White SW Computer Law Intellectual Property, Information Technology & Telecommunications Newsletter - April 1997

The legal aspects of doing business on the Internet are still being established. The US Courts are providing most of the case law at the moment but it can only be a matter of time before such matters are before the Australian Courts. In December 1996, the Minnesota District Court ruled that the State of Minnesota had jurisdiction over Granite Gate Resorts Inc and its President, who are based in Nevada. Granite Gate provided a commercial sports betting service which is illegal in Minnesota but represented that such a betting service was legal. The agreement between Granite Gate and its customers provided that all claims against Granite Gate must be commenced in Belize, whereas claims against customers could be brought in the customer's home state. The Court used a five-factor test (This test differs in Australia and other US States) to determine whether Minnesota Courts had jurisdiction and considered:

• the quantity of contacts
• the nature and quality of the contacts
• the connection with the cause of action with the contacts
• interest of the State in having the matter before the Courts of Minnesota
• convenience of the parties

Records produced by Granite showed that Minnesota residents had both Internet and telephone contacts with Granite and as the defendants had an advertisement on the World Wide Web, accessible by Minnesota residents, it was ruled that the State of Minnesota had jurisdiction to take consumer protection action against the defendants. Have you considered excluding customers from certain jurisdictions or considered the implications of advertising on the Internet?

Litigation can be a costly experience, without skilled legal advice, the implication of Court orders may not be fully understood. Although the Courts, in general, assist parties who are self represented, they will not do so to the prejudice of the other party. In the matter of Dependable Database Data Pty Ltd v ABI - Australian Business Information Pty Ltd and Neville, it was alleged that the defendants had infringed the copyright relating to a direct marketing database by taking a substatial part of the compilation. Orders (granting injunctive relief, a declaration and the directing of an inquiry as to damages) were made by the Court following the failure of the defendants to comply with earlier orders of the Court. The defendants made an application to the Court to have the judgment set aside. Neville, a director of ABI had thought that when ABI went into liquidation, the court case would be concluded and argued this amongst other things. However, since the defendants could not provide $40,000.00 security for legal costs and pay the Plaintiff's costs thrown away, the Court refused the defendants' application, which had the effect of denying them the opportunity to defend the claim. If legal proceedings are taken against you, you should seek legal advice and/or notify your insurer as soon as possible to ensure you do not prejudice your position.

In The Shetland Times Ltd v Wills and Zetnews Ltd, Shetland Times (ST) published a newspaper - The Shetland Times and the defendants published another newspaper - The Shetland News (SN). ST have recently established a web site on which they feature various articles from their paper. SN also operates a web site which had links to headlines on ST's site. By using these links, readers bypassed the need to visit ST's home page and did not see the advertisements placed there. ST claimed infringement of copyright as SN reproduced the headlines from ST when providing the links and the text of the articles when it was displayed on the users screen. An interim injunction preventing SN from using such links was granted by the Scottish Court on the basis that incorporation of headlines ( “links” ) provided at another site constituted an infringement of the copyright which subsisted in the headlines and their articles as cable programs and the headlines alone as literary works. The matter of whether a copyright infringement has occurred is expected to be finally determined by the Court later this year. If providing links to other sites, it may be prudent to obtain written authorisation before doing so.

In the matter of Thompson v Australian Capital Television Pty Ltd & Ors, Thompson sued Channel 7 for defamation following the retransmission of a current affairs program in the ACT originally broadcast by Channel 9 in other areas of Australia. Despite Thompson having signed a Deed with Channel 9 and receiving the sum of $50,000, on appeal to the High Court, it was found that Channel 7 was not released from liability although the program was retransmitted with minimal delay, not allowing editing of the contents. Any use of materials originally published by another party should be done with care as claims for actions such as defamation or copyright infringement could be made against you. If you are using third party materials, insist that the supplier of those materials indemnifies you against all such claims. This can be particularly important for producers of multimedia and other works in which a range of materials are collated.

The question of which Court had jurisdiction over disputes arising from insurance claims was examined in Akai Pty Ltd v The People's Insurance Company Ltd. PIC, a Singapore based insurance company sought to rely on a clause in its policy which stated that the policy was to be governed by the laws of England and any dispute arising from the policy was to be referred to the English Courts. On appeal to the High Court, it was considered that The Insurance Contracts Act 1984 (Cth)had the effect to void this clause and concluded that New South Wales was the correct forum for the dispute. It is easy to gloss over the terms of any contract or to forget to put them in! Make sure you get legal advice as to which jurisdiction you are agreeing to. In a non-insurance contract, Akai may have had to fight this battle in the English Courts at a much higher cost.

In a recent US decision in The National Basketball Association v Motorola, the NBA had obtained an injunction preventing the sale of a hand held pager produced by Motorola and used to display scores and statistics from NBA games as they are played. Motorola appealed against the injunction and the Court found in their favour. It was held that updates of NBA games gathered and transmitted by pager did not constitute an infringement of copyright or misappropriation of “hot-news”. The Court took into consideration the fact that Motorola collected and transmitted the data at its own expense and had not benefited from free-riding on a NBA product. It was noted that Motorola was not infringing the copyright owned by the NBA in producing the games and live broadcasts of the games. Care must be taken when distinguishing facts from a compilation of facts - if there has been effort expended in displaying facts in a certain way, for example in a table or graph, copyright may then exist in the work.

As seen in Broderbund Software Inc and Anor v Computermate Products (Australia) Pty Ltd and Anor, the importation of copies of a computer program into Australia without authorisation from the copyright owner is considered to be an infringement of copyright, even if the copies are original and obtained from a licensed distributor overseas. If you are sued for copyright infringement under such circumstances, it becomes important to determine whether the infringement was flagrant or not. If you have been notified by an exclusive licensor that you are infringing their copyright, and you continue to do so, the damages awarded by the Court for your infringement can be drastically increased. Many parties dispute the current parallel importation laws in Australia, but flagrant infringement of copyright by continued importation can be an expensive and ineffective method of demonstrating a point of view.