Campaigntrack Pty Ltd v Real Estate Tool Box Pty Ltd

Campaigntrack Pty Ltd v Real Estate Tool Box Pty

Ltd [2022] FCAFC 112 (6 July 2022)

Last Updated: 6 July 2022

FEDERAL COURT OF AUSTRALIA

Campaigntrack Pty Ltd v Real Estate Tool Box Pty Ltd [2022] FCAFC 112

File number(s):

NSD 1015 of 2021

Judgment of:

GREENWOOD, CHEESEMAN AND MCELWAINE JJ

Date of judgment:

Catchwords:

6 July 2022

COPYRIGHT – appeal from decision of the primary judge

dismissing claims of copyright infringement, misuse of confidential

information, and various breaches of contract – where primary

judge upheld the claims in relation to only one of the respondents –

where appellant contends that its claims should have been upheld by

the primary judge against all respondents

COPYRIGHT – whether the primary judge erred in dismissing the

copyright infringement claims against the respondents – whether

the primary judge erred in not considering the evidence from 29

September 2016 in deciding what inferences should be drawn on the

appellant’s authorisation case – whether the primary judge erred in

not concluding that the appellant’s authorisation case was made out

against each of the respondents and within the period 29 September

2016 to June 2018 – grounds 1 to 7 allowed

COPYRIGHT – whether the primary judge erred in dismissing the

contract claims against the fourth and fifth respondents – where

there was no error in the approach of the primary judge – grounds

10, 11, 12, and 13 dismissed

Legislation:

Copyright Act 1968 (Cth) ss 13, 22(6), 31(1), 35 36(1), 36(1A), 101(1),

115(4)

Copyright Amendment (Digital Agenda) Act 2000 (Cth) ss 36,

101(1A)

Federal Court of Australia Act 1976 (Cth) ss 24, 37M, 37N

Federal Court Rules 2011 (Cth) r 36.54(c)

Cases cited:

ABT17 v Minister for Immigration and Border Protection (2020)

269 CLR 439; [2020] HCA 34

Allesch v Maunz (2000) 203 CLR 172; [2000] HCA 40

Australasian Performing Right Association Limited v Jain (1990)

26 FCR 53

Australasian Performing Right Association Limited v Metro on

George Pty Ltd (2004) 210 ALR 244; [2004] FCA 1123

Australian Tape Manufacturers Association Ltd the

Commonwealth (1993) 177 CLR 480; [1993] HCA 10

Bahonko v Sterjov (2008) 166 FCR 415; [2008] FCAFC 30

Banque Commerciale SA (En Liqn) v Akhil Holdings Ltd (1990) 169

CLR 279; [1990] HCA 11

Beale v Government Insurance Office of NSW (1997) 48 NSWLR

430

Browne v Dunn (1894) 6 R 67

Campaigntrack Pty Ltd v Real Estate Tool Box Pty Ltd (No 2)

[2021] FCA 1053

Campaigntrack Pty Ltd v Real Estate Tool Box Pty Ltd [2021] FCA

809

Cooper v Universal Music Australia Pty Ltd [2006] FCAFC 187;

(2006) 156 FCR 380

Coulton v Holcombe (1986) 162 CLR 1; [1986] HCA 33

Electricity Generation Corporation t/as Verve Energy v Woodside

Energy Ltd (2014) 251 CLR 640; [2014] HCA 7

Federal Commissioner of Taxation v Glencore Investment Pty Ltd

[2019] FCAFC 187; 281 FCR 219

Jadwan Pty Ltd v Rae and Partners and Others (2020) 278 FCR 1;

[2020] FCAFC 62

JR Consulting & Drafting Pty Ltd v Cummings (2016) 116 IPR 440;

[2016] FCAFC 20

Lee v Lee (2019) 266 CLR 129; [2019] HCA 28

Microsoft Corporation v PC Club Australia Pty Ltd (2005) 148 FCR

310; [2005] FCA 1522

Mifsud v Campbell (1991) 21 NSWLR 725

Minister for Immigration and Border Protection v SZVFW [2018]

HCA 30; (2018) 264 CLR 541

MWJ v The Queen (2005) 80 ALJR 329; [2005] HCA 74

Performing Right Society Ltd v Ciryl Theatrical Syndicate Ltd

[1924] 1 KB 1

Roadshow Films Pty Ltd v iiNet Limited (2012) 248 CLR 42; [2012]

HCA 16

Roadshow Films Pty Ltd v iiNet Ltd (2011) 194 FCR 285; [2011]

FCAFC 23

Seymour v Australian Broadcasting Commission (1977) 19 NSWLR

219

State Rail Authority of New South Wales v Earthline Contractors

Pty Ltd (in liq) [1999] HCA 3; (1999) 73 ALJR 306

Streetworx Pty Ltd v Artcraft Urban Group Pty Ltd (2014) 110 IPR

82; [2014] FCA 1366

United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR

1; [1985] HCA 49

Universal Music Australia Pty Ltd v Cooper (2005) 150 FCR 1;

[2005] FCA 972

Universal Music Australia Pty Ltd v Sharman Licence Holdings Ltd

(2005) 222 FCR 465; [2005] FCA 1242

University of New South Wales v Moorhouse (1975) 133 CLR 1;

[1975] HCA 26

Warren v Coombes [1979] HCA 9; (1979) 142 CLR 531

WEA v Hanimex [1987] FCA 379; (1987) 17 FCR 274

Winstone v Wurlitzer Automatic Phonograph Company of

Australia Pty ltd [1946] VicLawRp 16; [1946] VLR 338

Division:

Registry:

General Division

New South Wales

Intellectual Property

National Practice

Area:

Sub-area:

Copyright and Industrial Designs

359

Number of

paragraphs:

Date of hearing:

15, 16 February 2022

Counsel for the

Appellant:

Mr M Green SC and Mr W H Wu

Solicitor for the

Appellant:

McLean & Associates Solicitors

Mr H P T Bevan SC

Counsel for the

First, Second,

Fourth, Fifth, Sixth

and Seventh

Respondents:

Solicitor for the

First, Second,

Mills Oakley Lawyers

Fourth, Fifth, Sixth

and Seventh

Respondents:

ORDERS

NSD 1015 of 2021

BETWEEN:

CAMPAIGNTRACK PTY LTD ACN 142 537 988

Appellant

AND:

REAL ESTATE TOOL BOX PTY LTD ACN 614 827 379

First Respondent

BIGGIN & SCOTT CORPORATE PTY LTD ACN 072 450 689

Second Respondent

DAVID SEMMENS (and others named in the Schedule)

Third Respondent

ORDER MADE BY: GREENWOOD, CHEESEMAN AND MCELWAINE JJ

DATE OF ORDER: 6 JULY 2022

In these orders:

DreamDesk Source Code Works means the literary works in the source code

of the DreamDesk system and includes the three PHP files named “src\Functions

\edms.php”, “views.adhoc-edit.php” and “views\adhoc-edit2.php”;

DreamDesk Database and Table Works means the literary works in the

DreamDesk database and 18 tables within the database;

PDF Works means the literary or artistic works in the PDF templates in the

“client_data” folder in the DreamDesk system;

Toolbox system means the “Real Estate Tool Box” software system.

THE COURT ORDERS THAT:

1. The appeal be allowed.

2. Set aside orders 6 and 8 made on 31 August 2021 in proceeding NSD 772 of 2017.

3. In lieu thereof:

(a) Declare that the first, second, sixth and seventh respondents have between 29

September 2016 and June 2018 infringed:

(i) the copyright in the DreamDesk Source Code Works, by:

A. authorising the third respondent to reproduce the whole or a

substantial part of the DreamDesk Source Code Works in material

form in developing the Toolbox system;

B. authorising other developers of the Toolbox system to reproduce

a substantial part of the DreamDesk Source Code Works in

material form in developing the Toolbox system;

C. authorising users of the Toolbox system to reproduce a

substantial part of the DreamDesk Source Code Works in

material form in using the Toolbox system; and

(ii) the copyright in the DreamDesk Database and Table Works, by:

A. authorising the third respondent to reproduce a substantial part

of the DreamDesk Database and Table Works;

B. authorising users of the Toolbox system to reproduce a

substantial part of the DreamDesk Database and Table Works.

(b) Declare that the first respondent has infringed the copyright in the DreamDesk

Source Code Works, by authorising between 29 September 2016 and June 2018 the

third respondent to communicate a substantial part of the DreamDesk Source

Code Works to the public, in developing the Toolbox system.

(c) Declare that the fourth and fifth respondents have infringed between 29

September 2016 and June 2018:

(i) the copyright in the DreamDesk Database and Table Works, by

authorising the third respondent to reproduce a substantial part of the

DreamDesk Database and Table Works;

(ii) the copyright in the PDF Works, by authorising the third

respondent to reproduce the whole of the PDF Works in material form.

(d) The first, second, sixth and seventh respondents be permanently restrained

from reproducing or authorising the reproduction of the whole or a substantial

part of:

(i) the DreamDesk Source Code Works;

(ii) the DreamDesk Database and Table Works,

in material form, without the licence of the copyright owner.

(e) The first respondent be permanently restrained from communicating or

authorising the communication of the whole or a substantial part of the

DreamDesk Source Code Works to the public, without the licence of the copyright

owner.

(f) The fourth and fifth respondents be permanently restrained from reproducing

or authorising the reproduction of the whole or a substantial part of:

(i) the DreamDesk Database and Table Works;

(ii) the PDF Works

in material form, without the licence of the copyright owner.

(g) Within 28 days of the date of these orders, each of the first, second, fourth,

fifth, sixth and seventh respondents permanently destroy or erase, on oath or

affirmation, all reproductions of the DreamDesk Source Code Works, the

DreamDesk Database and Table Works and the PDF Works in their possession,

custody, power or control, such verification to set out steps undertaken to give

effect to the destruction or erasure.

(h) The matter be remitted to the primary judge for an inquiry as to damages or

profits in respect of copyright infringement.

4. The Parties file and exchange any submissions as to costs or other consequential orders

not to exceed 3 pages within 7 days.

5. The question of costs, and any consequential orders, be determined on the papers.

REASONS FOR JUDGMENT

GREENWOOD J:

Part I: Background and matters of principle

1. I have had the benefit of reading the final draft reasons for judgment of his Honour

Justice McElwaine and the final draft reasons of her Honour Justice Cheeseman. I agree

with the orders proposed by his Honour McElwaine J and his Honour’s reasoning

explanatory of the basis upon which the orders are to be made.

2. I respectfully disagree with the conclusion of her Honour Cheeseman J that the appeal

ought to be dismissed, and although there are a number of contextual matters of

principle identified by her Honour with which I agree, there are a number of significant

and material considerations that, in my view, ought to have been examined by the

primary judge and made the subject of exposed findings in quelling the controversy at

trial on the question of whether parties described as the “represented respondents” (and

I will return to these designations shortly), engaged in conduct properly characterised as

authorisation of the primary infringements (as found by the primary judge) of the

appellant’s copyright subsisting in particular source code (called the “DreamDesk source

code”), the “DreamDesk Database Work”, “Table Works” and “PDF Works” (the

“DreamDesk system”), by Mr Semmens and software developers acting under his

direction (Mr Gallagher and Mr Zhang), and by users, in the period on and from 29

September 2019 (and ultimately until June 2018).

3. I agree with both McElwaine J and Cheeseman J that the question of whether the

represented respondents engaged in conduct of authorising infringements of the

appellant’s copyright in the DreamDesk system by the developers, and users, of a

software program or system called the “Toolbox system” in the period from 29

September 2016 to June 2018 by reason of the “indifference” of the represented

respondents to the gravity of the matters of fact and law put to them (and to their

lawyers) by the appellant (and by its lawyers), was part of the controversy before the

primary judge. The grounds of appeal contend for error on the part of the primary judge

in failing to determine this aspect of the case on authorisation based upon the conduct of

the represented respondents in the period on and from 29 September 2016. The text of

the particular grounds of appeal going to this aspect of the case are discussed in the

reasons for judgment of McElwaine J and it is not necessary to recite them in these

reasons.

4. Moreover, this aspect of the case was an important part of the controversy not a matter

at the periphery of the controversy to be quelled by a trial of the action.

5. Thus, in my view, it was necessary for the primary judge in deciding the authorisation

case in the period on and after 29 September 2016 to address the matters of fact

reflected in the chronology of events that emerged between the parties on and after 29

September 2016 material to the authorisation case in that period in the context of the

primary judge’s findings made on the whole of the evidence. The reason that is so, put

analogically, is that there is a geological fault line running through the evidence at 29

September 2019 that meant that the seam of evidential strata did not just continue, but

came to be seen in a different setting. That which went before can be seen but altered by

the evidence of the events on and after 29 September 2019. The point is not that

evidence of the later events was overlooked by the primary judge in addressing the

general narrative of events and exchanges, but rather, in reasoning to a conclusion on

the authorisation case on and after 29 September 2019, evidence of material matters

were simply not weighed in the balance or, put another way, taken into account in

reasoning to a conclusion answering the statutory questions arising under s 36(1) and s

36(1A) of the Copyright Act 1968 (Cth) (the “Act”), in that period. It was a fact-intensive

question, and the material findings in the period prior to 29 September 2016, and facts

material to the question arising on and after 29 September 2016, had to be weighed in

the reasoning on the authorisation question in the period on and from 29 September

2016.

6. The appellant contends that the primary judge failed to address these matters.

7. The appellant also contends that a consideration of the material matters in evidence

before the primary judge concerning the period on and after 29 September 2016 taken in

conjunction with facts as found by the primary judge concerning conduct in the earlier

period, but nevertheless material to the authorisation case in the subsequent period,

properly gave rise to an inference of authorisation by the represented parties which

ought to have been drawn by the primary judge but, in contended error, was not drawn.

8. Before examining the contentions of the appellant on these questions, the following

matters of principle concerning appellate review ought to be noted:

(1) An appeal by way of re-hearing, such as the appeal in this case, is a procedure

for the correction of error. The identification of error, within the limits of the

grounds of appeal, whether of law or fact, on the part of the primary judge, is an

indispensable condition of a successful appeal: Minister for Immigration and

Border Protection v SZVFW [2018] HCA 30; (2018) 264 CLR 541 (“SZVFW”),

Gageler J at [30]. To the extent necessary to address the grounds on which the

primary judge is respectfully said to have erred, the Full Court is “obliged” to

conduct a “real review” of the trial and the primary judge’s reasons for, in this case,

dismissing the authorisation case in the period on and after 29 September 2016:

SZVFW, Gageler J at [32].

(2) In conducting a real review of the primary judge’s reasons, the judges

exercising the appellate jurisdiction of this Court cannot excuse themselves from

the “task”, central to the exercise of the appellate jurisdiction (in an appeal such as

this), of weighing conflicting evidence and deciding whether inferences ought to be

drawn or not, and reaching their own conclusions: SZVFW, Gageler J at [32].

(3) In applying the general standard of “correctness” to appellate review, the

majority in Warren v Coombes [1979] HCA 9; (1979) 142 CLR 531, Gibbs ACJ,

Jacobs and Murphy JJ, said this at 551 about the position of an appellate court in

determining proper inferences to be drawn from facts found or undisputed facts

(see also, SZVFW, Gageler J at [41]):

Shortly expressed, the established principles are, we think,

that in general an appellate court is in as good a position as

the trial judge to decide on the proper inference to be drawn

from facts which are undisputed or which, having been

disputed, are established by the findings of the trial judge.

In deciding what is the proper inference to be drawn, the

appellate court will give respect and weight to the

conclusion of the trial judge, but, once having reached its

own conclusion, will not shrink from giving effect to it.

(4) In undertaking a real review of the primary judge’s reasons within

the limits of, and the extent necessary to address the grounds of appeal,

the Full Court in applying the correctness standard must observe the

“natural limitations” that arise concerning the resolution of challenges

to the credibility of witnesses based on factors such as the demeanour

of the individuals in giving evidence (or impressions the primary judge

may have found about them). It may be that considerations alive in the

case before the primary judge are not necessarily fully reflected in the

transcript and, of course, the primary judge is the trier of fact (and the

application of the facts as found according to law), weighing all of the

evidence “viewed as a whole”: SZVFW, Gageler J at [33].

(5) Keeping the scope of these natural limitations in mind (otherwise

described by the majority in Warren v Coombes at 552 as the

“advantages enjoyed by the judge who conducted the trial”), the

majority also said this at 552:

[I]f the judges of appeal consider that in the circumstances

the trial judge was in no better position to decide the

particular question than they are themselves, or if, after

giving full weight to his [or her] decision, they consider that

it was wrong, they must discharge their duty and give effect

to their own judgment.

[emphasis added]

9. In this appeal, the central matter, put simply, is that in deciding whether the represented

respondents authorised infringements of the appellant’s copyright by users of the

“Toolbox system” on and after 29 September 2016, the primary judge failed to have

regard to, weigh and make findings about, important evidence of events on and after 29

September 2016 central to that question, and failed to have regard to material facts as

found in the period anterior to 29 September 2016 that inform the extent to which an

inference may be drawn concerning the contended indifference of the represented

respondents to things put to them on and from 29 September 2016.

10. In the context of that aspect of the controversy before the primary judge to be quelled by

the primary judge’s decision, the appeal court is in a position to consider the facts as

found, the evidence of the events on and from 29 September 2016 said not to have been

considered, and determine whether an inference is to be drawn which establishes the

contended case on authorisation in that period and whether failure to draw the

contended inference reflects error to be corrected in undertaking the necessary “real

review” according to the “correctness” standard of appellate review.

11. I respectfully disagree with her Honour Cheeseman J’s observation at [147] of her

Honour’s reasons that: “in the absence of error by the primary judge, it is not necessary

to embark upon a real review of all of the material that was before the primary judge in

order to revisit the primary judge’s rejection of the authorisation claims”. I do so because

that approach respectfully seems to me to invert the essential task of the Full Court

which is, within the limits of the grounds of appeal, and to the extent necessary to

address them, the appellate court must conduct a real review of the primary judge’s

judgment, the reasons explanatory of the findings, and the evidence said not to have

been addressed in the reasoning, all going to the authorisation case in the post-29

September 2016 period in order to decide whether the primary judgment reflects error

in failing to draw the contended inference and whether inferences are to be drawn.

12. As to other matters of principle, I accept that the extent of the primary judge’s duty to

“record the evidence given and the findings made depend, as the duty to give reasons

does, upon the circumstances of the particular case” and where “certain evidence” is

“important or critical” to a “proper determination” of claims made in the controversy to

be quelled by a decision of the primary judge, evidence of that character cannot be

“overlooked” and nor can the primary judge fail to “give consideration” to it. If such

evidence is “not referred to” in reasoning to a conclusion, certain inferences arise. All

“material” or “ultimate” findings of fact should be set out in the reasons. The application

of the law to the facts found in determining the claims ought to be set out in the reasons.

As to these matters, see Beale v Government Insurance Office of NSW (1997) 48

NSWLR 430 at 442-444, emphasised by Cheeseman J. I also accept that the reasons of

the primary judge may properly “omit attention to peripheral issues” (State Rail

Authority of New South Wales v Earthline Contractors Pty Ltd (in liq) [1999] HCA 3;

(1999) 73 ALJR 306, Kirby J at [90]), but that is not true of evidence characterised as

“important or critical” or “material” to a “proper determination” (that is, a proper

quelling) of the claims of a plaintiff or applicant at trial.

13. Where, as here, the contention is of the latter kind, the obligation of the appellate court

is to conduct a “real review” of the primary judge’s decision as explained by the primary

judge’s reasons, according to the “correctness” standard of appellate review: no more, no

less.

14. It is now necessary to consider the findings of the primary judge in relation to the

relevant events giving rise to the controversy, and the particular findings and reasoning

concerning the events on and after 29 September 2016 material to the authorisation case

in that period.

Part II: The relevant events and findings made by the primary judge about them

15. The so-called “represented respondents” (all represented by the same legal team) are

Biggin & Scott Corporate Pty Ltd (“Biggin & Scott” or “B&S”), Real Estate Tool Box Pty

Ltd (“RETB”), Dream Desk Pty Ltd (“DDPL”), Mr Meissner, Mr Stoner and Ms Bartels.

In these observations, I am concerned with findings made by the primary judge relevant,

ultimately, to the question of whether B&S, Mr Stoner, Ms Bartels and RETB authorised,

in the later period, by their conduct, infringements of the copyright subsisting in the

appellant’s “DreamDesk” software (and related works) by users of the “Toolbox system”

and conduct of Mr Semmens (and the software developers under his direction), of

infringing the appellant’s copyright in developing the Toolbox system. So far as any

other aspect of the appeal is concerned in relation to the fifth respondent, Mr Meissner,

and the sixth respondent, DDPL, I agree with the observations of McElwaine J. I also

agree generally with the observations of McElwaine J in relation to B&S, RETB, Mr

Stoner and Ms Bartels, but I also wish to make the observations reflected in these

reasons in relation to those respondents.

16. Biggin & Scott in the entire period relevant to these proceedings was the franchisor of a

group of real estate agencies operating in Victoria. The group of agencies had been using

an online software system called “Campaigntrack” from 2006 to 2009 and then again in

2013. Through that software system, the appellant, Campaigntrack Pty Ltd (“CPL”),

provided online marketing and sales services to the real estate industry.

17. The Campaigntrack software system had a range of functionalities. It is not necessary to

describe them here.

18. In November 2014, Mr Meissner operated (and continued to operate throughout the

relevant events) an advertising agency called “JGM Advertising Pty Ltd” (“JGM”). In

November 2014, Mr Meissner met with Mr Semmens and his business partner, Mr

Ewart. In the meeting, Mr Semmens and Mr Ewart proposed creating a new internet

online real estate marketing system and sought investment from Mr Meissner for the

venture called the “DreamDesk venture”. On 11 March 2015, Mr Meissner, Mr Semmens

and Mr Ewart agreed to incorporate DDPL to pursue that venture. They agreed the

proportionate distribution of the shares to be issued in DDPL once Mr Meissner (and

JGM) had recouped the investment. That allocation did not occur due to events relating

to the conduct of Mr Semmens. DDPL was incorporated ultimately on 12 March 2015.

Mr Meissner was its sole director and shareholder. Mr Semmens became an

independent contractor to DDPL for the venture and worked on the “technical and

software development” of the DreamDesk system.

19. The DreamDesk system developed by Mr Semmens had two principal components. The

first was a “web application” comprising a software program provided to users over the

internet, executed on a remote server to deliver particular functionality. It enabled a real

estate agent to quote, manage, invoice and market real estate campaigns and create

artwork and enable email marketing. The second was a “relational database” arranged in

a particular way for associating (or relating) particular records (data) one to the other

within the database.

