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Federal Court of Australia |
Last Updated: 18 February 2008
FEDERAL COURT OF AUSTRALIA
A.C.M. Services
Pty Ltd ACN 055 655 082 v Linmac Cranes
Australasia Pty Ltd ACN 126
152 289 [2008] FCA 76
PRACTICE AND PROCEDURE –
interlocutory injunction – principles to be
applied
Trade Practices Act 1974
(Cth)
Copyright Act 1968 (Cth)
Property Law Act 1969
(WA)
Property Law Act 1974 (Qld)
Australian Broadcasting
Corporation v O’Neill (2006) 227 CLR 57 - applied
Coco v
A.N. Clark (Engineers) Limited [1969] RPC 41 - cited
Corrs
Pavey Whiting & Byrne v Collector of Customs (1987) 14 FCR 434 -
cited
Liberty Financial Limited v Scott (No 2) [2005] VSC 26 -
cited
Reinforced Plastics Applications (Swansea) v Swansea Plastics and
Engineering Co Limited (1979) FSR 182 - cited
Ocular Sciences
Limited v Aspec Vision Care Limited [1997] RPC 289 –
cited
Sabre Corporation Pty Ltd v Laboratories Pharm-a-Care (1995) 31
IPR 445 -
applied
A.C.M.
SERVICES PTY LTD ACN 055 655 082 AND DELLGALE PTY LTD ACN 108 404 904 v LINMAC
CRANES AUSTRALASIA PTY LTD ACN 125 152 289,
HERMES SPEZIALI, PAUL FRANCIS
O'CONNELL AND JOHN ANTHONY BROADHURST
QUD421 OF
2007
LOGAN J
15 FEBRUARY
2008
BRISBANE
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AND:
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THE COURT ORDERS THAT:
1. The application for interlocutory injunctive relief be dismissed.2. The Applicants pay the Respondents’ costs of and incidental to that application.
Note: Settlement and entry
of orders is dealt with in Order 36 of the Federal Court Rules.
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BETWEEN:
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A.C.M. SERVICES PTY LTD ACN 055 655 082
First Applicant DELLGALE PTY LTD ACN 108 404 904 Second Applicant |
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AND:
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LINMAC CRANES AUSTRALASIA PTY LTD ACN 125 152 289
First Respondent HERMES SPEZIALI Second Respondent PAUL FRANCIS O'CONNELL Third Respondent JOHN ANTHONY BROADHURST Fourth Respondent |
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JUDGE:
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LOGAN J
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DATE:
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15 FEBRUARY 2008
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PLACE:
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BRISBANE
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REASONS FOR JUDGMENT
1 These proceedings arise out of the market for the supply of mobile cranes in Australia. A popular type of mobile crane is that known as a "pick and carry" crane. These are designed to operate without "outriggers". They present the advantage of permitting the ready movement of a crane from a lifting task at one site to one at another site without the need on each occasion to deploy and then retract stabilising outriggers.
2 It is matter of history that there were once two principal suppliers of "pick and carry" mobile cranes in the Australian market, a company known as Franna and another, Linmac Pty Ltd ("Linmac").
3 Franna still carries on business in the Australian market. In June 1996, Linmac went into receivership. The demand for "pick and carry" mobile cranes has continued unabated. That demand has manifested itself in a waiting list of some two years for mobile cranes produced by Franna and in a second hand market for Linmac cranes.
4 The First Applicant, ACM Services Pty Ltd ("ACM") initially conducted a crane hire business in Rockhampton and in Brisbane. In that business it used cranes manufactured by Linmac. On occasion, when these cranes needed repair, it was supplied by Linmac under licence with copies of relevant plans for the limited purpose of facilitating the undertaking of those repairs.
5 More recently, and its seems, as a result of a perception of a gap in the Australian market for the supply of "pick and carry" mobile cranes, ACM has come to acquire from a United States company, Ground Force Manufacturing LLC ("Ground Force") a used Linmac crane, parts for Linmac cranes and what it now asserts to be copyrighted materials and allegedly confidential information said to have been originally owned by Linmac and vested in Ground Force in a way which permitted a transfer of ownership to ACM.
