Federal Court of Australia

WILCOX J: The main issue in this case is the boundary of copyright protection. At what level of meagreness does it become impossible to describe an original composition as a "literary work" within the meaning of the Copyright Act 1968 ? The question arises in the context of a dispute between competing video game manufacturers as to the use of sets of 45 numbers as prize scales for draw poker gaming machines.

The facts

The applicant, Olympic Amusements Pty Limited ("Olympic"), trades under the name "Olympic Video Gaming". The managing director of the company is Nickolas Balagiannis who has had long experience in the amusement machine industry and established Olympic in 1984. At about that time, Olympic commenced the development of machines containing computer programs for draw poker. The main market for such machines was in New South Wales where gaming machines had to be licensed by a statutory authority, the Liquor Administration Board ("the Board"). Regulations required that any licensed machine provide a return to players, over time, of not less than 85% of all moneys wagered in it. So any applicant for a licence of a computer-controlled machine had to demonstrate, mathematically, that the program governing the machine would yield that return; and prize scales had to be constructed with this in mind. At the same time, it was commercially desirable to ensure the player return would not greatly exceed 85%. The machine operator (typically a club or hotel) had to pay a State tax on the amount wagered but, subject to that requirement, was entitled to pocket the difference between the amount wagered and the amount returned to players. A computer program that returned players substantially more than 85% would be likely to have less appeal to operators and be more difficult for the manufacturer to sell.

In this situation, in late 1984 or early 1985, Olympic enlisted the assistance of Dr Timothy Brown, then Senior Lecturer in Statistics at the University of Melbourne. Dr Brown was also Director of the Statistical Consulting Centre, a unit then recently established within the university's Department of Statistics for the purpose of providing consultancy services to paying clients. It appears Dr Brown was instructed about Olympic's requirements by David Wade, the then General Manager of the company. Mr Wade offered some views about prize scales but informed Dr Brown possible combinations had to be analysed mathematically. Dr Brown produced a report, Report No.22, which went through three versions as a consequence of consultation with employees of Olympic. Dr Brown said in evidence "the revisions were occasioned by requests from Olympic to vary the prize scale". There were differences between the prize scales the subject of calculation in each of the three versions. The final revision was completed in February 1986. Its contents were summarised in its Introduction:

"This report details calculations made on the game of Draw Poker played with a pack of 53 cards of which one is a joker or wild card. The aim of the calculations is to determine a prize scale in which the expected return of a player is at least 85% of his input according to common-sense rules for the circumstances in which particular numbers of cards are chosen for replacement after the first draw. These rules, hereafter called the strategy, are outlined in Section 3. Section 2 contains a list of the prizes, and the expected return at the end of the game. The method of calculation is described in Section 4. Details of the calculations are given in Section 5. Section 6 describes the computer program including the checks that have been made on its operation."

The prize scale examined in this report was as follows:

"Hand Prize

Royal Straight Flush 500

Five of a kind 100

Straight Flush 50

Four of a kind 30

Full House 7

Flush 4

Straight 3

Three of a kind 2

Two pairs 1"

This prize table assumes the player has wagered only one coin. However, it was likely many players would bet more than one coin. At that time, New South Wales law prohibited the use of coins having a denomination of more than twenty cents but allowed the simultaneous wager of five coins; so it was commercially desirable to exhibit a prize scale showing results of successful multiple bets. Of course, if the prize for a successful multiple bet was simply a multiple of the prize for one coin, the percentage return would remain unaffected. However, Mr Balagiannis wished to offer the then legally permissible maximum payout ($100) to a bettor of even a single coin. He could not, of course, offer a multiple of that figure to successful multiple bettors. This complicated the calculation of player return. In fact the earliest scales adopted by Olympic had a constant return of 500 for a Royal Flush regardless of the number of coins that were wagered.

In his affidavit, Dr Brown explained the complexity of his task:

"The preparation of the report was very complex because the percentage return depends on the strategy adopted by the player. A strategy for Draw Poker consists of a listing of the decisions of what cards the player will discard for each type of hand on the first draw. Each type of hand has a probability of occurring on the first draw which can be determined mathematically, given that the electronic poker machine draws completely at random from the pack of cards. Given a particular type of hand after the first draw, and given a particular strategy for discarding cards, the probability of achieving each of the prizes after the second draw can be calculated mathematically. The two sets of probability calculations can be combined to give, for a particular strategy, the probability of achieving each of the prizes. The return of the machine can then be computed for this strategy. The best strategy is that which achieves the highest overall return for a particular prize scale. The work done was to determine reasonable overall strategies, using the probability calculations, and then to generate prize scales which would produce specified returns to the player from the machines, assuming the player used the reasonable overall strategy.