20. Mr Stoner was a director of B&S. Between March and May 2015, Mr Stoner was

approached by Mr Ewart who suggested that B&S consider moving from the

Campaigntrack system to the DreamDesk system. Ultimately, agreement was reached

and Mr Stoner for the Biggin & Scott franchisor entity (and the group of agencies), on

the one hand, and Mr Meissner for DDPL, on the other hand, entered into a written

agreement by which B&S became a client of DDPL. The B&S group went “live” on the

DreamDesk platform on 17 August 2015.

21. On 26 May 2016, Mr Semmens signed two important documents both of which

contained an acceptance (admission) that whilst an officer of DDPL, he had “deliberately

used confidential information and trade secrets and other intellectual property

(including but not limited to the ‘Process 55” system) being the property of TDG and

Campaign Track so as to develop the business of Dream Desk”. He also acknowledged

(or at least asserted) that “Mr Martin Ewart, a person associated with [DDPL] is and was

at all material times aware of the conduct I have engaged in as described above”. Mr

Semmens also acknowledged that he had “deliberately gained access to the private email

accounts of [Mr Farrugia] the CEO of The Digital Group and [Mr Stewart] Exec

Chairman of The Digital Group”. Both documents contained the statements and the full

text is set out by the primary judge at [22].

22. The primary judge described these signed statements of Mr Semmens as a statement

that he had copied an earlier system called “Process 55” (a web-based real estate

marketing system), when he developed the DreamDesk system.

23. The primary judge explained the context in which Mr Semmens came to make these

statements. The primary judge explained that by September 2013, The Digital Group Pty

Ltd (“DGPL”), a company founded by Mr Semmens and his brother-in-law, Mr Farrugia,

owned the intellectual property (copyright) in Process 55. Mr Stewart (mentioned above

in the statement and who had joined the DGPL venture), and Mr Farrugia, held the view

that Mr Semmens “had stolen the intellectual property of [DGPL] in the development of

the DreamDesk system”: PJ, [21].

24. On 28 May 2016, Mr Semmens and Mr Ewart told Mr Meissner of these matters. On 30

May 2016, Mr Stewart and Mr Farrugia told Mr Meissner of their concern that Mr

Semmens had used DGPL’s intellectual property in developing the DreamDesk

functionality (in particular, the “PDF Distiller” functionality enabling images to be used

in real estate marketing campaigns), without authority.

25. As a result, Mr Meissner decided to either buy the title to Process 55 to solve the

problem created by Mr Semmens or sell the DreamDesk system.

26. However, in May/June 2016, CPL and another company called “New Litho Pty Ltd”

(“NLPL”) agreed in principle with DGPL to purchase the Process 55 system. They

ultimately did so by an agreement with DGPL in August 2016. CPL and NLPL also

wanted to purchase the DreamDesk system. In July 2016, DDPL (Mr Meissner) agreed

to sell DreamDesk to CPL and NLPL for $50,000. DDPL sought a licence-back of a

particular feature called “Dashboard” which displayed on a homepage or intranet page

key information for a user at the “front-end” of the DreamDesk system, and other

functionality. The agreement for the sale of the intellectual property in the DreamDesk

system was signed on 18 July 2016 between DDPL, CPL and NLPL. It expressly excluded

any intellectual property that DreamDesk may have derived from Process 55 or

functionality of DreamDesk used necessarily in conjunction with Process 55 to enable

operation of the DreamDesk system.

27. The agreement also provided for an exclusive Australia-wide licence-back to DDPL to

use the DreamDesk intellectual property for the purpose of operating the “DreamDesk

Business” until 3 October 2016.

28. On 30 July 2016, Mr Semmens made enquiries of a company called “Aleyant Systems

LLC” (“Aleyant”) which owned a web-based online design system called “eDocBuilder”

(otherwise called the “EDB Tool” or the “Tool”). On 2 August 2016, Mr Semmens had

discussions with Aleyant and was given an online demonstration of the EDB Tool used

for designing data publishing systems.

29. The primary judge drew an inference that the point of the enquiry was to determine

whether the Tool could be used to deliver a new system with the same eventual

functionality as DreamDesk. At [37], the primary judge first notes his conclusion

(derived from the analysis later appearing in his Honour’s reasons) that the new system,

to be called “Toolbox” was developed “by first copying substantial parts, probably the

whole, of the source code of DreamDesk” [emphasis added] by Mr Semmens and

developers acting under his instructions.

30. On 3 August 2016, Mr Semmens met with Mr Stoner (who, apart from being a director,

was also the CEO of Biggin & Scott), at B&S’s Head Office. Mr Semmens told Mr Stoner

that he “could create a system with similar functionality to DreamDesk and

Campaigntrack” and asked Mr Stoner whether he (meaning B&S) would be interested in

“developing the [new] system”: PJ, [38].

31. At that meeting, Mr Stoner showed Mr Semmens a letter he had written and had already

signed. The text of the letter is set out at [38] of the primary judge’s reasons. Mr Stoner

said in the letter that he was happy for the EDB Tool to be used as a “PDF delivery

system”, and as to the arrangement with Mr Semmens he said this: “You are instructed

to build a web to print delivery system that does not breach any other [company’s] IP or

ownership, in particular DreamDesk or Campaign Track” [emphasis added]. To make

that point even clearer, Mr Stoner also said this in the letter: “In simple terms we do not

want [anything] used that can be claimed as owned by the 2 companies above”

[emphasis added].

32. Although Mr Stoner had handwritten both his own name (above which he had signed the

letter) and the name of Mr Semmens at the foot of the letter in order for him to also sign,

Mr Semmens did not sign the letter.

33. At [40], the primary judge inferred, from the terms of the letter, that the development of

the new Toolbox system was already underway on 3 August 2016. Having reviewed

aspects of Mr Stoner’s oral evidence, the primary judge reached four findings at [43] of

the reasons.

34. First, Mr Stoner knew that Mr Semmens had admitted to “using Process 55 in

developing DreamDesk”.

35. Second, it was “hardly surprising” that Mr Stoner wanted an assurance from Mr

Semmens that he would not infringe (again) the intellectual property rights of others in

building the new web to print delivery system).

36. Third, Mr Stoner “trusted” Mr Semmens not to infringe the rights of DDPL or CPL (and

NLPL) in developing the new system.

37. Fourth, Mr Stoner did not want Mr Semmens to misuse the intellectual property of

others in developing the new system.

38. Ms Bartels (a director of B&S and later, company secretary of RETB) was told by Mr

Stoner of the substance of the letter. Mr Bartels left it to Mr Stoner to determine the

specifications of the new system. The primary judge made two findings at [45]

concerning Ms Bartels.

39. First, Ms Bartels was likely to have known that Mr Semmens had admitted to using

Process 55 to develop DreamDesk and that this “had caused problems”.

40. Second, Ms Bartels did not want Mr Semmens to misuse the intellectual property of

others in developing the new system.

41. Because the licence-back to DDPL would end on 3 October 2016, the new system had to

be developed by Mr Semmens and made functional and available online to the B&S

group of agencies by 3 October 2016, a period of merely two months from the date of the

meeting with Mr Stoner on 3 August 2016. The licence-back to DDPL in effect facilitated

a sub-licence to DDPL’s client, B&S and the B&S agencies. The primary judge observes

that Mr Semmens most likely started to develop the Toolbox system on or about 9

August 2016: PJ, [54].

42. As to the EDB Tool, the primary judge observes that Mr Stoner gave evidence about

changes that had been made to the “username” and “password” for the EDB template.

The detail of it does not presently matter. The primary judge concluded that the events

did “reflect adversely on Mr Stoner’s credibility”, but the primary judge observes that the

explanation was that Mr Stoner wanted his own login details to be created in order to

provide those details to the appellant’s solicitor “so as not to provide them with a

document which indicated the involvement of Mr Semmens” in the relevant events (that

is, the use of the EDB Tool by Mr Semmens to develop a new system).

43. From 16 August 2016 to 19 September 2016, Mr Semmens ran a number of “migration

scripts” concerning the DreamDesk system. The detail of it is set out at PJ, [56] and PJ,

[57]. Mr Semmens accepted that he had done so: PJ, [58]. Mr Semmens gave evidence

that Ms Bartels told him to keep the client data up to date: PJ, [59]. Doing so did not

copy any of CPL’s intellectual property: PJ, [64].

44. During the period of the development of Toolbox, Ms Bartels, in discussions with Ms

Keys of CPL on 18 August 2016, sought to convey the impression that B&S were

considering moving to the Campaigntrack system, whilst at the same time B&S was

actually seeking to develop the new Toolbox system (PJ, [71]), and Mr Stoner’s position

in the period 18 August 2016 to 6 September 2016 was that the Campaigntrack system

was his “least preferred option” for use by the group: PJ, [72]. The primary judge

accepted that in this period, B&S conveyed to CPL that it was actually considering using

Campaigntrack’s system for the group when, in fact, the Campaigntrack system was

B&S’s “least preferred option”: PJ, [73].

45. At [75], the primary judge commences a description of the early development of the

Toolbox system from 26 August 2016. The primary judge concludes that it was likely

that Mr Meissner was aware of these developments and the involvement of DDPL people

and his own (JGM) staff: PJ, [78]. The primary judge accepted that one of the DDPL

actors, Ms Neal, was using an email address for her engagement in work on Toolbox that

was not her DDPL email.

46. From [84], the primary judge describes the ongoing development of Toolbox from 8

September 2016. For example, on 8 September 2016, Ms Neal and Ms Bartels exchanged

emails copied to Mr Semmens and Mr Stoner regarding aspects of the functionality of

the Toolbox system and the integration of data with the real estate agency’s customer

relationship management system.

47. In mid-August 2016, Mr Stoner decided that the Toolbox venture ought to be

undertaken through a separate entity: PJ, [70]. Mr Stoner, in proposing a “structure”,

was speaking for B&S. B&S (and its partners in the venture) were to have a controlling

interest of 70%, with Mr Semmens (and his partners) a 30% interest. The “objective”

was to have each B&S agency on the new Toolbox system by 3 October 2016. Further, Mr

Stoner, Ms Bartels and B&S were taking an active role to ensure the success of the new

venture by bringing in production revenue from the agencies, sharing information about

use of Toolbox and by Mr Stoner and Ms Bartels persuading customers to move to the

Toolbox system. As to these matters, see PJ, [86].

48. On 14 September 2016, Ms Keys (and Mr Dean) of CPL, met with Ms Bartels. The

primary judge notes that Ms Bartels gave evidence that she demonstrated features of the

DreamDesk system which were not part of the Campaigntrack system to them. Ms

Bartels gave evidence that she did so “in the hope that [CPL] would keep DreamDesk

alive for B&S so we did not ultimately have to go down the track of launching a new

system”. Ms Keys, however, gave evidence that Ms Bartels had said that everything is

“pretty much set for B&S to come back to Campaigntrack”; the “only issue” was whether

Campaigntrack could accommodate an intranet feature; and “at this point, it is just a

matter of going through the contract and finalising the pricing”: PJ, [89]. The primary

judge preferred the version of the facts given in evidence by Ms Keys: PJ, [90].

49. RETB was incorporated on 15 September 2016 with Mr Stoner as the sole director and a

95% shareholder. Ms Bartels was appointed as company secretary and a 5% shareholder.

RETB became the trustee of a unit trust on 1 October 2016 to conduct the new Toolbox

venture.

50. On 6 or 7 September 2016, CPL and NLPL paid the purchase price for DreamDesk to

DDPL and by email asked Mr Meissner for the passwords which were to be provided as

part of the settlement. By 16 September 2016, the passwords had not been provided. On

16 September 2016, Ms Neal (DDPL) sent an email to Ms Keys advising that Mr

Meissner was on a cruise ship and not contactable until 18/19 September 2016. Having

considered Mr Meissner’s evidence and an email he caused to be sent on 16 September

2016, the primary judge formed the view that Mr Meissner could have been contacted.

51. On 21 September 2016, Mr Stoner sent an email to Ms Keys copied to Mr Meissner and

Ms Bartels expressing concern that DreamDesk would be “shut off” on and from 3

October 2016. The primary judge accepted (at [100](1)) that Mr Stoner, by the email,

sought to convey the impression that CPL was putting B&S in a difficult position

commercially, and that if CPL turned off DreamDesk on 3 October 2016, B&S would

have “little option but to “go manual”, whereas the true position was that “Mr Stoner

considered that he would likely have available a competing system which even if not fully

functional, would be sufficiently operational to avoid ‘going manual’”.

52. At [100](3), the primary judge accepted that Mr Stoner’s “communication did not

convey that he was, together with others, developing a competing system and his

comments to [CPL, Ms Keys] were intended to convey that his interests were more

confined than they really were” [emphasis added]. At [102], the primary judge observes

that “despite Mr Stoner’s evidence”, it was probable that at least one of Mr Stoner’s

purposes of the email was to “buy time” in order to “further develop or complete the

development of the Toolbox system”: PJ, [102].

53. Thus, it seems that the primary judge had accepted, at least in the context of this email,

that Mr Stoner was willing to convey an impression that he knew to be incorrect in order

to suit the particular circumstances of the day.

54. On 22 September 2016, Mr Semmens provided Ms Keys with some degree of access to

the server on which DreamDesk was stored. However, at some time between 19 and 22

September 2016, Mr Semmens deleted migration scripts from the “virtual server” and

from the DreamDesk system: PJ, [104].

55. Mr Watts is the CEO of NLPL. On 22 September 2016, he discovered that RETB had

been incorporated; that the Toolbox domain name had been registered to RETB; and

that when the Toolbox internet protocol address was entered into a browser, it resolved

to a login page for the DreamDesk system. On 23 September 2016, CPL and NLPL began

investigating whether the Toolbox system had been copied from the DreamDesk system.

The primary judge at [106] concluded that both systems were running on the computer

of Mr Semmens having regard to the IP address for his computer.

56. On 26 September 2016, Mr Stoner sent an email to Ms Keys saying that Biggin & Scott

would not be entering into a contract with CPL.

57. Mr Stoner sought an extension from 3 October 2016 for four weeks to continue using

DreamDesk.

58. On 26 September 2016, Ms Keys spoke to Mr Meissner asking why CPL had not yet

received access to the DreamDesk system and particularly the Amazon web server. After

speaking to Ms Neal and Mr Semmens, Mr Meissner sent an email to Ms Keys saying

that access would be fixed that morning.

59. On 27 September 2016, Mr Stoner again requested a four week extension of access to

DreamDesk until 24 October 2016.

60. In the course of CPL attempting to establish whether the Toolbox system had been

copied from the DreamDesk system, enquiries were made of Mr Semmens for access to a

facility called the “DreamDesk Git repository” which through access in the repository to

features and interactions called “commits and branches” would establish when “things

occurred”. At [113], [115] and [116], the primary judge concluded that Mr Semmens had

deleted these features of the repository for versions of the DreamDesk system and the

Toolbox system and found that his doing so “made it ‘virtually impossible’ for [CPL] to

prove when certain things occurred, in particular various development pathways of the

DreamDesk system”.

Part III: Aspects of the primary judge’s other findings

61. Before turning to the events on and from 29 September 2016, the following findings of

the primary judge ought to be noted:

(1) At [263], the primary judge accepted the conclusions of Mr Taylor (a Court

appointed IT expert), set out in his report that substantial parts of the

corresponding code in the Toolbox system had been copied from DreamDesk.

(2) At [275], the primary judge found that knowledge of the development of the

Toolbox system lay principally with Mr Semmens (and developers under his

direction, Mr Gallagher and Mr Zhang), and Ms Neal. The primary judge

concluded at [275] that the appellant’s evidence demonstrated that Toolbox was

developed by reproducing DreamDesk.

(3) At [278](2), the primary judge found that Mr Semmens made the deletions

from the DreamDesk Git repository to prevent CPL from having access to evidence

probative of copying of the DreamDesk system or parts of it.

(4) At [278](1) and (3), the primary judge found that Mr Semmens deleted

migration scripts and “RSYNC commands” because he did not want CPL to know

that he had copied data, although neither act constituted infringement. He did not

take those steps on instructions from Ms Bartels or B&S.

(5) At [278](4), the primary judge found that Mr Semmens altered a particular Git

commit log to prevent CPL obtaining probative evidence of copying from the

DreamDesk system. He did not do so on the instructions of Mr Stoner, B&S or

RETB.

(6) At [278](6), the primary judge found that Mr Semmens took the steps there

described in order to make it more difficult for CPL to establish its case.

(7) At [278](7), (8), (10) and (11), the primary judge found that Mr Semmens took

the steps there described which had the effect of removing information relevant to

whether an infringement had occurred.

(8) At [280], the primary judge found that Mr Semmens was the “main developer”

of the Toolbox system and that he reproduced a substantial part of the source code

works and the whole of three “PHP Files” in the DreamDesk system.

(9) At [281], the primary judge found that Mr Semmens copied the whole or

substantial parts of the DreamDesk source code (and system) and then proceeded

to modify it or caused Mr Gallagher and Mr Zhang to modify it under his

supervision.

(10) At [282] to [284], the primary judge found that Mr Semmens reproduced the

DreamDesk source code as a whole at least as early as early August 2016. The

primary judge also found that reproductions occurred when the DreamDesk

system was used, loaded, edited or modified by Mr Semmens. The primary judge

found at [284] and [285] that Mr Semmens reproduced a substantial part of each

of the “Database Work”, the “Table Works” and the “PDF works” (see the primary

judge’s definitions of those works at [193] and [194]).

Part IV: The steps taken by CPL and NLPL and events occurring on and from 29

September 2016

62. As earlier mentioned at [55] of these reasons, on 22 September 2016, CPL and NLPL

discovered particular events in relation to RETB and the Toolbox domain registration.

As also mentioned earlier, investigations then began immediately to determine whether

DreamDesk had been copied (as was ultimately found) in developing the Toolbox

system. Other aspects of those investigations were mentioned earlier including

difficulties CPL had on 28 September 2016 in securing access to the Git repository and

the requests made by Mr Stoner on 26 September and 27 September 2016 for a four

week extension from CPL of the licence-back of the DreamDesk system until 24 October

2016.

63. On 29 September 2016, McLean & Associates (Ms McLean), the solicitors for CPL, sent

an email to Mr Meissner (DDPL) attaching a letter of that date referring to the request

(of Mr Stoner) to extend the licence-back to DDPL to enable B&S to enjoy continuing use

of DreamDesk. The letter noted DDPL’s failure to perform its obligations under the Sale

Agreement which seems to be a reference to the delays in providing CPL with all of the

necessary login details, passwords, server access (and the various matters concerning

access set out in an email of 28 September 2016 from Mr Ryan Allen of CPL). Mr Allen

had been retained by CPL on 23 September 2016 to investigate possible copying of

DreamDesk in developing the Toolbox system. At [122] to [124], the primary judge

describes the following things revealed by Mr Allen’s forensic searches between 3

October 2016 and 10 October 2016:

122. On 3 October 2016, Mr Allen found evidence of RSYNC commands being run on

the production server of the DreamDesk system. An RSYNC command is a

command to copy files from one location to another. The production server is the

service used to provide the DreamDesk system to customers.

123. On 4 October 2016, Mr Allen installed a software named “sudoreplay” on the

production server of the DreamDesk system, to record and allow playback of a

user’s activity on the server. The videos logged by the sudoreplay software showed:

(1) on 5 October 2016, the running of an RSYNC command for files in a sub-folder

“images”, found in a sub-folder for Whitford Property. Whitford Property was a

real estate agency operating in Victoria;

(2) on 5 October 2016, the running of an RSYNC command for files in a sub-folder

for Biggin & Scott;

(3) on 6 October 2016, the running of an RSYNC command for files in a sub-folder

“images”, found in a Biggin & Scott sub-folder; and

(4) on 10 October 2016, the running of an RSYNC command for files in a

sub-folder “approved”, found in a Biggin & Scott sub-folder.

124. All of the above RSYNC commands copied files to an identified target folder,

which included the word “toolbox”, at an identical IP address. In

cross-examination, Mr Semmens stated that he ran the RSYNC commands.

64. Returning to the letter of 29 September 2016, Ms McLean also notes the direct request

by B&S (Mr Stoner’s requests) to extend the licence. The letter also notes two other

matters in these terms:

• Our clients have become aware of improper access and

duplication of code which is intellectual property now owned by

our clients;

• Our clients are also aware of the incorporation and involvement

of Real Estate Tool Box Pty Ltd.

[emphasis added]

65. The letter advised that CPL (and NLPL) would extend the licence to DDPL (and thus to

B&S) for one week from 3 October 2016 subject to four matters.

66. First, DDPL not permit use of the DreamDesk platform otherwise than in the ordinary

course of business.

67. Second, B&S not use the platform otherwise than in the ordinary course of business.

68. Third, all relevant parties involved provide an undertaking to CPL that the intellectual

property already obtained or duplicated will not be used for any purpose.

69. Fourth, all relevant parties involved provide an undertaking to CPL that the intellectual

property already obtained or duplicated will be destroyed immediately.

70. The letter observes that absent the undertaking from all relevant parties in those terms,

the extension would not be granted. The letter called for a response by 3.30pm the

following day.

71. Mr Meissner responded by email the next day at 1.23pm saying that, in principle, he

agreed to the “terms” subject to a number of comments.

72. First, one copy of the DreamDesk platform would need to be kept, in his view, until

DDPL had been paid by its customers (including B&S). Mr Meissner contended that

DDPL would need access to data to deal with those customers and also suppliers.

73. Second, DDPL believed that everything required to be done under the Sale Agreement

had been “supplied this week”.

74. Third, Mr Meissner said this: “I understand what is required under the contract, and it

will be enforced by myself in terms of end date; non use of [the] platform; inappropriate

use by current clients in anything apart from its present usage, and my participation in

any area other than as a print broker”.

75. Fourth, Mr Meissner said that he did not understand the reference to “another

company” (which was Mr Meissner’s reference to RETB).

76. Fifth, Mr Meissner observed that if the licence-back was to be extended, B&S would be

told that “as of midnight October 10 2016 [DDPL] will no longer support the platform

and web to print [the licence from CPL having come to an end]”.

77. Sixth, as to complaints made by CPL about improper duplication of code, Mr Meissner

said this: “The IP purchased by your client is being used solely by [DDPL] contractors

(no one else) for its original function only, and [Biggin & Scott] only has login to enter

campaign related material” [emphasis added].

