lo ) 'SUDGMEN eS re ee ee T No. 1B I... Kdwk NOT FOR GENERAL DISTRIBUTION IN_THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION BETWEEN: AND: CORAM: WILCOX J PLACE: SYDNEY DATE: 5 NOVEMBER 1987 MINUTES OF ORDER ) ) ) NSW G.501 of 1987 ) ) WEIGHT WATCHERS INTERNATIONAL INC First Applicant NARICH PTY LIMITED Second Applicant ULTRA-TEN LIMITED Third Applicant ADMAX PROMOTIONS PTY LTD First Respondent PETER NOLAN Second Respondent MANDY NOLAN Third Respondent GORDON AND GOTCH LTD Fourth Respondent GLORIA MARSHALL FIGURE SALONS OF AUSTRALIA PTY LTD Fifth Respondent A RECEIVED 72 DEC 1987 i FEDERAL court o | AUSTRALIA, OF PRINCIPA ? PEGISTRY a : ZN <x - Panwats vi "NLS are a Soule Dd wy ee reso é Ween oyeesare Spt ag Tees ote on oF THE COURT NOTES THAT: A. The applicants, through their counsel, give the usual undertaking as to damages. AND THE COURT ORDERS THAT: Note: Until further order of the Court, the respondents and each of them, their servants and agents, be restrained from further distributing, or permitting to be distributed, any copies of the publication entitled "Successful Slimming", exhibit A in this proceeding. Each of the fourth and fifth respondents take whatever steps are reasonably available to them to recall and collect all copies of the said publication which may be still under their control and to store those copies in a secure place, the identity of which is to be notified to the solicitors for the applicants. Such recall and collection is to be completed within seven days of today. | The costs of this application be the applicants' costs in the principal proceedings. Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. NOT FOR GENERAL DISTRIBUTION IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION BETWEEN: AND: CORAM : WILCOX J PLACE: SYDNEY DATE: 5 NOVEMBER 1987 ) ) ) NSW G.509 of 1987 ) ) COMPASS PUBLISHING CO PTY LIMITED Applicant ADMAX PROMOTIONS PTY LTD First Respondent PETER NOLAN Second Respondent MANDY NOLAN Third Respondent GORDON AND GOTCH LTD Fourth Respondent GLORIA MARSHALL FIGURE SALONS OF AUSTRALIA PTY LTD Fifth Respondent MINUTES OF ORDER yt mare mer ne ee Sr ere oe pag Wrst ¥ wt yo THE COURT NOTES THAT: A. The applicant, through its counsel, gives the usual undertaking as to damages. AND THE COURT ORDERS THAT: Notes: Until further order of the Court, the respondents and each of them, their servants and agents, be restrained from further distributing, or permitting to be distributed, any copies of the publication entitled Successful Slimming, exhibit A in this proceeding. Each of the fourth and fifth respondents take whatever steps are reasonably available to them to recall and collect all copies of the said publication which may be still under their control and to store those copies in a secure place, the identity of which is to be notified to the solicitors for the applicant. Such recall and collection is to be completed within seven days of today. The costs of this application be the applicant's costs in the principal proceedings. Settlement and entry of orders is dealt with in order 36 of the Federal Court Rules. - - ae NOT FOR GENERAL DISTRIBUTION IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY ere GENERAL DIVISION NSW G.501 of 1987 he BETWEEN: WEIGHT WATCHERS INTERNATIONAL INC a First Applicant NARICH PTY LIMITED Second Applicant = ULTRA-TEN LIMITED Third Applicant AND: ADMAX PROMOTIONS PTY LTD First Respondent PETER NOLAN Second Respondent a MANDY NOLAN ~ Third Respondent GORDON AND GOTCH LTD Fourth Respondent GLORIA MARSHALL FIGURE SALONS OF AUSTRALIA PTY LTD Fifth Respondent NSW G.501 of 1987 BETWEEN: COMPASS PUBLISHING CO PTY LIMITED Applicant AND: ADMAX PROMOTIONS PTY LTD First Respondent PETER NOLAN Second Respondent MANDY NOLAN Third Respondent GORDON AND GOTCH LTD Fourth Respondent GLORIA MARSHALL FIGURE SALONS OF AUSTRALIA PTY LTD Fifth Respondent CORAM: WILCOX J PLACE: SYDNEY DATE: 5 NOVEMBER 1987 EXTEMPORE REASONS FOR JUDGMENT These are applications for the grant of interlocutory relief in two related matters which have, by consent, been heard together. In one matter there are three applicants, namely Weight Watchers International Inc, which is a corporation apparently incorporated in the United States and whose centre of activities 1s at New York, Narich Pty Limited, any con as, aad tat Oe eel bon eer a company controlled by Mr Richard Penn which was at one stage the franchisee from Weight Watchers in relation to the Weight Watchers' business activities in Australia, and Ultra-Ten Limited, which 1s a company also controlled by Mr Penn and which 1s the present franchisee. In the other Application the sole applicant 1s Compass Publishing Company Pty Limited which has, since 25 May 1987, been the beneficiary of an exclusive licence by Weight Watchers Magazine, a business conducted by a subsidiary of Weight Watchers International, in relation to the publication in magazine form un Australia of a booklet previously published by Weight Watchers Magazine in the United States entitled "Weight Watchers Magazine Low Calorie Sweet Treats". The two Applications each name five respondents. The first respondent in each matter 1s Admax Promotions Pty Limited, a company controlled by the second and third respondents, namely Peter Nolan and Mandy Nolan. For practical purposes, those three respondents may be regarded as falling into a single category. The fourth respondent is Gordon and Gotch Limited, which is a distributor of periodicals and which is involved because it has recently undertaken the distribution of a publication of Admax Productions called "Successful Slimming". The fifth respondent in each matter is Gloria Marshall