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

If a company is found to have infringed the copyright owned by another party the directors or managers of that company may be found personally liable for such infringements by authorising or procuring such conduct by or on behalf of the company.

In December 1996, Steven Lagos, a company director of the company Palm Beach Pty Ltd was found to have infringed Microsoft's copyright in the case Microsoft Corporation v Auschina Polaris Pty Ltd & Ors.

In that case, Palm Beach had imported unlicensed copies of Microsoft programs into Australia. It was found that Lagos knew that if the copies had been made in Australia they would have constituted an infringement of copyright and that he had authorised or procured the infringement.

It was ordered that he had to personally pay Microsoft the value of the unlicensed programs without any deductions to be allowed for the purchase price and other pre-sale expenses. Have you considered your personal liability for any such infringements in your office?

In 1994, Telstra Corporation Ltd used a photo of the swimmer Kieren Perkins in an advertising supplement regarding the selection of a carrier for long distance and international calls. Telstra had not sought permission from Perkins to use the photo and gave the impression that Perkins supported Telstra in the selection process.

It was found on Appeal in Talmax Pty Ltd and Anor v Telstra Corporation Ltd, that Telstra had engaged in misleading and deceptive conduct and as such was restrained from using the advertising material. Perkins was also awarded $15,000 for loss of opportunity to exploit commercial advantage together with legal costs. You should ensure that any photos used in publications, multimedia etc are being used with the subject's permission.

It is a lot cheaper to edit them out in the production stage rather than defend an action in the Court.

A draft bill to be released by the New South Wales Government could see all national, unrestricted intellectual property rights subject to stamp duty when these rights are transferred. It is important that in your contractual documentation, the party responsible for paying taxes and other Government charges is made clear. This can be of particular importance when transactions involved occur in New South Wales or in other countries such as New Zealand where a goods and services tax is levied. Have you considered who is going to pay for any such stamp duty or VAT/GST?

With the majority of businesses creating and storing their documents and letters on computers and with the ever increasing use of e-mail as a means of communication, electronic evidence is going to become an increasingly important.

A number of US cases have already seen such evidence playing an important role. After purchasing a solar energy subsidiary of Atlantic Richfield Co, Siemens Solar Industries found e-mail in Atlantic's computer system which showed at the time of the sale, Atlantic knew that their solar technology project was not commercially viable. Siemens sued Atlantic for having misrepresented the likely success of the project.

In a case for wrongful termination against Oracle, an employee used an incriminating piece of e-mail in support of her case.

The e-mail was found to have been forged and the employee was charged with perjury.

In most litigation, a party can request the other side to “Discover” all relevant documents in their possession. This will include documents stored in a computer network and on PCs, laptops, home computers and off site backup copies, e-mail and also computer logs and audit trails.

You should ensure that you know who has copies of or access to stored information within your organisation. Have you considered what information you collect which could be used against you or another party you are or could be litigating against?

In Hong Kong, the appeal R v Megabyte Magnetic Industrial Co Ltd examined the question of copyright infringement. The appellants were convicted of possession of, for the purpose of trade or business, CDs and CD ROM discs which breached Hong Kong's criminal copyrightlaws. A Belgian company had ordered 5,000 copies to be made of a CD and 2,500 copies to be made of a CD ROM disc. The appellants arranged for the manufacture of the copies by a Chinese company and requested the Belgian company to verify that they owned the copyright in the material and to authorise the appellants to make copies of the works. The Belgian company supplied a letter stating that they were authorised to copy the CDs. The Magistrate found that the inquiries made by the appellants were not sufficient, however, this was overturned on Appeal and the convictions quashed.

Does your firm have a policy with respect to verifying copyright ownership - do you know the consequences if you fail to make proper inquiries?

In 1981 in USA, Playboy Enterprises Inc obtained an injunction against Chuckleberry Publishing Inc and Tattilo Edtrice SpA to prevent them from selling their magazine Playmen in the US. The injunction prevented Tattilo from using the trade marks “Playboy” or “Playmen” or any other confusingly similar word in conjunction with the sale or distribution of English language publications and related products in the US.

Fifteen years later In Playboy Enterprises Inc v Chuckleberry Publishing Inc & others , the court found that by offering access to American customers via the Internet, Tattilo was in contempt of Court by breaching the injunction.

Tattilo was ordered to :

• shut down its Internet site in Italy or refrain from taking new subscriptions from US residents
• invalidate user names and passwords previously purchased by US residents and refund the remainder of their subscriptions
• pay to Playboy, all gross profits earned from its Internet services provided to US residents
• revise its Internet site to indicate that no subscriptions are available to US residents
• pay Playboy's legal costs
• pay US$1,000 per day until it complies with this order. This order is particularly important as the judgment for damages could most likely be transferred to Italy for enforcement under international convention obligations whereas the injunction may not.

In 1995, the Trade Marks Act 1993 came into force in South Africa which, amongst other things, gave protection to well known trade marks originating from certain foreign countries. Joburgers was using the McDonalds, Big Mac and “golden arches” trade marks for which McDonalds sought an interlocutory injunction. Joburgers and a franchisee, Dax were successful, at trial, in seeking to have the trade marks of McDonalds removed from the register for non-use even though McDonalds had sought relief on the basis that its trade marks were well known. On appeal in McDonalds Corporation v Joburgers Drive-Inn Restaurant (Pty ) Ltd and Anor & McDonalds Corporation v Dax Prop CC and Anor, McDonalds was successful in its claim that its trade marks were well known and Joburgers and Dax were restrained from imitating, reproducing or translating in the Republic of South Africa any of McDonalds' trade marks in which the words McDonald or McDonalds appear.

Have you considered the value of registering your trade marks in Australia and foreign countries where you do or may do business? Without the added protection that is afforded by registration, it can be difficult to enforce your rights with respect to trade marks.