FEDERAL COURT OF AUSTRALIA Budget Eyewear Australia Pty Ltd v Specsavers Pty Ltd [2010] FCA 507 Citation: Budget Eyewear Australia Pty Limited v Specsavers Pty Ltd [2010] FCA 507 Parties: BUDGET EYEWEAR AUSTRALIA PTY LTD (ACN 005 481 890) v SPECSAVERS PTY LTD (ACN 097 147 932) File number: NSD 530 of 2010 Judge: BENNETT J Date of judgment: 19 May 2010 Corrigendum: 24 June 2010 Catchwords: COPYRIGHT – application for interlocutory relief – respondent copied phrases in applicant's print advertisements, radio script and terms and conditions – some words replaced with synonyms – subsistence of copyright – copyright in advertisements reflecting a novel advertising campaign – expression of the concept intended to attract customers – authorship – originality – ordinary words – infringement – substantial part – copying of the idea or the expression of the idea – prima facie case – balance of convenience – damage to the copyright Cases cited: Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57 applied IceTV Pty Limited v Nine Network Australia Pty Ltd (2009) 239 CLR 458 considered Kirk v J & R Fleming Limited [1929] MacG Cop Cas 44 considered Date of hearing: 18 May 2010 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 30 Counsel for the Applicant: Mr M R Hall Solicitor for the Applicant: Mallesons Stephen Jaques Counsel for the Respondent: Mr R Cobden SC Solicitor for the Respondent: Minter Ellison IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 530 of 2010 BETWEEN: BUDGET EYEWEAR AUSTRALIA PTY LTD (ACN 005 481 890) Applicant AND: SPECSAVERS PTY LTD (ACN 097 147 932) Respondent JUDGE: BENNETT J DATE of corrigendum: 24 JUNE 2010 PLACE: SYDNEY CORRIGENDUM 1 The heading "Annexure B" has been added above the image labelled "B" and three images have been added to Annexure B. I certify that the preceding paragraph is a true copy of the Corrigendum to the Reasons for Judgment herein of the Honourable Justice Bennett. Associate: Dated: 24 June 2010 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 530 of 2010 BETWEEN: BUDGET EYEWEAR AUSTRALIA PTY LTD (ACN 005 481 890) Applicant AND: SPECSAVERS PTY LTD (ACN 097 147 932) Respondent JUDGE: BENNETT J DATE OF ORDER: 19 MAY 2010 WHERE MADE: SYDNEY Upon the Applicant, by its counsel, giving the usual undertakings as to damages, THE COURT ORDERS THAT: 1. Until further order, the Respondent be restrained from publishing or communicating, or causing the publication or communication of the advertisement which is Annexure A to the Application. 2. The costs of the application for interlocutory relief be the Applicant's costs in the cause. Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 530 of 2010 BETWEEN: BUDGET EYEWEAR AUSTRALIA PTY LTD (ACN 005 481 890) Applicant AND: SPECSAVERS PTY LTD (ACN 097 147 932) Respondent JUDGE: BENNETT J DATE: 19 MAY 2010 PLACE: SYDNEY REASONS FOR JUDGMENT 1 The applicant (Budget Eyewear) owns and operates the chain of Budget Eyewear optical retail stores in Australia. The respondent (Specsavers) operates the chain of Specsavers optical retail stores in Australia. Budget Eyewear and Specsavers are competitors engaged in the business of selling optical frames and lenses. Budget Eyewear operates approximately 85 stores across all Australian States and Territories excluding the Northern Territory. It has an additional 12 stores that operate under a franchise business model. Luxottica Retail Australia Pty Limited is the company that owns and operates OPSM Stores in Australia. Both Budget Eyewear and Luxottica Retail Australia Pty Ltd are ultimately owned by Luxottica S.P.A. Specsavers has 219 stores throughout Australia, of which 208 operate on a franchise model. 2 Budget Eyewear alleges that Specsavers has infringed its copyright in each of four works in which it claims copyright, and seeks interlocutory relief for infringement of that copyright. Those works are two versions of a print advertisement, a radio script and a set of terms and conditions under which the offer in the advertisements were made (together, the Works). 