Re Microsoft Corporation and Ors v Rodney David Marks and Anor [1992] FCA 22 (4 February 1992)

FEDERAL COURT OF AUSTRALIA

Re: MICROSOFT CORPORATION AND ORS
And: RODNEY DAVID MARKS AND ANOR
No. N G430 of 1991
FED No. 130
Contempt of Court

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Gummow J.(1)

CATCHWORDS

Contempt of Court - injunction against reproduction of computer programs - act of contempt admitted - dispute as to form of penalty - respondent and family wholly dependent on income from computer business - no attitude of conscious disregard of obligations by respondent - assessment of costs of applicants.

Australasian Meat Industry Employees' Union v Mudginberri Station Proprietary Limited [1986] HCA 46; (1986) 161 CLR 98.

Australian Design Council v Peter Berrello (1989) 17 IPR 389.

HEARING

SYDNEY
4:2:1992

Counsel and solicitors Mr J.T. Svehla instructed by
for the applicants: Mallesons Stephen Jacques.

Counsel and solicitors Miss L. McCallum instructed by

for the respondents: Lander, Rogers, Melbourne.

ORDER

(1) The respondent be fined the sum of $2,000 to be paid to the Registrar of the Court within 14 days of today.

(2) The respondent pay the costs of the applicants which are assessed at $16,000 in the manner described in Order 3.

(3) The costs fixed in Order 2 be paid a to one-third on or before 60 days hereafter, one-third on or before 120 days hereafter, and one-third on or before 180 days from today.

(4) If the costs are so paid as provided in Order 3, then any interest upon the costs from time to time unpaid, which would otherwise be attracted, will not be payable.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Federal Court Rules.

DECISION

On 5 August 1991, the present applicants commenced a proceeding in this Court alleging copyright infringement against Mr and Mrs Marks. Mr Marks is the respondent to the present contempt application.

2. On 11 October 1991, the Court, by consent, made various orders. At the time, the orders were explained and their significance emphasised to Mr Marks by his legal advisers. The orders as taken out and entered 28 October 1991 bore a statement:

"Take note that you will be liable to
imprisonment or sequestration of property if you
disobey the within orders."

The orders were later personally served upon Mr Marks.

3. Paragraph 1 of the orders contains various injunctions concerned with the reproduction or authorisation of the reproduction of the whole or a substantial part of various computer programs identified as the Microsoft programs, the Autodesk programs, the WordPerfect programs, the Lotus programs and the Ashton-Tate programs. The injunctions in each case also enjoined Mr and Mrs Marks from selling, offering for sale, supplying, offering to supply or distributing any unauthorised copy of the program in question.

4. Before the Court this afternoon is a notice of motion seeking punishment for contempt. It was filed in Court on 20 December 1991. Paragraphs 1, 2, 3 and 4 of the statement of charge read as follows, alleging that Mr Marks was guilty of:

"1. Reproducing the whole of the computer programs Microsoft
Windows (3.0) and MS DOS versions (5.00) and (5.00. 333 beta
2) being the computer programs identified in schedule A to
the statement of claim dated 2 August 1991 and the subject
of Order 1(a) entered on 28 October 1991.
2. Reproducing the whole of the computer program known as
WordPerfect (5.1) being a computer program identified in
Schedule C in the statement of claim dated 2 August 1991 and
the subject of Order 1(e) of the orders entered 28 October
1991.
3. Offering for sale, selling and supplying an unbranded
386-33MHz computer (serial number 105629) (the 'Computer'),
which had loaded on its hard disk unauthorised copies of the
programs Microsoft Windows (3.0) and MS DOS versions (5.00)
and (5.00 .333 beta 2), to D.J. Platten on Friday, 15
November 1991.
4. Offering for sale, selling and supplying the Computer, which
had loaded on its hard disk an unauthorised copy of the
program WordPerfect (5.1), to D.J. Platten on Friday, 15
November 1991."

