AUSTRALIA:DYNAMIC SUPPLIES Vs. TONNEX INTERNATIONAL

[Anonymous]

AUSTRALIA:DYNAMIC SUPPLIES Vs. TONNEX INTERNATIONAL

In brief   
Dynamic Supplies created a compatibility chart for printer consumables. Tonnex created a similar compatibility chart which contained a number of the idiosyncrasies in the presentation of information from Dynamic Supplies’ compatibility chart.The Federal Court found Tonnex had infringed Dynamic Supplies’ copyright in its compatibility chart for printer consumables.The Court also held that Tonnex had made a number of representations which contravened what was formerly section 52 of the Trade Practices Act 1974 (Cth), now section 18 of the Australian Consumer Law.

Dynamic Supplies Pty Limited v Tonnex International Pty Limited [2011] FCA 362
On 13 April 2011, the Federal Court of Australia handed down its decision in Dynamic Supplies Pty Limited v Tonnex International Pty Limited [2011] FCA 362. The Court found Tonnex had infringed Dynamic Supplies’ copyright in its compatibility chart for printer consumables. The Court also held that Tonnex had made a number of representations which contravened what was formerly section 52 of the Trade Practices Act 1974 (Cth) (TPA) (now section 18 of the Australian Consumer Law).

Subsistence of copyright
Dynamic Supplies submitted that the copyright in its compatibility chart existed as it was a compilation in which originality was comprised in the layout and format of information, the arrangement and order of information, and the description of the products.

Justice Yates held that Mr Campbell, who was employed by Dynamic Supplies, used intellectual effort and his skill and judgment in compiling the compatibility chart. Justice Yates stated that it is erroneous to regard that the compatibility chart was an obvious or prosaic arrangement of information and that mere simplicity did not deprive a work of originality for the purposes of copyright.

The fundamental question is whether there is a sufficient degree of skill, judgment or labour. Justice Yates answered in the affirmative and held that copyright subsisted in the compatibility chart and was vested in Dynamic Supplies as Mr Campbell’s employer, by virtue of section 32 of the Copyright Act 1968 (Cth).

Infringement of copyright
Justice Yates went on to hold that Tonnex infringed Dynamic Supplies’ copyright in the compatibility chart. Tonnex’s own compatibility chart contained a number of idiosyncrasies in the presentation of information which originated from Dynamic Supplies’ compatibility chart. Justice Yates commented that it was inconceivable that the same idiosyncrasies in the Dynamic Supplies’ compatibility chart could find their way into Tonnex’s compatibility chart by pure chance.

Misleading and deceptive conduct
Dynamic Supplies also submitted that Tonnex made a number of statements which were misleading and deceptive. The Court largely upheld these submissions.

The Court held that the statement by Tonnex that all its products were 100% genuine OEM (Original Equipment Manufacturer) was misleading and deceptive. Justice Yates concluded that Tonnex could not be absolutely certain that its products were genuine (some of Tonnex’s wholesalers were not authorised distributors of OEM products). Justice Yates also noted that Tonnex did not have a system in place for systemically checking for the presence of counterfeit products. Consequently, Justice Yates concluded that there was a real risk that some products from Tonnex’s wholesalers might be counterfeits and therefore that Tonnex’s statement was misleading and deceptive.

Regarding Tonnex’s statement that it sells “genuine Australian products”, Justice Yates found it to be misleading and deceptive. Though Tonnex had issued a correction to make clear that the products were not manufactured in Australia, Justice Yates concluded that the statements were “powerful descriptors” and a substantial number of Tonnex’s customers were likely to understand the statement as referring to products made in Australia. Consequently, Justice Yates found this representation also contravened section 52 of the TPA.

Justice Yates also found Tonnex had made a misleading or deceptive representation by claiming the prizes offered by a HP promotion were tax-free based on the relevant legislative requirements under the Income Tax Assessment Act 1997 (Cth).

Further orders
On 13 April 2011, Justice Yates stood over the proceeding for a further directions hearing schedule in June 2011. What relief, if any, should be granted to Dynamic Supplies will be determined at the future hearing.

Lessons
This case highlights the need for caution in making representations about the authenticity and source of products, and the need to be able to support, on more than mere belief, positive representations that have been made about products sold by a supplier, even where they are sold to industry members.

The case also shows that simplicity will not deprive a work of the requisite originality for the subsistence of copyright. The focus remains on intellectual effort, namely the degree of skill, judgment or labour that has been involved.

[Author]

July 6, 2011 at 9:47 AM