78. On 3 October 2016, Mr Maletic of Mills Oakley, the solicitors representing all relevant

parties except Mr Semmens, sent an email to Ms McLean requesting, on behalf of B&S,

an extension of the licence until 17 October 2016. Mr Maletic observed that B&S is a

large franchisor with over 40 franchisees. He observed that more time would be required

to enable the franchisees to transfer their requirements “off the platform” while the

licence was on foot. Mr Maletic observed that a date of 24 October 2016 had been sought

(by Mr Stoner) but, as a matter of compromise, a date of 17 October 2016 was now

sought by B&S “in good faith”. The letter confirmed that B&S would provide the

undertakings as sought.

79. On 5 October 2016, McLean & Associates sent an email to Mr Meissner attaching a letter

of that date and an undertaking addressed to Mr Meissner, DDPL and Mr Semmens. The

proposed extension would be on terms of the provision of the undertaking and payment

of a fee of $5,000. The undertaking was framed in terms of addressing the conduct

complaint of improper access and duplication of the DreamDesk code and apprehension

about the existence and role of RETB. The elements of the undertaking to be given by

DDPL, Mr Meissner and Mr Semmens were these:

[DDPL], Meissner and [Semmens] undertake and agree that they

individually or jointly with any other person or entity will not use,

market, sell, copy, duplicate or in any way enable or facilitate the

development of any system by making use of any of the intellectual

property which comprises and/or relates to the system of [DreamDesk],

which is now owned by [CPL] to the extent that they will not permit,

now or at any time in the future, access by any third party to the system

known as [DreamDesk] for any use other than its ordinary permissible

use.

[DDPL], Meissner and [Semmens] also undertake and agree that they

will immediately cause to be returned to [CPL], or if unable to be

returned then destroyed so as to render useless, any of [DreamDesk’s]

intellectual property or code which has already been copied, duplicated

or otherwise provided to any third party or entity of any description

whatsoever.

80. Mr Meissner responded by email on 5 October 2016 at 9.29pm agreeing to all “Re

Meissner”. As to Mr Semmens, Mr Meissner said that he could not speak for him and

that Mr Semmens had never used DreamDesk “unless under DDPL authority”. As to the

concern about use, Mr Meissner said that “no part [of DreamDesk] can, or ever was

used, by others”.

81. On 5 October 2016 at 9.09am, Ms Neal of DDPL sent an email to “all” (which seems to

be Mr Semmens, Mr Adams and Ms Davies of DDPL, Mr Stoner of B&S and Mr

Meissner) offering to “come in” after 1.00pm to provide help. On 5 October 2016, Ms

Neal responded, suggesting certain steps and Mr Semmens responded suggesting that

help in relation to templates and a simple guide on using the new system would be

helpful.

82. On 6 October 2016, Ms Neal sent an email to Mr Semmens, Ms Page (B&S), Mr Stoner,

Mr Meissner and Mr Adams and Ms Davies at DDPL addressing aspects of the domain,

the sub-domain and “endpoint” issues and other matters. On 6 October 2016, Ms Page

sent an email to all the above people advising that B&S would be ready by 7 October

2016.

83. On 6 October 2016 at 12.03pm, Ms McLean pressed Mr Meissner to secure the execution

of the undertaking by Mr Semmens. At 3.57pm that day, Mr Maletic sent an email to Ms

McLean attaching the undertaking duly executed by B&S (by Mr Stoner and Ms Bartels),

RETB (by Mr Stoner and Ms Bartels) and by Mr Stoner and Ms Bartels on their own

behalf. Mr Maletic also sought confirmation of the extension of the licence until 17

October 2016.

84. On 6 October 2016 at 9.43am, Mr Stoner sent the undertaking that B&S, RETB and he

and Ms Bartels were being called upon to sign (which was in the same terms as the

undertaking sent to Mr Meissner, DDPL and Mr Semmens to sign) to Mr Semmens. Mr

Semmens gave evidence that he and Mr Stoner, “possibly we discussed it”, but said that

he would not have signed it because he believed it “restricted me from working in the

industry”. That, of course, was not the textual terms of the undertaking. Mr Semmens

also said that he would not sign the undertaking in any event due to his intense dislike of

CPL. At 3.57pm that day (about six hours later), the undertaking signed by Mr Stoner

and Ms Bartels on their own behalf and on behalf of B&S and RETB was sent to Ms

McLean.

85. On 7 October 2016 at 2.32pm, Ms McLean responded to Mr Maletic’s email noting that

Mr Meissner had not procured the signature of one party (Mr Semmens) to the

undertaking and the fee of $5,000 had not been paid. Ms McLean then asked the

following question of Mr Maletic in the light of the difficulty CPL had experienced in

securing the signature of Mr Semmens to the undertaking: “In the meantime, we have

been asked by our client to enquire what system your client is moving over to. The

purpose of that request is in order for our client to gauge whether there would be any

possible reasons for the resistance to the provision of the undertaking requested”.

86. On 7 October 2016 at 5.44pm, Ms McLean sent an email to Mr Maletic advising that

DreamDesk would not be extended beyond 10 October 2016 as no undertaking had been

provided by Mr Semmens; the licence fee had not been paid; and Mr Meissner had not

yet made clear that he would cease operating DreamDesk on 10 October 2016.

87. On 7 October 2016, Ms Page (5.06pm) sent an email to Mr Semmens (copied to Mr

Stoner), re “tool box” asking about the allocation of templates, brochures, templates

onto Drop Box, mail cards, B&B, MUI and other matters concerned with

implementation issues for the Toolbox system.

88. On 9 October 2016, Mr Maletic sent an email to Ms McLean arising out of his

discussions with Mr Meissner, putting the proposition to Ms McLean that DDPL was

content for the licence to be extended to B&S until 17 October 2016 and that Mr

Meissner was willing and able to advance payment for the licence fee upon confirmation

as to the amount owing and the account into which the funds had been paid. On 9

October 2016, Ms McLean responded saying that DDPL had been paying a monthly fee

and knew the account details for payment. Ms McLean observed that, in any event, Mr

Maletic’s email did not address (and nor had Mr Meissner addressed in a satisfactory

fashion) the request for an undertaking to be provided by Mr Semmens. In that context,

Ms McLean said this:

Our client is already aware of activity that has given rise to the

necessity to seek the undertakings that have been requested. If no

questionable activity is anticipated then we would have expected that

there would have been absolutely no resistance to what was sought.

This is not the case and accordingly, our client has made a decision

based on the response received.

[emphasis added]

89. On 10 October 2016, Ms McLean sent an email to Mr Meissner pressing for the payment

of the fee of $5,000. Ms McLean confirmed the account details and pressed Mr Meissner

for the undertaking from Mr Semmens which, if not given, would result in the licence

ending that day. Mr Meissner responded that day saying that he had no control over Mr

Semmens who was taking his own legal advice.

90. On 10 October 2016 at 5.45pm, Ms McLean advised Mr Maletic that she looked forward

to hearing when Mr Semmens had received his advice, and also looked forward to

receiving confirmation of payment of the fee. Ms McLean observed that upon both

events occurring, access to DreamDesk would be reinstated.

91. That evening, B&S’s access to DreamDesk was brought to an end.

92. The Toolbox system went “live” on 10 October 2016.

93. At [149], the primary judge accepted that Mr Semmens took a series of steps on 11

October 2016 that deleted particular records, copied others and ran a copy of a

DreamDesk sub-domain which remained undisclosed to CPL.

94. In November 2016, the parties agreed to appoint an independent forensic IT expert, Mr

Justin Geri, to inspect the Toolbox system and report as to whether there was any

potential copying from the DreamDesk system. Mr Geri is the director of Forensic IT at

Ferrier Hodgson Forensics. In order for Mr Geri to undertake that task, Ms McLean

made a request of Mr Maletic for his clients to provide Mr Geri with access to the

“GitHub repository” which logs all changes made in the development of Toolbox. On 24

November 2016, Mr Maletic provided Ms McLean with a log file which the

Court-appointed expert, Mr Taylor, later identified and described as having had multiple

changes made to it including 233 author changes from (Semmens at dreamdesk) to

(Semmens at a private email address) and 54 changes in “commit descriptions”. Mr

Stoner gave evidence that he did not ask Mr Semmens to make the changes in the log file

to be provided for Mr Geri’s analysis but also said that Mr Semmens had “told him” that

“he had changed it [the Git log repository) because he had the email address in there

[the repository] of DreamDesk” and “I gave clear instructions to David to remove any

mention of DreamDesk” in that “when David was building the system, I made very clear

I didn’t want DreamDesk mentioned in anything” : PJ, [153] and [154].

95. At [155], the primary judge found that Mr Stoner and B&S did not want Toolbox to be

based in any way on the intellectual property related to DreamDesk, and did not want

there to be “any argument that it was so related or references to DreamDesk from which

such an argument could be made”, and “it was for that reason that Mr Stoner did not

want DreamDesk to be ‘mentioned in anything’”. The primary judge concluded that Mr

Semmens realised there was, in fact, “mention of DreamDesk, or some similar

description, in the Toolbox system which he wished to conceal”. The primary judge

found that Mr Semmens did not take those steps on the instruction of any other person.

The primary judge accepted Mr Stoner’s evidence that he did not ask Mr Semmens to

change the log file.

96. As to Mr Semmens, the primary judge makes a number of adverse observations about

the conduct of Mr Semmens at [157] to [161] read in conjunction with [164] to [168]. It is

not necessary to repeat them all. They are serious especially in the context of his conduct

overall as found. It is sufficient to note that at [168] the primary judge finds that:

Given the evidence as a whole, I conclude that Mr Semmens altered or

purposefully deleted some files and accounts, and disposed of

computers, in order to prevent access to files by [CPL] through

compulsory processes available to [CPL] in the present proceeding.

97. In Mr Geri’s preliminary report of 19 January 2017, he observes that based on

discussions with CPL and Mr Semmens, his understanding was that Mr Semmens was a

key developer of both DreamDesk and Toolbox. He makes a number of observations at

paras 27 and 28 about significant similarities in tables, front end menu options and

functionality. He observes that a comparison of 51 different front end options available

to users was undertaken between the two systems which identified “exact matches”

between 47 of the 51 options examined. At paras 30 and 31, Mr Geri expresses the

following view:

30. In relation to my instructions regarding “the potential copying or duplication of

any intellectual property” in my opinion there is a high probability that intellectual

property purchased by [CPL] has been used in the development of Real Estate

Toolbox. The applications have been developed by the same developer who had

access to both systems during the development process.

31. To forensically confirm if [CPL] intellectual property has been used in the

development of Real Estate Toolbox a forensic examination of the servers

responsible for hosting and managing the Real Estate Toolbox application should

be undertaken. Further to this an examination of any device used by Mr Semmens

during the development [of] both applications should also be undertaken to

identify if any [CPL] intellectual [property] exists on the devices.

[emphasis added]

98. On 19 January 2017, Ms McLean sent an email to Mr Maletic arising out of the opinion

expressed by Mr Geri of a “high probability” that the intellectual property of CPL had

been used in the development of Toolbox. Ms McLean called upon Mr Maletic’s clients to

cease operating the “Real Estate Tool Box system” failing which proceedings would be

commenced.

99. On 20 January 2017, Mr Maletic responded on behalf of at least B&S, RETB, Mr Stoner

and Ms Bartels (although he seems to make an observation on behalf of Mr Semmens as

well). He said these things.

100. First, Mr Maletic said that to “enable” his clients to respond to the demand, CPL would

need to “clarify” “what the intellectual property (IP) is that your client asserts that it

owns”. Of course, at this point, Mr Maletic’s clients well understood that the DreamDesk

software and its component systems earlier developed by Mr Semmens was the source of

CPL’s rights and that it had been acquired from DDPL with a licence-back to 3 October

2016 with controversy over the extension of the licence. Moreover, B&S, RETB, Mr

Stoner, Ms Bartels, Meissner and DDPL (but not Mr Semmens) had all given a signed

undertaking about the rights in DreamDesk. Mr Maletic, standing in the shoes of B&S,

RETB, Mr Stoner and Ms Bartels, was asking, on their behalf, for something they well

knew and comprehensively understood. Mr Maletic himself had directly engaged in the

licence-back discussions, the extension and the undertaking.

101. Second, Mr Maletic asked for proof of ownership of the IP including copies of any

agreements as between DDPL and CPL and proof of assignment of the copyright.

102. Third, his clients asked for any contracts or agreements that would have the effect of

excluding Mr Semmens from maintaining any rights in the DreamDesk IP said to be

owned by CPL.

103. Fourth, Mr Maletic’s clients sought details of prejudice suffered by CPL and the “basis

you say your client’s IP has been breached”.

104. The point of Ms McLean’s email was the question of addressing Mr Geri’s opinion

arising out of the concerns expressed on 29 September 2016 which ultimately gave rise

to the undertaking of 3 October 2016, and Mr Geri’s engagement. Mr Maletic’s clients

wanted to say, in effect: “We don’t understand what you’re talking about”. Mr Maletic’s

email of 20 January 2017 is an exercise, at least in part, in obfuscation and deflection by

his clients for whom, at all relevant times, he spoke. That approach was compounded by

Mr Maletic’s email of 2 February 2017 when he said that due to no response to his email

of 20 January 2017, his clients would proceed on the basis that they denied that CPL

owned the intellectual property it asserted it owned and denied any breach of CPL’s

rights.

105. On 3 February 2017, Ms McLean responded by letter emailed that day challenging the

bona fides of Mr Maletic’s clients in adopting the position reflected in Mr Maletic’s email

of 20 January 2017. Taking up Mr Geri’s report, Ms McLean noted that Mr Maletic’s

clients had not provided Mr Geri with unfettered access to accounts, schema, front end

code, the GitHub repository or access to a complete forensic copy of the server for

Toolbox for analysis.

106. Next, the letter makes the point about the curiosity of being called upon to clarify the IP

in issue, and the bona fides of Mr Maletic’s clients in doing so. The letter says this

(among other observations on this topic:

• You have asked us to clarify what the “intellectual property” (IP)

is that our client asserts that it owns.

• We find it curious that your client chooses to raise this query now,

after an allegation by our client that your client has copied or

otherwise improperly duplicated or caused to be duplicated the

intellectual property that our client purchased. Your client

acknowledged our client’s rights in relation to the intellectual

property regarding the [DreamDesk] system so to raise that

question now bespeaks an absence of bona fides.

107. Notwithstanding that observation, the letter, in response to the request, sets out the

cluster of works comprising the DreamDesk system acquired from DDPL, and CPL’s

rights in Process 55 acquired by CPL to overcome the difficulty of Mr Semmens having

“deliberately used” the intellectual property of others in developing the business of

DreamDesk (as he had conceded in writing).

108. As to the production of documents in proof of CPL’s ownership of the intellectual

property, the letter says this:

• In circumstances where your client has, at all times been aware of

and acknowledged our client’s rights as an owner of the

intellectual property relating to the [DreamDesk] system and that

that has been confirmed to your client by the director of [DDPL],

Mr Meissner, we do not consider it to be necessary to provide you

with a copy of any of the agreements which relate to the

intellectual property which it now owns.

109. The letter then addresses the question of prejudice. It then sets out contentions as to

breach, all of which so far as Mr Semmens is concerned, were made good at trial as to

primary infringement of DreamDesk. The letter concluded by seeking an undertaking

that any use of Toolbox be ceased by 6 February 2017.

110. Mr Maletic responded on 9 February 2017. As to the complaint about a lack of unfettered

access for Mr Geri to the material, sources or sites relating to Toolbox identified in detail

in Ms McLean’s letter, Mr Maletic characterised those requests as “an attempt to fish for

evidence that may support your client”.

111. As to the source and ownership of the intellectual property in the component works of

DreamDesk, Mr Maletic’s clients maintained, in effect, the earlier position adopted on

20 January 2017. As to breach, Mr Maletic’s clients asserted that no breach of CPL’s

rights had occurred and that Toolbox does not use the DreamDesk source code nor any

other component of DreamDesk.

112. Of course, Toolbox did use the source code and other works of DreamDesk, as ultimately

found at trial.

113. More importantly, notwithstanding the complaint made on 29 September 2016, the

giving of the undertaking on 3 October 2016 in the face of that complaint and the

requests for extension of the licence, and the preliminary report of Mr Geri, Mr Maletic’s

clients had no independent basis for any of the contentions made in the correspondence

by Mr Maletic, all of which were shown at trial to be wrong so far as title to DreamDesk

works were concerned and the extensive use and copying of DreamDesk to build

Toolbox.

114. In the result, Mr Maletic’s clients refused to cease using Toolbox and the litigation

ensued.

115. Biggin & Scott continued to use Toolbox until June 2018. RETB ceased trading at that

time. Biggin & Scott transitioned to a new system in April 2018 called “REDHQ”. Biggin

& Scott, Ms Bartels and Mr Stoner’s family company all hold shares in REDHQ.

116. Mr Semmens is the Chief Technology Officer of REDHQ.

117. Each day that users of the Toolbox system used that system (from the moment it went

“live” (PJ, [289])) it contained a substantial part of the DreamDesk source code. At the

time it went live, Toolbox was based, in substantial part, on the DreamDesk database

and table structures. Importantly, the use of the Toolbox system by users (including the

more than 40 agencies in the B&S group and B&S itself) “causes the source code to be

copied into memory and run” and thus “use of Toolbox involved a reproduction of a

substantial part of the DreamDesk source code”: PJ, [289] and [290]. Each and every

day after 29 September 2016, Mr Stoner, Ms Bartels, B&S and RETB were on notice of a

serious contention that use by users involved an act of infringement as Toolbox was run

copying and replicating the DreamDesk source code and other works. On 3 October

2016, they had given an undertaking not to use any system making use of any of the

intellectual property comprising the DreamDesk system. By 19 January 2017, they knew

that Mr Geri, the director of Forensic IT at Ferrier Hodgson Forensics had expressed the

preliminary view (as an informed view of an expert) that there was a “high probability”

that CPL’s intellectual property in DreamDesk had been used in the development of

Toolbox. Mr Stoner and Ms Bartels also knew as they confronted the events on and after

29 September 2016 that the problem they were now confronting through the contended

actions of Mr Semmens (and developers under his direction) in developing Toolbox

concerned a person who had previously caused a similar problem for Mr Meissner and

DDPL by Mr Semmens’ conduct of using, unlawfully, Process 55 to develop DreamDesk,

which in turn had led to the blunt statements of protection or insurance recited in Mr

Stoner’s letter of 3 August 2016. Now, the possible conduct of Mr Semmens that Mr

Stoner was concerned about inherent in the letter of 3 August 2016 and against which he

sought to protect himself (and Ms Bartels, and RETB as it would emerge in due course)

had emerged as a real and present danger for the Toolbox system and B&S, RETB, Mr

Stoner and Ms Bartels.

118. Yet, each day (until June 2018 as it transpired), Mr Stoner, Ms Bartels, B&S and RETB,

were content for the B&S group members and other users to use Toolbox engaging

reproductions of the DreamDesk source code (as users caused the source code to be

copied into memory and run) and other infringements of component parts of

DreamDesk (that is, Source Code Works, the Database Work, the Table Works and the

Menu Work).

119. They must also be taken to have been content with the obfuscating response of Mr

Maletic on 20 January 2017 in responding to the concerns put to them by CPL, by asking

questions about matters they already well understood rather than addressing the

affirmative things that might have been done to investigate the concerns put to them by

CPL through Ms McLean and the concerns raised by the preliminary view expressed by

Mr Geri. Ms McLean correctly called into question the bona fides of the response as

explained in her letter attached to the email of 3 February 2017. Mr Maletic’s clients well

knew and understood the source of the rights being asserted against them.

Part V: The reasoning concerning the authorisation case against Mr Stoner, Ms

Bartels, B&S and RETB

120. The authorisation case against B&S was that it authorised the reproduction of a

substantial part of the Database Work, the Table Works and the Menu Work and as to

use by users of Toolbox, B&S was said to have authorised the reproduction of a

substantial part of the Source Code Works, the Database Work, the Table Works and the

Menu Work. B&S was also said to have authorised the loading, editing and modification

of Toolbox.

121. As against RETB, the authorisation case was that it authorised the reproduction of a

substantial part of the Source Code Works, the Database Work, the Table Works and the

Menu Work. It was said to have authorised the communication of a substantial part of

the Source Code Works and the Menu Work.

122. As to use by users, RETB was said to have authorised their use in the same way that B&S

had authorised infringements by users.

123. As against Mr Stoner and Ms Bartels, they were said to have authorised reproductions of

a substantial part of the Database Work and the Table Works; a reproduction or

communication of a substantial part of the Source Code Works and Menu Work; and as

to use by users of the Toolbox system, a reproduction of a substantial part of the Source

Code Works, the Database Work, the Table Works and the Menu Work. They were also

said to have authorised the loading, editing or modification of Toolbox.

124. The authorisation case against all four of these respondents was described by the

primary judge as a claim that they authorised the infringements of the developers

(essentially in bringing Toolbox into “live” existence) and that they authorised the

infringements by users: PJ, [296]. No distinction is made by the primary judge between

the period up to 29 September 2016 and the materiality of evidence of events engaging

the four respondents on and after 29 September 2016. The primary judge dismissed the

authorisation case against all four of these respondents in its entirety.

125. The primary judge dismissed the authorisation case according to the following exposed

reasoning.

(1) Because Mr Stoner knew of the events concerning Mr Semmens and Process 55,

it was “hardly surprising” that Mr Stoner sought the assurance of 3 August 2016

from him not to infringe the rights of others in building a new web to print delivery

system. The primary judge repeats his earlier finding that Mr Stoner “trusted” Mr

Semmens not to infringe the rights of DDPL or CPL and that he “did not want Mr

Semmens to misuse the intellectual property belonging to others” in developing

Toolbox. The primary judge reached the same conclusion concerning Ms Bartels.

The primary judge finds that they each considered that Mr Semmens “could build

the [new] system in sufficient time given his expertise”: PJ, [297](1).

(2) It was not unusual that Mr Stoner and Ms Bartels “left the development of the

system to Mr Semmens”: PJ, [297](2).

(3) The instructions given to Mr Semmens by B&S (by Mr Stoner) were to build a

computer system with functionality equivalent to DreamDesk without infringing

the intellectual property of others: PJ, [297](3).

