Burden v Esr Group (Nz) Ltd
| Jurisdiction | New Zealand |
| Judge | Downs J |
| Judgment Date | 29 July 2022 |
| Neutral Citation | [2022] NZHC 1818 |
| Docket Number | CIV-2014-404-002456 |
| Court | High Court |
UNDER the Copyright Act 1994
IN THE MATTER OF infringement of copyright
[2022] NZHC 1818
Downs J
CIV-2014-404-002456
IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA
TĀMAKI MAKAURAU ROHE
Intellectual Property, Statutory Interpretation — claim for breach of copyright — meaning of “issue to the public” — right of “first circulation” — exhaustion — Copyright Act 1994 — Trade Marks Act 2002 — Copyright, Designs and Patents Act 1988 (UK) — Agreement on Trade-Related Aspects of Intellectual Property — World Intellectual Property Office Copyright Treaty
A H Brown QC, J R Wach and J Oliver-Hood for Plaintiffs
A J Pietras and V J Powell for Defendant
This judgment was delivered by me on Friday, 29 July 2022 at 10 am pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
The owner of a copyright has the exclusive right, in New Zealand, to issue copies of that work to the public. 1 Section 9(1) of the Copyright Act 1994 2 defines issuing copies to the public as “putting into circulation copies not previously put into circulation”. 3 I call this concept first circulation and the associated right, the right of first circulation. These are convenient labels, not more.
This case involves dealings in furniture in breach of copyright, and an alleged contravention of the plaintiffs' right of first circulation. It turns on the precise effect of s 9(1). The furniture was made in Vietnam before being imported and sold in New Zealand. It was earlier available for purchase, by others, in Vietnam.
The plaintiffs contend “putting into circulation copies not previously put into circulation” means circulation in New Zealand, by or with the consent of the copyright owner. The defendant contends circulation means anywhere in the world, irrespective of whether the copyright owner consented. Existing case law is not decisive, or at least not obviously so.
Other aspects of the case have been before the courts since 2014. Associated history approaches the Byzantine. With this in mind, I narrate only core background and strip everything else away. To do otherwise risks obscuring the analysis. For those interested, a chronology (of fact and litigation) comprises schedule 1 to this judgment.
Ian Burden designs, makes and exports furniture. Mr Burden owns the remaining plaintiffs, PGT Reclaimed (International) Ltd and Plantation Grown Timbers (Vietnam) Ltd. The defendant, ESR Group (NZ) Ltd, 4 sells furniture in New Zealand under the name, Early Settler.
From March 2013, ESR imported from Vietnam and sold furniture here that infringed the plaintiffs' copyright. I call this the furniture.
The furniture was copied from the plaintiffs' Irish Coast collection by a former colleague of Mr Burden. The furniture was made in Vietnam by companies in which that colleague had a controlling interest. ESR ordered the furniture from one of these companies after seeing its catalogue. The evidence implies the furniture pre-existed ESR's orders rather than being made to meet them.
ESR knew the furniture infringed copyright from 28 August 2014. ESR then ceased ordering more. ESR sold the last item of the furniture on or about 22 November 2014.
ESR earned a net profit of $221,134.50 from sales of the furniture between March 2013 and 22 November 2014. ESR's net profit from sales of the furniture from 28 August 2014 until 22 November 2014 is much smaller; $9,316.50 only. 5
ESR is unquestionably liable to the plaintiffs for this smaller figure as from 28 August 2014, it committed secondary copyright infringements by importing and selling the furniture, knowing it breached copyright.
In dispute is whether ESR is also liable to the plaintiffs for the larger figure going back to March 2013, before ESR knew the furniture breached copyright. 6 Liability rests on ESR having committed primary copyright infringement by issuing the furniture to the public, more particularly, by contravening the plaintiffs' right of first circulation. As observed, this turns on how first circulation operates under s 9(1) of the Act. If the provision confines first circulation to New Zealand by or with the consent of the copyright owner, ESR is liable for the obvious reason it put into circulation, here, the furniture in contravention of the plaintiffs' right. But, if first circulation in s 9(1) extends to anywhere in the world, irrespective of consent, ESR is
The Act is pivotal. The parties' submissions are best understood with it in mind, hence what follows. For reasons that will become apparent, I also touch on copyright law in the United Kingdom and other developments here and elsewhere, in something approaching chronological order.