6 In turn, ACM has entered into negotiations with the Second Applicant ("Dellgale") to sell to Dellgale, materially, the manufacturing drawings for certain types of Linmac cranes. At the time of these negotiations Dellgale was selling cranes made by a Chinese manufacturer, Zoomlion. In the course of these negotiations it was put to one of ACM’s officers, Mr Austin, that another had been dealing with Zoomlion in China with a set of Linmac manufacturing drawings and had made a request that Zoomlion manufacture mobile cranes in accordance with those drawings.
7 The present proceedings are a manifestation of a suspicion then formed on the part of ACM that what it conceived to be its copyright in the Linmac drawings and its confidential information was being used without its authority by the Respondents.
8 Three causes of action are pleaded by the Applicants:
(a) infringement of copyright;(b) breach of confidence; and
(c) misleading or deceptive conduct contrary to ss 52 and 53 of the Trade Practices Act 1974 (Cth).
9 Only the first two of these causes of action are relied upon by the Applicants in a claim for interlocutory injunctive relief against the Respondents. The Respondents have sought to meet that claim for interlocutory injunctive relief not by the giving of particular undertakings but rather by submitting that, having regard to the principles which attend the granting of interlocutory injunctive relief, no claim for such relief is made out. Those principles are not in doubt. In Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at 81-82, [65], Gummow and Hayne JJ, with whom Gleeson CJ and Crennan J agreed in this regard (at 68, [19]) stated:
"The relevant principles in Australia are those explained in Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618. This court (Kitto, Taylor, Menzies and Owen JJ) said that on such applications the court addresses itself to two main inquiries and continued:
‘The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to a relief ... The second inquiry is ... whether the inconvenience or injury which is the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted.’
By using the phrase ‘prima facie case’, their Honours did not mean that the plaintiff must show it is more probable than not that at trial the plaintiff will succeed; it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial."
10 Whether or not to grant an interlocutory injunction requires the exercise of a discretion informed by the application of these principles to the circumstances of the case as revealed by the material before the court at the time of the application.
SERIOUS QUESTION TO BE TRIED?
Infringement of copyright claim
11 The Applicants’ claim for infringement of copyright is not, in my opinion, a strong one on present materials.
12 At present, what is said to be the subject copyright works is described in vague terms as "the Linmac Crane drawings". There are said to be some 960 such drawings. It may readily be accepted that the manufacture of a sophisticated item of industrial machinery such as a "pick and carry" mobile crane would require many different technical design drawings. Which, if any, of these drawings is said to have been reproduced by the Respondents, or some of them, is entirely conjectural on the present state of the evidence.
13 To establish reproduction for the purposes of copyright law, two matters must be shown:
(a) sufficient objective similarity between the alleged infringing work and the copyright work, ie resemblance to the copyright work; and(b) subjective copying, and actual use of the copyright work, some causal connection between the alleged infringing work and the copyright work.
14 The Applicants’ evidence of events in China in relation to its alleged copyright works is contradictory. Mr Rouhan deposes that the Third Respondent, Mr O’Connell, showed Zoomlion’s factory manager in China certain drawings for a "Franna type" crane. Mr Austin on the other hand, as a matter of hearsay, describes this event as entailing "a set of Linmac drawings". There is no direct evidence from any officer or employee of Zoomlion as to what that company was shown by or on behalf of the Respondents. On the other hand, Mr O’Connell and the Second Respondent, Mr Speziali depose that what was taken to China was not Linmac crane manufacturing drawings but only a Linmac brochure which included information in the public domain but no manufacturing drawings.
15 The other principal factual basis for the alleged reproduction is to be certain statements by Mr O’Connell and the Fourth Respondent, Mr Broadhurst at a meeting in Toowoomba on 4 June 2007. What was said at that meeting is controversial. Even if the Applicants’ version is accepted it does not establish which drawings, if any, any of the Respondents have or had and neither does it establish that any such drawings were reproductions of the Applicants’ alleged copyright works.
16 It is not the Applicants’ case that ACM is the original owner of any of the alleged copyright works. Rather, the Applicants’ case is that ACM became the owner of the alleged copyright works. The Applicants’ evidence as to its title to the alleged copyright works is presently wanting in terms of a demonstration of a prima facie case of a chain of title from Linmac to it in respect of those works.
