FEDERAL COURT OF AUSTRALIA Microsoft Corporation v Chambers [2000] FCA 315 MICROSOFT CORPORATION AND ANOR v ALLEN WILLIAM CHAMBERS also known as ALEN CHESTERMAN and ALEN O'BRIEN trading as EZINET and ACRO N 962 of 1999 LINDGREN J 15 MARCH 2000 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 962 OF 1999 BETWEEN: MICROSOFT CORPORATION FIRST APPLICANT MICROSOFT PTY LIMITED SECOND APPLICANT AND: ALLEN WILLIAM CHAMBERS also known as ALEN CHESTERMAN and ALEN O'BRIEN trading as EZINET and ACRO RESPONDENT JUDGE: LINDGREN J DATE OF ORDER: 15 MARCH 2000 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Order 2 made on 25 February, 2000 be varied as from today's date by deletion of the words "to be held by them pending the final hearing and determination of this proceeding". 2. The respondent pay the applicants' costs of the proceeding. 3. The provisions of O 62, r 36A shall not apply. 4. The proceeding be otherwise dismissed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 962 OF 1999 BETWEEN: MICROSOFT CORPORATION FIRST APPLICANT MICROSOFT PTY LIMITED SECOND APPLICANT AND: ALLEN WILLIAM CHAMBERS also known as ALEN CHESTERMAN and ALEN O'BRIEN trading as EZINET and ACRO RESPONDENT JUDGE: LINDGREN J DATE: 15 MARCH 2000 PLACE: SYDNEY REASONS FOR JUDGMENT (ex tempore) 1 The applicants sue the respondent for infringement of copyright, infringement of registered trade marks and contravention of the Fair Trading Act 1987 (SA). 2 The trade marks are two word marks "MICROSOFT" and "WINDOWS". The first applicant is their registered owner. The copyright is said to exist in Microsoft computer programs identified in the application which are said to be original literary works in which copyright subsists, which copyright is also owned by the first applicant. The second applicant is the Australian subsidiary of the first applicant and is an authorised user of the trade marks. 3 The respondent is alleged to carry on business at 270 Wright Street, Adelaide under the name "Ezinet" and at 483 Main North Road, Enfield, South Australia under the name "Acro". It is alleged that the respondent reproduced "Microsoft Windows 98" onto the hard disk of certain personal computers which were the subject of four sales. The last of the four sales was to "Trade Mark Investigation Services" on 27 April, 1999. The name of that buyer correctly suggests that by that time the applicants were carrying out investigative inquiries as to the activities of the respondent. It is also alleged, in substance, that the respondent infringed the copyright by selling copies that had been made in infringement of the copyright in circumstances in which the respondent knew or ought to have known of that fact. 4 I am relieved of the need to discuss in any detail the background facts because on 25 February, 2000, by consent but without admissions, final orders were made save as to costs. Those final orders were orders numbered 2, 3, 4, 6, 7 and 8 of the applicants' amended notice of motion filed on 14 January last, in effect, seeking final relief pursuant to O 20 r 1, or, in the alternative, O 10 r 7. 5 Order 5 sought in that amended notice of motion was an order for delivery up of "each infringing Microsoft Program which is in the possession, power, custody or control of the respondent". Although I did not make that order on 25 February, I did, by consent and without admissions, order that the respondent deliver up a shrink-wrapped Microsoft Office 97 CD with yellow sticker bearing the number 2290-1440363 to the applicants' solicitors to be held by them pending the final hearing and determination of the proceeding. I have now completed the final hearing in the sense that I have heard the evidence and received submissions in relation to the outstanding issue of the costs of the proceeding. What I propose to do is to vary that order as from today's date by omitting the words "to be held by them pending the final hearing and determination of this proceeding". This will have the effect that what was an interlocutory order will now become a final order. 6 A great deal of evidence was read on the hearing on Monday, 13 March – two days ago. The applicants attempted to serve the originating process on the respondent on 7 September last and apparently thought they had effectively done so. I need not decide whether they had: the applicants are content for me to proceed today on the footing that they had not. The return date and first directions hearing was 20 October, 1999 and on that day, Mallesons Stephen Jacques ("Mallesons"), the solicitors for the applicants, wrote to the respondent, "Mr Allen Chambers", at both of the addresses mentioned earlier sending him a copy of the directions made. They were that he file and serve any defence by 9 November, 1999 and that the proceeding be stood over to 9.30 am on 10 November, 1999. 