3 The parties agree that the principles to be applied in this application for an interlocutory injunction were set out in Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57. The first question is whether Budget Eyewear has made out a prima facie case in the sense that if the evidence remains as it is, there is a probability that at the trial of the action, it will be entitled to relief. It is sufficient if Budget Eyewear shows a sufficient likelihood of success to justify, in the circumstances, the preservation of the status quo pending trial. If Budget Eyewear's entitlement to final relief is uncertain, the Court should consider what is best calculated to achieve justice between the parties in the circumstances of the case, bearing in mind the consequences of the granting or withholding of interlocutory relief. The requisite strength of the probability of ultimate success depends upon the nature of the rights asserted and the practical consequences likely to flow from the interlocutory orders sought (O'Neill per Gummow and Hayne JJ at [71]). 4 Specsavers does not deny that it copied the text of Budget Eyewear's campaign for its own advertisement. In making that admission it accepts that it copied the idea of the campaign. The copying did not extend to exact word reproduction. The advertisements of Specsavers and of Budget Eyewear as annexed to the Application are Annexures A and B respectively to these reasons. The radio script is as follows: 1. Break SFX: Music from previous Ad kicks in after the first sentence. FVO: If your Specsavers glasses break – and we're not saying they will – simply bring them into Budget Eyewear. We'll replace them with a pair from our own range – free of charge – until May 16. No kidding. Budget Eyewear. See it like it is. Legals: Terms and conditions apply. See budgeteyewear.com.au for your nearest participating store. 5 The set of terms and conditions is as follows: Terms and Conditions 1. Prescription glasses or sunglasses purchased at a Specsavers retail outlet in Australia that are found to be faulty will be replaced with a pair of glasses or sunglasses from the Budget Eyewear range up to the value of the Specsavers pair. 2. Replacement pair will include equivalent lens type (i.e. single vision, bi-focal, multi-focal) and will be made to the same prescription as the Specsavers pair. 3. Replacement is subject to the surrender of the Specsavers pair and proof of Specsavers purchase (i.e. must have a Specsavers receipt). 4. Offer cannot be exchanged for cash. 5. Participating stores only, offer is not available in the following Budget Eyewear stores: Ballina, Beenleigh, Browns Plains, Caloundra, Camberwell, Capalaba, Cleveland, Lismore, Margate, Morayfield and Sydney City. 6. Offer expires 16/05/2010. 6 Budget Eyewear contends that each constitutes an original work in which copyright subsists. It points in particular to the following phrases: (a) "If your Specsavers glasses break – and we're not saying they will – simply bring them into Budget Eyewear. We'll replace them with pair from our own range – free of charge"; (b) "We're not saying they will, but if your Specsavers glasses break, we'll replace them for free"; and (c) "If your glasses aren't all they're cracked up to be, don't worry, we'll come to the rescue. For the next two weeks… you can take any Specsavers glasses to your nearest participating Budget Eyewear store and we'll replace them with a pair from our range – free of charge". 7 The Specsavers print advertisement contained the following phrases, which are underlined here to show the identity of certain words and phrases: (a) "If your OPSM glasses happen to break, and we're not saying they're going to, we'll exchange them with a pair from Specsavers with a 2 year guarantee, for free"; and (b) "If your prescription glasses aren't what you hoped for, don't stress – we're here to help. From Thursday 13th May to Thursday 27th May, take any broken OPSM glasses to your nearest Specsavers store and we'll give you a pair from our range – for free". 8 There has, of course, been a substitution of "OPSM" for "Specsavers". The changes made to Budget Eyewear's terms and conditions are as follows: 1. Prescription glasses or(excludes sunglasses) purchased at an Specsavers OPSM retail outlet in Australia that are found to be faulty broken will be replaced with a pair of prescription glasses or sunglasses from the Budget Eyewear Specsavers range with frames of your choiceup to the value of the Specsavers pair a maximum price of $399,. 2. Replacement pair will include equivalent lens type (i.e. single vision, bi-focal, multi-focal) and coatings will be made to the same prescription as the Specsavers OPSM pair. 3. Replacement is subject to the surrender of the Specsavers OPSM pair and proof of Specsavers OPSM purchase (i.e. must have an Specsavers OPSM receipt). 4. Offer cannot be exchanged for cash. 5. Participating stores only, offer is not available in the following Budget Eyewear stores: Ballina, Beenleigh, Browns Plains, Caloundra, Camberwell, Capalaba, Cleveland, Lismore, Margate, Morayfield and Sydney City. 6. Offer expires ends 1627/05/2010. 