(4) Neither Mr Stoner nor Ms Bartels (nor B&S nor RETB) conducted any

independent audit or verification that the system developed for them did not

infringe another company’s intellectual property rights. The primary judge did not

regard that matter either “of itself” or “cumulatively with other circumstances”

(that is, any other circumstances) as establishing authorisation: PJ, [297](4). The

primary judge then said this at [297[(4):

Rather, that is a reflection of the facts that: an instruction

had been given not to infringement intellectual property

rights; each of Mr Stoner and Ms Bartels trusted there

would be no infringement; in all likelihood, neither turned

their mind to whether an independent audit should be

carried out; and a lack of ready means to carry out an

independent audit in the time frame which would have been

required.

[emphasis added]

(5) Thus, neither Mr Stoner nor Ms Bartels (nor, therefore, B&S nor

RETB) likely ever turned their minds to an independent audit. The

reference to a lack of ready means to carry out an independent audit “in

the time frame” seems to suggest that the primary judge had in mind

the time frame to build the new system. Mr Stoner and Ms Bartels

could have turned their mind to an independent audit and did have the

time to facilitate such an audit during the course of the events on and

after 29 September 2016 until a view had been reached through such a

process.

(6) Mr Stoner did not tamper with the Git log repository; he did cause

B&S to pay the invoices of Mr Semmens, unsurprisingly; he or B&S or

RETB loaned money to Mr Semmens, again unsurprisingly, as Mr

Stoner, Ms Bartels and Mr Semmens were “friends”: PJ, [297](5) and

(6).

(7) The primary judge makes the conclusionary observation that RETB

did not communicate or authorise a communication of a substantial

part of the source code: PJ, [298].

(8) Nor did RETB, B&S, Mr Stoner and/or Ms Bartels authorise a

reproduction of a substantial part of the Source Code Works, the

Database Work, the Table Works and/or the Menu Work: PJ, [299].

Also at [299], the conclusionary observation is stated that none of

RETB, B&S, Mr Stoner or Ms Bartels “relevantly authorise[d]”

reproduction of any of the works in issue “either through the user’s use

of the Toolbox system”, or the loading, editing or modification of

Toolbox.

(9) At [300], the primary judge observes that, “it might be difficult to

infer authorisation where the relevant person [any of RETB, B&S, Mr

Stoner and Ms Bartels] ‘neither knew nor had reason to suspect that the

act might be done’”. The primary judge then said this at [300]:

It has not been established that RETB, [B&S], Mr Stoner or

Ms Bartels knew (or that they should reasonably have

known) that any of the works had been reproduced in the

Toolbox system or that they knew that use by users of the

loading, editing or modification of the Toolbox system by

developers or others might involve reproduction of a

substantial part of the DreamDesk system. This is not a case

where the act of using the Toolbox system was known

necessarily to involve an act of reproduction, such as might

be the case in providing a photocopier for the purpose of

copying library books. I am not satisfied that [B&S], RETB,

Mr Stoner or Ms Bartels relevantly authorised any

infringement, whether of Mr Semmens or of other

developers or users.

[emphasis added]

126. All members of the Full Court sitting on this appeal accept and agree that the question of

whether any or all of B&S, RETB, Mr Stoner and Ms Bartels authorised infringements of

the copyright subsisting in, “put simply”, the DreamDesk works, by users of Toolbox (or

by Mr Semmens in developing Toolbox and modifying it), by adopting a position of

indifference to the sequence of events that emerged on and from 29 September 2016,

was in controversy before the primary judge and thus formed part of the appellant’s case

at trial.

127. However, there is no discussion by the primary judge of that case and no analysis of or

findings concerning the evidence and matters material to that case in the reasoning in

determining the authorisation case made on and after 29 September 2016. There is no

mention of the letter of 29 September 2016, the exchanges that followed it, the seeking,

and ultimately obtaining of, the undertakings, the circumstance that Mr Stoner knew

that Mr Semmens had not signed the important letter of 3 August 2016 as put to him by

Mr Stoner or the undertaking put to Mr Semmens which had been discussed with Mr

Stoner. Nor is there any discussion of the implications of Mr Geri’s report or any of the

matters relevant to that part of the case observed at [117] to [119] of these reasons.

128. To the extent that the primary judge took the view that each of the above four

respondents had “no reason to suspect” that the relevant act might be done by users

using Toolbox at any time after 29 September 2016; or that on and from 29 September

2016 they had no reason to suspect that Toolbox embodied substantial parts of the

relevant DreamDesk works; or that from 29 September 2016 there was no basis on

which “they should reasonably have known” that use “might involve” reproducing a

substantial part of the DreamDesk system, the conclusions simply cannot stand in the

face of the whole of the evidence.

129. It was no answer on and from 29 September 2016 for Mr Stoner to say that he “trusted”

Mr Semmens or that he and Ms Bartels, B&S and RETB, all “trusted” Mr Semmens, or

that there was no material or serious matters of fact concerning their “friend” and his

contended conduct. Mr Stoner knew that his trusted friend Mr Semmens had previously

engaged in conduct of the kind now being asserted against him concerning DreamDesk.

Rather than investigate the issue properly by giving Mr Geri the necessary

comprehensive forensic access to the files and repository, Mr Stoner, Ms Bartels, B&S

and RETB denied any use of DreamDesk works, kept using Toolbox until June 2018 and,

in the meantime, put the appellant to the cost of proving use of DreamDesk works in

Toolbox. Had each of those four respondents confronted the complaints made about

copying of DreamDesk and enabled and facilitated a proper investigation of that

question, the time and cost of proving use by Mr Semmens might well have been

avoided. There, no doubt, would have been an authorisation case to address, but

authorisation in the post-investigation stage would have taken a very different course

entirely, once it became revealed, as a question of clear fact (as it ultimately became a

clear matter of fact in the evidence at trial), that Mr Semmens had comprehensively

copied and reproduced the DreamDesk intellectual property in circumstances where he

had no right to do so and knew he had no right to do so. Once the real facts became clear

to Mr Stoner, Ms Bartels, B&S and RETB, it would have also become clear that users

would not be entitled to continue to use Toolbox in that state of affairs and thus the

authorisation case in the period on and from 29 September 2016 would largely not even

have arisen.

130. For my part, I am satisfied that each of the four respondents authorised the

infringements on and after 29 September 2016.

131. As to s 36(1A)(a) of the Act, Mr Stoner and Ms Bartels enjoyed the power to investigate

the contentions being addressed to them by the appellant through its lawyers on and

from 29 September 2016 and they enjoyed the power to stop Toolbox going live until the

concerns put to them by the appellant through its lawyer (against the background of the

contextual matters they knew, as already discussed) had been properly addressed. They

could have co-operated with Mr Geri. They enjoyed the power to enable access to the

sources, files and repositories Mr Geri sought to access to forensically examine the

extent to which their trusted friend, Mr Semmens, had reproduced the DreamDesk

works in creating the Toolbox system in the compressed time within which he did so.

They also enjoyed the power to prevent obfuscation on the question of “what rights?” by

their lawyer asking questions about things they well knew and already understood. They

also enjoyed such power for and on behalf of B&S and RETB.

132. As to s 36(1A)(b) and the relationship between the four respondents and Mr Semmens,

Mr Stoner and Ms Bartels trusted Mr Semmens and he was their “friend”. As things

turned out, he extensively abused their trust (just as he had abused, as they knew, the

rights of the owner of Process 55). As from 29 September 2016, put anecdotally, a “red

light” was flashing. It was no longer open to Mr Stoner and Ms Bartels to deny the

conduct put to them, without proper investigation simply on the basis that Mr Semmens

was trusted by them not to have substantially used DreamDesk works in developing

Toolbox, as found (a denial they were in no position to make in any event from their own

knowledge).

133. As to s 36(1A)(c), I am satisfied that neither Mr Stoner nor Ms Bartels took reasonable

steps to prevent or avoid the doing of the relevant acts so far as use by users each day

engaged infringement and, by not acting reasonably, they allowed the Toolbox system,

incorporating substantial reproductions of DreamDesk works to be used.

134. In our system of adversarial litigation, there is little more a party can reasonably do

(short of the undesirable notion of taking the law into their own hands) than assert the

position it contends for, through its lawyers, as a matter of fact and law in the context of

the history of the dealings between the parties and suggest processes that would enable,

in a case such as this, a full and frank examination of the relevant source codes, logs,

files, repositories and other sources by an expert in order to determine whether the

works of another have been reproduced as contended and whether use by users would,

each day, engage continuing infringements by reason of that circumstances. If

respondents to such a claim, such as Mr Stoner, Ms Bartels, B&S and RETB, are not the

authors (developers) of the impugned system (in this case, the Toolbox system), and are

not in a position to know from their own direct knowledge whether the contentions are

true or false or likely to be true or false, denying use, denying breach and denying an

effective mechanism for testing the veracity of the contentions (and putting the claimant

to litigation where the claim of title and use is shown to be correct) is unreasonable and

indifferent in the contextual circumstances where they knew Mr Semmens had breached

the rights of others in Process 55; they knew they had given an undertaking concerning

the protection of the DreamDesk works and they knew that Mr Geri had expressed an

important preliminary view of real concern. They also knew that Ms McLean had

brought to their attention, through Mr Maletic, the difficulty Mr Geri was experiencing

in securing access to the files, repository and sources that forensically would reveal

evidence probative of the real position (a position ultimately established at trial). In

other words, in the context of all of these considerations, it was unreasonable for them

to act as they did and they enjoyed the power both for themselves and B&S and RETB to

act reasonably. Rather, they chose to keep using Toolbox until it suited them not to, in

June 2018, rather than reasonably deal with the problem put before them on 29

September 2016.

135. I am satisfied that the indifference demonstrated by Mr Stoner and Ms Bartels to the

matters complained about as put to them, on and from 29 September 2016, constituted

an authorisation by them, and through them, by B&S and RETB of infringing use of

DreamDesk works by users of Toolbox. I am also satisfied that by reason of their

indifference to the complaints put to them, they authorised the infringement of the

DreamDesk works by Mr Semmens and the developers acting under his direction in

bringing into existence the Toolbox system.

136. Thus, I am satisfied that the authorisation case is made out. I am satisfied that the

primary judge ought to have addressed that aspect of the case in his reasoning on

authorisation and ought to have found authorisation in the conduct of these four

respondents on and from 29 September 2016. I am respectfully satisfied that the

primary judge erred in not doing so and, to that extent, on and from 29 September 2016,

I would uphold the appeal.

137. I also generally agree, as supplemented by these remarks, as mentioned earlier, with the

observations of his Honour Justice McElwaine and I otherwise agree with his Honour in

relation to all other aspects of the appeal not addressed in these reasons. I agree with the

orders his Honour proposes.

I certify that the preceding one hundred and thirty-seven (137) numbered paragraphs are a

true copy of the Reasons for Judgment of the Honourable Justice Greenwood.

Associate:

Dated: 6 July 2022

REASONS FOR JUDGMENT

CHEESEMAN J:

138. I have had the considerable advantage of reading, in draft, the reasons to be published

by McElwaine J, which contain a comprehensive recitation of the relevant factual and

procedural background (including the way in which the case was run below), the reasons

of the primary judge, the grounds of appeal and the respective submissions of the

parties. I adopt his Honour’s use of terms. I respectfully agree with his Honour’s

reasoning in support of his conclusions in respect of all but one part of the appeal. That

part of the appeal is the subject of separate reasons of Greenwood J, which I have also

seen in draft. Justice Greenwood agrees with McElwaine J’s conclusions and proposed

orders. That permits me to directly address that part of the appeal on which I have

reached a different conclusion.

139. It is with respect to their Honours’ conclusion that the primary judge erred in not

concluding that the appellant’s authorisation by indifference case was made out against

each of the represented respondents in the period from 29 September 2016 to June 2018

that I respectfully disagree. By way of shorthand, I will refer to this part of the

appellant’s case as the later period authorisation case. Accordingly, in the result, I

would dismiss the appeal with costs.

140. I respectfully agree with Greenwood and McElwaine JJ that the later period

authorisation case was part of the appellant’s case below. The authorisation by

indifference argument was adequately formulated in submissions, notwithstanding that

it was either not pleaded, or at best, oblique in the pleading. Such evidence as there

appears to have been before the primary judge on this issue was largely documentary, it

did not feature in written submissions and it was not put to the relevant witnesses for

the parties against whom the finding of authorisation by indifference was sought.

141. The core argument propounded by the appellant on the later period authorisation case is

that the primary judge failed to draw the correct inference from all of the primary facts

that he found. The appellant contends that the primary judge should have found, and

erred in not finding, that:

(1) the represented respondents knew, or had reason to suspect, that the Toolbox

system contained reproductions of copyright works in the DreamDesk system

(grounds 2 (b)(i), 3 (c)(i) - Mr Stoner, Ms Bartels, Biggin & Scott and RETB;

ground 7 (c)(i) – Mr Meissner and DDPL);

(2) Mr Stoner, Ms Bartels, Biggin & Scott and RETB’s failure to take steps to

prevent or avoid the infringements and Biggin & Scott and RETB’s continued use

of the Toolbox system, about which Mr Stoner and Ms Bartels knew, constituted

indifference to the appellant’s rights to such a degree that authorisation was the

only available inference to be drawn (grounds 2(b)(ii), 3(c)(ii)); and

(3) Mr Meissner and DDPL’s failure to take any steps to prevent or avoid Mr

Semmens’ infringements of the Database Work, the Table Works and the PDF

Works, after 29 September 2016, or 5 October 2016, constituted authorisation of

those infringements (ground 7(c)(ii)).

142. The appellant does not advance as a ground of appeal that the primary judge erred in

that he overlooked relevant evidence. Rather, the appellant contends that the primary

judge ought to have made findings based on the following evidence: the 29 September

2016 letter; the circumstances surrounding the requests for, and the giving of,

undertakings by the represented respondents; the course of correspondence between the

appellant’s solicitor and the represented respondents’ solicitors in the period after 29

September 2016; and the preliminary report of Mr Geri, the IT expert engaged by the

appellant. I am not satisfied that the primary judge erred in not making findings to the

effect for which the appellant contends. My reasons for reaching this conclusion are as

follows.

143. In a frequently cited passage from Beale v Government Insurance Office of NSW (1997)

48 NSWLR 430 (at 442-444), Meagher JA described the fundamental elements of a

statement of reasons. His Honour began with the observation by Samuels JA in Mifsud v

Campbell (1991) 21 NSWLR 725 at 728 (at 442):

...it is an incident of judicial duty for the judge to consider all the

evidence in the case. It is plainly unnecessary for a judge to refer to all

the evidence led in the proceedings or to indicate which of it is accepted

or rejected. The extent of the duty to record the evidence given and the

findings made depend, as the duty to give reasons does, upon the

circumstances of the individual case.

His Honour continued at (443-444):

...However, there are three fundamental elements of a statement of

reasons, which it is useful to consider. First, a judge should refer to

relevant evidence. There is no need to refer to the relevant evidence in

detail, especially in circumstances where it is clear that the evidence has

been considered. However, where certain evidence is important or

critical to the proper determination of the matter and it is not referred

to by the trial judge, an appellate court may infer that the trial judge

overlooked the evidence or failed to give consideration to it: North

Sydney Council v Ligon 302 Pty Ltd (1995) 87 LGERA 435. Where

conflicting evidence of a significant nature is given, the existence of

both sets of evidence should be referred to.

Secondly, a judge should set out any material findings of fact and any

conclusions or ultimate findings of fact reached. The obvious extension

of the principle in North Sydney Council is that, where findings of fact

are not referred to, an appellate court may infer that the trial judge

considered that finding to be immaterial. Where one set of evidence is

accepted over a conflicting set of significant evidence, the trial judge

should set out his findings as to how he comes to accept the one over

the other. But that is not to say that a judge must make explicit findings

on each disputed piece of evidence, especially if the inference as to what

is found is appropriately clear: Selvanayagam v University of the West

Indies [1983] 1 WLR 585; [1983] 1 All ER 824. Further, it may not be

necessary to make findings on every argument or destroy every

submission, particularly where the arguments advanced are numerous

and of varying significance: Rajski v Bainton (Court of Appeal, 6

September 1991, unreported).

Thirdly, a judge should provide reasons for making the relevant

findings of fact (and conclusions) and reasons in applying the law to the

facts found. Those reasons or the process of reasoning should be

understandable and preferably logical as well.

144. His Honour then observed that (at 444):

...It has been noted by this Court that the content required of a

statement of reasons is to be measured against the burden that the

provision of reasons imposes on the judicial system: Sinak v Tess

(Court of Appeal, 15 March 1995, unreported). The reason for this is

that the giving of overly elaborate reasons can serve to undermine

public confidence in the judiciary and in the judicial system in the same

way that insufficient reasons can. On the one hand, the provision of

inadequate reasons can lead to a sense of injustice and a reduced

appreciation or understanding of legal rights and obligations. On the

other hand, an overly onerous duty to provide reasons increases costs

and delay in the judicial system which has the effect of undermining

public confidence in the judicial system. The costs and delays involved

in litigation today are problems which have attracted enormous public

attention, a plethora of government inquiries and the attention of the

Australian Law Reform Commission. In the end, the balancing act

which needs to be undertaken in considering the sufficiency of a

statement of reasons involves the adoption of, at the least, a minimum

standard which places the parties in a position to understand why the

decision was made sufficiently to allow them to exercise any right of

appeal.

145. An appeal by way of a rehearing is an appeal for the correction of error framed by

reference to the ground or grounds on which the appellant claims that a judgment is

erroneous and the existence of error is an indispensable condition of a successful appeal:

Minister for Immigration and Border Protection v SZVFW [2018] HCA 30; 264 CLR

541 at 553 [21], 556 [30], 556 [32] (Gageler J). The further observations of Gageler J in

SZVFW at [33] bear repeating (emphasis added and footnotes incorporated):

Performing its obligation to conduct a “real review”, the appellate court

“must, of necessity, observe the ‘natural limitations’ that exist in the

case of any appellate court proceeding wholly or substantially on the

record” [Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 at 125-126

[23], quoting Dearman v Dearman [1908] HCA 84; (1908) 7 CLR 549

at 561]. Limitations of that nature can include: “those occasioned by the

resolution of any conflicts at trial about witness credibility based on

factors such as the demeanour or impression of witnesses; any

disadvantages that may derive from considerations not adequately

reflected in the recorded transcript of the trial; and matters arising

from the advantages that a primary judge may enjoy in the

opportunity to consider, and reflect upon, the entirety of the

evidence as it is received at trial and to draw conclusions

from that evidence, viewed as a whole” [CSR Ltd v Della

Maddalena [2006] HCA 1; (2006) 80 ALJR 458 at 465 [17];

[2006] HCA 1; 224 ALR 1 at 7]. The appellate court needs to

be conscious that “[n]o judicial reasons can ever state all of

the pertinent factors; nor can they express every feature of

the evidence that causes a decision-maker to prefer one

factual conclusion over another” [Fox v Percy [2003] HCA

22; (2003) 214 CLR 118 at 132 [41] (footnote omitted)]. The

more prominently limitations of that nature feature in a

particular appeal, the more difficult it will be for the

appellate court to be satisfied that the primary judge was in

error [eg, SW Hart & Co Pty Ltd v Edwards Hot Water

Systems [1985] HCA 59; (1985) 159 CLR 466 at 478].

146. Similar observations were made by Kirby J regarding the relative advantage of the

primary judge over an appellate Court in State Rail Authority of New South Wales v

Earthline Constructions Pty Ltd (in liq) [1999] HCA 3; 160 ALR 588 where his Honour

said at 619 [90]:

The true advantages in fact-finding which the trial judge enjoys include

the fact that the judge hears the evidence in its entirety whereas the

appellate court is typically taken to selected passages, chosen by the

parties so as to advance their respective arguments. The trial judge

hears and sees all of the evidence. The evidence is generally presented

in a reasonably logical context. It unfolds, usually with a measure of

chronological order, as it is given in testimony or tendered in

documentary or electronic form. During the trial and adjournments,

the judge has the opportunity to reflect on the evidence and to weigh

particular elements against the rest of the evidence whilst the latter is

still fresh in mind. A busy appellate court may not have the time or

opportunity to read the entire transcript and all of the exhibits. As it

seems to me, these are the real reasons for caution on the part of an

appellate court where it inclines to conclusions on factual matters

different from those reached by the trial judge. These considerations

acquire added force where, as in the present case, the trial was a very

long one, the exhibits are most numerous, the issues are multiple and

the oral and written submissions were detailed and protracted. In such

cases, the reasons given by the trial judge, however conscientious he or

she may be, may omit attention to peripheral issues. They are designed

to explain conclusions to which the judge has been driven by the overall

impressions and considerations, some of which may, quite properly,

not be expressly specified.

(Footnotes omitted)

His Honour’s reasoning was applied by the Full Court in Federal Commissioner of

Taxation v Glencore Investment Pty Ltd [2019] FCAFC 187; 281 FCR 219, 266 at

[145] (Middleton and Steward JJ, with whom Thawley J agreed).

147. In the absence of error by the primary judge, it is not necessary to embark upon a real

review of all the material that was before the primary judge in order to revisit the

primary judge’s rejection of the authorisation claims. Unless error, framed by reference

to the ground or grounds of appeal, is established, there is no warrant for an appeal

court to substitute its own findings for those of the primary judge. In the circumstances

of this appeal, there is a risk in doing so. The advantage enjoyed by the primary judge in

receiving all of the evidence as it unfolded, with an opportunity to reflect on it and draw

conclusions based on the evidence as a whole, is self-evident. The liability hearing lasted

twelve days and was heard in two blocks of dates, ten months apart. For this Court on

appeal to assess whether the appellant’s later period authorisation case was fairly or

adequately put to the witnesses and whether it is open to draw an inference in favour of

the appellant’s later period authorisation case presents real difficulty. Had I been

satisfied that the appellant had established error on the part of the primary judge, it

would have been necessary to be satisfied that the material before the Court on this

appeal was adequate for the Court to embark on such a task. Although four successive

waves of overlapping supplementary materials were provided over the two days of the

appeal hearing, I have a residual concern as to whether all of the relevant material has

been placed before this Court.

148. I now turn to explain my reasons for concluding that error has not been established by

reference to the multiple unchallenged trust findings which span the whole of the

relevant period and the nature and quality of the evidence at trial said to support the

appellant’s later period authorisation case.

149. It warrants emphasis at the outset that whether a person has authorised the doing of any

act comprised in the copyright of a copyright owner is, necessarily, a fact sensitive and

fact intensive inquiry. Every case will depend upon its own facts. Matters of degree are

involved. Where the conduct relied upon as constituting authorisation is indifference,

whether by acts or omissions, the Court is required to assess whether the conduct

reaches such a degree that authorisation or permission may be inferred. Critical to that

assessment is whether the person said to have authorised the relevant act, by

indifference, either knew or had reason to suspect that the act might be done. There is a

difference between knowing that specific acts of copyright infringement have occurred

and merely suspecting that they may have occurred. That difference in the circumstances

of a given case may be of importance.

