White SW Computer Law Intellectual Property, Information Technology & Telecommunications Newsletter - June 1998

In Australia, there is no “work for hire” doctrine so it must be assumed, in the absence of a written copyright assignment, that the copyright on a literary, musical, dramatic or artistic work created under contract is owned by the author. Computer software is considered, for the purposes of the Copyright Act, to be a literary work. If you are hiring a contractor to develop a software program for you, it is important to consider whether you want to own the copyright in the application so that, amongst other things you can continue to modify the software and sell the software to third parties. To obtain a binding assignment of copyright, the assignment agreement must be in writing, signed by the original copyright owner and should state the intentions of the parties involved as clearly as possible.

Parties who sell their copyright works in the USA should consider registering their copyright at the US Copyright Office. There is a small fee payable and copies of the work must be lodged. By registering the copyright, you increase the damages payable to you in the event that a party in the USA infringes your copyright.

In June 1998, the High Court of New Zealand handed down orders in the matter of Oggi Advertising Limited v Cameron Bruce McKenzie and Ors . McKenzie had registered the domain name www.oggi.co.nz, allegedly for a Canadian, Mr Elliot Oggi. Oggis Advertising claims that McKenzie and two other defendants sought to take advantage of the fact that Oggi Advertising had not registered the domain name, by registering it themselves and seeking financial gain to relinquish same. Following case law from the US, such as Panavision International LP v Toeppen and the UK, such as Marks & Spencer plc v One in a Million Ltd and Ors, the Court ordered, amongst other things, that the first three defendants be restrained from dealing with the word “oggi” or the domain name “www.oggi.co.nz”, or any similar name or domain name which would be likely to dilute the value of Oggi Advertising's trade name or trade mark and that the domain name “www.oggi.co.nz” be assigned to Oggi Advertising.

There is similar case law in many jurisdictions, which suggest that the registration of domain names with the intention to profit from the sale of the domain name to a party whose trade mark or trading name is similar to the domain name will give rise to a claim against the parties registering the domain name for actions including trade mark infringement and misleading and deceptive conduct.

A restraint of trade clause is commonly used in agreements such as employment contracts and software development agreements to ensure that one party may not entice the customers or employees away from one party to the other. In the matter of Real Tech Systems Integration Pty Ltd and Anor v Douglas Sidney Meuross and Anor, the Court had made an order that Meuross “would not solicit, attempt to solicit, entice away or attempt to entice away from the employ of the applicants or either of them any employees of the applicants or either of them except Mr Zbignew Byczkowski.” Meuross made the required undertaking to the Court that he would comply with the Court's orders. Some time later, Meuross contacted an employee of Real Tech, Simon Broose, allegedly to inform him of a job vacancy with a company known as International Freight Services ( “IFS” ). Meuross claims that he thought Broose had resigned from his position with Real Tech, which was not in fact true. Real Tech alleged that Meuross had placed the advertisement for employment, not IFS and that he was actually contacting Broose under the guise of telling him about the job with IFS in order to obtain the services of Broose for his own company, not IFS. The Court found in favour of Real Tech and ordered that Meuross pay for the legal costs of Real Tech arising from his contempt of court. The Court could have ordered that Meuross serve a term of imprisonment or may have imposed fine in addition to making orders as to costs.

Restraint or trade clauses should not be taken lightly. Provided that the terms of restraint are not too wide, the Court will be likely to make orders to enforce the clause should a dispute arise. The contravention of undertakings made to the Court are considered to be a contempt of Court and may result in any one or a combination of imprisonment, a fine or costs orders being made against you.

In the US case of Superguide Corporation v Daniel Kegan, Superguide was seeking to register the trade mark “Superguide”. Kegan, the holder of the trade mark “Macguide” objected to the registration of the mark in relation to computer goods or services. Superguide filed a declaratory relief action, which Kegan sought to dismiss due to lack of jurisdiction. The North Carolina Court was asked to consider whether it had jurisdiction over Kegan, a resident of Illinois. The Court found that due to Kegan's Internet based business having customers in North Carolina, there was sufficient contact with Kegan arising in North Carolina for that state's Courts to have jurisdiction over the dispute.

There is continuing case law, particularly arising in the US, which illustrates the importance of having customers agree to submit to the legal jurisdiction in your location. It is a real possibility that an Australian supplier could be sued in the US in relation to goods or services delivered or ordered via the Internet.