Case: Futuretronics.com.au Pty Limited v Graphix Labels Pty Ltd (No 2) [2008] FCA 746
Outcome: cited
What then is the proper method for calculating the amount of loss caused by the infringement? Various methods of measuring damages for infringement of copyright have been described: see Futuretronics.com.au Pty Limited v Graphix Labels Pty Ltd (No 2) [2008] FCA 746 at [11] and TS&amp;B Retail Systems Pty Ltd 158 FCR 444 at [204]-[209]. 58 I come now to Krueger's claim for additional damages. In a claim for additional damages under s 115(4) of the Copyright Act , some general observations were made by Besanko J in Futuretronics.com.au Pty Limited v Graphix Labels Pty Ltd (No 2) [2008] FCA 746 at [17] : First, there is no need ... to consider if an award of additional damages can be made under s 115(4) [even where] no damages are awarded under s 115(2) because I have awarded ... damages under s 115(2) ( Polygram Pty Ltd v Golden Editions Pty Ltd (No 2) 38 IPR 451 at 459-461 per Lockhart J; MJA Scientifics [International Pty Ltd v S C Johnson and Son Pty Ltd (1998) 43 IPR 275] at 283-284 per Sundberg J). Secondly, it is not necessary that there be a proportionate relationship between the additional damages awarded under subs (4) and the damages awarded under subs (2): Flags 2000 Pty Ltd v Smith (2003) 59 IPR 191 at 198 per Goldberg J. An award of additional damages under subs (4) is not dependent upon the adequacy or inadequacy of an award of damages under subs (2). Thirdly, the matters in subs (4)(b)(i)-(iv) inclusive are not preconditions to an award of additional damages. In other words, and using the flagrancy of the infringement as an example, the Court must have regard to the flagrancy of the infringement in determining whether to award additional damages, but is not the case that additional damages can be awarded only if the breach involves a particular degree of flagrancy. Fourthly, ...there is a distinction between conduct of a defendant after an infringement (or after being informed that he has allegedly infringed the plaintiff's copyright) and relevant to the substantive allegations against him on the one hand, and the defendant's conduct of his defence to an action for an infringement of copyright in relation to procedural matters on the other. The former matter is within the terms of s 115(4)(b)(ib) of the [Copyright] Act, whereas ... the latter matter is a matter to be taken into account in determining the appropriate order as to costs. ... Fifthly, an award under s 115(4) of the [Copyright] Act can encompass damages which at common law would be aggravated damages and exemplary damages: Bailey 53 FCR at 113-114. 63 Vawdrey's conduct in its defence of the instant action must also be mentioned as it bears on the issue of costs: see Futuretronics at [17]. That conduct included: (1) Vawdrey's contention that Paul Vawdrey and if not Paul, then Michael Vawdrey, developed the load restraint system: see [20], [24], [44], [56] of the reasons for decision. On any view, those contentions were inconsistent with each other, as well the other evidence, and thus improbable to say the least; (2) Michael Vawdrey instructing an employee (Lang) to backdate the electronic copy of the second Vawdrey drawing (drawing number 25-1056-2) to be provided to Krueger during preparation for trial to create the impression that the document was created and sent on 5 December 2002 when in fact the drawing was sent no earlier than 12 December 2002, if at all: see [80] of the reasons for decision; (3) Michael Vawdrey adducing in evidence an internal job sheet of a hand drawing of what was described as a "Vawdrey-type lock" said to have been created in 1995 in support of a contention that the Krueger Concept was not original. In fact, the reference to the "Vawdrey-type lock" was added much later than 1995 and "only in respect of the litigation". Despite being called for, Vawdrey did not produce the original of the job sheet: see [101] of the reasons for decision; and (4) Vawdrey did not seek to explain how or when it came into possession of a copy of Krueger's invoice for the manufacture of the trailers with the handwriting of Cameron staff: see [73] of the reasons for decision. 64 I find that this conduct (separately and collectively) added significantly to the length of the trial. Moreover, it involved the use of tactics and taking of positions intended to benefit Vawdrey when Vawdrey knew that such positions and tactics were, at the very least, inconsistent with the objective evidence. Subject to what the parties have to say, I therefore propose to make the following costs orders: (1) Vawdrey pay on an indemnity basis one-third of Krueger's costs of, and incidental to, the proceedings through the end of the trial on liability; (2) Vawdrey pay on a party-party basis all of Krueger's costs of, and incidental to, the proceedings following the end of the trial on liability, excluding any costs of and incidental to Krueger's settlement with Camerons. 65 The reason I propose to award only one-third of Krueger's costs through trial against Vawdrey is that until the end of trial Camerons was also a party who would have been liable for a share of the prevailing party's costs. Indeed, it would have been liable for a greater share because, as noted earlier, Vawdrey was a respondent only in relation to the copyright claim, not the confidentiality claims. One might ask, then, whether it is more appropriate to make an indemnity costs order against Vawdrey only in relation to one half of Krueger's costs incurred in prosecuting the copyright claim. On its face, such an order would appear to more accurately capture the costs for which Vawdrey can be said to be responsible. The problem, however, is that much of the same evidence and facts was relevant to both the confidentiality and copyright claims and I foresee that it would thus be difficult, if not impossible, for the parties or a taxing master to allocate or separate costs on a claim-by-claim basis. Accordingly, and this is again subject to what the parties may say, I consider that in the circumstances the better approach is simply to order that Vawdrey pay a percentage share of Krueger's overall costs.