9 Budget Eyewear contends that these substitutions represent minor departures from the precise words used in the Works which are insufficient to avoid a finding of copyright infringement, particularly in the present case where it is clear and it is accepted that the text of Budget Eyewear's advertisements has been used as the source of the Specsavers print advertisement. Budget Eyewear submits that, at the least, Specsavers has taken a substantial part of each of the Works. 10 Budget Eyewear launched its advertising campaign on 1 May 2010. The advertisements stated that the offer was open till 16 May 2010. On 7 May Specsavers directed its advertising agency to utilise Budget Eyewear's campaign. On 13 May Specsavers placed its advertisements which stated that its offer was open from 13 May to 27 May 2010. Budget Eyewear immediately commenced proceedings on 14 May 2010. 11 Specsavers raises a number of matters in opposing the grant of interlocutory relief: * The Works are not works of a kind in which copyright can subsist. * As to subsistence of copyright, Specsavers says that the evidence of authorship is confusing and inadequate and that there is no evidence before the Court of originality. * The assignment of copyright to Budget Eyewear is not complete. * As to infringement, while acknowledging that the requisite causal connections are present, Specsavers says that there is no infringement when the whole of each work is considered separately. * There is no evidence of damage arising by reason of the alleged breach of copyright, nor is there any other evidence from Budget Eyewear to address the balance of convenience. Authorship and originality 12 BMF Advertising Pty Limited (BMF) is Budget Eyewear's advertising agency. Mr Rippon, the Managing Director of BMF, says that in late March and during April 2010 BMF was asked by Budget Eyewear to create an advertising campaign involving a replacement offer for Specsavers customers with Budget Eyewear prescription glasses. Mr Rippon says that employees of BMF 'created concepts for the campaign and presented them to Budget Eyewear'. The campaign was known as the 'See it like it is' campaign. Mr Rippon then says that the "concepts" selected by Budget Eyewear included the print advertisements and the radio script. His evidence is that the words used in the advertisements were written by Mr Cox, an employee of BMF and a resident of Sydney for several years, who wrote them as part of his duties as a BMF employee. 13 Specsavers submits that it may be inferred from Mr Rippon's evidence that some degree of instruction preceded the creation of the materials concerned. It submits that this casts considerable doubt on the originality of what it is that Mr Cox did. Specsavers also points to the evidence that employees of BMF created concepts for the campaign and presented them to Budget Eyewear. It submits that there is insufficient evidence of authorship in view of that stated contribution and the fact that BMF was asked by Budget Eyewear to create the concept. Specsavers suggests that the evidence is insufficient to establish that Mr Cox was solely the author of the works. 14 Even accepting that there is evidence of authorship through Mr Cox, Specsavers submits that there is no evidence of originality. It submits that the Budget Eyewear advertisements are merely a collection of simple phrases designed to express the simple series of concepts. It points out that protection is not and should not be given to simple phrases such as those used in the advertisements, but copyright requires originality in the expression of thought. Accepting that questions of originality must depend largely on the special facts of the case and be a question of degree, Specsavers relies on Kirk v J & R Fleming Limited [1929] MacG Cop Cas 44 where it was held that sentences such as 'let us make you a spare pair' and 'good sight is your most valuable asset' were not original such as to claim copyright. In that case, the defendant company had proved that practically the same words had been used by opticians in their advertisements for some years. Mr Justice Luxmoore concluded that the plaintiff had done nothing more than string together four ordinary and commonplace sentences, three of which were proved or admitted to have been in common use at the material date. There is no such evidence at this stage of these proceedings. 