FEDERAL COURT OF AUSTRALIA Horizon Local Communications Networks Pty Ltd v MGM Wireless Pty Ltd [2002] FCA 873 COPYRIGHT – application for an interlocutory injunction HORIZON LOCAL COMMUNICATIONS NETWORKS PTY LTD v MGM WIRELESS PTY LTD V 393 OF 2002 HEEREY J 9 JULY 2002 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIADISTRICT REGISTRY V 393 OF 2002 BETWEEN: HORIZON LOCAL COMMUNICATIONS NETWORKS PTY LTD (ACN 096 659 282) APPLICANT AND: MGM WIRELESS PTY LTD (ACN 058 683 775) RESPONDENT JUDGE: HEEREY J DATE OF ORDER: 9 JULY 2002 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The application for an interlocutory injunction is dismissed with costs. 2. The directions hearing is adjourned to 20 August 2002. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIADISTRICT REGISTRY V 393 OF 2002 BETWEEN: HORIZON LOCAL COMMUNICATIONS NETWORKS PTY LTD (ACN 096 659 282) APPLICANT AND: MGM WIRELESS PTY LTD (ACN 058 683 775) RESPONDENT JUDGE: HEEREY J DATE: 9 JULY 2002 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 I am not satisfied that the applicant has established that there is a serious issue to be tried on the only basis on which an interlocutory injunction is sought, namely that the respondent's MSGU software would infringe copyright of the applicant. 2 The basis of the applicant's claim is cl 4.6 of the licence agreement dated 21 November 2001. That clause is as follows: "MGM agrees to develop for HLCN the 'SMS Metro LITE product. HLCN shall pay MGM on a time and materials basis based on normal industry standard terms and conditions to develop this product. The parties shall agree on thee (sic) specifications for the product as soon as possible, and it is anticipated that the product development shall be completed within 60 days of this agreement, unless otherwise agreed between the parties. It is further agreed that the cost of the development shall not exceed AUD$20,000.00, unless the parties agree in writing otherwise. Ownership of the intellectual property in this product shall belong to HLCN, and HLCN shall take out any patents trademarks or copyright in the product at its discretion. MGM shall if called upon execute any transfers, assignment or other paper writing or documentation of any description which may be required by HLCN to take ownership of the product intellectual property or protect its ownership of the same. MGM shall install the product on HLCN's SMS Centre gateway in Melbourne and provide maintenance, upgrades, bug fixes and level 3 technical support on the same basis as set in this agreement." 3 The natural meaning of that clause to my mind is that the intellectual property is to vest in the applicant when the product is completed. The clause is looking into the future. Work is to be done by the respondent in developing the product and it is that product, when developed, which may form the subject of intellectual property. 4 Mr Fortunatow on behalf of the respondent has deposed that, because the applicant had not made payments as required, he instructed relevant staff working on the software development for the applicant to cease work. I see no reason to disbelieve that statement because it is quite consistent with other evidence as to the disputes between the parties. For present purposes, I do not need to canvass the merits of those disputes. It is sufficient to say that it seems clear that the product contemplated by cl 4.6 has not been produced. 5 Further, there is no reliable evidence advanced by the applicant to show that the respondent's software would infringe the Metro Lite product even if the latter had reached a sufficient stage of development to be the subject of property. Mr Hukin on behalf of the applicant simply deposed: "In breach of the Plaintiff's copyright and ownership of the intellectual property under the Agreement the Defendant is now advertising an SMS product called MSGU over the defendant's web site which product is designed to do exactly what the SMS Metro Lite product was to do for the Plaintiff. In fact the operation of the advertised MSG product is word for word what was discussed with the Defendant in respect of the Plaintiff's SMS Metro Lite product in terms of operation and marketing and for more details in that respect I would refer to the affidavit of Martin John Cattach sworn 25th day of June 2002 and filed herein." 6 The mere fact that the respondent's product was "designed to do exactly what the SMS product was to do for the plaintiff" would not in itself make out a claim for infringement of copyright, which of course is concerned with form of expression rather than ideas. 7 The same may be said for Mr Cattach's evidence. He deposed in par 26 that: "The SMS Metro Lite product was my idea and it provided a way of using the Defendant's SMS gateway that until the Plaintiff revealed to the Defendant, it had no idea of the possibility of using it in this way." 8 It seems a little surprising that if the whole concept was Mr Cattach's idea that it needed the respondent to develop the concept. Anyway, apart from that, the fact that the product was Mr Cattach's idea does not make out a case of infringement of copyright. 9 The application for an interlocutory injunction will be dismissed. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey. Associate: Dated: 12 July 2002 Counsel for the Applicant: Mr R A Scheid Solicitor for the Applicant: Wantrup & Associates Counsel for the Respondent: Mr D F Hyde Solicitor for the Respondent: Oakley Thompson & Co Pty Ltd Date of Hearing: 9 July 2002 Date of Judgment: 9 July 2002