One particular strategy for working out the percentage returns is to simply let our computers run for a [sic] 100,000 or 1,000,000 games to find out empirically what happens. However, this approach, at that time, was not acceptable to Olympic as there was a concern that the empirical approach might not lead to an acceptable strategy for the purpose of the Liquor Administration Board. Accordingly, we had to write formulas for the whole process. That is to say, we had to write programs to implement those formulas which involves a massive amount of creative mathematical work in that we had to work out what the chances were for every situation."

Dr Brown said he believed the prize scales set out in each revision of Report No.22:

"... are numbers that I came up with after I had done the process of generating a strategy, and generating a process which enabled me to make exact calculations of the statistical returns. The figures were derived initially from initial prize scales that were given to me by Olympic however it was necessary for me to alter the prize scales so as to achieve the objectives that Olympic instructed me to in my brief."

At about this time, Olympic produced the first of its "Wildcard" machines. These machines contained a computer program for games of draw poker with a 53 card pack including a joker. The first program used in Wildcard machines is identified within Olympic as "Wildcard 1". Its prize scale coincides with that analysed in the first version of Report No.22. This prize scale was slightly modified for the program known as "Wildcard 2". The prize scale for Wildcard 3 is that examined in the final version of the report; it differs from that considered in the second version only in respect of the reward for a Full House. Wildcard 4 used the same prize scale as Wildcard 3.

Wildcard 5 was released by Olympic to the market in late 1986 or early 1987. Its prize scale was identical to one considered in the second version of Dr Brown's Report No.22 dated 17 January 1986. It was a scale to which was applicable some general evidence of Dr Brown concerning the process by which the prize scales were determined:

"... we did calculations based on some preliminary ideas about what the prize scale might be as to what was a reasonable strategy for playing the particular game and reasonable meant that where there was a clear advantage to the player to discard certain cards after the first draw that we would adopt that particular strategy. If it was a more subtle matter where the numerical calculation showed that it would be better with this particular sort of prize scale to use one strategy or another we may not always have used the optimal strategy for that particular kind of prize scale and then we wrote a computer program which based on the strategy that had been settled calculated what the probability would be of obtaining the various prizes using that strategy at the second draw. Those computer programs are in the annexure and they are quite long and complicated calculations. After we had arrived at those calculations based on that strategy there would then be a detailed discussion with Olympic which would go to matters like how appealing a particular prize scale might be thought to be to players and so on and at that point we would be able to settle on a prize scale in consultation with people from Olympic."

Dr Brown said communications about development of the prize scales were usually conducted by telephone or face to face discussions, not by correspondence. He was unable to say who first suggested the particular numbers in the second version of Report No.22 but he was sure the order of hands came from Olympic. He said either Mr Wade or Mr Balagiannis would have specified the maximum prize be 500. Dr Brown was asked whether he regarded the determination of the prize scales as a joint effort. He replied:

"... there's a test for academic authorship along the following lines which I think is relevant: would this particular piece of academic paper have been created without the input of any of those people involved and if the answer is yes they should all be joint authors to it and I would regard that as the situation in this particular case, namely that the prize scales would not have arisen either by our efforts alone or by the efforts of people in Olympic alone."

Dr Brown's evidence continued:

"Q. I think earlier on you talked about this process of consultation resulting in settlement of a formal prize scale in each occasion. Was it after that process of consultation and settlement that the actual report was prepared going through the detailed calculations?

A. Yes indeed, because the reports were prepared not primarily as a report to Olympic as to what the prize scale should be but as part of the process of Olympic gaining Liquor Administration Board approval."

Subsequently, Olympic went back to the Statistical Consulting Centre for advice about other prize scales. By that time Dr Brown had accepted an appointment as Professor of Mathematics at the University of Western Australia. So the Centre fulfilled its commissions from Olympic by using the services of other University of Melbourne staff. Their work was used in obtaining licences for later Wildcard programs; although, as time went on and the company's employees developed expertise in calculating player return, the Centre's involvement was reduced. It is not necessary to detail the situation in connection with all the "Wildcard" programs. At the hearing of this proceeding, Olympic confined its claim to the prize scales of only two programs: Wildcard 5 and Wildcard 14.

Wildcard 14 was developed in response to a 1992 announcement by the Board that the maximum permissible prize would be raised to $500 (2,500 units). The program was released commercially in February 1993. Its prize scale was similar to that used in Wildcard 10, which had been approved by the Board in 1989, with the difference that the prize for Royal Flush was multiplied for multiple bets. This variation was selected by Theo Tolkis, an Olympic employee, and approved by Arthur Balayannis, Assistant Manufacturing Manager of the Company. Wildcard 10 was itself based on a variation of one of Dr Brown's prize scales suggested by a colleague in the University of Western Australia, Dr Thomas Dickson. That suggestion was then considered by employees of Olympic. Mr Balayannis changed one figure, the prize for a Straight Flush, and adopted the result.