15 Budget Eyewear submits that the evidence sufficiently supports originality of the content of the advertisements for the purposes of obtaining an interlocutory injunction. It points to the whole of the process that occurred at BMF as described by Mr Rippon. This includes the attainment of instruction, the working up of the concept and then the work of presentation and execution. This leads, it submits, to an original creation by Mr Cox and, conceivably, of other employees of BMF. It submits that a degree of care and skill must have been exercised in order to convey simple ideas effectively in an advertisement and that various means could have been taken to express the concept. Budget Eyewear says that the originality of expression in the advertisements is supported by the fact that Specsavers had copied not only the idea but also the way in which Budget Eyewear expressed that concept. 16 There is no necessary inconsistency in that evidence. It is possible for others to be involved in the creation of the concept without having necessarily been involved in the expression of that concept. In view of the evidence of Mr Rippon, there is in my view sufficient evidence of authorship for the purposes of this application. BMF has assigned to Budget Eyewear all advertising materials in whatever form created for the "See it like it is" campaign including but not limited to any literary works and specific phrases used in the advertisements and radio script. 17 In my view Budget Eyewear has an arguable case that the way in which a concept is expressed in an advertisement intended to attract customers may involve originality that attracts copyright protection. It is necessary for the creator of the advertisement to choose words and expressions carefully and to put those words and phrases together in a particular considered way. Expressions such as 'if your glasses are not all they are cracked up to be, don't worry, we'll come to the rescue' may involve ordinary words, as does much literary language, but the fact that the words are commonplace does not mean that the way in which they are put together cannot have a degree of originality. 18 The terms and conditions included in the advertisements were written by Mr Sheedy, the Legal Officer of the Luxottica Retail Australia Pty Limited group of companies which, as mentioned above, includes Budget Eyewear. Mr Sheedy says that he drafted the terms and conditions to apply to and to be advertised as part of this particular advertising campaign and that he spent several hours writing them. I have more difficulty in coming to a conclusion that these terms and conditions attract copyright as an original literary work. It is not necessary to decide that issue for reasons which follow. Infringement 19 Specsavers acknowledges that the requisite causal connection is present, that is that it had access to, read and absorbed the Budget Eyewear advertisements and its contents. It points out that the proper comparison is between the Specsavers advertisement and each alleged copyright work, that is the whole work in each case. Specsavers submits that there is no infringement because Budget Eyewear's Works are a particular expression of a simple message or idea which, they say, can be set out as follows: 1. if your Specsavers/OPSM glasses break; 2. and the advertiser is not suggesting that they are likely to; 3. bring them to us (the advertiser); 4. we will replace them from our range; 5. for free. 20 Budget Eyewear submits that Specsavers tried to avoid infringement by the simple use of synonyms. Specsavers submits that many of the words in its advertisement have to be used to convey the simple message required by the concept. Once the limited number of elements of the message are identified, and assuming that identical expression might infringe, Specsavers says that synonyms are the only way to convey the concept. A further but related submission by Specsavers, is that the terms and conditions of which Mr Sheedy claims authorship are of such a commonplace and ordinary variety as to require at the very least practically verbatim copying of the whole before any infringement is to be found. 21 Specsavers' argument is, in effect, that as in IceTV Pty Limited v Nine Network Australia Pty Ltd (2009) 239 CLR 458, the use and arrangement of the words and phrases is 'obvious and prosaic' and lacks the requisite originality (IceTV at [43] per French CJ, Crennan and Kiefel JJ). The contrary view as submitted by Budget Eyewear, and one that I accept, is that Specsavers chose to adopt the same expression of the ideas where various means could have been used to express the concept. Budget Eyewear says that Specsavers could have copied the idea but exercised its own imagination to express that novel concept in new and different language rather than, in its contention, "using a thesaurus" to substitute a synonym. 