150. The primary judge made multiple unchallenged trust findings, including those at

PJ[297], [299], [300] and [305]. The findings at PJ[297(7)] and PJ[305(6)] are

particularly difficult for the appellant to overcome in order to make good the later period

authorisation case on appeal. The primary judge’s trust findings are not temporally

limited and are made in the context of the primary judge’s assessment of the whole of

the evidence, including the case put in cross-examination of the witnesses for the

represented respondents.

151. During the hearing of the appeal, the 29 September 2016 letter became a focus of the

appellant’s oral submissions. In my view it is clear that the primary judge was aware of,

and considered, the 29 September 2016 letter. The primary judge did not err in not

making an express finding in relation to the 29 September 2016 letter. The 29

September 2016 letter expressed the appellant’s concern that there had been “improper

access and duplication of code which is intellectual property now owned by our clients”

and that the appellant’s willingness to extend the DreamDesk licence was conditional

upon the provision of undertakings by all relevant parties that duplicated intellectual

property would not be used and would be destroyed immediately. The primary judge

referred to the email sent from Mills Oakley, the solicitors for Mr Stoner, Ms Bartels,

Biggin & Scott and RETB, to the appellant’s solicitor on 3 October 2016 which expressly

refers to, and in effect responds to, the 29 September 2016 letter: PJ[121]. The primary

judge observed that Mills Oakley confirmed that Biggin & Scott was willing to provide to

the appellant certain undertakings, namely the undertakings requested by the appellant

in the 29 September 2016 letter. It follows that the primary judge was aware of, and

considered, the 29 September 2016 letter. When the 29 September 2016 letter is

considered in the context of the whole of the evidence, it may be inferred that the

absence of an express finding in relation to that letter is because the primary judge

considered it to be immaterial.

152. The letter was sent on behalf of the appellant. For that reason, it is necessary to consider

the primary judge’s findings in relation to the commercial relationships between the

parties. Biggin & Scott was a former customer of the appellant. The appellant wished to

re-establish its commercial relationship with Biggin & Scott. Biggin & Scott’s experience

with the appellant was that it was dissatisfied with the appellant as a supplier/provider.

Returning to use the appellant was Biggin & Scott’s least preferred option once

DreamDesk was shut down. The appellant’s commitment to convincing Biggin & Scott to

return as a customer was a driver in the appellant acquiring Process 55 and DreamDesk.

The acquisition was undertaken with a view to shutting down DreamDesk so that

customers of DreamDesk, including Biggin & Scott, could be induced to use the

appellant as supplier/provider. The evidence demonstrated that the represented

respondents were aware of that objective: PJ[98], [147]. The commercial history

between Biggin & Scott and the appellant dating back to the beginning of 2015 is

relevant to how the allegations made on behalf of the appellant in the 29 September

2016 letter were received by those parties.

153. It is next necessary to consider what was done after the represented respondents

received the letter. In response to the 29 September 2016 letter, the represented

respondents took active steps to co-operate with the appellant.

154. First, the response by the represented respondents to the 29 September 2016 letter was

to give undertakings as requested by the appellant. The giving of undertakings by the

represented respondents is consistent with: the finding that the represented respondents

trusted Mr Semmens; the represented respondents’ continued belief that Mr Semmens

was acting in accordance with the 3 August 2016 direction (at PJ[297(1)]); Mr Stoner’s

evidence that he was seeking assurances from Mr Semmens in this regard about every

two days (PJ[296(1)]); and the primary judge’s findings of trust premised on Mr

Meissner’s state of mind based on his shocked reaction to Mr Semmens’ use of Process

55 in the development of DreamDesk: PJ[305(1)]. The appellant did not demonstrate

that it was put to the relevant witnesses that they proffered the undertakings for the

ulterior purpose of concealing conduct that comprised infringement. In those

circumstances, it was not open for the appellant to submit that was the case. Seen in this

light, it is not surprising that that the primary judge did not make findings that the

undertakings were proffered at a time when the represented respondents knew, or had

reason to suspect, that the Toolbox system contained reproductions of copyright works

in the DreamDesk system.

155. Secondly, the represented respondents granted access on two occasions to Mr Geri and

co-operated with him, to allow him to provide an opinion to the appellant as to whether

infringement had occurred. To provide such access, after giving the undertakings, is

consistent with a continuation of the relationship of trust about which the primary judge

made comprehensive findings. Particularly, when the primary judge did not find that the

represented respondents were aware of the steps taken by Mr Semmens to cover his

tracks: PJ[69], [128], [154], [155], [156], [278(1)], [278(3)], [278(4)], [278(5)]. Indeed,

the primary judge rejected the appellant’s submission that the Court should infer that

Ms Bartels, on behalf of Biggin & Scott, instructed Mr Semmens to delete RSYNC

commands from the DreamDesk system. RSYNC commands operate to copy files from

one location to another. While the primary judge accepted that Mr Semmens had in fact

deleted the relevant commands, he did not accept that it was done on instruction of Ms

Bartels, and by extension Biggin & Scott: PJ[278(3)]. The granting of access to Mr Geri

counts strongly against inferring indifference amounting to authorisation on the part of

the represented respondents.

156. Thirdly, after they received the preliminary Geri report, the represented respondents

were entitled to assess the allegations that had been made in the 29 September 2016

letter by reference to Mr Geri’s preliminary report of 19 January 2017. That report was

inconclusive. The critical paragraphs of the Geri report were as follows:

30. In relation to my instructions regarding “the potential copying or duplication of

any intellectual property” in my opinion there is a high probability that intellectual

property purchased by Campaigntrack has been used in the development of Real

Estate Toolbox. The applications have been developed by the same developer who

had access to both systems during the development process.

31. To forensically confirm if Campaigntrack intellectual property has been used in the

development of Real Estate Toolbox a forensic examination of the servers

responsible for hosting and managing the Real Estate Toolbox application should

be undertaken. Further to this an examination of any device used by Mr. Semmens

during the development both applications should also be undertaken to identify if

any Campaigntrack intellectual exists on the devices.

157. Mr Geri’s first opinion, in [30], was no more than a speculative assumption. The

conclusion that he reached as to the high probability of copying appears to be based on

the fact that the applications have been developed by the same developer and not on his

expertise. There was no new information in [30] that the represented respondents did

not already know. The primary judge’s finding at PJ[297(1)] is significant in this regard.

Mr Geri’s second conclusion, in [31], is that he could not come to a concluded view based

on his expertise without further forensic examinations being conducted. There was

nothing in Mr Geri’s preliminary report that was capable of displacing the subsisting

relationship of trust that the primary judge found to exist between the represented

respondents and Mr Semmens, or that was capable of confirming that the allegations of

infringement in the 29 September 2016 letter were well made.

158. The appellant did not cross-examine any of the witnesses for the represented

respondents meaningfully, or at all, on the preliminary Geri report. The report was only

put to Mr Stoner and the proposition put was, on any view, on the periphery of

relevance. Critically, it was not directly put to Mr Stoner that he was on notice of the

appellant’s claims of copying, from defined points in time, and that he elected not to

make inquiries to determine the true position. When Mr Geri’s preliminary report was

put to Mr Stoner in cross-examination the following exchange occurred:

HIS HONOUR: Yes, okay. Ask the question.

So you’re aware that Mr – you’re aware that Mr [Geri] relied upon the

log files to perform – to express an opinion about matters in them?---

From this, yes.

And you’re aware that, in paragraph 30, Mr [Geri] said:

In relation to my instructions regarding the potential

copying or duplication of any intellectual property, it is my

opinion that there is a high probability that intellectual

property purchased by Campaigntrack has been used in

the development of Real Estate Toolbox. The applications

have been developed by the same developer who had access

to both systems during the development process.

Do you remember reading that?---Mmm

And then Mr [Geri] concluded to forensically confirm if

Campaigntrack’s:

Campaigntrack intellectual property has been used in the

development of Real Estate Toolbox, a forensic

examination of the servers responsible for hosting and

managing the Real Estate Toolbox applications should be

undertaken. Further to this, an examination of any device

used by Mr Semmens during the development of both

applications should be undertaken to identify if any

Campaigntrack intellectual property ... –

That should be intellectual property:

...intellectual exists on the devices.

Do you remember reading that?---Yes.

...

Mr GREEN: Mr Stoner, if you can please look at page 3 of the – the

small bundle I’ve sent you – or that the applicant’s solicitors have sent

you. Do you agree that it was not true that the initial draft of the

independent expert’s report had found no issues relating to the Real

Estate Toolbox system?---My recollection is, and I haven’t read this

whole ..... is we objected to the report because it mentioned

conversations between [Geri] and David – David which made it not

what it was supposed to be.

You mean, when you said “David” you mean between Mr [Geri] and Mr

Semmens?---yes.

Well, I wasn’t putting that to you. I was putting it to you that you were

asked by Mr Hine, “Are you happy with this for Simon?” And it appears

that what was being put forward is that:

The initial draft of the independent expert’s report, they

sought

Meaning Campaigntrack sought:

found no issues relating to the ..... Real Estate Tool Box

system.

You accept that as at 27 April 2018, that that was not the case?

HIS HONOUR: Just before you answer that, Mr Stoner. Mr Green, am I

really assisted? I have the document in front of me.

MR GREEN: Yes, your Honour. Yes, your Honour.

HIS HONOUR: It says – it says – that the opinion of this man as at that

time - - -

MR GREEN: Yes.

HIS HONOUR: - - - was that there was a high probability, but he

couldn’t prove it.

MR GREEN: Yes. Well, that’s not – that’s - - -

HIS HONOUR: So how is - - -

MR GREEN: “Found no issues,” your Honour is a quote - - -

HIS HONOUR: But - - -

MR GREEN: - - - anyway, but I will move on, though ...

159. The exchange between the primary judge and Senior Counsel for the appellant is

consistent with the primary judge regarding the preliminary Geri report as being

inconclusive. Senior Counsel for the appellant did not pursue the tangential line on

which he had commenced in cross-examination. On the appeal the Court was not taken

to any evidence to demonstrate that the proposition that the appellant seeks to establish

based on the preliminary Geri report was put fairly, or at all, to any witness.

160. That the primary judge regarded the 29 September 2016 letter as immaterial is readily

understood when viewed in the context of the continuing relationship of trust between

the represented respondents and Mr Semmens, the unchallenged evidence adduced in

cross-examination that Mr Stoner probably sought assurances from Mr Semmens every

two days about whether he had complied with the directive issued on 3 August 2016 and

the commercial history between the parties. The absence of error and the comprehensive

nature of the trust findings made across the whole of the relevant period preclude this

Court from embarking on its own fact finding in relation to the later period authorisation

case. That the primary judge does not analyse all of the evidence comprised in the main

of the correspondence between the appellant’s solicitor and the represented

respondents’ solicitors in the period between 29 September 2016 and 9 February 2017

does not establish error. The more compelling inference is that this evidence was

considered by the primary judge to be immaterial to his finding on authorisation. That

the primary judge regarded the evidence as immaterial is demonstrated by the nature

and quality of the evidence in issue, the contextual setting of the comprehensive trust

findings, the scant attention given to the evidence in the way in which the appellant put

the case below and the inadequacy of any cross-examination of relevant witnesses on

this evidence.

161. For these reasons, I would dismiss the appeal with costs.

I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the

Reasons for Judgment of the Honourable Justice Cheeseman.

Associate:

Dated: 6 July 2022

REASONS FOR JUDGMENT

MCELWAINE J:

INTRODUCTION

162. The appellant, Campaigntrack Pty Ltd, is a provider of online marketing services to the

real estate industry primarily by means of the software system known as Campaigntrack.

The second respondent (Biggin & Scott) is the franchisor of a group of real estate

agencies that operate in Victoria. Between 2006 and 2009, and then from 2013 until

2015, Biggin & Scott used the Campaigntrack software under licence from the appellant.

In May 2015, Biggin & Scott moved to a different platform known as DreamDesk, which

was a cloud based marketing system developed by Mr David Semmens (Mr Semmens).

DreamDesk utilises an online platform known as Process 55 which generates marketing

material including advertisements, brochures and performs useful administrative tasks.

163. In July 2016, the appellant and New Litho Pty Ltd (New Litho) acquired ownership of

the copyright in Process 55 and DreamDesk. This was for the purpose of shutting down

DreamDesk in order to then persuade clients to move or return to Campaigntrack. Mr

Semmens then set about developing another real estate marketing software system

known as “Real Estate Toolbox” (Toolbox). On 10 October 2016, Biggin & Scott ceased

to use DreamDesk and commenced using Toolbox, which use continued until April 2018.

In June 2018, Toolbox was discontinued.

164. How those basic facts gave rise to proceedings in this Court is ultimately explained by

the conduct of Mr Semmens who, as found by the primary judge, infringed copyright in

the DreamDesk source code by reproducing the whole or a substantial part of that code

and misused confidential information of the appellant and New Litho as comprised in

that code.

165. The appellant commenced proceedings in this Court and contended that there had been

infringement of its copyright rights, misuse of confidential information and various

breaches of contract in relation to DreamDesk. New Litho was not named as a party and

no point was taken before the primary judge or before us that its absence is of any

consequence. The primary judge dismissed the proceeding against each of the

respondents (represented respondents) other than Mr Semmens: Campaigntrack

Pty Ltd v Real Estate Tool Box Pty Ltd [2021] FCA 809 (PJ). The represented

respondents are Biggin & Scott, Dream Desk Pty Ltd, Jonathan Meissner, Paul Stoner

and Michelle Bartells.

166. In a separate decision, the primary judge made orders to give effect to his earlier

reasons: Campaigntrack Pty Ltd v Real Estate Tool Box Pty Ltd (No 2) [2021] FCA 1053

(PJ No 2). He:

(1) Declared that Mr Semmens infringed copyright in:

(a) The literary works comprised in the source code for the DreamDesk

system (Source Code Works) by reproducing the whole or a

substantial part of the source code in material form in developing the

Toolbox system; authorising other developers and users of the Toolbox

system to reproduce a substantial part of the Source Code Works in

material form in developing the Toolbox system; and authorising users

of the Toolbox system to reproduce a substantial part of the Source

Code Works in using the Toolbox system;

(b) the DreamDesk database and Table Works, by reproducing a

substantial part of their respective structures; and

(c) the PDF works, by reproducing the whole of the PDF works in

material form;

without the licence of the appellant or New Litho;

(2) Declared that Mr Semmens misused the confidential information of

the appellant and New Litho comprised in the DreamDesk Source Code

Works;

(3) Enjoined Mr Semmens, by himself, his servants or agents, from

reproducing in material form or authorising reproduction in material

form the Source Code Works and from communicating or authorising

the communication to the public of the whole or a substantial part of

the source code without the licence of the copyright owner;

(4) Made orders requiring Mr Semmens to permanently destroy or

erase all reproductions of the DreamDesk copyright works;

(5) Ordered that Mr Semmens pay the appellant’s costs; and

(6) Otherwise dismissed the proceeding, with costs, against the

represented respondents.

GROUNDS OF APPEAL

167. Before this Court, the appellant advanced 13 grounds of appeal. In broad terms, these

grounds raise the following issues for determination:

(1) Grounds 1 to 7 – whether the primary judge erred in rejecting the copyright

claims against the represented respondents (copyright authorisation

infringement grounds);

(2) Grounds 8 to 9 – whether the primary judge erred in rejecting the confidential

information claims against the represented respondents (misuse of

confidential information grounds); and

(3) Grounds 10 to 13 – whether the primary judge erred in rejecting the contract

claims against the fourth respondent Dream Desk Pty Ltd (DDPL) and the fifth

respondent (Mr Meissner) (contract claims grounds).

168. The misuse of confidential information grounds were abandoned during the course of

the oral argument. Mr Semmens has not appealed the orders made against him.

THE ESSENTIAL FACTS

169. I commence by summarising the material facts and I am indebted for the clear and

concise manner in which the primary judge summarised the evidence and set out his

findings on questions of contested fact, which I adopt in my reasons.

170. As I have noted, Biggin & Scott is the franchisor of a group of real estate businesses. The

sixth respondent (Mr Stoner) and the seventh respondent (Ms Bartels) were each

directors of Biggin & Scott.

171. In November 2014, Mr Semmens and his then business partner, Mr Ewart, proposed to

develop a new cloud-based real estate marketing system called DreamDesk. Mr Meissner

ran an advertising business called JGM Advertising Pty Ltd and agreed to fund the

venture. This resulted in the incorporation of DDPL on 12 March 2015. Mr Meissner was

the sole director and shareholder. Mr Semmens was not an employee of DDPL but a

contractor who worked on the technical and software development of DreamDesk from

about February 2015.

172. Biggin & Scott used the Campaigntrack system until mid-2015. On 20 May 2015, an

agreement in writing was entered into between it and DDPL. The agreement was signed

by Mr Stoner on behalf of Biggin & Scott and Mr Meissner on behalf of DDPL. The effect

of the agreement was that Biggin & Scott agreed to become a client of DDPL in order to

be able to use the DreamDesk system. Among other things, the agreement acknowledged

that “at all times any templates or data relating to properties and staff put into

DreamDesk remain[ed] the property” of Biggin & Scott. Biggin & Scott went live with

DreamDesk on 17 August 2015.

173. On 28 May 2016, approximately one year following the agreement between Biggin &

Scott and DDPL, Mr Semmens and Mr Ewart told Mr Meissner that they had been

informed that the intellectual property of a company called The Digital Group Pty Ltd

(Digital Group) was being used in the DreamDesk software. Digital Group was

founded by Mr Semmens and his brother-in-law, Mr Farrugia. The intellectual property

alleged to have been misused was the “PDF Distiller”. As Mr Meissner understood it, this

enabled the DreamDesk system to produce and edit PDF images used in real estate

marketing campaigns. Digital Group’s software was the web-based real estate marketing

system, Process 55, which Mr Semmens had been involved in developing between 2001

and 2006.

174. Mr Meissner did not want to operate using intellectual property that he or DDPL were

not authorised to use and, in consequence, he decided to either buy Process 55 or sell

DreamDesk. Between May and June 2016, the appellant and New Litho negotiated with

Digital Group to purchase the intellectual property rights in the Process 55 system and

DreamDesk for the purpose of shutting it down so as to persuade clients to move or

return to Campaigntrack.

175. On 18 July 2016, two agreements were entered into: (1) the DreamDesk sale agreement

between DDPL and Mr Meissner as vendors and the appellant and New Litho as the

purchasers; and (2) a binding heads of agreement between Mr Meissner, the appellant

and New Litho. Clause 1.2 of the sale agreement provided:

the parties acknowledge that the sale of the intellectual property does

not include Process 55 as that is owned by Digital Group Pty Ltd. The

sale does not include any intellectual property that DreamDesk may

have that is derived from Process 55 or that is separate but used in

conjunction with Process 55 for the operation of the DreamDesk

business.

176. The agreement further provided for a licence, in favour of DDPL, of intellectual property

in the DreamDesk system until 3 October 2016.

177. Between 30 July and 2 August 2016, Mr Semmens inquired about using a web-based

online design and publishing system called “eDocBuilder”. On 3 August 2016, Mr

Semmens met with Mr Stoner at the head office of Biggin & Scott. Mr Semmens told Mr

Stoner that he could create a system with similar functionality to DreamDesk and

Campaigntrack. That system became known as Toolbox. At the meeting, Mr Stoner

showed Mr Semmens a letter on the Biggin & Scott letterhead which included the

following relevant parts:

You are instructed to build a web to print delivery system that does not

breach any other companies IP or ownership, in particular DreamDesk

or Campaign Track.

All products used should be off the shelf products owned by 3rd parties

with a licence agreement or able to be used through open code or any

other industry standard that classes the use as open (can not [sic] be

claimed).

...

In simple terms we do not want any thing [sic] used that can be claimed

as owned by the 2 companies above. We are happy with E-DOC being

used as the PDF delivery system ...

178. Mr Stoner wrote his and the name of Mr Semmens at the foot of the letter. Mr Stoner

signed the letter. Mr Semmens did not sign it. In evidence before the primary judge, Mr

Semmens accepted that he discussed the letter with Mr Stoner.

179. The primary judge inferred that the development of a new system (ultimately Toolbox)

was by that point in time underway. He also found that Mr Stoner was aware that it was

proposed that the new system would use eDocbuilder. Although Ms Bartels did not see

the letter of 3 August 2016, she was informed of its substance by Mr Stoner. Ms Bartels

left it to Mr Semmens to determine the specifications of the new system.

180. Not unexpectedly, Mr Stoner was cross-examined about the content of the letter of 3

August 2016 and gave the following evidence at PJ [41]:

So you say that this was the instruction that you gave Mr Semmens on 3

August 2016, to build a Web to Print delivery system that does not

breach any other company’s IP or ownership, in particular, Dream Desk

or Campaigntrack?---Yes.

And you say that you did that without knowledge of what I have taken

you to in relation to Process 55?---Yes.

Other than what Mr Ewart said to you about a “problem”?---So on this

date, I knew that Dream Desk was – had been, well, I’m not sure if it

had been purchased or was being purchased.

You didn’t know or you did know?---I’m not sure. Well, I’m not sure if

it had been purchased by then. But on that date, I knew that, who had

bought it or was buying it and what the future looked like.

...

Why include “Breach any other company’s IP” if the only knowledge

you had was that of the Dream Desk sale?---Well, that’s what their issue

was, that they had breached Process 55’s IP.

Well, I think, the evidence you gave us, was you were only aware, very

broadly, of what Mr Ewart had told you?---That’s in May, this is

August.

So you – the evidence you give is that you became more familiar with

the situation relating to Mr Semmens from May to August 2016. Is that

correct?---Absolutely.

...

You knew there was a problem with Process 55 and the use of Process

55 by Dream Desk, did you not?----At that stage, yes. On 3 August.

...

You appreciated that there was real risk that Mr Semmens might

infringe another company’s IP?---No. I would have to say, “No”. I trust

David.

Well, why would you put in – you instructed to:

Build a Web to Print delivery system that does not breach

any other company’s IP or ownership, in particular,

Dream Desk or Campaigntrack.

?---Just to make it clear, I don’t want any crossovers with anything.

...

