This was an application brought by the plaintiffs for injunctive relief alleging infringement of copyright and breaches of the Fair Trading Act 1986. The first three plaintiffs were Korean-based broadcasters who licensed their content to the fourth plaintiff – a New Zealand based company that broadcast the first plaintiffs’ content in New Zealand. The plaintiffs brought proceedings against the defendants alleging that the defendants’ advertised for sale, distributed and broadcast material in breach of the plaintiffs’ copyright. The plaintiffs also alleged that the defendants’ conduct was misleading or deceptive, or was likely to mislead and deceive, the public under the Fair Trading Act 1986.

The defendants had operated a system called “Baro TV”. The defendants’ system recorded content in Korea which was broadcast by the first three plaintiffs and would send it, via the Internet, to set top boxes in New Zealand. This enabled viewers based in New Zealand to watch the plaintiffs’ content without having to purchase a decoder and pay a licence fee to the fourth defendant. The defendants supplied their customers with both a device called a “Digizon standard” or “DigizonSTD” which recorded the first to third plaintiffs’ broadcast and was stored in a warehouse in Korea and a set top box called “Digizon on TV” which was connected to the customer’s TV in New Zealand.

There was no dispute between the parties that the content of the first to third plaintiffs were copyright works and that the works were owned by them and that they had been communicated into New Zealand. The defendants did however dispute that there was any copying of the work or that the work had been communicated to the public.

The Court granted the plaintiffs’ injunction and held as follows:

Serious question to be tried – copying and communicating the work to the public

(1)   As to the question of whether copying had occurred, the Court held that the question was whether the Baro TV system and the Digizon devices involved copying the copyright work by the digitisation process in any material form. Section 2 of the Copyright Act defines “copying” as including “reproducing … or storing the work in any material form (including any digital format)”.”

(2)   The Court accepted the plaintiffs’ submissions that “reproducing” in “any material form” in terms of the definition of copying occurred in this case:

(a)   Upon the reproduction or copying of the work on a television monitor at a point in time when the viewer watches the broadcast on his or her domestic television set in New Zealand; and

(b)   When the “Digizon on TV” device received and converted the digitised signal into a viewable form. [59] and [68].

(3)   Although the reproduction and retention of data was transient, it nevertheless constituted copying in terms of the definition of copying in s2. [69]

(4)   The Court rejected the defendants’ submissions that the first three plaintiffs, by broadcasting their content in Korea, had given the defendant permission to view the content in New Zealand. Copyright is territorial as evidenced and confirmed by the requirement to extend to New Zealand the rights of the plaintiffs as copyright owners by the Copyright (Application to Other Countries) Order 1995. It is also confirmed by the provisions under the Copyright Act relating to exclusive licences in ss 123 and 124 and s228 providing protection for re-broadcasting in New Zealand. The defendants had no permission from the plaintiffs to broadcast the content in New Zealand. [71] – [74]

(5)   The Court also rejected the defendants’ submissions under s43A of the Act which provides an exception for transient reproduction of a copyright work. The exception only applies where the reproduction is transient or incidental; is an integral and essential part of the technological process enabling non-infringing use of, or lawful dealing in the work; and has no independent economic significance. Although the reproduction of the work by the defendants might be transient and might not have an independent economic significance, therefore meeting the criteria of (a) and (c) of the exception, it did not meet the requirement of (b). The defendants failed to show that the reproduction of the plaintiffs’ copyright work was an integral and essential part of a technological process for making and receiving a communication that does not infringe copyright or enabling the lawful use of, or dealing in, the work. [78] and [83].

(6)   As to infringement of the plaintiffs’ copyright by communicating the work in public under s16(f), the Court accepted that one-to-one communications of a work (i.e. from the defendants’ Baro system to individual household subscribers) were “to the public”. If such a communication was not to the public the property right of a copyright owner under s14 could be rendered nugatory or at least seriously compromised and undermined. This cannot be the intended purpose of the legislation. The Court also noted Copinger & Skone James on Copyright which suggested that the restricted act of communicating to the public does not mean that it is communicated to the public at large. Where a work is only available to subscribers to an Internet service, the subscribers will qualify as “the public” for this purpose. However, the Court noted that it did not have to expressly determine this issue. [104] – [106]

Did the defendant copy or communicate the whole or a substantial part of the work – s29?

(7)   There was no contention that anything less than the whole of the content of the broadcast of the plaintiffs was sent to New Zealand. Therefore the requirements of s29(2) were satisfied. [113] – [114]

Rights and remedies in respect of apparatus for unauthorised reception of transmissions – s228

(8)   Section 228 of the Act did not apply as the programmes that the defendants broadcast came directly from Korea and were not the same transmissions that were broadcast by the fourth plaintiff in New Zealand. Accordingly, the fourth defendant was not able to rely on s228 to provide them with a remedy against the defendants’ activities. Section 228 only provides a remedy to a person in New Zealand where there has been unauthorised reception of that person’s transmissions. This was not the case here as the unauthorised transmission was of the first to third plaintiffs’ content which occurred in Korea. [129] – [132]

Exclusive licensing

(9)   The fourth plaintiff was not an exclusive licensee of the first to third plaintiffs. There was no evidence or material which showed that the fourth plaintiff was an exclusive licensee and entitled to the rights and remedies conferred by s123 of the Act. The Court expressly rejected the plaintiffs’ submission that the Act does not require an exclusive licence to be in writing. The plaintiffs in its evidence only pointed to a power of attorney in favour of the fourth defendant from the first to third plaintiffs. [137] – [140]

 Fair Trading Act 1986 – Serious Question to be Tried

(10)   Both parties submitted that the Fair Trading Act causes of action rested on whether there was copyright infringement under the Act. The Court held that there were serious questions to be tried under the Fair Trading Act given its findings in relation to infringement of copyright under s16(1)(a) and (f) of the Act. [143] – [145]

Balance of convenience

(11)   The balance of convenience was in favour of the plaintiffs. Although the granting of an interim injunction would result in lost business opportunities for the defendants which are seldom readily quantifiable, due to the short period of trading thus far, any losses suffered by the defendant should be readily ascertainable. Furthermore the defendants entered the market in full knowledge of the plaintiffs’ copyright in the broadcast. The defendants would have been aware that the plaintiffs would have challenged the defendants’ access to the New Zealand market due to the plaintiffs’ copyright in the broadcast. [152] – [155]

Undertaking as to damages – ability of undertaking to be met, whether undertaking needs to be from all applicants

(12)   An undertaking was only offered by the fourth plaintiff as it was the only plaintiff based in New Zealand. Having reviewed case law on this point, the Court noted that where an undertaking has been given but there is doubt about an applicant(s) ability to meet it, this is a matter to be taken into account in assessing the balance of convenience. Refusal to provide information about the ability to pay may be a significant factor against granting an application. Only the fourth plaintiff submitted any financial evidence to the Court relying on the fact that an agent could provide an undertaking on a principal’s behalf. The Court closely reviewed the appointment of the fourth plaintiff as an agent and found that it did not extend to permitting the fourth plaintiff to enter into an undertaking on behalf of the other three plaintiffs. The Court accordingly required that as a condition of any interim injunction that the first to third plaintiffs each file an undertaking as to damages. [187], [191] – [192]