22 I am satisfied that while the Specsavers advertisement is not an exact copy of the Budget Eyewear advertisements, they have taken a substantial part of each of the two print advertisements and the words used in the radio broadcast. Although I am not satisfied that the terms and conditions are subject to copyright, the Specsavers advertisement took a substantial part of the Budget Eyewear advertisements, even disregarding the terms and conditions. 23 It cannot, in my view, be said that Budget Eyewear has other than a prima facie case that, if they can establish facts to support their contentions, would be successful at trial. Balance of convenience 24 Specsavers points out that Budget Eyewear has led no evidence that touches on balance of convenience. There is no evidence of any damage attributable to damages that would be suffered by Budget Eyewear as the copyright owner, irreparable or otherwise, that may not be compensable by damages or an account of profits. Mr Roussel, the Managing Director of Specsavers, says that Specsavers decided to commence its own advertising campaign to minimise the potential damage caused from the style of advertising the subject of these proceedings. He details his concerns as to the damage that would be suffered by Specsavers if Budget Eyewear continued this advertising campaign and Specsavers were prevented from responding to it. That damage could extend to loss of existing customers and potential customers, which would result in loss not only to Specsavers as a company but also to the individual franchisees who own interests in and operate the Specsavers stores. 25 Specsavers submits that there has been no damage done to the copyright. It says that any damage would arise because of the use of the same idea, so that even if the same concept were expressed differently, the same damage would result. 26 Budget Eyewear submits that as the copyright owner, it is entitled to a period of exclusivity in its advertising campaign which constitutes its expression of its concept. It points out that it would lose that advantage of exclusivity if its copyright were not protected. Further if, as here, a competitor has copied that expression it would no longer be identified with Budget Eyewear. Budget Eyewear submits that it is damage to the copyright that is in question because it has lost the benefit of that ownership, being the right to the particular expression of a concept. 27 Budget Eyewear points out that the applicant in these proceeding is the copyright owner and not OPSM, which is the subject of the Specsavers advertisements. Budget Eyewear says that its concern is not whose glasses are replaced but whose copyright is breached. Further, it submits that it can be inferred that customers may believe that Budget Eyewear was the copier, or in the alternative, simply one of "the crowd". 28 I am satisfied that there is sufficient strength in the probability of ultimate success on the part of Budget Eyewear in establishing copyright in the advertising. If the injunction is not granted Budget Eyewear loses its ownership of the content of the advertisements which formed part of an advertising campaign which it conceived and which contained the expression of the concept, or the way in which that advertising concept was presented to the public. 29 This does not preclude Specsavers from creating its own expression of the concept, which, broadly speaking, could be described as the replacement of glasses on a certain basis. This would lessen the damage feared by Mr Roussel. I also note that the evidence is that while Specsavers had placed a series of its advertisements in newspapers on 13 May, there was no evidence of any future desire on its part to advertise further, although it may be noted that the Specsavers offer was stated to be open until 27 May. 30 The balance of convenience, which determines in this case what best achieves justice between the parties, favours Budget Eyewear's right to use the Works without the use by Specsavers of the results of its copying of the Works. It follows that upon the continuation of Budget Eyewear's undertaking as to damages given by its counsel, an order should be made for interlocutory relief as sought in the application. * I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett. Associate: Dated: 27 May 2010 Annexure A Annexure B