Case: Bailey v Namol Pty Ltd [1994] FCA 1401 ; (1994) 53 FCR 102
Outcome: applied
In relation to the claim for damages under s 115(2) of the Act , the Court, in awarding damages for infringement of copyright, will have regard to similar considerations as attend the award of damages in tort: General Tire &amp; Rubber Co v Firestone Tyre and Rubber Co Ltd [1976] RPC 197. The purpose of an award is to compensate the plaintiff for the loss suffered as a result of the defendant's infringement: Bailey v Namol Pty Ltd [1994] FCA 1401 ; (1994) 53 FCR 102 at 110-111. 11 Various methods of measuring damages for an infringement of copyright have been described in the cases. In Sutherland Publishing Co Ltd v Caxton Publishing Co Ltd [1936] 1 Ch 323 at 336, Lord Wright MR said that the measure of damages in a copyright case "is the depreciation caused by the infringement to the value of the copyright as a chose in action". However, the authorities make it clear that is only one method of measuring damages: Autodesk Australia Pty Ltd v Cheung (1990) 17 IPR 69 ; Bailey 53 FCR at 111-112; Milpurrurru v Indofurn Pty Ltd (1994) 54 FCR 240. Another method is to determine the licence fee or royalty the infringing party would have to pay to use the work lawfully. There are difficulties in applying that approach in circumstances where it cannot be inferred that the infringing party would pay a licence fee rather than not use the work ( Autodesk 17 IPR at 75). The applicant did not contend that either of the aforesaid methods was appropriate in this case. It submitted that this was a case in which it was appropriate to treat the damages as being at large and to approach the assessment of damages as a jury would ( Fenning Film Service Ltd v Wolverhampton, Walsall and District Cinemas Ltd [1914] 3 KB 1171 at 1174 per Horridge J). I think that is the proper approach in the circumstances of this case. 17 In relation to the claim for additional damages under s 115(4) of the Act , it is appropriate to begin by making the following general observations. First, there is no need for me to consider if an award of additional damages can be made under s 115(4) if no damages are awarded under s 115(2) because I have awarded nominal 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 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 it is not the case that additional damages can be awarded only if the breach involves a particular degree of flagrancy. Fourthly, in the recent case of Flags 2000 Goldberg J suggested that 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 Act , whereas it has been suggested that the latter matter is a matter to be taken into account in determining the appropriate order as to costs. In Flags 2000 59 IPR at 201, [45]-[46] Goldberg J said: "[45] The applicants submitted that the insertion of subparas (ia) and (ib) was declaratory of the position which had existed prior to the amendments. There is substance in that submission as can be seen from cases such as Carson v John Fairfax &amp; Sons [1993] HCA 31 ; (1992) 178 CLR 44 at 71 ; [1993] HCA 31 ; 113 ALR 577 at 597 and Microsoft Corp v Goodview Electronics Pty Ltd (2000) 49 IPR 578. However, the conduct taken into account in those cases was conduct which was relevant to the substantive allegations made against the respondents. For example, in the Microsoft case the respondent filed a defence which proved to be false. Branson J took that fact into account in conjunction with other evidence which showed an intention on behalf of the respondent to conceal the identity of their suppliers to find 'a deliberate pattern of conduct by the respondents in which they recognised the illegality of the enterprise they are engaged in and actively sought to conceal it'. [46] I do not consider that the conduct of the respondent contemplated by subpara (ib) of s 115(4)(b) is referable to conduct of the defence in so far as it relates to procedural matters and matters whereby the applicants are put to the proof of their case, albeit unreasonably. I consider that these are matters more appropriately dealt with by an appropriate order for costs." In certain circumstances, the distinction may be a difficult one to apply and there is an obvious need to avoid double-counting. Nevertheless, I agree with the distinction identified by Goldberg J in Flags 2000 59 IPR 191. Fifthly, an award under s 115(4) of the Act can encompass damages which at common law would be aggravated damages and exemplary damages: Bailey 53 FCR at 113-114.