The Act is New Zealand's third (domestic) copyright statute. Earlier Acts were the Copyright Act 1913 and the Copyright Act 1962. The Act was introduced in response to New Zealand's accession to the Agreement on Trade-Related Aspects of Intellectual Property, or TRIP. As observed by our Supreme Court, because of (a) time-pressure to comply with TRIP and (b) our “historical reliance on United Kingdom copyright law”, the Act was “largely based” on a United Kingdom statute: the Copyright, Designs and Patents Act 1988. 8 I call this the United Kingdom Act.
Section 16 of our Act provides the owner of copyright has “the exclusive right to do … the following acts in New Zealand”:
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(a) To copy the work;
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(b) To issue copies of the work to the public, whether by sale or otherwise;
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(c) To perform the work in public;
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(d) To play the work in public;
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(e) To show the work in public;
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(f) To communicate the work to the public;
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(g) To make an adaptation of the work;
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(h) To do any of the acts referred to in any of paragraphs (a) to (f) in relation to an adaptation of the work;
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(i) To authorise another person to do any of the acts referred to in any of paragraphs (a) to (h).
The Act creates two broad types of copyright infringement: primary infringement and secondary infringement. Secondary infringement requires proof of knowledge the copy infringed copyright; primary infringement does not.
Under s 29(1), primary infringement occurs when a person “other than pursuant to a copyright licence, does any restrictive act”. Section 31 makes a restrictive act—hence a species of primary infringement—the “issue of copies of a work to the public”.
As observed, s 9(1) defines the issue of copies to the public. It reads:
9 Meaning of issue to the public
(1) References in this Act to the issue of copies of a work to the public mean the act of putting into circulation copies not previously put into circulation; and do not include the acts of—
(a) Subsequent distribution or sale of those copies; or
(b) Subject to subsections (2) and (3), subsequent hiring or loan of those copies; or
(c) Subsequent importation of those copies into New Zealand; or
(d) Distribution of imported copies that are not infringing copies within the meaning of section 12 subsequent to their importation into New Zealand.
The Act recognises copies of a work as either genuine or infringing. A genuine copy is made by the copyright owner or someone under licence of the copyright owner. Parallel imports provide the best example of a genuine copy of a work. Section 12(5A)(a) addresses this situation. Such a copy “is not an infringing copy … if … it is made by or with the consent of the owner of copyright, or other equivalent intellectual property right, in the work in question in the country in which the object was made”.
Unsurprisingly, an “infringing copy” (in s 12(2)) involves “an infringement of the copyright in the work in question”. A copy of this type is made without the consent or licence of the copyright owner and, unlike a genuine copy, potentially damaging to sales of the copyright owner's products and reputation. Infringing copies are often cheaper than genuine copies, of inferior quality to them, or both.
Again, the Act is based on the United Kingdom Act. The latter created a right of first circulation by its s 16(1)(b). Section 9 of our Act is based on s 18 of the United Kingdom Act. That was framed this way when our Act was enacted:
18 Infringement by issue of copies to the public
(1) The issue to the public of copies of the work is an act restricted by the copyright in every description of copyright work.
(2) References in this Part to the issue to the public of copies of a work are [except where the work is a computer program] to the act of putting into circulation copies not previously put into circulation, in the United Kingdom or elsewhere, and not to—
(a) any subsequent distribution, sale, hiring or loan of those copies, or
(b) any subsequent importation of those copies into the United Kingdom;
Except that in relation to sound recordings [and films] the restricted act of issuing copies to the public includes any rental of copies to the public.
(3) References in this Part to the issue to the public of copies of a work where the work is a computer program are to the act of putting into circulation copies of that program not previously put into circulation in the United Kingdom or any other member State, by or with the consent of the copyright owners, and not to—
(a) any subsequent distribution, sale, hiring or loan of those copies, or
(b) any subsequent importation of those copies into the United Kingdom,
Except that the restricted act of issuing copies to the...
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