Microsoft Corporation & ORS v CPL Notting Hill Pty Ltd & Ord (No.5) [2019] FCCA 1255

FACTS

The Microsoft parties are the owner and exclusive Australian licensor of Copyright in the Windows 7 software. CPL Notting Hill (CPLNH) sells new computers pre-installed with Windows 7. CPL Distribution (CPLD) purchases computer hardware and software from third parties and sells it to CPLNH.  At first instance, Microsoft’s case was that CPLNH’s affixation of Certificates of Authenticity (COA) onto computers on which it had pre-installed the software breached the “System Builder Licence”, and the sale of 39 of these computers infringed Microsoft’s Copyright per s38 of the Copyright Act. Microsoft alleged further copyright infringement when CPLNH authorised purchasers of the computers to reproduce Widows 7 from data storage to RAM.  The primary judge upheld Microsoft’s claims, but provided no reasons for doing so. The primary judge also incorrectly made findings that had not been pleaded by any of the parties.  Given that the primary judge erred in finding the appellants liable for infringements that were not alleged against them, he necessarily erred in quantifying the additional damages against each of the appellants. On appeal, the case was remitted for re-hearing. The current case is a hearing on this remittal.

ISSUES

Nature of Further hearing

The question is whether the orders are made under s28 FCA Act (1)(C)- being remitting the proceeding, or (1)(f) being the grant of new trial.

Paragraph 3 of the Order remits for ‘re-hearing’ which does not fall clearly within the wording of s28(1)(C) or (f).  From the appeal reasons as a whole, O’Callaghan J intended in paragraph 3 of the order for the parties to have their cases heard again, submission made, and another judge to make findings and provide reasons with the benefit of seeing the witnesses under cross examination to form her own views as to credibility.  The intent was for the matter to be tried again but did not consider it appropriate for him as the appellate court to embark on a retrial. He therefore remitted the matter for re-hearing, for a new trial to occur upon remittal.

This does not give the Microsoft parties free reign to change the case pleaded at first trial, or to re-open their case to amend their pleadings.  In the cases of CPSU [1] and Fernando [2], remittal doesn’t preclude the possibility that a party can change their case, the key consideration is what is best in the interests of justice.  What the Full Court ordered is determined by regard to the reasons as a whole. 

Amendments Sought

The first amendment seeks to include the second and fourth respondent (the directors of the respective companies) in the Application for s115(2) damages, on the grounds that this omission was inadvertent. The alleged purpose was to align the application with the claim; as all respondents were on notice of the damages claim as it was addressed in the claim and the written opening submissions, the omission was likely inadvertent. This comes within the first class of cases where a party is permitted to reopen.[3]  The respondents have not put on any evidence they will not be able to meet the amendment, and Microsoft assures there will not be further evidence from them.  

The second amendment seeks to amend the Application and Claim to add a claim against all four respondents for liability for copyright infringement on the basis of joint tortfeasorship. The amended application seeks a declaration that “the Respondents have, as joint tortfeasors, infringed the First Applicant’s copyright in the Microsoft Programs” further to the declaration of copyright infringement by reproduction or authorising the reproduction of the software currently sought.  This was a new cause of auction and did not fall within the permitted classes in Bradshaw. Although the classes aren’t exhaustive, the judge was not persuaded the interests of justice are better served by permitting the addition of this new cause of action, and therefore refuses this amendment.  

 



[1] CPSU, The Community and Public Sector Union v Telstra Corporation Ltd (No 2) [2001] FCA 479 (1 May 2001).

[2] Fernando v Commonwealth of Australia [2014] FCAFC 181 (22 December 2014).