ask for an account of profits.
25 A plaintiff may also seek conversion damages under s 116 of the Copyright Act. Section 116 creates a legal fiction. The fiction is that the plaintiff is the owner of a work that has been brought into existence by the defendant in breach of copyright. Then, as the owner the plaintiff may sue for conversion if the work has been converted or he may bring an action in detinue.
26 The measure of damages for conversion is the value of the work converted. That value is usually determined at the date of conversion: Caxton Publishing [1939] AC 192 at 203. There are circumstances (such as in a rising market) when it may be appropriate to determine the value at some later point in time, for example, the date of the issue of the writ or the date of judgment: Asamera Oil Corporation Ltd v Sea Oil & General Corporation and Baud Corporation, NV [1979] 1 SCR 633. In this case it was accepted by both sides that the conversion date was the appropriate date.
27 If there is a market for the work the value of it is taken to be the market price: Rodocanachi, Sons & Co v Milburn Brothers (1886) 18 QBD 67 at 76; Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc [2000] FCA 660 at [98]. Sometimes, the price which the defendant has obtained for the work is treated as the market price: see generally Nichols Advanced Vehicle Systems Inc v Rees (No3) [1988] RPC 71; Manfal Pty Ltd v Longuet (1986) 8 IPR 410 (Qld Sup Ct); cf O'Mara Books Limited v Express Newspapers plc [1999] FSR 49. In that event the defendant is allowed the expense of sale on the basis that the plaintiff would have incurred those expenses himself: Clark v Nicholson (1835) 1 CM&R 724. In addition, in a conversion action the defendant must be given credit for any work and materials he put into the converted work: Morgan v Powell (1842) 3 QB 278; 114 ER 513; Reid v Fairbanks (1853) 13 CB 692; 138 ER 1371; Munro v Willmott [1949] 1 KB 295. There is an English case which holds that a defendant in a copyright action is not to be given any credit for work and material he put into the infringing work, in particular the cost of manufacturing, labelling, packaging, storing, advertising the goods or distributing them to retailers: Lewis Trusts v Bambers Stores Limited [1982] FSR 281. I doubt whether this case is correctly decided. The question of credit for work and material to be allowed for in favour of a defendant was discussed by Toohey J in Fire Nymph Products Ltd and Alpen Holdings Pty Ltd v Jalco Products (WA) Pty Ltd (1983) 1 IPR 79 at 116. Lewis Trusts was referred to, but not approved, by Lindgren J in Microsoft Corporation v Auschina Polaris Pty Ltd (1996) 71 FCR 231 at 247-248. In Australia it matters not whether the English case is correct, for the common law principles, as I understand them to be, are given effect in relation to conversion damages by reason of s 116(1D). That subsection requires the defendant to be given credit for both pre and post conversion expenses.
28 The Magistrate assessed conversion damages in the following ways. First he found that the appellant companies had converted approximately 1450 DVDs. The conversion was by sale or exchange. According to the appellants an exchange involved a cost; the cost was $20 per DVD. The respondents, on the other hand, said that the average sale price of each converted DVD was $60, with a cost to the corporate appellants of $20. They submitted that the corporate appellant's claim should be further "reduced by $7 [per DVD] to take into account the fact that one third of the stock was represented by swaps". They argued that they should recover a sum equal to 1450 (the number of converted DVDs) multiplied by $47 (the corporate appellants' profit after taking into account the reduction for the percentage of stock represented by swaps). This would have produced a figure for conversion damages of approximately $68 000. The Magistrate said, however, that he would "reduce the conversion damages which [he] intended to award from $80 000 to $65 000 to take into account [the second corporate appellant's] acquiescence in the sale of the parallel imported films".
