FEDERAL COURT OF AUSTRALIA

Flashback Holdings Pty Limited v Showtime DVD Holdings Pty Ltd (No. 2)
[2008] FCA 2008

FLASHBACK HOLDINGS PTY LIMITED v SHOWTIME DVD HOLDINGS PTY LTD, INTERFREIGHT LOGISTICS PTY LTD and WILLIAM NIGEL HEYDON LESLIE

NSD 680 of 2008

PERRAM J

10 DECEMBER 2008

SYDNEY

THE COURT ORDERS THAT:

1.                  Upon the undertaking of the applicant to amend its statement of claim to include an allegation that Gaiam Inc is the owner of the copyright: the stay which was ordered by this Court on 17 October 2008 be lifted.

2.                  Leave be granted to the applicant to:

(a)                join Gaiam Inc as a party to the proceeding; and

(b)               amend its statement of claim to include an allegation that Gaiam Inc is the copyright owner.

3.                  The first respondent, by an authorised officer and within seven days, file and serve an affidavit detailing the assets and liabilities of the first respondent and identifying each of the films comprising the “Animated Classics” item listed on the spreadsheet annexed to these orders and marked with the letter “A”.

4.                  On or before 18 January 2009, the respondents give discovery of documents (including handwritten notes, electronic material and hard copy documents) relating to the films referred to in annexure “A” to the orders made by the Court on 14 May 2008 (“Films”) and concerning at least the following:

(a)                the importation into Australia and exportation from Australia of copies of Films between September 2007 and June 2008, including notices from customs in Australia and New Zealand;

(b)               the quantity of Films imported between March 2007 and June 2008;

(c)                the quantity of Films exported between March 2007 and June 2008;

(d)               the price at which the respondents acquired copies of the Films between March 2007 and June 2008;

(e)                the price at which the respondents sold the Films between March 2007 and June 2008;

(f)                 the quantity and location of Films currently in the possession or control of the respondents;

(g)                the agreements, instructions and conversations referred to in the defence of the first and third respondent dated 17 July 2008 and the defence of the second respondent dated 18 July 2008;

(h)                customers to whom copies of Films were supplied or to whom the respondents intended to supply copies of Films between September 2007 and June 2008, including:

(i)                  the names and addresses of customers;

(ii)                the number of copies supplied;

(iii)               the price at which the copies were supplied; and

(iv)              the dates on which the copies were supplied;

(i)                  one copy of each Film; and

(j)                 all documents relating to any proceeding or proposed proceeding between the first and/or third respondents and Absolute Home Entertainment 2004 Ltd relating to royalties or the recovery thereof.

5.                  The applicant file and serve its affidavit evidence in chief on or before 27 January 2009.

6.                  The respondents file and serve their affidavit evidence in chief on or before 24 February 2009.

7.                  The applicant file and serve any evidence in reply on or before 10 March 2009.

8.                  The matter be fixed for hearing for three days commencing on 1 June 2009.

9.                  The proceeding be stood over for pre-trial directions at 9.30 am on 14 April 2009.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

REASONS FOR JUDGMENT

1                     This proceeding was commenced by application on 14 May 2008.  The applicant, Flashback Holdings Pty Limited (“Flashback”), alleges that it has an exclusive licence to distribute in Australia a range of children’s DVDs.  That allegation is contained in paragraphs 5 and 6 of the statement of claim which are as follows (excluding particulars):

5.         On 18 September 2007, the Applicant entered into an exclusive licence agreement with Absolute Home Entertainment 2004 Ltd (Licensor).

6.         By virtue of the Licence Agreement the Applicant was granted an exclusive licence pursuant to the Copyright Act 1968 (Cth) (“the Act”) to exercise the rights of the copyright owner in Australia including, but not limited to, the right to manufacture, make copies of, market, sell and otherwise distribute in Australia the cinematograph films particularised below.

2                     It will be apparent that those paragraphs do not explicitly allege that Absolute Home Entertainment 2004 Ltd (“Absolute”) is the owner of the copyright.  Section 120 of the Copyright Act 1968 (Cth) requires the owner of the copyright to be joined unless the Court otherwise grants leave.  On 17 October 2008 I disposed of Flashback’s application for leave to proceed without joining Absolute by refusing that application.  I stayed the proceeding until such time as Flashback joined Absolute to the proceedings.

3                     By a notice of motion filed 24 November 2008, Flashback applied for leave to join an American corporation, Gaiam Inc (“Gaiam”), to the proceeding as the owner of the copyright.  In support of that application material was placed before the Court which demonstrated that Gaiam was the owner of the copyright.  The implicit basis upon which my first orders were made was that the owner of the copyright was Absolute.  It is no longer disputed by the parties that, in truth, the owner of the copyright is Gaiam.

4                     There was tendered before me a letter from Gaiam indicating its consent to be joined as a party, although it also indicated it would take no active part in the proceeding.  The respondents have also indicated that they do not oppose the joinder of Gaiam to the proceeding.  If the statement of claim filed by Flashback is amended so as to make the allegation that the owner of the copyright is Gaiam and if Gaiam is also joined as a party to the proceeding, it seems to me that the basis upon which the prior stay of the proceeding was ordered will have disappeared.

5                     In those circumstances, it is appropriate to lift the stay but to do so on the condition that Flashback undertake to amend its statement of claim by including an allegation that the owner of the copyright is Gaiam.  I will, in due course, in addition to accepting that undertaking, grant leave to make that amendment which, as I have said, I do not understand to be opposed.

6                     The applicant also applied at the commencement of the present hearing for the making of a number of procedural directions.  I will return to those shortly.  It was also proposed that the first respondent should be directed to file and serve an affidavit detailing its current assets and liabilities and identifying each of the films comprising the animated classics which are referred to in the affidavit of Mr Banki.

7                     The basis upon which that order was sought emerged from that affidavit.  There was annexed to that affidavit an email which indicated that the first respondent was closing its Perth warehouse outlet.  The applicant is concerned, and puts the matter no higher than that, that there may be a dissipation of the assets of the first respondent and seeks, in those circumstances, the filing of an affidavit as to those matters.  I was informed from the bar table today by counsel for the first respondent that he had received instructions from his client that, in truth, the closing down of that warehouse was a precursor to the opening of another and that the concern that the applicant had was not well-founded.

8                     That being so, it is appropriate to direct the filing and service of the affidavit which has been sought.  I will make orders accordingly.

Associate:

Dated:         22 January 2009