Figure Salons of Australia Pty Limited, which company apparently conducts a number of weight loss salons throughout Australia. The dispute between the parties arises out of the recent publication by Admax Productions of the first issue of the magazine "Successful Slimming". That magazine carries a considerable number of recipes for dishes which are said to be low in kilojyoules, and therefore to be suitable for people who wish to lose weight. Some evidence is available as to the authorship of some of the recipes. I think that it is correct to say that the evidence would indicate three different categories, on the present state of the available information. In the first category is a small number of recipes which, according to evidence given today, were created by Mrs Jennifer Brock, an employee of Ultra-Ten Limited, on behalf of Ultra-Ten. These were the original work of Mrs Brock and I think that 1t is clear that the init1al copyright in relation to those recipes vested in her employer, Ultra-Ten. It is perhaps not completely clear, but it is certainly strongly arguable, that, under the franchise agreement between Ultra-Ten and Weight Watchers International Inc, the copyright passed through Ultra-Ten to Weight Watchers International Inc as soon as the recipes were created. In the view I take, it does not matter whether or not this is correct because both Weight Watchers International and Ultra-Ten are applicants in the present proceeding. Subject to one argument, it seems to me clear that one or other of those companies is the present owner of the copyright of the recipes created by Mrs Brock. mo oa ve ree se eee ene ome eo get ee coe et i ce mae ey eyes wat eee ee ey , ho. rn In the second category is a considerable number of recipes which were submitted by Mrs Brock to Ultra-Ten, but which were not her original work. Apparently, over the years, Mrs Brock has had access to a number of publications containing low kilojule recipes, many of which were publications put out by Weight Watchers International, but perhaps others as well. She has gone through those publications and selected recipes which she thought suitable for Australian conditions and has made the necessary alterations to render the recipes more meaningful to Australian cooks. This has involved changing imperial measurements to metric measurements and changing the language used in some of the recipes so as to make it more readily understandable to Australians. It is difficult to take the view that, in relation to recipes in this category, Mrs Brock had any copyright. It seems that her contribution was quite small. However, it is plain that at least a large proportion of these recipes came from publications of Weight Watchers International. In the time available, it has not been possible for the applicants to prove that Weight Watchers International did have copyright in those recipes, but I think that, for present purposes, I should make that assumption. The recipes have come from books published by that company in which the company has claimed copyright and the probabilities are that, in fact, it had the copyright which it claimed. Certainly it would be difficult to deny that there is a serious question in favour of the claim of copyright by Weight Watchers International. Seo cid There is a third category of cases of recipes in relation to which there 1s no reason to believe that any of the applicants have a copyright. There is also other material in "Successful Slimming", which has nothing to do with recipes, in relation to which no claim or copyright is made. As is recognised by counsel for the applicants, they do not, on any view of the matter, have copyright in the whole of Successful Slimming and, therefore, they would not be entitled to restrain the publication of every item contained in the magazine. However, it is not necessary to go through the magazine and to attempt to sort the recipes into the three categories which I have mentioned because J have been informed by counsel for the respondents that the respondents consider that the life of this issue is almost complete. If there is to be any order which would have the effect that any part of the magazine may not be further distributed, or if the magazine has to be recalled in order to eliminate any part, then the respondents would take the view that there is no point in the balance of the magazine being republished and further distributed. The issue before the Court has, therefore, been debated, at least for present purposes, upon the questions whether there is a serious question of any breach of copyright being involved in the publication of this magazine and whether the balance of convenience favours the granting of interlocutory relief. - oe Boas - ake sag ceeraian ¥ Preyer eae Pris . re = coy fabian . * - — exngqrrync sg ome ey egy As to the first question, it seems to me clear beyond argument that there is a serious question to be tried as to breach of the copyright of one or more of the applicants. As I have indicated, the decision as to which applicants have copyright is by no means clear. There is a question as to the rights of Compass Publishing Company, the applicant in the second proceeding, but I think that the agreement which has been made in favour of that company at least arguably confers upon the company an entitlement to take proceedings to restrain any breach of the copyright in "Weight Watchers Magazine Low Calorie Sweet Treats". Prima facie at least, there has been a copying of material from that book. Some issues have been raised by Mr Blakeney on behalf of the respondents as to whether there has been a breach of s.45 and s.47 of the Trade Practices Act 1974. I do not think that I need form any concluded view upon these matters. It is not clear to me that any of the agreements do constitute a breach of either of those provisions. But, even if Mr Blakeney's arguments in that regard were completely successful, it seems to me that the most that they could do would be to strike down, firstly, the agreement between Weight Watchers International and Compass and, secondly, although I think that this would be attended with greater difficulty, between Weight Watchers International and Ultra-Ten. This would still leave the position that, recipes having been created by an employee of Ultra-Ten, that company had a copyright which it was entitled to protect. It follows that, aeees orgy ae aa rae we even if the arguments based on the Trade Practices Act were completely successful, there 1s a prima facie case that Ultra-Ten, one of the applicants before the Court, would be entitled to proceed. In relation to the balance of convenience, I think that the matters raised by Mr Blakeney are not sufficient to displace what would be a usual order, namely, to restrain the further distribution of a publication which infringes an applicant's rights. I say that this is the usual order, not because there is any law to that effect, but simply because, as a matter of practicality, it would be extremely difficult for these applicants, like other applicants in their position, to quantify the damages they have sustained as a result of the infringement. Mr Blakeney says that they suffer no loss because the magazine which is put out by Ultra-Ten, in conducting the Australian business of Weight Watchers, is distributed free to members who undertake Weight Watchers' courses. I do not think that it follows that there is no loss. One of the inducements to people to undertake Weight Watchers! courses 1s the supporting material which they are able to obtain. Those concerned with the Weight Watchers' organisation obviously think that it is worthwhile to take the trouble to put out a free magazine in order to induce people to join up and to retain their interest in the courses. If those same people are able to obtain a magazine broadly comparable with the same material by going to an opposition health studio, for example, one of those conducted by the fifth respondent, Gloria Marshall Figure Salons, then there is a reduction in the inducement of people to patronise Weight Watchers. awe . Mr Blakeney also refers to the cost of recall, but I have some difficulty in seeing that this is a significant factor. So far as the evidence indicates, distribution has taken place by Gordon and Gotch to newsagents and through the salons of Gloria Marshall Figure Salons. [In the case of Gordon and Gotch, the newsagents are sent the publication for sale in their newsagencies. I do not have any information as to whether this is an outright sale by Gordon and Gotch, or whether the magazine is sent upon a sale or return basis. If there has been an outright sale, and Gordon and Gotch have lost control of the magazine, then I do not think that any order can affect the newsagents. But, if Gordon and Gotch still have control, then there seems to be no problem. Gordon and Gotch are no doubt in regular contact with the newsagents and I should not have thought, at least in the absence of any evidence to that effect, that there would be any particular difficulty or expense in having unsold magazines returned. So far as Gloria Marshall Figure Salons is concerned, there is no evidence to indicate the number of salons, but I would assume that the company is in contact with the managers of each of the salons and that the copies of the magazine which are still on hand can easily be returned. No doubt a loss will be suffered by one or more of the respondents if, in the event, undistributed copies cannot be sold, but the applicants have offered an undertaking as to damages and I think that it would be somewhat easier to Pecmecosnaeaneeceatetata ia? ee eee Y a 10. quantify that loss than the loss which might be suffered by the applicants if distribution was allowed to proceed. Consequently, I think that considerations of convenience favour the granting of appropriate relief. The orders that I propose to make in each matter are as follows: I note that the applicants in each matter, through their counsel, give the usual undertaking as to damages. I order that, until further order of the Court, the respondents and each of them, their servants and agents be restrained from further distributing, or permitting to be distributed, any copies of the publication entitled "Successful Slimming", exhibit A in these proceedings. I further order that each of the fourth and fifth respondents take whatever steps reasonably available to them to recall and to collect all copies of the said publication which may be still under their control and to store those copies ina secure place, the identity of which is to be notified to the solicitors for the applicants. Such recall and collection is to be completed within seven days of today. I order that the costs of these applications be the applicants' costs in the principal proceeding. I certify this and the nine (9) preceding pages to be a true copy of the Reasons for Judgment of his Honour Justice Wilcox. Associate: lm ae Date: 29 November 1987 oe are ew eee sudiietend ll. NSW G.501 of 1987 and NSW G.509 of 1987 Counsel for the Applicants: Solicitors for the Applicants: Counsel for the Respondents: Solicitors for the Respondents: Date(s) of hearing: Mr G G Masterman QC with Mr S$ N Galitsky Baker & McKenzie Mr M Blakeney Gould & Shaw 5 November 1987 a a mee yec tees = poteres