What next for the St Kilda schoolgirl?

Posted by Sandip Mukerjea and Paul Kallenbach

Events certainly do move quickly in the St Kilda Footballers saga.  Since Minter Ellison’s 22 December blog post, the identities of the three footballers the subject of the now infamous nude photographs has been widely published.  They are Nick Riewoldt, Zac Dawson and Nick Dal Santo.  It has also been revealed that the applicant in the Federal Court injunction case is none of these players but, rather their team mate Sam Gilbert, who professes to be the person who took the photographs in question (an assertion contradicted by the ‘St Kilda schoolgirl’ who maintains that she did so).

So what lies in store for the girl who, presently, is the first respondent in the Federal Court proceedings?  Various legal avenues have been debated in the press in recent days, and we take some time in our final post of 2010 to comment on and consider some of them.

Breach of copyright

Perhaps it makes most sense to start with copyright infringement, given that this appears to be the basis for the current injunction.

In general, copyright is infringed if a work (or a ‘substantial part’ of that work) that is protected under the Copyright Act 1968 (which includes, among other classes of work, photographs) is used without the copyright owner’s consent in one of the ways exclusively reserved to the copyright owner.     

Thus, if Gilbert can establish that he was the author of the photographs, then he will have a number of exclusive rights by virtue of the Copyright Act – including, most relevantly, the right to reproduce the photographs and the right to communicate them to the public.  If he can then show that he did not give permission for them to be reproduced or communicated, his action for breach of copyright is likely to succeed.

Privacy / breach of confidence

Perhaps the best avenue of relief for the photos’ subjects (Riewoldt and Dal Santo) is a claim for breach of confidence.

On 22 December 2010, the AFL Players Association lamented the lack of adequate privacy laws to protect prominent individuals and members of the general public alike, including AFL footballers.  Reference was made by the Players Association to the far stronger right to privacy in Europe and the United Kingdom.

Arguably, however, there is already more than adequate privacy protection available to the St Kilda Footballers under existing Australian law.  While our law does not recognise a right to privacy, nor has an American-style bill of rights, there are strong arguments that existing breach of confidence laws would be sufficient to grant the footballers protection in the current circumstances.

As early as 2001, in Australian Broadcasting Corporation v Lenah Game Meats [2001] HCA 63, the Chief Justice of the High Court of Australia, the Hon. Murray Gleeson, stated (at [42]):

Certain kinds of information about a person, such as information relating to health, personal relationships, or finance may be easy to identify as private; as may certain kinds of activity which a reasonable person, applying contemporary standards of morals and behaviour, would understand to be meant to be unobserved.

The Chief Justice also stated that a photographic image, illegally or improperly or surreptitiously obtained, where what is depicted is private, could still constitute confidential information, and thus subject to an obligation of confidentiality pursuant to breach of confidence laws.

More recently, in Giller v Procopets [2008] VSCA 236, the plaintiff had been involved in a de facto sexual relationship with the defendant, during the course of which the defendant recorded the plaintiff engaged in various sexual acts with the defendant and with the plaintiff’s knowledge.  Following the breakdown of the relationship, the defendant disclosed the videos to various third parties, including members of the plaintiff’s family.  The plaintiff successfully sued for breach of confidence.  Both the trial judge and the Victorian Court of Appeal were quick to recognise that video recordings of sexual relations between consenting adults in private have the necessary quality of confidence to attract protection under breach of confidence laws. This finding was not altogether surprising in light of the Chief Justice’s comments in Lenah Game Meats. 

In Mosley v News Group Newspapers [2008] EWHC 17777, the president of the Federation Internationale de l’Automobile was secretly filmed by a British tabloid newspaper engaging in an extra‑marital, sado‑masochistic sexual role play with several prostitutes.  The recordings were made secretly by one of the women with the assistance of the newspaper using a camera concealed in her clothing.  The video was published on the newspaper’s website and images from it were published in the hard copy publication.  

Mosley successfully sued the newspaper for breach of confidence.  The United Kingdom High Court concluded that Mosley was entitled to a reasonable expectation of privacy in respect of the information which had been published, on the basis that sexual activities are by their very nature inherently private and especially so when conducted on private property between consenting adults.  Justice Eady endorsed the sentiment that: 

People’s sex lives are to be regarded as essentially their own business – provided at least that participants are genuinely consenting adults and there is no question of exploiting the young or vulnerable. 

Importantly, the decision in Mosley is consistent with the Chief Justice’s observations in Lenah Game Meats and with the decision in Giller v Procopets – notwithstanding the existence of stronger (legislated) privacy rights in the United Kingdom.   

That being the case, it would seem that both Riewoldt and Dal Santo should have solid breach of confidence actions against the girl.  However, whether or not they are entitled to an injunction will depend (as we commented in our previous blog post) on whether the Federal Court forms the view that the relevant photographs have already passed into the public domain by virtue of their viral spread across the Web.

Defamation

In Ettinghausen v Australian Consolidated Press (1991) 23 NSWLR 443, the  rugby league player, Andrew Ettinghausen, successfully sued HQ Magazine in relation to a feature article concerning the Australian Rugby League Team’s tour of Great Britain in 1991.  The article was written by a journalist who had obtained unprecedented behind the scenes access to the team and staff, and was published in conjunction with a number of photographs, including a nude photograph of Ettinghausen taken after a game while he was showering.  Ettinghausen claimed that the photograph was defamatory of him in that it: 

•  imputed that he had deliberately permitted a photograph to be taken of him with his genitals exposed for the purposes of reproduction in a publication with a widespread readership; and
•  held him up to serious ridicule.

Ettinghausen succeeded in his action and received a payout of $350,000 which was later reduced on appeal to $100,000.  Prior to the jury verdict, the New South Wales Supreme Court considered an application for the imputations to be dismissed.  The application was refused.  Justice Hunt considered that, notwithstanding it seemed clear that Ettinghausen had not posed for the photograph (that is, it was a ‘fly on the wall’ style photograph), the tenor of the article and surrounding photographs was capable of suggesting that he had deliberately permitted the photograph to be taken and then later published for the purposes of the feature article.

As for the issue of exposure to ridicule, