Australian courts have the power to punish individuals by way of fine or imprisonment or to fine companies if they commit a contempt by disobeying a court order. This extends to persons who continue to infringe intellectual property rights in contravention of court orders. Whilst orders of contempt are rare, the Federal Court in the Connect TV case did impose reasonable fines and a suspended prison sentence for contempts of the court's orders relating to infringement of intellectual property rights.
We previously reported here and here on instances which led to imprisonment for some of those individuals involved in continued misuse of the UGG trade mark in contempt of the court's orders. The Connect TV case again shows that there can be serious consequences for continuing to infringe another person's intellectual property rights in breach of court orders.
Copyright infringement via internet re-broadcasting of TV programs
Connect TV is licensed to broadcast certain Russian television programs and films in Australia. Connect TV discovered various companies and individuals involved in unauthorised re-broadcasting of the licensed programs. The unauthorised broadcasts were arranged by visiting people's homes and installing set-top boxes with signal codes and passwords which enabled transmission of the programs to those televisions sets. Connect TV sued various companies and people involved in arranging those broadcasts for copyright infringement.
The court made interlocutory orders that certain of the companies sued, and their servants and agents, cease assisting or being involved in re-broadcasting or communicating the licensed Russian programs pending the trial. In particular, the court orders restrained the company All Rounder Investments Pty Ltd ("All Rounder") and its servants and agents from carrying out such activities.
The offending activities continued and 'All Rounder' fined
After the interlocutory orders were made Connect TV identified certain conduct which it considered contravened some of the orders and it brought contempt of court proceedings.
Connect TV brought contempt proceedings against All Rounder, Ms Lurie, the sole director of All Rounder, and against Mr Vladimir Grinberg, Ms Lurie's son.
The charge for contempt against All Rounder alleged that it failed to take all lawful steps to prevent existing customers from receiving or being able to receive the infringing broadcasts. The charge was proven and All Rounder was fined $30,000.
The conduct of Ms Lurie held to constitute contempt included:
- Sending an email to a potential customer of the Russian television services advising them to contact her son to obtain access to the infringing broadcasts. For this contempt, which the court called serious, the court imposed a one month suspended prison sentence. (All Rounder was also ordered to pay a fine of $20,000 for its role in this contempt.)
- Ms Lurie's name continued to be advertised on a website as being a provider of the Russian television services covered by the court orders. The court held that Ms Lurie deliberately failed to take any action to have her name removed from the website. For this contempt, the court ordered both Ms Lurie and All Rounder to pay fines of $10,000.
- Failing to take lawful steps available to All Rounder to prevent its customers having continued access to the offending broadcasts. Ms Lurie did not contact an existing customer and try to persuade the customer to stop using the Russian television services. For this, the court fined Ms Lurie $2,000.
A new business avoided penalties
Contempt proceedings were also brought against Ms Lurie's son, Mr Grinberg, claiming that he took steps to respond to the potential customer of Russian television services who was referred to him by his mother. However, Mr Grinberg was found "not guilty" of breaching the court orders by responding to the customer.
The court orders in the interlocutory application did not extend to Mr Grinberg's activities in a personal capacity. Whilst Mr Grinberg had worked for All Rounder at the time the original court orders were made, he subsequently started a new business and that business began providing the unauthorised Russian television services. Mr Grinberg argued that when he was in contact with potential customers of the unauthorised Russian television services after the court orders were made, he was acting as an agent of his new business, not as an agent of All Rounder, so the orders did not cover his activities. The court accepted Mr Grinberg's arguments and found that it could not be proved beyond reasonable doubt that Mr Grinberg was acting in his capacity as an agent of All Rounder rather than as the owner of his own business. The charges against him for contempt were therefore dismissed.
(Although Mr Grinberg found a temporary loop-hole in the original court orders to successfully defend the contempt charges, that could prove to be short lived. It would seem possible for Connect TV to obtain interlocutory orders restraining Mr Grinberg personally (as he is currently named as a respondent in the copyright infringement case). It would also seem possible for Connect TV to sue Mr Grinberg's new business for copyright infringement.)
Three lessons regarding infringement of Intellectual Property, from the Connect TV case
- An injunction restraining the infringement of intellectual property rights gives no guarantee that the infringers will cease their infringing conduct. Owners of intellectual property rights need to continue to observe the conduct of past infringers to ensure that the infringement ceases and that all court orders are complied with.
- The decision that Mr Grinberg was not guilty of contravening the court orders highlights the importance of carefully considering the wording of orders sought from or proposed by the court to ensure they are wide enough to deal with the infringing conduct and the offenders involved.
- This case also reminds lawyers that they need to be careful when advising a client on the meaning of orders made by the court against the client. Despite imposing fines on Ms Lurie for the various contempts, in fixing the fine of $2,000 the court accepted that Ms Lurie may have been misadvised about the extent of the orders requiring steps to be taken to have existing customers cease using All Rounder's broadcast services, and that this was a highly relevant consideration when determining the penalty for this contempt.