5. The respondent, Mr Marks, who appears by his counsel, does not dispute that the contempts set out in those four paragraphs were indeed committed. This, therefore, is not a case where the conduct complained of was casual, accidental and unintentional disobedience within the meaning of Australasian Meat Industry Employees' Union v Mudginberri Station Proprietary Limited [1986] HCA 46; (1986) 161 CLR 98 at 109. However, evidence was led by both sides as to the circumstances surrounding the events on 15 November 1991 with a view to supporting the rival contentions made as to the appropriate form of penalty.

6. Mr Marks was born in 1955 and has completed an electronics course at the Royal Melbourne Institute of Technology. About 15 years ago he moved to Nyora, a town which is approximately 140 km from Melbourne. He there commenced a television and radio repair business, operating out of his house. In addition, for some 7 years until approximately August 1991, he worked part-time as a meat lumper in order to supplement his income. The business, as I have said, operates from his house where Mr Marks has erected a showroom. Mr and Mrs Marks have two children and they are now wholly dependent upon the income from the computer business.

7. His clients include various technical colleges and schools, but he deals in particular with a number of farmers in the local area. They tend to rely very much on him for advice and service. The evidence is that between him and his wife there was in recent years an income of some $40,000 but this was at a time when he still was working part-time as a meat lumper. The business operates on an overdraft of some $40,000 and from time to time the overdraft has gone up to $80,000.

8. The events of 14 and 15 November 1991 are detailed in the affidavit of Mr Platten sworn 11 December 1991. Mr Platten is a private inquiry agent, apparently engaged by the present applicants. In addition to swearing an affidavit on 16 January 1992, Mr Marks gave some short oral evidence-in-chief and was cross-examined. He said in his oral evidence that when dealing with Mr Platten he did not give much thought as to whether there might be a copyright problem. He contended that he was pressed by Mr Platten to meet his requirements and that he, Mr Marks, always liked to send his customers away happy.

9. In addition, he was at this time very busy, and on the day first visited by Mr Platten he sold some 28 machines. Counsel for the applicants sought to present a case indicative of an attitude by Mr Marks of disregard of his obligations under the copyright law and in particular under the orders of the Court to which he consented on 11 October 1991. However, on balance, and bearing in mind the serious nature of contempt proceedings, I am not satisfied that I should make any general finding of that nature against Mr Marks, or that I should be influenced in dealing with matters of penalty by any such considerations. I say that, not overlooking the comfort which counsel for the applicants sought to derive from paras. 10 and 11, in particular, of Mr Platten's affidavit of 11 December 1991.

10. Mr Marks appears to be an energetic small businessman, but one who has heretofore not had the necessary appreciation of the significance of the orders of the Court which were made against him. He says that he profoundly regrets the episodes in question. Whilst I do not accept the explanation that he sold to Mr Platten only in response to an uncommon persistence and pressure by Mr Platten as a demanding customer, I am satisfied on the material before me that Mr Marks now has a deeper appreciation of the important nature of the orders of the Court to which he is subject. Nevertheless, the contempt is one which should I think attract some penalty.

11. The relevant principles are illustrated by the decision of French J. in Australian Design Council v Peter Berrello (1989) 17 IPR 389. In addition, there should be a payment of costs of the applicants. There is some evidence suggesting that those costs are in the vicinity of $20,000. Rather than further protract the proceedings, it would, I think, be in the interests of all parties if I were now to fix the sum which was to be payable as costs, thereby obviating the need for any further delay for taxation.

12. Accordingly, the Court:

1. finds proved the charges in paras. 1, 2, 3 and 4 of the
statement of charge filed 20 December 1991;
2. orders that Rodney David Marks be fined the sum of $2,000 to
be paid to the Registrar of the Court within 14 days of
today;
3. orders that the respondent pay the costs of the applicants
which are assessed at $16,000 in the manner described in
order 4;
4. orders that the costs fixed in order 3 be paid as to one-third
on or before 60 days hereafter, one-third on or before
120 days hereafter, and one-third on or before 180 days from
today;
5. orders that if the costs are so paid as provided in order 4,
then any interest upon the costs from time to time unpaid,
which would otherwise be attracted, will not be payable.