And the only basis for putting in an instruction, Mr Stoner, is that you

were concerned about the possibility that he would use code belonging

to Dream Desk or Campaigntrack? — It’s possible. But I don’t think

that’s my meaning.

181. The appellant submitted to the primary judge that: “Mr Stoner knew there was a real

risk that, in developing the new system, Mr Semmens might infringe the intellectual

property rights of DDPL or Campaigntrack”. In response to that submission, the primary

judge found at PJ [43]:

In the context of the events which had occurred, including the fact that

– to Mr Stoner’s knowledge – Mr Semmens had admitted to using

Process 55 in developing DreamDesk, it was hardly surprising that Mr

Stoner would seek an assurance from Mr Semmens that he would not

infringe the intellectual property rights of others in building a web to

print delivery system. I am satisfied that Mr Stoner trusted Mr

Semmens not to infringe the intellectual property rights of DDPL or

Campaigntrack in developing the new system. I conclude that Mr

Stoner did not want Mr Semmens to misuse intellectual property

belonging to others in developing the new system.

182. In August and September 2016, Biggin & Scott made inquiries with, and received offers

from, other providers of online advertising systems. Mr Stoner’s preference was for the

new system to be operational by 3 October 2016, which was the date of the end of

DDPL’s licence of intellectual property rights in DreamDesk. If the system was not

operational by then another service provider might be required and Campaigntrack was

the least preferred option.

183. On 6 or 7 September 2016, the appellant and New Litho purchased DreamDesk from

DDPL.

184. There was before the primary judge evidence of a proposed joint venture between Biggin

& Scott, companies known as Printco, ABC, and Mr Semmens. That evidence is set out in

an email sent by Mr Stoner on 9 September 2016, to two unnamed parties and which the

primary judge found was likely sent to, at least, Mr Semmens. At PJ [85], the primary

judge set out his ellipsis of that email:

On 9 September 2016, Mr Stoner sent an email to unnamed parties

(although the recipients are likely to have included Mr Neil Pearson of

Printco), with the subject line “structure”. Printco was a printing

business that printed display boards for Biggin & Scott. It is likely that

other recipients of the email were ABC (a display board company) and

Mr Semmens. The email included (paragraph numbering added):

[1] Hi Guys

[2] Proposed structure for new co

[3] Name AGENT TOOL BOX

Biggin & Scott

Printco

ABC

To own 70%

At a costs of $35,000 each

[4] David Seamans [sic] and partners 30%

At a costs of $30,000

[5] I think we need to be open to JV’s with larger groups

along the lines of white labelling the system on a 50/50

basis

And also prepared to take on other investors should the

need arise.

[6] We are currently sourcing a longer term for the platform

10 years at this stage so to be confirmed

[7] Where the team will sit is an issue as we cannot have one

company being able to be see another’s pricing.

We need to agree on this and quick. David may have a

solution.

[8] Our objective is to get the system finished with Biggin &

Scott using it by not later than October 3rd 2016 stage one

As B&S are bringing in revenue this helps on a few levels but

obviously part of start-up few is to help run the team until

we pick up

A few new clients.

[9] Biggin & Scott are happy for others to see how their

work flow is happening.

[10] Reasoning behind Printco and ABC being partners is

two fold

Both have strong relationships with clients whilst at the

same time can elevate some ongoing cost by introducing a

system

Which covers full web to print capabilities, Boards,

brochures, stationary, papers, edm’s, intranet.

[11] First year each partner of the 70% must bring in at least

the equivalent of what Biggin & Scott brings in production

fee wise.

[12] Obviously if close not a problem but I think we need a

taking the piss rule. Should this not happen under

p[er]forming partner must offer shares back.

[13] Printco and ABC get full access of the system to offer to

their clients obviously.

[14] Paul Stoner and Michelle page [Bartels] available to

help get deals across the line should it be needed.

[15] If in agreement let’s get this set up with the rules as

above and go for it.

[16] Dave will have a system presentation ready for us next

week.

[17] Cheers

Paul Stoner

Chief Executive Officer

[Biggin & Scott signature block]

185. The primary judge accepted as “accurate” the various submissions made by the appellant

about this email: PJ [86]. Primarily, Biggin & Scott and Mr Semmens each proposed,

with other parties, to become joint venturers in the Toolbox system. Biggin & Scott and

its partners would have a controlling interest of 70% and Mr Semmens would have a

30% interest. No direct finding was made that the joint venture was actually entered

into, although I infer that it was by several acts of part performance. Ultimately, nothing

turns in this appeal on that question.

186. On 15 September 2016, the first respondent Real Estate Toolbox Pty Ltd (RETB) was

incorporated. Mr Stoner’s view was that if the Toolbox venture was to move forward, it

should be done through a separate company. Mr Stoner and Ms Bartels were officers of

RETB.

187. On 7 and 19 September 2016, the appellant requested passwords for DreamDesk. On 20

September 2016, Mr Meissner wrote to Mr Semmens asking him to supply the

passwords to the appellant and to provide assistance. Mr Semmens provided passwords

and login details on 20, 22 and 23 September 2016.

188. On 21 September 2016, Mr Stoner requested a licence extension from the appellant to

continue to use the DreamDesk system beyond 3 October 2016. One purpose of the

requestwas to “buy time” in order to develop, or complete the development of, the

Toolbox system. On 26 September 2016, Mr Stoner emailed Ms Keys (who was acting for

the appellant) and Mr Meissner to advise that Biggin & Scott would not be entering into

a further contract with appellant. Mr Stoner asked for a four-week extension and “help

with the transition”.

189. On 29 September 2016, the appellant’s solicitor, Ms McLean, sent email correspondence

to Mr Meissner and DDPL upon which the appellant placed significant reliance in its

submissions in this appeal. For that reason, I set it out:

29 September 2016

...

Dear Mr Meissner

Campaigntrack Pty Ltd –v- Dream Desk Pty Ltd

We act on behalf of Campaigntrack Pty Ltd

We have been provided with correspondence seeking confirmation as to

whether our client would be willing to extend the licence to DreamDesk

to you in order for Dream Desk to be made available to your customer

Biggin & Scott. It is in that regard that we are instructed to respond as

follows:

• Dream Desk has failed to perform all of its obligations pursuant to

the recent agreement whereby title to the Dream Desk Business

and intellectual property of Dream desk Pty Ltd passed to our

clients;

• Our clients are not under any obligation to extend the licence to

Dream Desk;

• Our clients have been asked directly by Biggin & Scott to extend

the licence on the basis that it ought to operate as a good

corporate citizen;

• Our clients owe no duty of care to Biggin & Scott and any remedy

that Biggin & Scott could seek would be as against Dream Desk

Pty Ltd;

• Our clients have become aware of improper access and

duplication of code which is intellectual property now owned by

our clients;

• Our clients are also aware of the incorporation and involvement

of Real Estate Tool Box Pty Ltd.

Notwithstanding all of the above, our clients are willing to extend the

licence to Dream Desk Pty ltd [sic] for the period of one week from 3

October 2016, on the following basis:

• Dream Desk does not permit use of its platform otherwise than in

the ordinary course of business;

• Biggin & Scott do not use the platform otherwise than in the

ordinary course of business;

• All relevant parties involved provide an undertaking to our client

that the intellectual property already obtained or duplicated will

not be used for any purpose;

• All relevant parties involved provide an undertaking to our client

that the intellectual property already obtained or duplicated will

be destroyed immediately.

Absent an undertaking to the effect of the above the extension of the

licence will not be granted.

We would appreciate your response by no later than 3:30pm, Friday 30

September 2016.

Yours faithfully

MCLEAN & ASSOCIATES SOLICITORS

[signature]

Karen McLean

Solicitor Director

190. Mr Meissner responded by email on 30 September 2016. In part he stated:

...

In principal [sic] I agree to your terms but require us to keep one copy

of platform because until we are paid by our customers, and until we

have paid all suppliers, we need access to all data generated by the

system NOT to generate anything after the expiration date.

...

As I have agreed on numerous occasions I understand what is required

under the contract, and it will be enforced by myself in terms of end

date; non-use of platform; inappropriate use by current clients in

anything apart from its present usage, and my participation in any area

other than as a print Broker.

I do not understand your reference to another company, and your

involvement statement.

...

The IP purchased by your client is being used solely by Dream Desk

contractors (no one else) for its original function only, and Biggin only

has login to enter campaign related material.

...

191. Between 29 September and 3 October 2016, that correspondence came to the attention

of Biggin & Scott, RETB, Mr Stoner and Ms Bartels. On 3 October 2016, Mills Oakley

Lawyers, acting for those parties, requested an extension of the licence, referenced the

letter of 29 September and stated that Biggin & Scott was prepared to provide certain

undertakings to the appellant. That correspondence failed to address the assertions

about “improper access and duplication of code” or the incorporation of RETB. The

undertaking terms were ultimately set out in a document provided by Ms McLean on 5

October 2016. In that letter, she recorded that: “we are instructed to inform you that our

client has reached no agreement with Mr Semmins [sic] in relation to Jellis Craig.” The

undertakings were in the following terms (PJ [129]):

Dream Desk, Meissner and Semmins [sic] undertake and agree that

they individually or jointly with any other person or entity will not use,

market, sell, copy, duplicate or in any way enable or facilitate the

development of any system by making use of any of the intellectual

property which comprises and/or relates to the system of Dream Desk,

which is now owned by Campaigntrack Pty Ltd to the extent that they

will not permit, now or at any time in the future, access by any third

party to the system known as Dream Desk for any use other than its

ordinary permissible use.

Dream Desk, Meissner and Semmins [sic] also undertake and agree

that they will immediately cause to be returned to Campaigntract [sic]

Pty Ltd, or if unable to be returned then destroyed so as to render

useless, any of Dream Desks [sic] intellectual property or code which

has already been copied, duplicated or otherwise provided to any third

party or entity of any description whatsoever.

192. Mr Meissner replied by email on 5 October 2016 as follows:

I agree to all re Meissner,

but have no authority, nor was it part of any previous discussion, in

relation to David Semmins [sic].

Semmins [sic] never owned the IP, and never has used it unless under

Dream Desk authority.

The Dream Desk IP was sold to CT and as such no part can, or ever was

used, by others.

As of the cutoff time no part of the IP has been used, copied etc in any

other process.

As discussed I am overseas and cannot print or sign any Documents

and as such this email should be used as my acceptance on Meissner

and Dream Desk matters.

Also I presume the $5000 fee is monthly and only a % will be payable

for October

193. Mr Stoner was not aware that Mr Semmens had also been asked to give an undertaking.

Mr Stoner thought that an extension would be granted if Biggin & Scott, Ms Bartels and

he gave the undertakings. Mr Semmens did not sign the undertaking, though his

evidence was that he was not instructed by anyone else not to do so. In cross-

examination he gave the following evidence:

Were you told by anyone not to give the undertaking, Mr Semmens?---

No.

You were not?---No.

That’s your truthful evidence?---Yes.

You didn’t have a discussion with Mr Stoner about giving an

undertaking after he sent an email to you on 6 October 2016 at 9.43

am?---We – possibly we discussed it, but I wouldn’t have – yes, I

wouldn’t have signed it because it was, you know, restricting my work.

The undertaking that I read pretty much restricted me from working in

the industry, so I was never going to sign it.

Which undertaking are you referring to, Mr Semmens?---The one that

Therese [Keys] sent me.

When was the last time you read that undertaking, Mr Semmens?---A

long time ago. Well, sorry, I should say that’s the way I interpreted it, I

did not want to sign it, I didn’t want to have any restrictions.

Do you accept that if the undertaking didn’t do that then you’re

mistaken in your recollection?---I’m not mistaken, my recollection is

what I said.

All right. Sorry, your Honour, I just have to – we will just find the

undertaking, Mr Semmens, just bear with me for a moment. And I

should say for the benefit of ..... the undertaking which was sought from

this witness, of course. We’re just looking for it at the moment, I will

continue?---Regardless of what it said; if it was from Campaigntrack, I

would not have signed it, simple as that.

And why is that, Mr Semmens?---Because they are the most deceptive,

evil company I’ve ever come across in my entire life.

194. On 6 October 2016, Mills Oakley Lawyers provided the undertaking executed by Mr

Stoner and Ms Bartels on behalf of Biggin & Scott and RETB and each personally to Ms

McLean. That is also the day on which Ms Bartels began creating artwork that could be

used for different advertising material. Her concern was to ensure that something could

be up and running with Biggin & Scott’s artwork within minutes if access to DreamDesk

was shut off.

195. On 7 October 2016, Ms McLean sent the following email to Mills Oakley Lawyers:

I confirm that I am presently seeking instructions from my client with

regard to the extension. While an undertaking has been requested to be

provided by Mr Meissner and other parties, Mr Meissner has not yet

procured one party to sign the undertaking requested. Further,

payment of the licence fee has been requested and at the present time,

we are unaware of any payment having been received.

We will keep you informed of progress in relation to the above. In the

meantime, we have been asked by our client to enquire what system

your client is moving over to. The purpose of that request is in order for

our client to gauge whether there would be any possible reasons for the

resistance to the provision of the undertaking requested.

196. Later that day, Ms McLean sent further email correspondence to Mills Oakley Lawyers

and advised that the DreamDesk licence would not be extended beyond 10 October 2016.

She said:

I am writing to confirm that based on our present instructions the

licence for Dream Desk will not be extended beyond 10 October 2016.

The reasons for this are that:

1. Our client has not received an undertaking executed by David

Semmins [sic];

2. Our client has not received payment for the licence fee either for

the full month or for any lesser period, which in any event had not

been agreed; and

3. We have not received any indication directly from Mr Meissner

that he has an intention contrary to the position previously stated

that is that Dream Desk would be shut down on 10 October 2016.

Our client made clear to Mr Meissner the basis upon which the

extension of the licence would be granted and our clients requests have

not been complied with. All of the above matters are matters which are

beyond our clients [sic] control and accordingly have led to the decision

set out above.

197. In the evening of 10 October 2016, access to the DreamDesk system for Biggin & Scott

was denied. Thereafter, Ms Bartels sent an email to all users of the DreamDesk system at

Biggin & Scott, which stated:

Hi All

All Directors have been advised by Paul Stoner and below is notification

of Dream Desk Web to Print solution which has been shut down

without notice tonight.

3 weeks ago we became aware that Campaign Track had aggressively

tracked down the owner of a piece of IP in the Dream Desk web to print

solution and bought it off them for a large sum of money. The purchase

was made with one intention, to shut down Dream Desk as a

competitor.

We entered into negotiations with Campaign track which have now

stopped due to a major increase in productions fees, not only for us but

also our suppliers. One example was we would have to pay $12 per page

production fee for the magazine, at this stage we stopped our

negotiations and asked for time to exit the system. Another example

was 20% or $20 dollars on every print order.

Things very quickly got legal with all kinds of threats and requests that

we simply cannot agree to.

As of this morning we had another 7 days on dream desk after

numerous legal letters back and forth but at the very last minute this

afternoon Campaign Track turned the system off without notice.

Obviously we have had something being done in the back ground which

will be sent through to you tonight or first thing in the morning. The

new company is called Real Estate Tool Box with the same team and

their phone number is [redacted]. We have managed to get most of the

information across into the new system but tomorrow will tell.

Please be aware:

Biggin & Scott will never deal with Campaign Track or New Litho and

arrangements will be put in place to restrict active pipe moving

forward.

This is not the perfect situation but this gives you an idea of the type of

business’s these people are running.

198. The Toolbox system went live on 10 October 2016. By the end of October 2016, the

appellant had closed down the DreamDesk system. Importantly, the primary judge

found that on and from 11 October 2016, Mr Semmens had access to and was running a

copy of DreamDesk.

199. In November 2016, agreement was reached between Ms McLean and Mills Oakley

Lawyers for the appointment of an independent forensic IT expert to inspect the Toolbox

system and provide a report as to whether its content had been copied from the

DreamDesk. That expert was Mr Justin Geri (Mr Geri) from the firm Ferrier Hodgson.

It is not clear to me on the evidence whether Mr Meissner also agreed to the taking of

that step and the primary judge made no finding of fact to that effect, save for his

reference to “the parties” having reached agreement: PJ [152].

200. Mr Geri was given access to the Toolbox system on 16 November 2016, at the offices of

Biggin & Scott and in the presence of Mr Semmens. Mr Geri provided a preliminary

report dated 19 January 2017, to Ms McLean who, in turn, emailed it to Mills Oakley

Lawyers that day.

201. Mr Geri described the purpose of his engagement as:

8. Our instructions were to undertake a preliminary review in relation to the potential

copying or duplication of any intellectual property or other form of breach of

copyright relating to the Dream Desk application and the Real Estate Toolbox

application utilised.

202. After reciting the investigations that he undertook, Mr Geri expressed a number of

preliminary findings including:

30. In relation to my instructions regarding “the potential copying or duplication of

any intellectual property” in my opinion there is a high probability that intellectual

property purchased by Campaigntrack has been used in the development of Real

Estate Toolbox. The applications have been developed by the same developer who

had access to both systems during the development process.

31. To forensically confirm if Campaigntrack intellectual property has been used in the

development of Real Estate Toolbox a forensic examination of the servers

responsible for hosting and managing the Real Estate Toolbox application should

be undertaken. Further to this an examination of any device used by Mr Semmens

during the development of both applications should also be undertaken to identify

if any Campaigntrack intellectual [property] exists on the devices .

203. In her email of 19 January 2017, to Mills Oakley Lawyers, Ms McLean stated that:

We confirm that we have now received the Preliminary Report from

Ferrier Hodgson and attach it by way of service. As a consequence of

the findings of Mr Geri, we are instructed to request that your clients

immediately shut down and cease use of the Real Estate Toolbox

system. We ask that you provide us with confirmation that the Real

Estate Toolbox system has been shut down and will not be used within

24-hours of the receipt of this email. In the event that we do not receive

your response confirming that our request has been actioned, we will

seek our client’s instructions in relation to making an application for

the appropriate injunctive relief.

204. The requested confirmation was not received. Rather, by correspondence of 20 January

2017, Mills Oakley Lawyers advised that further information was required “to enable our

client to properly respond to your demand”, namely:

1. clarify what the “intellectual property” (“IP”) is that your client asserts that it owns;

2. provide us with proof of ownership of the IP, including any agreements, deeds or

contracts relating to any assignment of the IP to your client from Dream Desk Pty

Ltd;

3. provide us with any contracts or agreements that would exclude David Semmens

from maintaining any rights in the IP that your client alleges that it owns; and

4. provide details of the prejudice that your client asserts that it is suffering from use

of the system and the basis upon which you assert that damages would not be an

adequate remedy if there was in fact any breach of your clients IP (which is

denied).

205. Additionally, that correspondence made it clear that only upon receipt of the requested

information would Mills Oakley Lawyers seek instructions from their clients. The

solicitors exchanged further correspondence, but no agreement was reached that Biggin

& Scott would cease to use the Toolbox system. Independently, Biggin & Scott began to

use a new system in approximately April 2018, called Real Estate Digital HQ (REDHQ),

and thereafter in June 2018, RETB ceased use of the Toolbox system completely.

THE FINDINGS OF THE PRIMARY JUDGE

206. In broad summary, the primary judge accepted the appellant’s factual case and

dismissed the various challenges made by each of the respondents to identification,

subsistence, and ownership of the relevant rights: PJ [193]–[254], [314]. His Honour

upheld “in most respects” the appellant’s copyright and confidential information claims

as against Mr Semmens but rejected those claims against the represented respondents:

PJ [4], [279]–[290], [314]. The central findings that his Honour made upon the case

brought against Mr Semmens are set out as follows:

280. Mr Semmens was the “main developer” of the Toolbox system. The first commit to

the Toolbox repository was made by him on 26 August 2016 and I conclude he was

the sole developer of the Toolbox system up to that time. I accept that he

reproduced a substantial part of the Source Code Works as a whole and of the three

PHP files. I reach this conclusion principally on the basis of the evidence of Mr

Taylor which established that identical source code to that in DreamDesk was

found in Toolbox. It is also an inference which arises from the circumstances in

which Toolbox was developed, set out in detail above.

281. Assessing the evidence as a whole, I conclude that Mr Semmens copied the whole

or substantial parts of the DreamDesk source code (and system) and then

proceeded to modify it or have developers (Mr Gallagher and Mr Zhang) modify it

under his supervision...

282. On balance, I conclude that a reproduction of a substantial part of the DreamDesk

source code as a whole occurred at least in early August 2016 when Mr Semmens

first began developing Toolbox. Reproductions also occurred when the Toolbox

system then being developed was first committed by Mr Semmens to the Git

repository on 26 August 2016. Reproductions occurred when the system was used,

loaded, edited or modified by Mr Semmens during the process of development.

The use of the system caused the source code to be copied into memory and run.

The source code was also copied when a developer downloads source code from, or

commits source code to, the Git repository.

...

284. Nevertheless, I conclude from the evidence as a whole that Mr

Semmens reproduced a substantial part of each of the Database

Work and the Table Works. I reach that conclusion on the basis of

the similarities between the Database Work and the Table Works

in each of the DreamDesk system and the Toolbox system. The

substantial similarities are not explained as mere coincidence or

because of the fact that the database and tables contained fields

for matters one would expect to see in a database and tables

created for the intended functionality, even having regard to the

fact that many of the fields were logical and necessary for

compatibility with other real estate related applications. I

conclude that Mr Semmens reproduced, for the purposes of the

Toolbox system, a substantial part of the structure of the

DreamDesk Database Work and Table Works before migrating

the relevant data from DreamDesk to Toolbox.

285. In relation to the PDF Works, I am satisfied that Mr Semmens

reproduced the PDF Works which, containing templates, was

reproduction of more than mere data. I accept that, in

reproducing the PDF Works as a whole, Mr Semmens infringed

copyright.

207. I now turn to consider the reasons of the primary judge, which found his conclusion that

the proceeding against the represented respondents be dismissed.

208. The primary judge considered the principles relating to infringement: PJ [267]–[271].

His Honour identified that infringement of copyright under s 36(1) of the Copyright Act

1968 (Cth) (Copyright Act) occurs when a person who is not relevantly the owner does

“an act comprised in the copyright” (as set out at s 13 of the Copyright Act) without the

owner’s licence. Infringement may be direct (primary) or by authorisation (secondary):

PJ [267]–[268]. As to authorisation, his Honour set out the terms of s 36(1A); observed

that “authorise” has its ordinary meaning of “sanction, approve or countenance” by

reference to University of New South Wales v Moorhouse (1975) 133 CLR 1; [1975] HCA

26 (Moorhouse) and Roadshow Films Pty Ltd v iiNet Limited (2012) 248 CLR 42;

[2012] HCA 16 (iiNet HCA); and correctly reasoned “whether a person has authorised

an infringing act depends upon the proper inference to be drawn from all the facts of the

case”: PJ [271]. Importantly, his Honour interpreted authorisation under ss 36(1)–(1A)

of the Copyright Act to mean authorisation “to infringe intellectual property rights” (PJ

[297(4)], [305(2)–(3), (5)]) and as requiring a mental element of actual or constructive

knowledge: PJ [300], [305(4), (6)].