7 On 10 November, 1999 the respondent again did not appear and directions were made in his absence. On that day Mallesons again wrote to him at both addresses sending him a copy of that day's directions which were that I granted the applicants leave to file and serve any notice of motion for judgment in default of defence, made directions for the filing of affidavits by the respondent in answer to the notice of motion and directed that the proceeding be stood over to 10 February, 2000 at 9.30 am. Pursuant to the leave, the applicants filed a notice of motion on 15 December, 1999 seeking final relief as mentioned above. 8 Being concerned about the question of service, the applicants effected service again or for the first time, as the case may be, on 21 December. The respondent does not dispute that on this occasion he received the documents. He insists, however, that this is the first occasion when he became aware of the existence of the proceeding. On 14 January, 1999 the applicants filed an amended notice of motion seeking final judgment. 9 On 14 January, 2000 the applicants filed an amended notice of motion. I need not discuss the amendments. 10 The first time the respondent indicated that he intended to do anything at all about the proceeding was on or just before 10 February, 2000. On that date, Mr Paul Wells, solicitor appeared for him. As I have already indicated, consent orders were made on 25 February. On 7 March, 2000 the respondent filed his defence. 11 The respondent has filed two affidavits, one sworn on 17 February, 2000 and the other on 6 March, 2000. These affidavits put in issue many of the allegations made in the voluminous affidavits filed on behalf of the applicants as to attempted service. In his affidavit of 17 February, 2000, the respondent stated that he had no objection to the making of the orders sought in paras 2, 3, 4, 5, 6, 7 and 8 of the amended notice of motion filed on 14 January and that he was "happy to comply with those orders". 12 In substance, he was saying that he did not admit any wrongdoing and therefore did not object to the making of orders without prejudice to his position. On the question of costs, he stated as follows: "25. With respect to the costs in this matter I object to paying the applicant's [sic – applicants'] costs of the proceedings as I say I am instructed by solicitors [sic – "I instructed solicitors" or "I was advised by solicitors"] to defend the original summons [sic - application] and I would have complied with the orders sought, or consented to those orders, if the applicants had written to me or my solicitors requesting that I do so." 13 The problem with the respondent's position is that he should have promptly taken the stance that he took in his affidavit of 17 February, but failed to do so. From 21 December until 17 February, he did not make his position clear and seems to have avoided confronting and dealing with the proceeding. 14 In my opinion the applicants are entitled to an order for costs. 15 There has been no cross-examination of any witness. If I had been required to determine the issue of infringement, I would, on the present evidence and the admissions made in the respondent's defence, have found in favour of the applicants. The respondent has not submitted to the contrary. 16 There may be issues for the taxing officer in relation to particular items of work performed by Mallesons but fortunately I need not concern myself with them. Conclusion 17 In the result the Court orders that: 1. Order 2 made on 25 February, 2000 be varied as from today's date by deletion of the words "to be held by them pending the final hearing and determination of this proceeding". 2. The respondent pay the applicants' costs of the proceeding. 3. The provisions of Order 62, rule 36A shall not apply. 4. The proceeding be otherwise dismissed. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. Associate: Dated: 17 March 2000 Counsel for the Applicant: Mr M Green Solicitor for the Applicant: Mallesons Stephen Jaques Solicitor for the Respondent: Mr Paul Wells of Paul Wells & Co Date of Hearing: 13 March 2000 Date of Judgment: 15 March 2000