17 The original owner of most of the alleged copyright works is said to be Linmac. Evidence of four successive assignments in respect of Linmac’s drawings is necessary to show ACM’s ownership of any copyright in them:
• Linmac to Forward Engineers Pty Ltd ("Forward");• Forward to Westrac Engineers Pty Ltd ("Westrac");
• Westrac to Ground Force;
• Ground Force to ACM.
18 A fifth assignment, from ACM to Dellgale, is said to ground Dellgale’s interest in certain of the alleged copyright works.
19 It is necessary to state that Linmac is said to be the original owner of "most of" the alleged copyright works, because on the Applicants’ own materials, some drawings were created by or on behalf of Forward.
20 There is force in the Respondents’ submission that certain critical links in the chain of assignment are not established prima facie upon the present state of the evidence.
21 At all material times s 196(3) of the Copyright Act 1968 (Cth) has provided that an assignment of copyright (whether total or partial) does not have effect unless it is in writing signed by or on behalf of the assignors. On the evidence, Linmac’s principal place of business was in Western Australia. The effect of that State’s Property Law Act 1969 (WA), by s 34(1)(c), is that an assignment of an equitable interest in copyright must also be in writing. There are provisions to like effect in Queensland’s Property Law Act 1974 (Qld). No written agreement as between Linmac or its receivers and Forward in respect of the assignment of copyright is in evidence. There is no affidavit from the receivers. All that is offered is hearsay from an unidentified source at Forward that "they had purchased the Linmac crane manufacturing business from the receivers, including the intellectual property in the Linmac cranes". In the absence of any evidence of a written assignment, one is left with the possibility, grounded in shadowy evidence, that Forward acquired for value, an equitable interest in certain drawings in respect of Linmac cranes that Linmac owned at the time of its being placed in receivership.
22 I have already mentioned that, on the Applicants’ case, Forward undertook some drawing work itself. Precisely which of the alleged copyright works owe their provenance to Forward’s endeavours is not established. Neither is there any evidence of a written assignment of copyright as between Forward and Westrac. For the Applicants, Mr Austin has deposed that Forward was "acquired" or "taken over" by Westrac. Company searches call this into question as they do not demonstrate any ownership ever of shares in Forward by Westrac.
23 Within Pt V, Div 4, of the Copyright Act 1968 (Cth) are to be found certain statutory presumptions which assist in the proof of facts in civil actions in respect of copyright. Materially, it is conceivable that presumptions as to subsistence and ownership of copyright found in s 126 and presumptions relating to ownership of copyright found in s 126B might in the course of the proceedings come to the assistance of the Applicants. The evidence though at present does not engage either these presumptions.
24 What I have said is sufficient to demonstrate present weaknesses in the state of the evidence in respect of ACM’s asserted ownership of copyright in the drawings. Dellgale’s position is no stronger; a stream cannot run higher than its source.
Confidential Information
25 The elements of a claim in equity for the protection of confidential information are well settled. A person seeking such protection must be able to prove the following:
• precisely what constitutes the information sought to be protected;• that a necessary quality of confidentiality reposes in that information;
• that the information was received by the person against whom equitable relief is sought in such circumstances as to impart a duty of confidence; and
• that there is an actual or a threatened breach of that duty of confidence in respect of the information.
See Coco v A.N. Clark (Engineers) Limited [1969] RPC 41 at 48; Corrs Pavey Whiting & Byrne v Collector of Customs (1987) 14 FCR 434 at 443.
26 Corrs Pavey Whiting & Byrne v Collector of Customs (1987) 14 FCR 434 is also pertinent for the reminder given by Gummow J (at 443) as to the need in relation to a claim like the present for a plaintiff to be able to identify with precision, rather than in global terms, that which is said to be the confidential information.
27 Copies of certain drawings were exhibited to affidavits on behalf of the Applicants. An inspection of these discloses title blocks in which Linmac’s name and ownership is stated. There is though, no overt claim of confidentiality or even copyright on the face of the drawings. Neither is there evidence of any written confidentiality agreement ever used at any stage by an alleged owner of the drawings in dealings with third parties.
28 There is evidence of a practice adopted by Linmac of allowing third parties to have copies of such drawings of its plans as where necessary in order to effect repairs. At best, it might perhaps be inferred that, as a matter of business practice, it was mutually understood as between Linmac or its alleged successive assignees and third parties that the drawings contained at least some confidential information.
