Federal Circuit Court gets a firm grip on jelly-wrestling photograph infringements
Online businesses deal with a lot of challenges, including sometimes imitations and knock-offs. In this case, one imitator found out of the hard way that imitation and copyright infringement not only doesn’t pay, it can come with a hefty damages order.


The case

In 2008, brothers John and Jake Weller started ‘Crazy Town Parties’, a small business that sells and rents party supplies in Queensland. One of their products is jelly-wrestling crystals that, when hydrated, fills a small inflatable pool (which the Weller brothers also supplied) in which purchasers can hold jelly-wrestling matches. The Weller brothers’ jelly product is a popular product in their business, particularly for summer parties and schoolies. To advertise and promote the product, the brothers took three photographs which they then used on the jelly crystal packaging, their various business websites including eBay and Amazon, and business social media.

In 2013, Jake Weller discovered an eBay seller ‘CrazyTownBrisbane’ which was selling a jelly product for jelly-wrestling parties. The eBay listing was accompanied by one of the Weller brothers’ photographs. The Weller brothers arranged for a purchase of jelly-wrestling crystals from the ‘CrazyTownBrisbane’ eBay store, and discovered that the product, when delivered, was an inferior version of their jelly product, and also reproduced one of their photographs on the packaging. The operator of the ‘CrazyTownBrisbane’ eBay store was also identified as a Mr Ian Smith of Brisbane. The Weller brothers soon filed suit against Mr Smith on the grounds of misleading and deceptive conduct, passing off, and copyright infringement.


The court decision

The case was heard before Justice Jarrett in the Federal Circuit Court of Australia. On the issues of consumer law and business reputation, Justice Jarrett found that Mr Smith, by conducting a business under the name ‘CrazyTownBrisbane’, had engaged in conduct that passed off the name and reputation of the Weller brothers’ ‘Crazy Town Parties’ business, and also conduct that was likely to mislead and deceive consumers in contravention of section 28 of the Australian Consumer Law.

On the issue of copyright infringement, Justice Jarrett found that Mr. Smith had clearly infringed copyright in the three photographs taken by the Weller brothers. Specifically, John Weller was the copyright owner of two of the photographs which he had taken, and Jake Weller was the copyright owner of the third photograph which he had taken. All three had been reproduced by Mr Smith without permission, either on the ‘CrazyTownBrisbane’ eBay listing, or on the packaging of his own jelly-wrestling products.

In his judgement, Justice Jarrett noted that the Weller brothers had sent Mr Smith a cease-and-desist notice through eBay’s message service, and that despite this notice, Mr Smith had continued to use the photographs. Justice Jarrett also dismissed Mr Smith’s argument that he had not known the copyright subsisted in the photographs, which he found online through a Google Image search, and thus any infringement was unintentional.


Relief and additional damages under section 115

The Weller brothers sought relief and damages from Mr Smith on a number of grounds including copyright infringement. In determining the appropriate relief, his Honour took into account the clear and unambiguous infringement by Mr Smith, and that the Weller brothers would not have granted Mr Smith a licence to use the photographs for his purposes, even if requested, and that as such awarding relief by a measure of royalties would not be sufficient. Justice Jarrett also noted that Mr Smith had, while using the infringing photographs, made several sales of his imitation jelly product.

Justice Jarrett ordered Mr Smith to pay not only damages for loss of profit and damage to the Weller brother’s business reputation, but also additional damages of $20,000 pursuant to section 115 of
Copyright Act. Under section 115, where an infringement of copyright is established a court can, if satisfied that it would be proper to do so, award additional damages as it deems appropriate. The factors the court would consider to award additional damages include the flagrancy of the infringement, the need to deter similar infringements, and the conduct of the defendant. On these grounds, Justice Jarrett was satisfied that there was a need to award additional damages against Mr Smith, commenting:

“Downloading or copying images from webpages on the internet is an easy thing to do. There is a need to send a clear message that doing so and using the images so obtained for commercial gain is … “piracy” and that an infringer ought to be treated accordingly. There is a clear need for deterrence to prevent similar infringements of copyright.” 

Case link:
Weller & Anor v Smith [2016] FCCA 2827


‘Broadcast’ and exclusive licences: WIN v Channel Nine round 2

In a week while the World Intellectual Property Organization has been debating broadcasting rights, the NSW courts here Down Under has also been looking at broadcasting, specifically in a contract sense.

In April 2016, the NSW Supreme Court delivered its judgment in WIN Corporation v Nine Network Australia Pty Ltd. The dispute was over the interpretation of an agreement between WIN corporation, the regional broadcaster, and Channel Nine who, as well as exclusively licensing its programs to WIN for free-to-air broadcast, also streamed its programs in regional Australia via its online 9Now service. In its judgment, the NSW Supreme Court ruled that “live streaming is not broadcasting” within the meaning of the Nine-WIN agreement, and therefore, “there is nothing to inhibit [Nine] from internet live streaming into areas covered by the WIN licence areas, or at all.”

WIN appealed the decision to the NSW Court of Appeal in October 2016. In filing its appeal, WIN argued, amongst other things, that the primary judge had adopted an unnecessarily narrow meaning of the word ‘broadcast’ in the WIN-Nine agreement, and failed to give it its plain, ordinary meaning. Essentially, WIN argued that the term “broadcast” as used in the WIN-Nine agreement should cover not only free-to-air broadcasts, but also internet streaming.

The NSW Court of Appeal dismissed WIN’s argument, and upheld the primary judgment. They found that viewed in the context of the WIN-Nine agreement, the word “broadcast” was correctly regarded by the primary judge as referring to broadcast by free-to-air transmission, not broadcast by any means, and that as such the exclusive licence granted from Channel Nine to WIN was only exclusive in restricting Channel Nine from licensing its programs to other free-to-air broadcasters in the area. The appellate court commented:

“A playwright may grant to another person an exclusive licence to stage his or her play in public in a particular area for a particular period. The exclusive quality of the agreement precludes the playwright not only from granting an equivalent right to someone else but also from themself staging the play in public within the area during the period. But the exclusive grant does not preclude the playwright from staging the play for their family at home or screening a filmed version in public or selling the printed script through bookshops.

The important point is that a person who has a collection of rights and grants an exclusive licence in respect of only some of those rights does not, through the exclusivity undertaking, promise the grantee not to exercise (or allow others to exercise) the remainder of the rights that is not the subject of the grant. The exclusivity undertaking restricts the grantor only as regards the rights granted.”

Case link:
WIN Corporation Pty Ltd v Nine Network Australia Pty Ltd [2016] NSWCA 297


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