Having regard to the above, I am satisfied the prize scales for both the relevant programs were devised by one or more people connected with the Centre in conjunction with one or more employees of Olympic. The selection of the numbers was a joint effort by people in both organisations. All these people were resident in Australia. Each was a "qualified person" within the definition contained in s 32(4) of the Copyright Act 1000 .

As I have mentioned, the prize scale for Wildcard 5 was devised when the $100 limit was still in place. Accordingly, the Royal Flush prize remained constant. The scale was as follows:

"Coins played	1	2	3	4	5
Royal Flush	500	500	500	500	500
5 of a Kind	100	200	300	400	500
Straight Flush	50	100	150	200	250
4 of a Kind	30	60	90	120	150
Full House	5	10	15	20	25
Flush	4	8	12	16	20
Straight	3	6	9	12	15
3 of a Kind	2	4	6	8	10
2 Pair	1	2	3	4	5"

It will be noted the scale for one coin closely followed that discussed in the final version of Report No.22. The only difference was that Full House was reduced from 7 to 5. This was done because the original scale proved to provide a player return of about 91%. This was considered too high; Mr Balagiannis thought the optimum figure was about 88%. The reduction in the Full House prize was calculated to reduce the player return to about that level.

The Wildcard 5 prize scale was submitted to the Board in January 1987. Mr Balagiannis said it took about one month to obtain a licence, so he thought the program went on the market in February. It was apparently very successful. He said there were up to 1,000 conversion sales - that is, the new program placed in old machines - and 20 to 30 new sales each week.

Early in 1987, the respondent Milwell Pty Limited ("Milwell") put on the market a computer-operated video draw poker machine called "Five Aces II". Milwell had been formed in 1986 by Garry Graeme Macdougall, its present managing director. Five Aces II offered a prize scale identical to that used in Wildcard 5. One issue in the case is whether Milwell simply copied the Wildcard 5 prize scale.

The Wildcard 14 prize scale was as follows:

"Coins played	1	2	3	4	5
Royal Flush	500		1500	2000	2500
5 of a Kind	100	200	300	400	1000
Straight Flush	60	120	180	240	300
4 of a Kind	25	50	75	100	125
Full House	5	10	15	20	25
Flush	4	8	12	16	20
Straight	3	6	9	12	15
3 of a Kind	2	4	6	8	10
2 Pair	1	2	3	4	5"

It will be noted this scale multiplies the payout for a Royal Flush and also gives a special bonus for five coin bettors who have 5 of a Kind. The payout for Straight Flush is also higher than in Wildcard 5 but the prize for the much more probable result of 4 of a Kind is lower. The program was intended to provide a player return of about 87%. It was approved by the Board in January 1993 and put into the marketplace shortly afterwards.

On 28 April 1993 the Board sent a letter to Milwell approving, amongst other programs, a draw poker game called "Red Black". It used a prize scale identical to that of Wildcard 14, except the return on 5 of a Kind, for a five coin bet, was 500 rather than 1,000; the arithmetical progression was retained. Olympic claims Milwell copied this scale from Wildcard 14.

The proceeding

This proceeding was commenced on 18 September 1995 when Olympic filed an Application and Statement of Claim. These documents alleged both breach of copyright and conduct infringing s 52 of the Trade Practices Act 1974 . Both allegations were repeated in an Amended Statement of Claim filed at the commencement of the trial. However, during the course of the trial, counsel for Olympic, Mr A J Bannon SC and Ms Sally Dowling, abandoned the trade practices claim.

At a directions hearing held on 16 May 1997, Lindgren J ordered that the question of Milwell's liability be heard and determined separately from, and prior to, the question of relief. In accordance with that direction, the trial that gives rise to these reasons for judgment was confined to issues of liability. Some defences were abandoned. Having regard to the matters argued by Mr Richard Cobden, counsel for Milwell, there seem to be four liability issues:

(i) are the prize scales a work capable, as a matter of law, of giving rise to a copyright claim?;

(ii) if so, is copyright in either of the prize scales vested in Olympic?;

(iii) if so, did Milwell infringe that copyright?; and

(iv) if so, was the infringement innocent, within the meaning of s 115(3) of the Copyright Act 1842 ?

Capability of giving rise to copyright

Section 32(1) of the Act provides that, subject to the Act "copyright subsists in an original literary ... work that is unpublished and of which the author ... was a qualified person at the time when the work was made". I have already found each of the people concerned with authorship of the prize scales for Wildcard 5 and Wildcard 14 was a "qualified person" at the time the scales were devised. Neither of the scales was previously published, so s 32(1) applies if they amount to an "original literary work". Counsel for Olympic argue they do.

The term "literary work" is defined in s 10 of the Copyright Act to include:

"a table, or compilation, expressed in words, figures or symbols (whether or not in a visible form)".

The prize scales are, of course, each a table or compilation expressed in figures. But are they an "original literary work"? Counsel for Olympic submit they are, citing the judgment of Dixon J in Victoria Park Racing and Recreation Grounds Co Ltd v Taylor [1937] HCA 45; (1937) 58 CLR 479 at 511. In that case three members of the High Court (Latham CJ, Dixon and McTiernan JJ) rejected an argument that copyright subsisted in a list of the names of starters in a horse race with their positions and jockeys. Latham CJ went so far as to say (at 497) the contention that these lists constituted original literary works did not require any detailed answer. In relation to a claim that there was copyright in the numbers of the placed horses, he pointed out that copyright, where it exists, subsists for 50 years from the death of the author and said:

"Much more argument than has been produced in this case would be required to convince me that because the plaintiff caused those numbers to be exhibited for a few minutes upon a notice board, everybody in Australia was thereafter for a term of fifty years from somebody's death precluded from reproducing them in any material form".

He went on (at 498) to say: "What the law of copyright protects is some originality in the expression of thought".

It is important to note Latham CJ spoke of originality in the expression of the thought. There is no requirement that the thought itself be original. That was made clear by Lord Reid in Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 WLR 273. In that case the House of Lords unanimously upheld an argument that copyright subsisted in betting coupons containing lists of football matches with the odds offered by the respondent for successful bets of various types. The appellant argued that only parts of the coupons, which it did not copy, were protected by copyright but the House held it was necessary to consider the coupons as a whole and ask whether the portion copied by the appellant amounted to a substantial part of them. In considering originality, Lord Reid remarked at 277-278 that, in a compilation, "originality is a matter of degree depending on the amount of skill, judgment or labour that has been involved in making the compilation". Lord Evershed expressed a similar view, contrasting the case with decisions where copyright protection was denied to diaries containing readily available tables of information. He mentioned Leslie v J Young & Sons [1894] AC 335 where a local train timetable, compiled from official railway timetables, was not regarded as constituting an original work entitled to copyright, but a different view was taken about some pages in the same publication containing information regarding excursions. These pages involved an abridgment of information selected by the abridger. Lord Evershed concluded at 282:

"On the facts of this case, and in the light of the authorities to which I have alluded, I conclude that there was present here the requisite degree of skill, judgment and labour, not only in selecting out of the vast possible total of wagers those which should be offered, but also in the way in which the result of the selection was presented to the customer, including particularly the arrangement of the document and of its component headings and the way in which such headings were described and were coloured and also in the way in which, in the appropriate notes underneath the headings, the punter was informed of the possibilities open to him under each heading."

Lord Hodson said at 287:

"If the plaintiffs have employed more than negligible skill and labour in their selection of 16 lists containing varieties of bets which they offer to their customers they are entitled to be protected in respect of their coupons as being original compilations.

...

... there is there drawn a distinction between skill and labour devoted to the selection of a range of goods in which the plaintiffs were intending to trade and that employed for the purpose of bringing into existence the literary work, namely a catalogue. It may well be that there are cases in which expenditure of time and money has been laid out which cannot properly be taken into account as skill and labour involved in bringing into existence the literary work, be it catalogue or other compilation. This, however, is not, in my opinion, such a case, and I cannot accept that preparatory work must be excluded in this case so as to draw a line between the effort involved in developing ideas and that minimal effort required in setting those ideas down on paper."

Lord Devlin took up the same point. He said at 289 the "requirement of originality means that the product must originate from the author in the sense that it is the result of a substantial degree of skill, industry or experience employed by him". He then dealt with the appellant's argument that the skill, industry and experience employed by the respondent in selecting the various types of wager were irrelevant; the only relevant skill and labour was that deployed in the written expression of that selection, which was negligible. Lord Devlin thought the argument unsound and observed its result would be that there could not be copyright in a catalogue of goods, yet this had been recognised. He said at 290:

"I do not think it necessary in this type of case that the work done should have as its sole, or even as its main, object the preparation of a document such as a list or catalogue or race card. It is sufficient that the preparation of the document is an object of the work done. If that be so, the work cannot be split up and parts allotted to the several objects. The value of the work as a whole must be assessed when the claim to originality is being considered. If, when the work of selection is being done, there is no intention of listing results, the matter might well be different. A line could then be drawn between the work of selecting and the work of recording a selection independently made. No such line can be drawn in the present case which is, to my mind, much stronger than the ordinary case in which goods are being catalogued. The whole object of the work done was the production of the coupon."

See also Lord Pearce at 292-293.

In Kalamazoo (Aust) Pty Ltd v Compact Business Systems Pty Ltd (1985) 5 IPR 213 at 233-234, Thomas J of the Supreme Court of Queensland pointed to differences in the language employed by various judges in describing the degree of labour, skill, judgment or ingenuity required to support a copyright claim in respect of a compilation. He approved a statement in Ricketson, The Law of Intellectual Property, at para 5.18 that "a simple, unordered presentation will not be protected unless some greater coherence or order has been imposed upon it by the author". Thomas J added, at 234:

"The object of the search for originality is not to assess the novelty or the worth of the thought which a person injects into his work, but whether his expression is original, in the sense that it results from his own work and is not copied from another."

Ladbroke and Kalamazoo were discussed in a recent decision of the Full Court of this Court, Skybase Nominees Pty Ltd v Fortuity Pty Ltd (1956) 36 IPR 529. That case involved weight loss plans developed by an American company and adapted to local conditions by its Australian licensee. The trial judge had found the compilation of the plans involved considerable skill, labour, judgment and expense. The Full Court approved his approach in considering all elements in deciding that skill and judgment had been used in compiling and arranging the whole work. Relevant elements included food choices and serving sizes that were the product of judgment based on research.

Reference should be made to the decision of Sheppard J in this Court in Ainsworth Nominees Pty Ltd v Andclar Pty Ltd (1988) 12 IPR 551. That case was factually close to the present one; it was concerned with copyright in the specification for a poker machine score table. However, in that case the respondent conceded copyright subsisted in the applicants' specification; the major issue was whether it constituted one work or two. That issue was relevant to the respondent's argument that its specification did not reproduce a substantial portion of the applicants' work; the respondent utilised a 22 stop five reel machine whereas the applicants' machine had 25 stops. Because of the respondent's concession, the case has limited value as an authority. Nonetheless, it is interesting to note Sheppard J was impressed with evidence from an independent expert about the benefit the respondent derived in developing its 22 stop reel score table from knowledge of the applicants' 25 stop table. Applying a qualitative view, he held the copying was substantial despite the respondent's need to recalculate the player return percentage.

Milwell's case on subsistence of copyright is that Olympic's prize scales are too insubstantial to achieve protection. Mr Cobden says the tables over which copyright is asserted basically comprise lists of commonplace poker hands arranged in traditional or numerical order. With a couple of exceptions, the first line in the scale for Wildcard 5 and the prize for a five coin 5 of a Kind win on Wildcard 14, the columns for multiple coins are simply multiples of the figures in the first column. Mr Cobden says what would be protected, if copyright subsists, is simply a column of nine numbers; this is too insubstantial to attract copyright protection.

In support of this contention, Mr Cobden cited four cases. The earliest, Hollinrake v Truswell [1894] 3 Ch 420, concerned a cardboard pattern containing a scale that related measurements of the outer part of a sleeve to the desirable inner measurement. The English Court of Appeal held this was not a "map, chart or plan" within the meaning of the Copyright Act (UK) although it might be patentable as a tool; the relevant words and figures were part of a measuring apparatus, without which they were useless.

The second case is Smith's Newspapers Ltd v The Labor Daily (1925) 25 SR (NSW) 593, a decision of Harvey CJ in Eq. of the New South Wales Supreme Court. The parties were both newspaper publishers. The plaintiff complained of the defendant's practice of reproducing in its Wednesday editions the tips for that day's racing given by the plaintiff the previous day. The Chief Judge in Equity dismissed the suit, holding the defendant had taken from the plaintiff's newspaper no more than the names of the horses it had selected; this was information, not a literary work.

Francis Day and Hunter Ltd v Twentieth Century Fox Corporation Limited [1940] AC 112 was a decision of the Judicial Committee of the Privy Council. It has little relationship to the present case. Leaving aside a technical issue arising under the 1842 Act, the case only decided it was not a breach of the performing right in a composition (a song) to use the song title, and nothing more, as the title of a film.

The final authority mentioned by Mr Cobden is Exxon Corporation v Exxon Insurance Consultants International Ltd [1982] 1 Ch 119. The plaintiffs sought to restrain the defendant from using the invented word "Exxon" in its name. They claimed copyright protection on the basis that the name was an original literary work and also alleged the defendant's action amounted to passing off. The defendant failed to file a defence. After hearing argument, Graham J granted an injunction restraining passing off but rejected the copyright claim. The plaintiff unsuccessfully appealed to the English Court of Appeal. Stephenson LJ discussed the meaning of the term "original literary work". He held that, although "Exxon" was original, it was not a literary work. At 143 he said a literary work was "something which was intended to afford either information and instruction, or pleasure in the form of literary enjoyment". The other members of the Court, Oliver LJ and Cairns J, agreed with his opinion.

It will be seen the facts of these cases are well removed from those of the present case. However, Stephenson LJ's discussion of the concept of "literary work" is of assistance. The prize scales at issue in this case provide information and instruction regarding the rewards available for each of the listed hands. That information and instruction is the result of the utilisation of the skill and labour of several people. No doubt it is true, as Mr Cobden submits, that the main effort and exercise of skill went into selection of the nine numbers, rather than determination of the form of their presentation on the video machines. However, much the same comment may be made about the betting coupons at issue in Ladbroke; the critical matter for the plaintiff bookmaker was to make an astute selection of the types of wagers it would offer, the matches to which they would apply and the odds it would attach to them. The presentation to punters of information about these matters was of secondary moment although important in obtaining sales volume. In the present case, also, the selection of appropriate numbers was critical to success, although it was also commercially important to present those numbers in an attractive and readily comprehensible form.

In connection with this aspect of Mr Cobden's argument, I mention Express Newspapers PLC v Liverpool Daily Post & Echo PLC [1985] 1 WLR 1089. The plaintiff newspaper publisher distributed millions of cards, each carrying five letters that could be revealed by scraping away a paper covering. Over a period of some months, it published in each edition of its newspapers a line of five letters. Anybody who produced a card on which the revealed five letters matched a published line of letters earned a prize. In order to promote its own newspapers, the defendant reproduced in its papers the plaintiff's lines of letters. Whitford J of the English Chancery Division held this practice constituted breach of copyright. He noted the evidence as to the skill and effort that had gone into selecting the letters used on the printed cards, in order to make the game attractive to readers but not unacceptably expensive to the plaintiff. Adopting the definition of "literary work" offered by Stephenson LJ in Exxon, Whitford J pointed out the published lines of letters provided information; that was why the defendant copied them. The effort involved in publication was, of course, minimal; that did not deter Whitford J from saying the defendant had "scarcely even an arguable case" on the issue of breach of copyright.

Having regard to these authorities, it seems to me copyright is capable of subsisting in the prize scales published on Olympic's Wildcard 5 and Wildcard 14 machines. Although each scale consists of relatively few numbers, attached to well known poker hands, the evidence shows the selection of those numbers was a complex, highly skilled affair. The presentation of the result was a relatively straight-forward and simple matter, but nonetheless involved some exercise of judgment and labour.

Ownership of the copyright

Section 35(2) of the Copyright Act provides that, subject to the section, the author of a literary work (amongst other works) is the owner of any copyright subsisting in the work by virtue of Part III of the Act, which includes s 32.

Milwell denies Olympic owns any copyright that may subsist in the two prize scales. This issue loomed large at the trial. Milwell's case is that the relevant numbers were selected by people associated with the Statistical Consulting Centre; they were the authors of the work, if it was an original literary work. As the Centre was a unit of the University of Melbourne, any copyright that might exist in the prize scales was vested in the university.

The problem about this argument is that the selection of the numbers for both Wildcard 5 and Wildcard 14 was a collaborative exercise involving both Centre personnel and employees of Olympic. The final decision to adopt each set of numbers was made by a senior officer of the company. At worse, from Olympic's point of view, these are cases of joint authorship.

Section 10(1) of the Act defines a "work of joint authorship" as "a work that has been produced by the collaboration of two or more authors and in which the contribution of each author is not separate from the contribution of the other author or the contributions of the other authors". Division 9 of Part III of the Copyright Act deals with works of joint authorship. It includes s 78 which makes references in the Act to the author of a work, in relation to a work of joint authorship, a reference to all the authors of the work. Consequently, s 35(2) must be read as conferring ownership of the copyright in a jointly-authored literary work on each of its authors. Section 115(1) permits "the owner of a copyright" to bring an action for infringement of copyright; this must be read as a reference to any joint owner. The interest of one joint author is a tenancy in common, so a joint author can institute an action independently of the other: see Prior v Lansdowne Press Pty Ltd [1977] VR 65 at 68-69, Acorn Computers Ltd v MCS Microcomputers Systems Pty Ltd [1984] FCA 339; (1984) 4 IPR 214 at 221, Dixon Projects Pty Ltd v Masterton Homes Pty Ltd (1996) 36 IPR 136 at 141. It follows the action is properly instituted by Olympic regardless of any interest held by the University of Melbourne. If the case is one for an injunction, that situation is not affected by the non-joinder of the university.

During the course of the trial, reference was made to the possibility of Olympic obtaining an assignment from the university of any interest it might hold. Subsequently, this came to pass. With Mr Cobden's consent, Mr Bannon and Ms Dowling sent to my Associate a copy of a deed of assignment by the University of Melbourne to Olympic of:

"(a) any copyright in the Prize Scales and the Reports which may still be vested in it as at the date hereof;

(b) any rights to bring proceedings for infringement of any such copyright since 1985 against any person including the right to the benefit of any damages or account of profits in respect of any such infringement."

The deed is effective to assign to Olympic any copyright the university might hold. It might have significance in relation to the quantum of any damages recoverable by Olympic from Milwell. But it cannot repair any deficiency in Olympic's case in this proceeding in respect of injunctive relief. The general principle, subject only to some statutory exceptions, is that a plaintiff must have a complete cause of action at the date of instituting the proceeding. This principle applies to copyright claims: see Dixon Projects at 141. If Olympic was not, at least, a joint owner of the copyright in a particular prize scale at the time of instituting this proceeding, it would not be entitled to obtain relief against Milwell in respect of that prize scale in this proceeding. It might be entitled to do so in a later proceeding, instituted after it took an assignment of the university's interest; but that is another matter. However, Olympic has always been a joint owner, at least, of each of two scales. Consequently, there is no problem about its entitlement to maintain this proceeding. The second issue, also, must be decided in Olympic's favour.

Infringement of copyright

The respondent read affidavits of Mr Macdougall and his son, Scott, that were designed to establish that Milwell derived the Five Aces and Red Black prize scales otherwise than from Olympic's machines. The attempt failed lamentably. The facts stated in Mr Garry Macdougall's affidavit turned out to be incorrect in numerous respects. When the inaccuracies were pointed out by counsel, Mr Macdougall embarked on a course of explanation that became almost engaging in its increasingly fanciful mendacity. I need not go into details. In his final submissions, Mr Cobden did not suggest I should accept Mr Macdougall's denials of copying. This was realistic. On Mr Macdougall's own evidence, he was aware of Olympic's prize scales and had ample opportunity to copy them; and he was quite unable to offer any explanation of how otherwise he derived the scales used for Five Aces and Red Black.

Mr Cobden's argument on infringement is that what was taken by Milwell was not a substantial part of the original literary work, if that is what it was, constituted by each of the prize scales. However, with respect to him, Mr Cobden's argument takes a curious form. He rightly says that substantiality depends on quality rather than quantity, but he does not contend that what was taken by Milwell from Olympic was qualitatively insubstantial; he could hardly put that, since his client exactly copied Wildcard 5 and almost exactly copied Wildcard 14. Rather he points to similarities between the two Wildcard prize scales and their predecessors. He points out that Wildcard 5 differed from Wildcard 3 only in relation to the prize for a Full House and Wildcard 14 followed Wildcard 10:03AN except in providing a non-linear five coin prize for 5 of a Kind. However, these arguments go to the issue of originality of the claimed literary work, not to infringement. If Olympic, through its employees, had not been (at least) a joint author of Wildcard 3 and Wildcard 10:03AN, as I am satisfied it was, it might be argued scales that so closely approximated those earlier scales could not constitute an original literary work. However, if each of the earlier scales itself was an original literary work, then a variation that, on the respondent's own argument, was insubstantial would not deprive Olympic of its right to protect its copyright in the earlier scale.

As it seems to me, the real question in relation to infringement is whether any difference that exists between the applicant's prize scale and the corresponding scale of the respondent is so substantial as to warrant a finding, in either case, that Milwell's prize scale does not infringe Olympic's copyright.

In fact there is no difference between the prize scale of Wildcard 5 and that of Five Aces II. So no question of substantiality arises; Five Aces II clearly infringed Olympic's copyright over the Wildcard 5 prize scale. In relation to Wildcard 14 and Red Black, the only difference is the five coin prize for 5 of a Kind, 1,000 rather than 500. According to Dr Brown, this variation affects the player return only to the extent of 0.92%; nobody suggests this is significant. Here again, it must be held that Milwell has infringed Olympic's copyright.

Innocent infringement

A court of competent jurisdiction may grant an injunction restraining an infringement of copyright, whether the infringement be deliberate or innocent: see Copyright Act s 115(2). On one view, therefore, the issue of innocent infringement does not arise at this stage. However, the circumstances of the infringement have been litigated and the parties seek an immediate ruling on the issue of innocent infringement, if it arises. A ruling may assist them to resolve the outstanding issues.

Section 115(3) of the Act provides:

"(3) Where, in an action for infringement of copyright, it is established that an infringement was committed but it is also established that, at the time of the infringement, the defendant was not aware, and had no reasonable grounds for suspecting, that the act constituting the infringement was an infringement of the copyright, the plaintiff is not entitled under this section to any damages against the defendant in respect of the infringement, but is entitled to an account of profits in respect of the infringement whether any other relief is granted under this section or not."

Mr Cobden argues this provision applies. Even if it be concluded his client deliberately copied Olympic's prize scales, he says, there are circumstances by virtue of which it should be concluded Milwell was not aware, and had no reasonable grounds to suspect, that the copying constituted an infringement of copyright. He points out Mr Garry Macdougall denied knowing that prize scales were subject to copyright and no complaint was made by Olympic until several years after the first infringement. The Olympic machines each bear the conventional copyright symbol, the letter "c" in a circle, but Mr Cobden argues this is highly equivocal; it could refer to the machine's artwork, its program or any other feature of the machine. It does not clearly claim copyright in the prize scale.