29 Even assuming this is in favour of the Applicants, it is still necessary that there be some evidence of a misuse of the information. In Liberty Financial Limited v Scott (No 2) [2005] VSC 26 at [7], Arthur J cited with approval an observation made by Whitford J in Reinforced Plastics Applications (Swansea) v Swansea Plastics and Engineering Co Limited (1979) FSR 182 at 182:
"It is not really to be contemplated that proceedings of this kind should be allowed to go forward on nothing more than a speculative basis; and unless the plaintiff can show that he has some basis for a reasonable belief in his assertion that the defendants are making use of his confidential information, then the action can only be characterised as speculative and fishing, and ought not, in my judgment, to be allowed to proceed. It must be something more than a mere assertion."
30 Another cautionary note was sounded by Laddie J in Ocular Sciences Limited v Aspec Vision Care Limited [1997] RPC 289 at 359:
".. it is well recognised that breach of confidence actions can be used to oppress and harass competitors and ex-employees. The Courts are therefore careful to ensure that the plaintiff gives full and proper particulars of all the confidential information upon which he intends to rely in the proceedings. If the plaintiff fails to do this the Court may infer that the purpose of the litigation is harassment rather than the protection of the plaintiff’s rights and may strike out the action as an abuse of process."
.
31 The Respondents do not seek that the proceedings be struck out. That is not to say that the sentiments voiced in the passages just quoted are irrelevant. The First Respondent is certainly embarked upon a path that may see it come to be a competitor of the Applicants. It is a serious thing to allege that persons have breached a duty of confidence in respect of confidential information. There is force, in my opinion, in the Respondents’ submission that there is no evidence that any of them have misused or are going to misuse any confidential information of the Applicants. It must be observed as well that similar difficulties to those which I have highlighted in relation to the breach of copyright claim attend the proof of the Applicants’ ownership of the allegedly confidential information. Further, just what is said to constitute the information having the necessary quality of confidence is not identified with precision on the present state of the evidence. That in itself is telling as a person to whom injunctive relief is granted ought not be put in a position of doubt as to what is enjoined.
32 In short then it seems to me that, on the present state of the materials, the basis for there being a serious question to be tried is at least weak but better regarded as wanting.
BALANCE OF CONVENIENCE
33 It is for the Applicants to demonstrate that damages would be an inadequate remedy. As matters presently stand, I am unconvinced that this is so.
34 The Respondents have not yet entered the market in Australia for the supply of "pick and carry" mobile cranes. It seems likely that the substantive proceeding will be able to be heard within 6 months from and before the Respondents enter the market. On the other hand, the Applicants are much further advanced in the path to the manufacturer and supply of such cranes in Australia. The Respondents submit, and I agree, that a consequence of this, is that, it is likely that it will be easier for the Applicants to determine the quantum of their loss and damage if the Respondents are not restrained than if a restraint were imposed on the Respondents who then came ultimately to succeed in the proceedings and thereafter needed to call upon Applicants’ undertaking as to damages. I find this factor more persuasive than a further submission made on behalf of the Respondents in which it was asserted that there had been unexplained delay by the Applicants in the seeking of interlocutory relief.
35 It is true that as between June 2007 when there was an exchange of correspondence initiated by a letter of demand sent on behalf of the Applicants and December 2007 the Applicants did not further press upon the Respondents their asserted rights. Whether the Respondents’ response to the initial letter of demand was received is moot. The Respondents’ evidence is that in the interval they incurred expense in trying to establish their business. This may be accepted and it is not irrelevant although, in so doing, they were on notice at least of an asserted breach of the Applicants’ rights in so doing. Had the Applicants’ case in respect of a serious question to be tried not been as I have found it, then delay per se would not, in my opinion, have told against the grant of interlocutory relief.
36 There is an interplay so far as the grant of interlocutory relief is concerned between the strength an applicant’s claim that there exists a serious question to be tried and the balance of convenience: see for example Sabre Corporation Pty Ltd v Laboratories Pharm-a-Care (1995) 31 IPR 445 at 455. That interplay does not, in my opinion, tell in favour in the Applicants.
37 For these reasons, I decline the application for interlocutory injunctive
relief.
Associate:
Dated: 15
February 2008
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Solicitor for the Applicants:
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Counsel for the Respondents:
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Solicitor for the Respondents:
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Date of Hearing:
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Date of Judgment:
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