29 This method of assessing conversion damages, which has some of the hallmarks of an account of profits, followed the wrong path thus leading the Magistrate to make several errors. The issue for the Magistrate was to determine the value of the DVDs as if in the fictional ownership of Fraserside. The starting point was to ascertain the market value of the DVDs at the conversion date. That value would depend upon, or be affected by, a number of factors including: (1) Whether the DVDs could lawfully be sold in the ACT or the Northern Territory; and (2) The terms of the distributorship agreement between Fraserside and Calvista. The first factor would require the Magistrate to consider several subsidiary issues including: (1) Whether the DVDs were classified RC or X 18+; (2) If the DVDs had not been classified, whether they could be classified RC or X 18+. Armed with the answers to these questions the Magistrate was then required to determine whether there was a market for the X 18+ rated DVDs. If there was a market it would then have been necessary for the Magistrate to work out the price at which the DVDs could have been sold, taking into account, if relevant, the terms of the distribution agreement. If any of the DVDs were not classified, but were capable of being classified with an X 18+ rating, then, in the absence of contrary evidence, it might be assumed that their market value would be equal to their sale price reduced by the cost (both direct and indirect) necessarily incurred in obtaining the classification. Then it would be necessary to calculate the deductions required by s 116(1D). One would then have the information necessary to calculate the conversion damages.
30 Now, nothing of the sort was done by the Magistrate. In my opinion the case should go back to the Magistrate for him to assess the damages. I appreciate that the errors I have identified were not complained about in the Notice of Appeal. Nevertheless they were the subject of debate on the appeal and it is only fair that damages should be reconsidered.
31 The Magistrate also awarded additional damages under s 115(4) of the Copyright Actin the sum of $85 000. It has been said that this section permits an award of damages that are exemplary or aggravated or even penal in nature: Concrete Systems Pty Ltd v Devon Symonds Holdings Ltd(1978) 20 ALR 677 at 683. If this be correct then the court has power to award damages that are not available in the United Kingdom under the equivalent section of their Copyright Act. In that country only aggravated damages or its equivalent can be claimed: Beloff v Pressdram Ltd [1973]RPC 765; Redrow Homes Ltd v Betts Brothers Plc [1998] RPC 793, a decision of the House of Lords.
32 The order for s 115(4) damages was made because the Magistrate thought the appellants' conduct was "flagrant". He explained that the appellants "deliberately set aside batches of DVDs to use as a library for the purposes of copying and keeping their stock fresh. They knew that copying was illegal and they knew that it was rampant in the industry, particularly in the days when VHS was the method of distribution. Their reluctance to copy DVDs lasted only until the time they were able to make copies cheaply and without difficulty."
33 I would set aside the award of additional damages. Additional damages should only be awarded if, to summarise the effect of s 115(4)(b), the defendants' conduct deserves punishment or there is a need for deterrence: see also on exemplary damages Lamb v Cotogno (1987) 164 CLR 1 at 8; XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd (1985) 155 CLR 448 at 471. A defendant will deserve punishment if his conduct was vindictive, reprehensible, malicious or something of that sort. If the defendants' conduct is not outrageous, then there is no occasion to award additional damages. That is the situation here. This conclusion makes it unnecessary to decide whether as a matter of policy a court should grant a windfall profit to a pornographer.
34 Finally, if it matters, there are other difficulties in the way of the award. It is not possible to calculate additional damages without knowing what are the actual damages which the respondents will recover. And, in any event, in arriving at his decision the Magistrate failed to take into account two important facts. The first is that before trial the appellants had conceded the existence of copyright in the DVDs. In the absence of this concession the respondents may not have been able to prove their case. At least it would have been an extremely messy case to make out. The appellants should be given credit for saving the respondents significant costs as well as saving the court significant time. They should also be given credit for having submitted to injunctions in the form demanded by the respondents. That also saved the parties and the Court time and expense. So, as a matter of discretion, there should have been no award. This is another way of saying that, in my view, the award was unreasonable.
35 For these reasons I would allow the appeal, set aside the orders relating to damages and remit the matter to be reheard on quantum. The appellants should in my view have the costs of the appeal.
I certify that the preceding thirty five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein.