CATCHWORDS INTELLECTUAL PROPERTY - Ownership of compilation of information as to real property in Gold Coast City Council and Albert Shire Council local authority areas - confidential commercial information - respondents using information to offer database service in competition. INTERLOCUTORY INJUNCTION - Whether contractual arrangements between a third party and first respondent operated to deny the ability to seek injunctive relief on equitable grounds - serious question to be tried that applicant had no remaining right to the information - serious question to be tried in relation to breach of copyright in database - balance of convenience in favour of granting interlocutory injunction - no arguable basis that respondents entitled to use the information. Trade Practices Act 1974 s.87 Kalamazoo Pty. Ltd. v. Compact Business Systems Pty. Ltd. [1990] 1 Qd.R. 231 Appl. The Council of the City of Gold Coast v. Bernard John Pack and Infopac International Pty. Ltd. (ACN 056 099 239) QG67 of 1995 Cooper J., Brisbane, 31 March, 1995 IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION No. QG67 of 1995 BETWEEN: THE COUNCIL OF THE CITY OF GOLD COAST Applicant AND: BERNARD JOHN PACK First Respondent AND: INFOPAC INTERNATIONAL PTY. LTD. (ACN 056 099 239) Second Respondent JUDGE MAKING ORDER: Cooper J. WHERE MADE: Brisbane DATE OF ORDER: 31 March, 1995 MINUTES OF ORDER UPON THE APPLICANT GIVING THE USUAL UNDERTAKINGS AS TO DAMAGES THE COURT ORDERS THAT: 1. The first and second respondents, by themselves, their servants or agents or otherwise, be restrained pending the trial of the action from using or further using information contained in the database of the applicant copied by the first respondent on or about 7 August, 1992. 2. The first and second respondents deliver up within twenty-eight (28) days to the District Registrar pending the trial of this action, all copies of the applicant's database as at 7 August, 1992 held by the respondents, or either of them, or by their servants or agents or otherwise. 3. The respondents pay the costs of and incidental to the application for interlocutory relief to be taxed if not agreed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION No. QG67 of 1995 BETWEEN: THE COUNCIL OF THE CITY OF GOLD COAST Applicant AND: BERNARD JOHN PACK First Respondent AND: INFOPAC INTERNATIONAL PTY. LTD. (ACN 056 099 239) Second Respondent CORAM: Cooper J. PLACE: Brisbane DATE: 31 March, 1995 REASONS FOR JUDGMENT The applicant Council claims to be the owner and copyright holder of a compilation of information as to real property situate in the local authority areas of the applicant and the Albert Shire Council. The information is contained in a database of some 160,000 entries claimed to have been prepared by one Robert Rawle for and at the request of the applicant using information supplied by the applicant and information supplied by the Albert Shire Council under an arrangement between the two Councils. The applicant claims that the database was made available to the first respondent, trading as ACI Computer Data Services, under an agreement whereby the first respondent was retained to develop a computer software package to facilitate electronic access to the information database. The agreement is alleged to have been made for and on behalf of the applicant by Citipac International Pty. Ltd. ("Citipac"), a company controlled by the applicant. On 9 August, 1992 Citipac delivered a written notice to the first respondent which provided :- "1. Citipac International Pty. Ltd. (CI) at this time, will not be entering into any agreement with any organisation, for the development, marketing and support of a `Bulletin Board' type product for use by CI and its clients. 2. CI undertakes to discontinue use of the `Bulletin Board' product, developed by yourself. 3. At this time CI has no intention to pursue any claims upon yourself and/or A.C.I. Computer Data Services for intellectual property rights in the `Bulletin Board' for which CI has contributed to both financially and intellectually. 4. CI will require all equipment owned by CI, currently in your possession, to be returned to its premises by 5.00 pm on 7 August, 1992. 5. All services provided to CI by yourself, and/or A.C.I. Computer Data Services will cease by 5.00 pm on 7 August, 1992 and payment will be made by CI for services provided by yourself, and/or A.C.I. Computer Data Services to CI, up until this date and time. 6. CI will require that all data owned by Gold Coast City Council and/or Albert Shire Council, that may be in either your or A.C.I. computer Data Services' possession, be destroyed." The applicant contends that the arrangement between the applicant and the first respondent was terminated by the giving of such notice and that any right of the first respondent to use the information contained in the database was thereby terminated. The applicant contends, and the respondents do not contend otherwise for the purpose of this application, that the information on the database had the character of confidential commercial information. The first respondent by paragraph 40 of his affidavit, admits that upon termination he copied from the hard drive of the computer equipment being used by him the database of approximately 160,000 entries. Since that time the applicant has itself, or through Citipac, developed a software program to electronically access the database. It offers a commercial subscription service to persons having an interest in accessing information on the database eg. real estate agents. Using the information contained in the database the second respondent, of which the first respondent is a director, has been offering a service in competition to that offered by the applicant. The respondents have updated the second respondent's database with information obtained from the Queensland Lands Department records and from real estate agents who have obtained the information as current subscribers to the applicant's subscription service. The respondents contend that the first respondent had a joint venture with the applicant and/or Citipac, described in the first respondent's affidavit as :- "In a series of discussions in early 1992 between Bob Rawle, myself and Gary Watson (and on one occasion Ludwig) it was agreed that - · I would develop and integrate the software shown to Rawle and Watson (ie Smartpac) with the GCCC data and thereby make the Citipac's product more user friendly and more comprehensive · As part of this I would adapt existing communications software to enable Citipac to deliver the GCCC data on line (ie Smartpac Dialup) · Citipac (Bob Rawle in particular) would market the new product (ie Smartpac, Phonepac and Smartpac Dialup) to existing Citipac customers and would expand sales throughout the Gold Coast area · I was to provide my knowledge and expertise but was to retain the intellectual property in all software (ie Smartpac and Smartpac dialup) developed · Ludwig was to be paid a licence fee for any Phonepac application sold · Citipac would meet all expenses · Citipac and I were to share 50/50 all profits of the service thus made available." The first respondent alleges that joint venture was wrongly repudiated. There is nothing in the "joint venture" agreement contended for by the respondent which would indicate that the applicant was to part with its property in the database to the joint venture. Rather, all of the evidence is against the applicant doing otherwise than retaining property in the information. For example, the second respondent in letters to the applicant's Town Clerk of 12 December, 1993, 6 April, 1994 and 14 June, 1994 and to the applicant's Mayor of 6 April, 1994 sought access to the applicant's property database pursuant to some commercial arrangement to be negotiated between the second respondent and the applicant. There was no allegation that the database was now the property of the joint venture. The letters are only consistent with the second respondent recognising that it had no right to exploit the applicant's database in the absence of some future agreement yet to be agreed. The applicant by way of interlocutory relief seeks an injunction pending trial of the action restraining the use or further use of the information contained in the applicant's property information database as at 7 August, 1992 and use of information contained in updates of data on the said database as supplied by the applicant to its licensees periodically since 7 August, 1992. The applicant also seeks delivery up of the copied material pending trial. The respondents resist the interlocutory relief on the basis that such rights, if any, as the applicant has to prohibit the use of the relevant information can only arise out of the contract whereby the first respondent obtained access to the information. In this case the respondents allege the contract was between Citipac and the first respondent. The respondents submit that the applicant could not rely on the intervention of equity to protect confidential information on equitable grounds. Thus they submit in the instant case that to grant injunctive relief would be an exercise of the auxiliary jurisdiction as an aid to the enforcement of the rights arising out of the contract between Citipac and the first respondent; there would be no original equitable jurisdiction to grant injunctive relief because of the existence of the contract. Further, they submitted that without Citipac as a party the proceedings are incompetent, for the highest the applicant can put its case is that it had a joint property in the information and as such Citipac is a necessary party. In the affidavit of Mr. Rawle filed in support of the application, he deposes :- "3. I have been employed by a private Company, Rawle Associates Pty Ltd, ACN 010 842 529, which has had a contract for services with the Applicant herein since approximately April 1989. Now produced and shown to me and marked "BR3" is a true copy of my resume of relevant qualifications and experience. 4. The Applicant has been engaged in computer software development and marketing, in particular, the development and marketing of a total computer software package designed originally to meet the Applicant's requirements in the discharge of its statutory functions. Part of the total computer software package included a property information data base. Since development of the total computer software package it has been marketed successfully to Local Government Authorities throughout Australia and to subscribers, having interest in the information contained within the relevant database, for financial reward to the Applicant. 5. I was one of the principle architects of the property information database. At the Applicant's request, in or about the six month period commencing the 3rd of April 1989, I arranged the entire land Record for Gold Coast City (`the Applicant's land record') and thereafter by January 1992 the Albert Shire (`the Albert land record') into an Information Database (`the Information Database'). The Albert land record was made available to the Applicant by the Albert Shire Council (`ASC') under an on-going arrangement for mutual beneficial cooperation which subsists between the two local authorities. 6. The Land Records: (a) Are required to be maintained by both the Applicant and ASC under s590(1) of the Act; (b) Comprise a record of every parcel of rateable land under the jurisdiction of the Applicant and ASC, that is 85,679 parcels for the Applicant and 82,673 parcels for ASC as at the date of swearing this Affidavit; and (c) Subject to the reservations expressed in paragraph 8, are available for inspection by members of the public only upon the requisition of the Applicant, or, as appropriate, ASC and upon pre-payment of the $7.00 per parcel requisition fee. ...... 10. Access to the data on the Information Database, particularly the data within the field descriptions identified in paragraph 8 herein, is of obvious utility to commercial enterprises on the Gold Coast and in Albert concerned with dealings with land. Commencing December 1989 the Applicant began commercially to exploit its monopoly over the Applicant's land record and to utilise the Information Database by licensing the use of the database amongst, inter alia, real estate agents, solicitors, valuers and financial institutions upon payment of license fees. Initially, data on the Information Database was distributed amongst licensees via computer disk or printed copy. 11. In about January 1992 Citipac began exploring the prospect of licensees being granted direct access to the Information Database via computer modem, the so-called `Electronic Bulletin Board', (`the EBB'). 12. On or about 14 February 1992 Citipac retained the First Respondent, who then traded as, or alternatively, was employed by `ACI Computer Data Services' to devise the software needed to facilitate direct access by licensees via modem. 13. Pursuant to and for the purposes of the retainer in paragraph 12, and for no other purpose: (a) The First Respondent was provided with the Information Database; (b) The Applicant paid the First Respondent a salary of $1,000.00 per week; (c) Citipac provided the First Respondent with office premises and computer hardware." If this evidence is accepted on trial, property in the database was and remained the property of the applicant. The contractual arrangements between Citipac and the first respondent, even if limited to those two parties, would not operate to deny to the applicant its property in the information in the database or its ability to seek injunctive relief on equitable grounds to restrain the use of such information by the first and second respondents for a purpose other than the limited purpose for which the first respondent gained access to the material. Additionally, there is nothing to suggest that Citipac claims any property in the information or is a necessary party. The applicant, in my view, has demonstrated a sufficient standing to seek equitable relief to restrain the unauthorised use of its property database. Subject to such standing being established, the respondents concede that there is a serious question to be tried that the 1992 database to which the first respondent had no remaining right after 7 August, 1992, was the source from which the respondents compiled part of the service offered by the second respondent and in respect of which the applicant might be entitled to equitable relief by way of injunction. Next the respondents submit that so far as the copyright claim is concerned, there is no evidence to establish a serious question to be tried as to the element of originality in the compilation of the material in the database or that copyright was and is owned by the applicant. The evidence of Rawle in paragraph 5 as set out above, and paragraphs 7, 8, 9 and 10 of his affidavit, is sufficient to raise a serious question as to the originality of the work. The process described by Rawle shows that the work was his own and not copied, that it involved the exercise of choice and was not a mere copying of recorded information and that it involved the application of considerable time and effort. Prima facie that would satisfy the test of originality in a compilation (see Kalamazoo Pty. Ltd. v. Compact Business Systems Pty. Ltd. [1990] 1 Qd.R. 231 at 251 ff.). Additionally, the circumstances in which the compilation was prepared on the evidence of Mr. Rawle raises a serious question to be tried that copyright in the original work vested in the applicant. The removal of the database from the hard drive by the first respondent on 7 August, 1992 is conceded as amounting to copying in a material form. There is therefore a serious question to be tried as to a breach of the applicant's copyright in the compilation of information stored in the applicant's database. The applicant submits that the balance of convenience is wholly in favour of granting the interlocutory relief because the respondents make out no arguable basis which might lead to a finding that the respondents or either of them is entitled to use or to continue to use the information contained in the database at a minimum as it was on 9 August, 1992. The respondents submit that the first respondent, on his affidavit, makes out a fiduciary joint venture relationship between Citipac and the first respondent which was breached by Citipac. Assuming for the sake of the argument that this is so, breach of the agreement may sound in damages but it does not give property rights to the first or second respondent or a right to the second respondent to exploit without restraint the property of the applicant in the information contained in the database or the copyright in the compilation of information which constituted the database. The respondents next submit that the affidavit material of the first respondent discloses a case of misleading and deceptive conduct in obtaining from the first respondent his confidential trade secrets and know-how as to the use of on-line communications and bulletin boards to retrieve and disseminate the information contained in the database. Thus they submit :- (a) The respondents are entitled to restrain the applicant from using a bulletin board service; or (b) The Court would, under s.87 of the Trade Practices Act 1974, order the applicant or Citipac to grant a free data licence to the second respondent. Even assuming that the relief in (a) above is available to the first or second respondent, it would not carry with it the consequence that the second respondent was free to exploit the applicant's database as it stood at 9 August, 1992. Insofar as the alleged relief under s.87 of the Trade Practices Act is concerned, I doubt that the court has power under the section to make such an order. In any event the conduct complained of does not even arguably require that the court mould an order giving the second respondent a right to exploit for its own purposes and commercial advantage the applicant's property where such an arrangement was never within the contemplation of either the applicant, Citipac or the first respondent. The respondents submit that the fraudulent and/or misleading and deceptive conduct complained of which led to the first respondent making his confidential trade secrets and know-how available to the defendant would deny to the applicant the permanent injunctive relief claimed. It was submitted that the applicant was "claiming protection for a commercial property information bulleting [sic] board service, which, if Pack is accepted was achieved as a result of a springboard fraudulently obtained." In my view this submission is misconceived. The relief sought by the applicant is to restrain improper use of its information and copyright material by the respondents. It is not seeking to restrain the respondents from operating a competitive business. The first respondent, in his affidavit, deposes that the information in the applicant's database is available from other sources and can be obtained at a cost of $80,000.00 to $90,000.00. The applicant only seeks to prevent the unlawful taking and exploitation of its property. If the respondents obtain the information from another source there is no claim in these proceedings to restrain the use of that information in a competitive information service. Finally, the respondents submit that there is an arguable defence of laches. The delay alleged is the period of five months prior to the institution of proceedings in January, 1995 after an original demand to desist from use of the material by the applicant's solicitors. On the material the second respondent has been exploiting the database since 1993 and has been representing to the applicant that the information in it was sourced from Lands Department records. These representations were false and the admission of copying has only come in these proceedings. The second respondent's business has continued and expanded since its commencement in 1993 but not on the evidence in any material way because of the failure of the applicant to institute proceedings five months before they were commenced. There is no serious question that the proceedings, whether by way of defence or cross-claim will result in a situation whereby the respondents will acquire a right to exploit the applicant's database or the applicant will be denied injunctive relief to protect its rights in the property against unlawful exploitation. In these circumstances arguments based on the maintenance of the status quo pending trial, loss of market share and the difficulty in assessing damages carry little, if any, weight in the balance of convenience. In my view the applicant, giving the usual undertaking as to damages which was offered by its counsel, is entitled to interlocutory relief to restrain the use of the information in the database as at 9 August, 1992. I am not satisfied that the applicant has made out any basis for relief against the respondents in relation to the updating of that material since August, 1992. UPON THE APPLICANT GIVING THE USUAL UNDERTAKINGS AS TO DAMAGES THE COURT ORDERS THAT: 1. the first and second respondents, by themselves, their servants or agents or otherwise, be restrained pending the trial of the action from using or further using information contained in the database of the applicant copied by the first respondent on or about 7 August, 1992. 2. the first and second respondents deliver up within twenty-eight (28) days to the District Registrar pending the trial of this action, all copies of the applicant's database as at 7 August, 1992 held by the respondents, or either of them, or by their servants or agents or otherwise. 3. The respondents pay the costs of and incidental to the application for interlocutory relief to be taxed if not agreed. I certify that this and the preceding Eleven (11) pages are a true copy of the reasons for judgment herein of his Honour Justice Cooper. Date: 31 March, 1995 Associate Counsel for the Applicant: Mr. R.I. Myers Solicitors for the Applicant: Gall Standfield & Smith Counsel for the Respondents: Mr. J.B. Sweeney Solicitors for the Respondents: Bernard Ponting & Co. Date of Hearing: 29 March, 1995 Place of Hearing: Brisbane Date of Judgment: 31 March, 1995