209. Detailed factual findings were made about the development of the Toolbox system. In

accordance with the extracts that I have set out above, Mr Semmens engaged in primary

and secondary infringement of copyright in the identified works. The claims of primary

infringement against Biggin & Scott and RETB were each rejected for the reason that Mr

Semmens did not act as the agent of Biggin & Scott or RETB: PJ [294]–[295]. There is

no appeal against that finding.

210. On the authorisation case, the primary judge considered the appellant’s submission that

Biggin & Scott, RETB, Mr Stoner, and Ms Bartels “authorised the infringements of the

developers and users”: PJ [296]. Relevantly, his Honour found as follows:

(1) Mr Stoner sought an assurance from Mr Semmens that “he would not infringe

the intellectual property rights of others”: PJ [43], [297(1)]. Mr Stoner trusted Mr

Semmens not to do so, and Mr Stoner and Ms Bartels “did not want Mr Semmens

to misuse intellectual property belonging to others in developing the new system”:

PJ [297(1)].

(2) Mr Stoner and Ms Bartels “considered Mr Semmens to be a person who had the

relevant expertise in building a software system with the relevant functionality.

They considered he could build the system in sufficient time given his

expertise...[and they] wanted him to do so without infringing the intellectual

property rights of others”: PJ [297(1)].

(3) It was not unusual to leave the development to Mr Semmens and the decision

to use him was “not surprising”. Each knew that Mr Semmens “had the relevant

expertise and familiarity with the kind of product they wanted” and he was a

“logical choice for developing the software in the required timeframe, at least

provided they were satisfied he would develop the system without infringing the

intellectual property rights of others”: PJ [297(2)].

(4) The instructions given in the contractual relationship with Mr Semmens were

“to build a computer system with functionality equivalent to DreamDesk and to do

so without infringing any person’s intellectual property rights”: PJ [297(3)].

(5) The fact that no independent audit or verification was conducted reflected how

the instruction had been given. Moreover, Mr Semmens was trusted that “there

would be no infringement” and while “in all likelihood, neither turned their mind

to whether an independent audit should be carried out”, there was “a lack of ready

means to carry out an independent audit in the time frame which would have been

required”: PJ [297(4)].

211. Furthermore, the primary judge rejected the case that RETB communicated or

authorised the communication of the Source Code Works: PJ [298]. His Honour held

that Mr Semmens was the person responsible for determining the content of the

communication under s 22(6) of the Copyright Act and that RETB “...did not relevantly

communicate a substantial part of the source code or ‘authorise’ such a communication”:

PJ [298].

212. The appellant’s contention concerning the authorisation of reproduction of the works

was rejected noting that RETB, Biggin & Scott, Mr Stoner, and Ms Bartels “...did not

relevantly authorise reproduction of any of the works in issue”: PJ [299]. By reference to

Moorhouse, his Honour reasoned that “...authorisation connotes a ‘mental element’ and

it might be difficult to infer authorisation where the relevant person ‘neither knew nor

had reason to suspect that the act might be done’”: PJ [300]. On that premise, his

Honour found at PJ [300] that it was not established that RETB, Biggin & Scott, Mr

Stoner, or Ms Bartels:

...knew (or that they should reasonably have known) that any of the

works had been reproduced in the Toolbox system or that they knew

that use by users or the loading, editing or modification of the Toolbox

system by developers or others might involve reproduction of a

substantial part of the DreamDesk system...

213. His Honour held that the case against DDPL and Mr Meissner was narrower and did not

include the Source Code Works: PJ [301]. An un-pleaded case of primary infringement

was rejected. The following findings were made:

(1) By providing staff and resources used to develop the system, DDPL and Mr

Meissner had participated in the development of Toolbox through DDPL and JGM

Advertising: PJ [305(1)]. Mr Meissner “...made it plain in his evidence that he was

shocked to discover that Mr Semmens had used Process 55 in the development of

DreamDesk”: PJ [305(1)]. The primary judge did not accept that “...having been

surprised in that way, and having been effectively forced to sell the intellectual

property rights in DreamDesk, he then participated in developing a new system, in

competition with the purchaser of DreamDesk, in a way which infringed the

intellectual property rights just transferred”: PJ [305(1)].

(2) The manner in which Mr Meissner left others to turn the system off did not

indicate authorisation to infringe: PJ [305(2)]. His Honour did not regard the

payment for certain invoices relating to hosting services as establishing

authorisation, either alone or cumulatively: PJ [305(3)].

(3) While DDPL and Mr Meissner had power to prevent infringements “...by not

paying for that work and by not paying for the AWS Invoices”, the primary judge

did not accept that “Mr Meissner believed that infringements were occurring or

that there was anything to prevent”: PJ [305(4)].

(4) The primary judge did not accept that “...instructions were issued to Mr

Semmens in terms, express or implied, which requested or required him to

infringe any person’s intellectual property rights.” His Honour concluded that “...it

was understood by Mr Semmens that Mr Meissner wanted no such thing to occur

given the events which had unfolded before the development of the Toolbox

system”: PJ [305(5)].

(5) His Honour accepted that DDPL and Mr Meissner took no steps to prevent or

avoid the infringements but concluded that Mr Meissner “....did not know of any

events which called for his (or DDPL’s) intervention.” Mr Semmens had the

relevant expertise and “Mr Meissner did not”. Mr Meissner knew of Mr Semmens’

admitted earlier improper use of intellectual property in developing DreamDesk

but, “[i]n the circumstances, it was reasonable for Mr Meissner to take the view

that Mr Semmens would not engage in such conduct again [and, thus the]

circumstances known to Mr Meissner did not call for some active audit or

investigation on his own part during the process of development of Toolbox”: PJ

[305(6)].

214. In short, the primary judge found that the represented respondents lacked actual or

constructive knowledge and for that reason, found they did not authorise the infringing

acts within the meaning of the Copyright Act, ss 36(1)–(1A).

215. The misuse of confidential information claims were made out in that his Honour found

that “Mr Semmens knew that the intellectual property associated with DreamDesk...was

owned by DDPL and had been sold by DDPL to Campaigntrack” [and that] “...it was

clear to Mr Semmens (and would have been clear to a reasonable person in his position)

that he was not free to deal with the information as his own”: PJ [314].

216. It is unnecessary to consider why the primary judge rejected these claims against the

represented respondents in consequence of the abandonment of grounds 8 and 9 of the

appeal.

217. Dealing next with the breach of contract claims, the appellant contended that various

contractual terms were breached by DDPL and Mr Meissner, described as the

(1)“transfer term and “assistance term”, (2) “assignment term” and “transfer warranty”,

(3) “password term”, (4) “non-modification term”, (5) “non-access term”, (6) “non-

transfer term”, (7) “licencing warranty” and (8) “compliance term”.

218. As to the first, it was held that DDPL did not fail to provide assistance of the kind cl 1.6

of the DreamDesk sale agreement required: PJ [321(1)]. Further, breach of the

assistance term was not established by reason of Mr Meissner having aligned with the

other respondents or by his involvement in the new system, REDHQ PJ [321(1)]. As to

breach of the transfer term, the primary judge held that the fact that Mr Semmens

continued to hold copies of the DreamDesk system did not establish a breach: PJ

[321(2)].

219. As to the second, the primary judge concluded that the claims did not arise in that DDPL

was, at the time of the sale, the owner of the copyright in the relevant intellectual

property: PJ [322].

220. As to the third, the appellant contended that the password term was breached because

the passwords were not provided “on payment of the purchase price”: PJ [324]. That

claim failed in that the primary judge interpreted the contract as requiring “reasonable

assistance, on and after payment of the purchase price” (PJ [327]) and that assistance of

that type was provided by DDPL.

221. As to the fourth, while the primary judge was satisfied that modifications were made by

Mr Semmens to “intellectual property associated with the operation of the DreamDesk

business” after 18 July 2016, his Honour held that these were not modifications

“engaged in” or “authorised by” DDPL or Mr Meissner: PJ [334].

222. As to the fifth, the primary judge was not satisfied that DDPL or Mr Meissner accessed

or authorised access to the DreamDesk system after the DreamDesk sale agreement: PJ

[339]. His Honour did not accept that Mr Semmens was acting as DDPL’s agent with

respect to his access and highlighted that it was not directly put to Mr Meissner in cross-

examination that he accessed or authorised access to the DreamDesk system after the

DreamDesk sale agreement: PJ [339].

223. As to the sixth, it was held that because cl 2.3.8 operated as a condition of a licence

granted under cl 2.3, the appellant’s case was misconceived in that no licence was

granted: PJ [343]. In any case, his Honour did not accept that DDPL transferred or

authorised the transfer of the DreamDesk Database, Tables, or PDF files: PJ [344].

224. As to the seventh, it was held that DDPL did not breach the licencing warranty, which

turned on the meaning of cl 2.6 of the DreamDesk sale agreement: PJ [345], [347]. It did

not part “with possession or any right associated with” the intellectual property by

having earlier entered into an agreement with Biggin & Scott dated 20 May 2015: PJ

[347]. The primary judge was also not satisfied that by reason of the agreement of 20

May 2015, DDPL breached the assignment term or the transfer warranty, or that Mr

Meissner breached the transfer warranty or the licencing warranty: PJ [347].

225. Finally, and as to the eighth contract claim, the primary judge noted that cl 1.3 reflected

the general rule in contracts that each party to a contract agrees by implication to do all

things necessary to secure performance of the contract, but concluded it did not

materially add to any of the other breach of contract claims: PJ [349].

CONSIDERATION

226. I now consider the various grounds of appeal to this Court.

Copyright authorisation infringement grounds

227. The appellant advanced four primary contentions of error:

(1) authorisation does not mean “authorisation to infringe” (grounds 1 to 7);

(2) authorisation does not require a mental element (grounds 1, 4 and 5);

(3) authorisation should have been found (grounds 1, 4 and 5); and

(4) if a mental element is required, it was met and authorisation should have been

found (grounds 2 to 4, 6 to 7).

228. I deal with these grounds seriatim.

229. As to the first, the appellant contends that the primary judge applied the wrong test by

interpreting authorisation at ss 36(1)–(1A) of the Copyright Act to require it to prove

that the represented respondents authorised the primary actor (Mr Semmens and other

Toolbox developers and users) to “infringe intellectual property rights”. That error is

said to be found in various sentences within PJ [297(7)], [305(2)], [305(3)], and

[305(5)]. The error asserted is that ss 36(1)–36(1A) require proof that the defendant

“authorised the doing...of, any act comprised in the copyright in a work”. That is, the

appellant is not required to establish that the defendant authorised infringement of

intellectual property rights.

230. As correctly observed by the represented respondents, this contention is not a ground of

appeal. In any event, it is of no merit. What is clear is that the primary judge, in various

paragraphs of the reasons, adopted a convenient shorthand for the statutory

requirement. This contention rests on a selective reading of isolated sentences and fails

to have regard to the reasons as a whole. At PJ [169], his Honour set out s 36(1) of the

Copyright Act. At PJ [170] his Honour also summarised the effect of s 13 of the

Copyright Act that an act comprised in the copyright in a literary work includes: (a) any

act that the owner of the copyright has the exclusive right to do; and (b) the exclusive

right to authorise a person to do that act. At PJ [267], his Honour said further:

...by reason of s 36(1) of the Copyright Act, copyright in a work is

infringed by a person who is not the owner of the copyright who does

any act “comprised in the copyright” without the licence of the owner of

the copyright. Section 13 provides that an act comprised in the

copyright in a literary work includes any act that the owner of the

copyright has the exclusive right to do in the exclusive right to authorise

a person to do that act.

231. The shorthand phrase employed by the primary judge was also used by counsel for the

appellant in his written closing submission at the trial: for example, paragraph [529] of

the submission dated 21 August 2020.

232. For these reasons, the primary judge plainly did not misunderstand or misstate the

statutory requirements.

233. Secondly, the appellant argues that the phrase employed by the primary judge,

“authorisation to infringe”, is contrary to binding authority. In its submission, all that is

required is authorisation of the act which comprises the infringement, rather than the

authorisation of the infringement itself. That is so: Moorhouse at 11 and 17 (Gibbs J),

and at 21 and 23 (Jacobs J), McTiernan ACJ in agreement; iiNet HCA (French CJ,

Crennan and Kiefel JJ at [5], [50]; Gummow and Hayne JJ at [142]. However, the

primary judge did not commit the error that is asserted. Once again, the appellant

focuses on individual phrases and fails to read the whole of the reasons in context. It is

certainly the case that in some sub paragraphs at PJ [305] the primary judge employed

the phrase “authorisation to infringe intellectual property rights”. For the same reasons

that I have set out above, it is clear that by using this shorthand phrase, the primary

judge did not overlook that authorisation is concerned with the act done, rather than its

legal consequence. He did not misunderstand or misapply s 36 when read with s 13 of

the Copyright Act.

234. Thirdly, the appellant contends that the primary judge wrongly imported a mental

element into the legal characterisation of the primary act, which is not essential to

establish authorisation. This argument focuses upon the various phrases employed by

the primary judge: “authorised him to infringe”, “an authorisation to infringe intellectual

property rights” and “requested or required him to infringe any person’s intellectual

property rights” each in the context of the conduct of Mr Semmens: PJ [297(7)],

[305(2)] and [305(5)]. I reject this submission for the reason that, once again, it

selectively focuses upon individual phrases used by the primary judge and fails to have

regard to the entirety of the reasons when read in context.

235. The primary judge did not conclude that authorisation requires knowledge about the

legal quality of the infringing act. So much is clear from: (a) his Honour’s summary of

the appellant’s case at PJ [296] that the represented respondents “knew that there was a

real risk that, in developing the system, Mr Semmens might infringe the intellectual

property rights of DDPL”; and (b) his Honour’s summary of the legal principles to be

applied at PJ [268] where, referencing iiNet HCA at [93], he correctly distinguished

between primary and secondary infringement, describing the latter as “...namely the

authorisation of the doing of the act or acts comprised in the copyright constituting the

primary infringement”.

236. The appellant relied on a more substantial argument that the primary judge erroneously

imported a mental element as necessary to establish authorisation of the doing of any act

comprised in the copyright pursuant to s 36(1) of the Copyright Act. Although not a

clearly articulated appeal ground, the appellant submitted that it is encompassed within

grounds 1, 4, and 5. In rejecting the authorisation case against Biggin & Scott, RETB, Mr

Stoner, and Ms Bartels, the primary judge said at PJ [300]:

As noted in the passage from Moorhouse, extracted at [270] above,

authorisation connotes a “mental element” and it might be difficult to

infer authorisation where the relevant person “neither knew nor had

reason to suspect that the act might be done”. It has not been

established that RETB, Biggin & Scott, Mr Stoner or Ms Bartels knew

(or that they should reasonably have known) that any of the works had

been reproduced in the Toolbox system or that they knew that use by

users or the loading, editing or modification of the Toolbox system by

developers or others might involve reproduction of a substantial part of

the DreamDesk system. This is not a case where the act of using the

Toolbox system was known necessarily to involve an act of

reproduction, such as might be the case in providing a photocopier for

the purpose of copying library books. I am not satisfied that Biggin &

Scott, RETB, Mr Stoner or Ms Bartels relevantly authorised any

infringement, whether of Mr Semmens or of other developers or users.

237. At PJ [304]–[305], the primary judge reasoned similarly in rejecting the case against

DDPL and Mr Meissner.

238. The starting point is s 36 of the Copyright Act which provides:

36 Infringement by doing acts comprised in the copyright

(1) Subject to this Act, the copyright in a literary, dramatic, musical or artistic work

is infringed by a person who, not being the owner of the copyright, and without the

licence of the owner of the copyright, does in Australia, or authorizes the doing in

Australia of, any act comprised in the copyright.

(1A) In determining, for the purposes of subsection (1), whether or not

a person has authorised the doing in Australia of any act comprised in

the copyright in a work, without the licence of the owner of the

copyright, the matters that must be taken into account include the

following:

(a) the extent (if any) of the person’s power to prevent the

doing of the act concerned;

(b) the nature of any relationship existing between the

person and the person who did the act concerned;

(c) whether the person took any reasonable steps to prevent

or avoid the doing of the act, including whether the person

complied with any relevant industry codes of practice.

(2) The next three succeeding sections do not affect the generality of this section.

239. The phrase in s 36(1) “any act comprised in the copyright” subsisting in the relevant

work derives its content from the exclusive right to do all or any of the acts described in s

31(1)(a) to (d) of the Copyright Act. Section 35 determines, or provides for determining,

who, for the purposes of the Copyright Act, is the owner of the copyright subsisting in

the work and s 13(1) provides that a reference to “an act comprised in the copyright” in a

work (or other subject-matter) is a reference to any act the owner of the copyright has

the exclusive right to do under the Act. The “exclusive right” to do an act in relation to a

work includes the exclusive right “to authorise a person to do that act in relation to that

work”: s 13(2). Thus, infringement of copyright is framed by s 36(1) as conduct of a

person (not being the owner and without the owner’s licence) who does any act

comprised in the copyright or who authorises the doing (one of the exclusive rights of

the copyright owner), of any act comprised in the copyright

240. As observed by Gummow J in WEA v Hanimex [1987] FCA 379; (1987) 17 FCR 274 at

284 “... the circumstance that the concept of ‘authorisation’ in the legislation had its own

independent operation from what one might call primary infringement, did not exclude

the general law principles dealing with joint tortfeasors from operation upon primary

infringement”. See also Australasian Performing Right Association Limited v Jain

(1990) 26 FCR 53 (at 57 per Sheppard, Foster & Hill JJ).

241. The Copyright Amendment (Digital Agenda) Act 2000 (Cth) (Digital Agenda Act)

introduced three mandatory considerations into the Copyright Act: ss 36(1A)(a) to (c)

and 101(1A)(a) to (c). These represented a partial codification of common law

developments in relation to authorisation: iiNet HCA (at [22], [24] per French CJ,

Crennan & Kiefel JJ). After the Digital Agenda Act, mandatory and primary

consideration must now be given to the statutory factors, although other matters may

continue to be considered: iiNet HCA (at [63], [68] per French CJ, Crennan & Kiefel JJ;

at [135] per Gummow and Hayne JJ); JR Consulting & Drafting Pty Ltd v Cummings

(2016) 116 IPR 440; [2016] FCAFC 20 (at [322]–[332] per Bennett, Greenwood &

Besanko JJ).

242. Accordingly, the statutory factors are “intended to inform the drawing of an inference of

authorisation”: iiNet HCA (at [68] per French CJ, Crennan & Kiefel JJ); Cooper v

Universal Music Australia Pty Ltd [2006] FCAFC 187; (2006) 156 FCR 380 (at [20] per

Branson J, French J agreeing).

243. Although the exclusive right of the copyright owner to do an act in relation to a work

includes the exclusive right to authorize a person to do that act (s 13(2)), the appellant

did not assert a case against the represented respondents that they purported to grant to

Mr Semmens the right to do the act complained of, and the primary judge rejected the

case that Mr Semmens acted as the agent of the represented respondents. From that

finding there is no appeal. The appellant’s case rests on an inference of implied

authorisation from all of the facts: iiNet HCA at [47], [61] and [125]. The appellant relies

upon the reasoning of Jacobs J (with whom McTiernan ACJ agreed) in Moorhouse at

20–21 who, when dealing with the phrase “sanction, approve, countenance”, said:

...But authorization is wider than authority. It has, in relation to a

similar use in previous copyright legislation, been given the meaning,

taken from the Oxford Dictionary, of “sanction, approve, countenance”.

See Falcon v. Famous Players Film Co. (1926) 2 KB 474 which was

approved in Adelaide Corporation v. Australasian Performing Right

Association Limited. [1928] HCA 10; (1928) 40 CLR 481. I have no

doubt that the word is used in the same sense in s. 36 (1). It is a wide

meaning which in cases of permission or invitation is apt to apply both

where an express permission or invitation is extended to do the act

comprised in the copyright and where such a permission or invitation

may be implied. Where a general permission or invitation may be

implied it is clearly unnecessary that the authorizing party have

knowledge that a particular act comprised in the copyright will be done.

(citations added.)

244. That passage should not be read out of context. It will be recalled that in Moorhouse, the

University authorities provided library books and photocopying machines, charged

students for the making of copies, controlled the use of the machines, had reasonable

grounds to suspect that infringements might occur and failed to take adequate steps to

prevent unauthorised copying. Thus, the issue was whether a general permission or

invitation to make such use of the copying facilities as the users thought fit should be

inferred. Conduct of that character does not require actual knowledge of particular

infringing acts, as the circumstances may support the inference of implied authorisation.

That passage must also be read with his Honour’s later observation at 22:

In the circumstances it was of little importance whether or not the

University authorities knew in fact that users of the machines were

doing acts comprised in the authors’ copyrights. This knowledge or lack

of it would not change the terms of the invitation extended by the

supplier of the books and machines. Knowledge could become

important if the invitation were qualified in such a way as to make it

clear that the invitation did not extend to the doing of acts comprised in

the copyright and if nevertheless it were known that the qualification to

the invitation was being ignored and yet the University allowed that

state of things to continue. Then it might be found as a fact that the

University authorised the continued state of things, the continued use

of its machines to do acts comprised in the authors’ copyrights, and

thus to infringe those copyrights.

245. I do not interpret the reasoning of Jacobs J as denying the necessity for there to be either

“express knowledge” of the doing of the relevant act comprised in the copyright in the

work, or “constructive knowledge” of the doing of that act as a matter of inference or

implication drawn from conduct amounting to a “general permission or invitation” (in

which event, actual knowledge “in fact” that a particular act will be done is of “little

importance” or “unnecessary”) or “wilful blindness” to the doing of an act comprised in

the copyright (in which event, the conduct is of the character of a general permission or

invitation by omission, by wilful indifference or wilful inactivity to the doing of the

primary act comprised in the copyright). I deal later in these reasons with the elements

of wilful blindness.. The implication of “a general permission or invitation” turns upon

whether the authorising party has reasonable grounds to suspect that an act comprised

in the copyright has or is likely to be done which is assessed upon all of the

circumstances and is consistent with his Honour’s reference in a later paragraph

(Moorhouse at 21) where he cited with approval the judgment of Banks LJ in

Performing Right Society Ltd v Ciryl Theatrical Syndicate Ltd [1924] 1 KB 1 at 9 who

reasoned that:

...The Court may infer an authorization or permission from acts which

fall short of being direct and positive; ...indifference, exhibited by acts

of commission or omission, may reach a degree from which

authorization or permission may be inferred. It is a question of fact in

each case what is the true inference to be drawn from the conduct of the

person who is said to have authorized...