Mr Bannon and Ms Dowling argue that if I find, contrary to Mr Garry Macdougall's evidence, that Milwell copied Olympic's prize scales, there is little room for accepting his statement that he did not realise the prize scales were subject to copyright. Furthermore, Mr Scott Macdougall conceded in evidence that he had been aware "for some years" that the Wildcard machines contained the copyright symbol. Mr Scott Macdougall actually said he "wouldn't have picked it in the early days" - he joined Milwell in 1986 - when he "was maybe a bit more naive" but was "more educated now". Even so, he said, he did not understand Milwell "could be in difficulty if it simply copies the Wildcard prize scales".

I am persuaded, on the probabilities, that Milwell - that is, the Messrs Macdougall - did not realise copying of Olympic's prize scales would be a breach of copyright. In reaching that conclusion, I place no weight on Mr Garry Macdougall's evidence to that effect; I do not regard him as a truthful witness. I reach the conclusion for other reasons. First, Mr Garry Macdougall is an unsophisticated person. He must possess a measure of commercial shrewdness; otherwise he would not have survived for more than a decade in a highly competitive industry. But he struck me as a "rough and ready" type of businessman, not well informed about the law relevant to his business and not curious about it. There is nothing in his past history, of which I am aware, that suggests that, before this case arose, he had ever given a moment's thought to the concept of copyright or had any idea what it was. I also accept this was Mr Scott Macdougall's position during his early years with Milwell. Mr Scott Macdougall seems better educated, and more commercially sophisticated, than his father. However, he must have been quite young when he commenced with Milwell and his previous experience, as a builder/carpenter, would have been unlikely to equip him with knowledge of copyright.

My second reason is the absence of complaint of infringement. It appears Milwell first infringed an Olympic copyright in November 1986 when it released its Five Aces I program. This program exactly reproduced Olympic's Wildcard 3 prize scale. Five Aces I was replaced in 1988 by Five Aces II which used the Wildcard 5 prize scale. The evidence establishes all machine manufacturers kept a close watch on their competitors' products. I accept the Messrs Macdougall assumed that Olympic employees saw Milwell's products very shortly after their release to the market, as indeed they did. If they had thought about copyright for a moment, the Messrs Macdougall would almost certainly have regarded the absence of complaint as an indication that Olympic did not claim copyright in its prize scales. The evidence does not establish any complaint before the institution of this proceeding in September 1995. Possibly Mr Scott Macdougall became conscious of copyright before that date; if he did, I think the long absence of complaint would have caused him to believe there was no infringement.

A more difficult question is whether Milwell had reason to suspect its actions amounted to infringement of copyright. The copyright symbol on the machine is not large; it could easily be missed, even by a person noting down the prize scale. If an observer did notice the symbol, it would not be clear it related to the prize scale as distinct (particularly) from the art work, which Milwell did not copy. And if that observation occurred in recent times, and the observer was one of the Messrs Macdougall, any flicker of suspicion that it might refer to the prize scale would reasonably be douched by the observer's knowledge that Olympic had never complained about the copying of its prize scales. It is important to emphasise I do not say Olympic is debarred from recovering damages by reason of acquiescence or delay; that defence was abandoned by Mr Cobden. But I think its known failure to complain is a factor that supports the absence of a reasonable ground for Milwell to suspect copying Olympic's prize scales constituted an infringement of copyright.

Another relevant circumstance is the nature of the work. Anybody who has even the vaguest knowledge of the notion of copyright knows it applies to significant works like books, plays and films. Although I accept that Olympic's prize scales are each a "literary work" within the meaning of the Act, this is because of a definition in s 10 that gives to that term a somewhat artificial meaning. It might not really occur to a person who was unaware of the statutory definition of "literary work" that an agglomeration of numbers might be a work protected by copyright.

In the result, I find the s 115(3) defence made out. Olympic is entitled to an account of any profits in respect of the infringements of its copyright, but not to an award of damages.

Orders

As requested by counsel, I will give the parties an opportunity to consider these reasons before making any orders. No doubt their representatives will confer regarding the future course of the case. I will stand over the matter for mention at 9.30am on 7 April 1998. If counsel seek any orders that day, they should bring in short minutes.

I certify that this and the preceding twenty (20) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Wilcox.

Associate:

Dated: 3 March 1998

Counsel for the Applicant:	A Bannon SC and S Dowling
Solicitor for the Applicant:	Cutler Hughes & Harris
Counsel for the Respondent:	R Cobden
Solicitor for the Respondent:	Cropper Parkhill
Date of Hearing:	10, 11 and 12 December 1997