Once again, the exclusive licences have been proved on the balance of probabilities on the basis of evidence which is not disputed.
There is no direct evidence that the respondents have themselves infringed copyright in the films by copying them. However, it is indisputable that the respondents have been dealing in infringing copies of the films. This is established by the first, second and fourth affidavits by Mr Newnham, the first affidavit of Mr Dunne and the affidavits of Messrs White, Rametta, Gray, Sleath, Rossel, Touhy, Rakonic, Hopkins and Caffin, including evidence about trap purchases at the respondents' business premises and the indicia of counterfeit copies obviously apparent. Almost all of the trap purchase DVDs were obviously counterfeit by reference to the "blue back" colour of the active side of the disc. The respondents seek to advance the proposition that they were not to know that the films were counterfeit because the visible slick material was not obviously counterfeit and the DVD covers were sealed prior to sale. However, if the respondents, as vendors of films, choose not to check even a single copy of DVDs offered for sale, they should, in my view, be taken to have been recklessly indifferent as to copyright infringement. The respondents may not have known they were dealing in infringing copies but they should have known. That is sufficient for the purposes of ss.102 and 103 of the Copyright Act. The respondents admit selling copies of all of the infringing films and importing for sale of some of them.
As to the copyright claim in the confidential information, it cannot be seriously contended that these are not original literary works. The evidence of Mr Newnham establishes that. The respondents seek to raise the possibility that the customer lists they employ came not from the applicants but from another source. However, they had no plausible explanation as to how "seed names"[22] placed on the applicants' lists recently appeared in the respondents own. Nor is there a plausible explanation as to how over half of the names on the respective lists of up to half a million names were common[23]. It is indisputable that the respondents have never had the authority of Calvista to use its customer lists and that the respondents have been using an infringing copy or copies of the list for commercial gain. However, there is no direct evidence that the respondents have themselves copied any of Calvista's lists. Accordingly, the respondents may be able to successfully resist that copyright claim, which is based upon inferences said to be available on the evidence. Nevertheless, the elements of a cause of action for breach of confidence have been established in that the available evidence shows that the information in question has been received or obtained in circumstances importing an obligation of confidence on the part of the recipient. Direct communication is not essential. The material may have come via a third party but its commercial value, and hence its confidentiality, was obvious.
Even if the respondents were permitted to re-plead and to introduce all of the affidavit evidence they have filed, I see no possibility of them successfully resisting the applicants' claims as to the subsistence of copyright in the allegedly infringed films, and the customer lists and database, and the claims as to the ownership of that copyright and the exclusive licences. Neither is there any serious prospect of the respondents being able to resist the applicants' claims of infringing conduct by way of selling the infringing films and importing the infringing films into Australia and trading in them in Australia. Likewise, the respondents have no serious prospect of resisting the breach of confidence claim. They could, however, successfully resist the claim of breach of copyright in the customer lists and database. Further, until such time as evidence from Mr Karakikes is tested, it cannot be said that he could not resist the claim of personal liability against him. In an affidavit filed on 26 June 2006 Mr Karakikes sought to explain his conduct. I cannot rule out the possibility that that evidence, augmented possibly by cross-examination, might enable him to successfully resist the order sought against him personally. Accordingly, the applicants should only have summary judgment in relation to a copyright claim in respect of the films and the breach of confidence claim against the first and second respondents.
As to relief, I will make orders 1, 3, 5, 6, 9(i) and 10 sought in the further amended application. The question of whether orders 2, 4, 7, 8 and 9(ii) should be made must await the completion of the trial of the matter. Final orders as to costs of the proceedings generally and interest should also await the completion of the trial.
The question then arises what damages the applicants should receive in consequence of their obtaining summary judgment. They seek only nominal damages of $1 pursuant to s.115(2) of the Copyright Act and that could not be seriously resisted. They seek actual damages, pursuant to s.116 of the Copyright Act of between $500 and $600, based on 18 trap purchases at amounts between $25 and $29 per unit, allowing $1 per unit for cost. That is a modest claim and it could not be seriously resisted. The respondents seek to resist it upon the basis that trade in the films outside the ACT and the Northern Territory is unlawful. However, that is not strictly correct. The applicants are free to trade in the films anywhere in Australia from either the ACT or the Northern Territory. In other words, the market is national, although the lawful source of supply is geographically limited.
There are more substantial questions to resolve in relation to the claim of $250,000 as additional damages pursuant to s.115(4) in respect of the films and $100,000 in respect of the breach of confidence. It cannot be said that the amounts sought under those heads are appropriate without hearing and testing the evidence of the respondents as to their conduct. In saying that, I disregard the attempt by the respondents to rely upon the illegality of the trade in X rated films outside the ACT and the Northern Territory in the proposed amended points of claim for the purpose of resisting the claim for additional damages. That defence is untenable in the light of the Full Federal Court judgment in Venus Adult Shops Pty Ltd v Fraserside Holdings Ltd [2006] FCAFC 188 at [114].
Having regard to the conduct of the respondents up to the trial of this matter and the current state of the proceedings, I will refuse leave for the respondents to rely upon their proposed further amended defence and the affidavit of Mr Karakikes filed on 12 December 2006. Both were prepared following the closure of the applicants' case and it would be unfair, and unnecessarily add to the length and cost of the proceedings, to permit that additional material to be introduced.
I will give summary judgment in the limited terms indicated above and I will hear the parties as to what directions should now be made for the future conduct of the balance of the proceedings. I will further order that the first and second respondents bear the costs of the summary judgment application, and I will hear the parties as to the quantum of costs that should be awarded.