246. In contrast, Gibbs J reasoned in Moorhouse at 12–13, after observing that the word

authorize has its dictionary meaning of “sanction, approve, countenance”, that:

...It can also mean “permit”, and in Adelaide Corporation v.

Australasian Performing Right Association Ltd. [1928] HCA 10;

(1928) 40 CLR 481 “authorize” and “permit” appear to have been

treated as synonymous. A person cannot be said to authorize an

infringement of copyright unless he has some power to prevent it:

Adelaide Corporation v. Australasian Performing Right Association

Ltd. (1928) 40 CLR, [at 497–498, 503]. Express or formal permission

or sanction, or active conduct indicating approval, is not essential to

constitute an authorization; “Inactivity or ‘indifference, exhibited by

acts of commission or omission, may reach a degree from which an

authorization or permission may be inferred’”: Adelaide Corporation v.

Australasian Performing Right Association Ltd. (1928) 40 CLR, [at

504]. However, the word “authorize” connotes a mental element and it

could not be inferred that a person had, by mere inactivity, authorized

something to be done if he neither knew nor had reason to suspect that

the act might be done.

(citations added.)

247. Knowledge or reason to suspect without control is not sufficient: Australian Tape

Manufacturers Association Ltd the Commonwealth (1993) 176 CLR 480; [1993] HCA 10

at 497 - 498per Mason CJ, Brennan, Deane and Gaudron JJ. In iiNet HCA at [50],

French CJ, Crennan and Kiefel JJ understood Jacobs J in Moorehouse (at 21) to have

found that “an implied invitation to infringe could constitute authorization despite the

absence of knowledge of any act of infringement”, recognising of course that in 1975

Jacobs J was writing before the introduction into the Copyright Act of the mandatory

factors at ss 36(1A)(a) – (c) and ss 101(1A)(a) – (c). As further explained by Gummow

and Hayne JJ in iiNet HCA at [128]:

In Moorhouse, Jacobs J adopted a passage in the judgment of Bankes

LJ in Performing Right Society Ltd v Ciryl Theatrical Syndicate Ltd

[1924] 1 KB 1. This was to the effect that indifference, exhibited by acts

of commission or omission, “may reach a degree” from which there may

be inferred authorisation. It is upon this notion of indifference to the

requisite degree on the part of iiNet that the appellants rely for the

proposition that iiNet sanctioned, in the sense of countenanced, the

Scheduled Infringements. The contrast between the notion of

indifference, and the requirement by the United States Supreme Court

in Metro-Goldwyn-Mayer Studios Inc v Grokster Ltd 545 US 913

(2005) of intentional inducement or encouragement of “contributory

infringement”, will be apparent.

(Citations added.)

248. What should not be overlooked is the further point made by French CJ, Crennan and

Kiefel JJ in iiNet HCA at [52], when dealing with the relevantly indistinguishable text of

s 101(1A) of the Copyright Act introduced into that Act by the Digital Agenda Act, that

the statute at paragraphs (a) and (c) is derived from the reasons of Gibbs J in

Moorhouse. It is that text which must be taken into account which primarily informs the

drawing of an inference of authorisation from the facts of this case. Knowledge is

relevant to consideration of the extent of the person’s power to prevent the doing of the

act comprised in the copyright.

249. In Roadshow Films Pty Ltd v iiNet Ltd (2011) 194 FCR 285; [2011] FCAFC 23 (iiNet

FC), the Full Court dismissed the appeal from the decision of this Court with Emmett

and Nicholas JJ in the majority (albeit with separate reasons) and Jagot J dissenting.

Each judgment comprehensively reviewed what is required to establish authorisation in

circumstances where copyright owners of cinematic and television works contended that

iiNet, as an ISP, had received various notices from and on behalf of owners to the effect

that some of its customers had used the service to infringe the rights of the copyright

owners and where iiNet had power to terminate the customer accounts. By majority, this

Court concluded that iiNet had not authorised the claimed acts of infringement by failing

to exercise that power.

250. As the reasons of this Court demonstrate, knowledge of acts comprised in the copyright

is a relevant matter although inactivity, indifference, or wilful blindness may be of such

character and degree as to infer knowledge and conclude authorisation. Nicholas J from

[757] analysed in detail when something less than actual knowledge of infringement may

be sufficient to found the inference of authorisation in the context of the requirements of

s 101(1A) of the Copyright Act. IiNet had received written notice from the Australian

Federation Against Copyright Theft (the Federation) which provided that it was acting

as an association whose members comprised various copyright owners and in that

capacity was “currently investigating infringements of copyright in movies and television

shows” by customers of iiNet through the use of the BitTorrent peer to peer protocol.

The notice further provided that information gathered by the Federation indicated

“numerous infringements of copyright in motion pictures and television shows”

controlled by its members by customers of iiNet. The notice attached a spreadsheet that

contained information relevant to the alleged infringing activities, which in some detail

specified: the date of each infringement, the IP address used by an identified customer of

iiNet and the motion pictures and television shows in which copyright was said to have

been infringed.

251. Nicholas J reasoned that the notices were insufficient to fix iiNet “with knowledge that

its network was being utilized by users of particular accounts to infringe the appelants’

copyright in the identified films”: [763]. His Honour continued:

I accept that they must have given the respondent reason to suspect

that such infringements had occurred. However, knowing that specific

acts of copyright infringement have occurred and merely suspecting

they have occurred are quite different things. In the circumstances of

the present case, the difference is of considerable importance.

252. The contrast with the facts of this case is self-evident. As explained below, commencing

on 29 September 2016, the represented respondents were put on specific notice by the

appellant that it suspected that copyright in DreamDesk had been infringed in the

development of Toolbox. That factual difference is important to understand why

Nicholas J drew the distinction that I have set out and explained in further detail at

[764]:

It is important to recall, as the primary judge found, that the

respondent has hundreds of thousands of customers and that each day

it receives hundreds of notices issued by or on behalf of copyright

owners. I do not think the respondent could reasonably be expected to

issue warnings, or to terminate or suspend particular accounts, in

reliance upon any such notice in circumstances where it has been told

nothing at all about the methods used to obtain the information which

lead to the issue of the notice. Nor should it be up to the respondent to

seek out this information from a copyright owner who chooses not to

provide it in the first place.

253. On the question of wilful blindness, Nicholas J said at [766]:

The appellants also submitted that the respondent was “wilfully blind”

to the matters disclosed in the AFACT notices which I take to mean that

the respondent deliberately abstained from inquiring into those

matters for fear of what the inquiry might reveal: Colbeam Palmer Ltd

v Stock Affiliates Pty Ltd [1968] HCA 50; (1968) 122 CLR 25 at 33 per

Windeyer J. In determining whether a person should be taken to know

of facts on the ground that he or she was “wilfully blind” to them, it is

necessary to look to the motivation behind the failure to make inquiry.

In R v Crabbe [1985] HCA 22; (1985) 156 CLR 464 at 470-471 the High

Court approved the following statement by Professor Glanville Williams

in Criminal Law: The General Part, 2nd ed. (1961) at 159:

A court can properly find wilful blindness only where it can

almost be said that the defendant actually knew. He

suspected the fact; he realised its probability; but he

refrained from obtaining the final confirmation because he

wanted in the event to be able to deny knowledge. This, and

this alone, is wilful blindness. It requires in effect a finding

that the defendant intended to cheat the administration of

justice.

254. From [776], Nicholas J turned to that which he described as “the critical question”, that

is whether iiNet sanctioned, approved, or countenanced any primary act of infringement

which had been found to have occurred. Neither sanction nor approval were made out

on the unchallenged findings of fact of the primary judge: [777]. Turning to countenance,

his Honour referenced the decision of this Court in Australasian Performing Right

Association Ltd v Jain (1990) 26 FCR 53 at 61 where Sheppard, Foster, and Hill JJ

observed:

The judgment of the members of the High Court in the Moorhouse case

establishes that one of the meanings of the word “authorise” in the

context in which it is here used is “countenance”. It may be that not

every act which amounts to the countenancing of something is an

authorisation. Every case will depend upon its own facts. Matters of

degree are involved. But the evidence in the present case reveals, in our

opinion, a studied and deliberate course of action in which Mr Jain

decided to ignore the appellant's rights and to allow a situation to

develop and to continue in which he must have known that it was likely

that the appellant's music would be played without any licence from it.

It was within his power to control what was occurring be [sic] he did

nothing at all. In those circumstances we have reached the conclusion

that the appellant established that Mr Jain authorised the infringement

of copyright in question ...

and relevantly continued:

779. As the primary judge pointed out, “countenance” is sometimes defined to

mean to sanction or favour, or to patronise or encourage. As I have said, I do

not think the respondent’s conduct fits those descriptions. It is likely,

however, that the Full Court in Jain had in mind some of the broader

definitions of that word which can include “to tolerate” or “to permit”. These

words are useful synonyms so long as it is recognised that the word

“authorise” itself connotes a mental element involving the giving of a consent

or permission of some kind or a carelessness from which such consent or

permission may be inferred.

780. In Jain, it was the respondent’s decision to ignore the copyright owner’s

rights that was central to the Full Court’s finding of authorisation. I do not

think it is correct to say that the respondent in the present case ignored the

appellants’ rights. The respondent was of the view that it was not required to

act on the AFACT notices because they were based upon allegations that

required further investigation which the respondent did not believe it was

required to undertake. I do not infer from this that it was in the respondent’s

mind to consent to or to permit copyright infringement by iiNet users using

the respondent’s facilities.

781. I accept that a refusal by an ISP to act on infringement allegations made by or

on behalf of a copyright owner may be evidence from which authorisation

might be inferred. But that will only be so if the refusal is unreasonable.

Whether or not a refusal is unreasonable must depend upon the

circumstances in which it occurs including the nature and quality of the

information upon which the ISP is requested to act by the copyright owner.

255. Emmett J approached the question of knowledge by focussing on the facts, primarily the

numerous notices in writing from the Federation to iiNet which particularised the

alleged infringements: [89]–110]. He recorded at [109] that iiNet “accepted that it had

general knowledge of copyright infringement committed by its customers or that

infringement was likely to occur on its facilities.” In his Honour’s view the question was

“whether, given that knowledge, there were reasonable steps available to iiNet, once it

received that knowledge, that would have prevented infringements occurring in the

future”: [110].

256. Jagot J, in dissent, differed from the majority only on the question of whether it was

reasonable to expect iiNet, in response to the notices from the Federation, to take steps

to warn its customers or to suspend or terminate accounts which turned upon her

Honour’s detailed analysis of the facts and application of s 101(1A): [389]–[449]. Her

Honour concluded that “iiNet had evidence of widespread and repeat copyright

infringements by its customers or persons its customers were allowing to use iiNet’s

internet service”: [450].

257. What is clear is that each member of this Court in iiNet FC accepted that in order to

establish that a person has authorised the doing of an act comprised in the copyright in

the work and has thus infringed the copyright by exercising an exclusive right of the

copyright owner in relation to that act, it is necessary to prove on the balance of

probabilities that the person either had actual knowledge of the doing of the act or

constructive knowledge of the act because the person had reasonable grounds to suspect

the doing of the act or, the person exhibited wilful blindness to the doing of the act. I

describe in these reasons these three possible states of knowledge as the “mental

element”. It is equally clear that it is not necessary to prove as an element of any one of

the three states of knowledge constituting the mental element of the person, actual

knowledge that the act constituted an “infringing act” or that the person had

constructive knowledge of, or was wilfully blind to, the act being an “infringing act”. The

relevant fact comprehended by the mental element (as described) is the “doing of an act

comprised in the copyright” taking into account the s 36(1A)(a) to (c) factors, not the

legal character of the act.

258. Counsel for the appellant relied upon several decisions for the proposition that a mental

element is not a precondition to inferring authorisation. The first is the reasoning of

Jacobs J in Moorhouse at 21. As I have explained, that passage is concerned with

drawing an inference of permission or invitation from all of the circumstances and must

be read together with his Honour’s later reasoning at 22 which speaks to the

“unqualified” supply of library books and photocopiers as amounting to “an invitation to

users of the library” to use the copiers “as they saw fit”.

259. In Australasian Performing Right Association Ltd v Metro on George Pty Ltd (2004)

210 ALR 244; [2004] FCA 1123 (Metro on George) at [16], Bennett J in her Honour’s

summary of the legal principles referenced the decision of Jacobs J in Moorhouse that

knowledge is unnecessary. However, that statement cannot be read divorced from the

facts (the music venue operator relied on a contract with promoters to the effect that it

did not authorise individual performances) and her Honour’s later finding at [44] that

the respondent did not take steps to prevent or avoid infringing acts of performance.

260. Contrary to the appellant’s submissions, Conti J in Microsoft Corporation v PC Club

Australia Pty Ltd (2005) 148 FCR 310; [2005] FCA 1522 at [146]–[147] did not reason

that knowledge is unnecessary. His Honour referenced the reasons of Gibbs and Jacobs

JJ in Moorhouse and then in an orthodox way at [147] moved to a consideration of the

particular facts by approaching the content of authorisation “...and its application to

particular circumstances in a broad or comprehensive way”.

261. Tamberlin J in Universal Music Australia Pty Ltd v Cooper (2005) 150 FCR 1; [2005]

FCA 972 at [78]–[79] referenced each judgment in Moorhouse and observed that the

majority stated: “...knowledge was not relevant where a general permission or invitation

existed to perform the acts of infringement...” This is consistent with my analysis.

262. In Streetworx Pty Ltd v Artcraft Urban Group Pty Ltd (2014) 110 IPR 82; [2014] FCA

1366, Beach J analysed what is meant by authorisation from [389]. At [394] and after

referencing Moorhouse and iiNet, his Honour stated that “For ‘authorise’, no intention

to infringe or knowledge that the relevant acts would or would be likely to infringe is

necessary.” That sentence should not be understood divorced from the particular facts –

whether officers of a corporation had, distinctly from the corporation, authorised the

acts of infringement – and the immediately preceding paragraph where his Honour

observed that an officer of a corporation “...merely by his position alone cannot be said

to authorise”, and “[e]ngaging or personally participating in relevant acts of

infringement coupled with the power to prevent may be sufficient to demonstrate such

sanctioning, approval or countenance.”

263. The final authority relied upon by the appellant is Universal Music Australia Pty Ltd v

Sharman Licence Holdings Ltd (2005) 222 FCR 465; [2005] FCA 1242 at [370] per

Wilcox J. After referencing each of Gibbs and Jacobs JJ in Moorhouse from [367], his

Honour said:

Knowledge, or lack of knowledge, is an important factor in determining

whether a person has authorised an infringement. However, it is not a

conclusive factor. Just as there may be authorisation without

knowledge, mere knowledge is not enough. In Nationwide News Pty

at 422, Sackville J (with whom Jenkinson and Burchett JJ agreed) said:

Nonetheless, a person does not authorise an infringement

merely because he or she knows that another person might

infringe the copyright and takes no step to prevent the

infringement.

264. I do not interpret that paragraph as inconsistent with my reasons. His Honour at [369]

cited the passage of Jacobs J in Moorhouse at 21: where a general permission or

invitation to do an act comprised in the copyright may be implied.

265. As each of the cases to which I have referred demonstrate, close attention must be paid

to the facts of this case and the way in which the appellant framed its case at trial. It was

not the appellant’s case that the represented respondents knew that the instruction

contained in the letter of 3 August 2016 had not or would not be complied with. Nor was

it the appellant’s case that it should be inferred that the represented respondents

granted a general permission or invitation to Mr Semmens to do acts comprised in the

appellant’s copyright. The case was that despite the instruction to Mr Semmens “...to

build a web to print delivery system that does not breach any other companies IP or

ownership, in particular DreamDesk or Campaign Track” and “[a]ll products used

should be off the shelf products...”, the represented respondents authorised the

infringements for each of the reasons summarised by the primary judge at PJ [296]. The

appellant’s case focussed attention on knowledge “...that there was a real risk that, in

developing the system, Mr Semmens might infringe intellectual property rights...” and

that “...Mr Stoner had a heightened and constant awareness of the risk of infringement”.

266. Moreover, in the written outline of opening submissions before the primary judge dated

7 July 2020, the appellant expressed its case against Biggin & Scott, RETB, Mr Stoner,

and Ms Bartels in the alternative as follows:

They either deliberately procured, authorised or caused Mr Semmens

to copy the DreamDesk system in developing the Toolbox system.

Alternatively, in all the circumstances, they knew or had reason to

suspect Mr Semmens would copy the DreamDesk system in doing so,

and they took no or insufficient steps to prevent that from happening.

They continued to exploit or enjoy the benefits of the Toolbox system

after the allegations in this proceeding were made.

267. What is apparent from the reasons of the primary judge at [304]–[305] is that a case of

the same type was asserted against DDPL and Mr Meissner.

268. Having framed each case in that way, it is hardly surprising that the primary judge

reasoned that “...it might be difficult to infer authorisation where the relevant person

‘neither knew nor had reason to suspect that the act might be done’”: PJ [300].

269. When the issue of authorisation is examined through the lens of s 36(1A) of the

Copyright Act, knowledge is plainly relevant in this case as to the extent of the power of

each of the represented respondents that was open to be exercised, but was not, to

prevent the infringing conduct of Mr Semmens pursuant to subparagraphs (a) and (c).

Those persons cannot be expected to have taken reasonable steps “to prevent or avoid

the doing of the act” by Mr Semmens unless each had knowledge of the particular acts,

or a reasonable person with knowledge of the circumstances at the time would have had

such knowledge.

270. For these reasons, I conclude that the primary judge did not err in the way in which his

Honour framed the principle applicable to the circumstances of the case before him at

PJ [300] or [304]–[305].

271. I next address the arguments on the third and fourth copyright authorisation

contentions together as there is considerable overlap and the third, although it proceeds

on the assumption that the primary judge erred in accordance with the first and second

contentions, is not satisfactorily answered by my conclusion that the primary judge did

not apply a wrong test. The core argument on these grounds is that the primary judge

failed to draw the correct inference from all of the primary facts that he found. To

understand that argument it is necessary to examine those facts in some detail, which I

take from uncontested findings of the primary judge.

272. Mr Semmens reproduced the whole or a substantial part of the Source Code Works in

developing Toolbox. Other developers of Toolbox (Mr Gallagher and Mr Zhang)

reproduced a substantial part of the Source Code Works. Users of Toolbox (including

Biggin & Scott) reproduced a substantial part of the Source Code Works in using

Toolbox. Mr Semmens communicated a substantial part of the Source Code Works in

developing Toolbox.

273. The Toolbox venture provided Biggin & Scott and its partners with a controlling interest,

and Mr Semmens and his partners a minority interest. Biggin & Scott subsequently

invested in the venture and instructed Mr Semmens in relation to the development of

Toolbox. The directors of Biggin & Scott communicated with Mr Semmens and

DDPL/JGM Advertising staff in the development of Toolbox, including in relation to

features and testing. The Toolbox venture operated by way of a trust and RETB was the

trustee. Mr Stoner participated in the venture as the CEO/director of Biggin & Scott and

the sole director of RETB. Ms Bartels participated as a director of Biggin & Scott and the

sole company secretary of RETB. Mr Stoner paid Mr Semmens’ invoices in relation to

development of Toolbox and Ms Bartels paid the Toolbox hosting invoice. DDPL and Mr

Meissner participated in the development of Toolbox through DDPL and JGM

Advertising, including by providing staff and resources used to develop the Toolbox

system. DDPL and Mr Meissner had power to prevent the infringements, including by

not engaging the DDPL and JGM Advertising staff to develop the Toolbox system, by not

paying for that work and by not paying for the AWS invoices.

274. The represented respondents had relevant “relationships” with the primary actors.

Biggin & Scott and Mr Semmens were in a contractual relationship and Biggin & Scott

could instruct Mr Semmens. Mr Semmens was contracted to DDPL, and DDPL and Mr

Meissner could issue instructions to Mr Semmens. The other Toolbox developers, Mr

Gallagher and Mr Zhang, were contracted to or employed by DDPL or JGM Advertising,

another company controlled by Mr Meissner and worked under Mr Semmens’

supervision. Biggin & Scott and RETB had relationships with the users of Toolbox. Users

included Biggin & Scott franchisees. Mr Stoner, Ms Bartels, and Biggin & Scott caused

Biggin & Scott to move to Toolbox. Mr Stoner and Ms Bartels were available to persuade

other customers to move to Toolbox.

275. On the question of whether the represented respondents took “steps to prevent or avoid”

the primary acts, Biggin & Scott, RETB, Mr Stoner, and Ms Bartels did not conduct any

independent audit or verification that Toolbox did not infringe another company’s

intellectual property rights, and DDPL and Mr Meissner took no steps to prevent or

avoid the primary acts in the development of Toolbox or the moving of data away from

DreamDesk.

276. Despite these findings, the primary judge was not satisfied that the appellant had made

out its authorisation case for the reasons that he set out at PJ [297] (Biggin & Scott, Mr

Stoner, RETB, and Ms Bartels) and PJ [305] (DDPL and Mr Meissner). Central to that

reasoning is the finding that each trusted Mr Semmens not to infringe intellectual

property rights; expressly relied upon him to not misuse intellectual property belonging

to others; did not know or reasonably ought to have known that copyright works had

been used in the Toolbox system; and Mr Meissner was “shocked” to discover that Mr

Semmens had used Process 55 in the development of DreamDesk. The multiple findings

of trust are significant upon this appeal as each quintessentially turns upon the

assessment that the primary judge made of the evidence when given by the witnesses.

The appellant does not challenge these findings. They are based on the following

evidence.

277. After extracting a portion of the cross-examination of Mr Stoner at PJ [41], and in

particular the following questions and answers,

You knew there was a problem with Process 55 and the use of Process

55 by DreamDesk, did you not? – At that stage, yes. On 3 August.

...

You appreciated that there was real risk that Mr Semmens might

infringe another company'ss IP?---No. I would have to say, “No”. I trust

David

the primary judge found at PJ [43]: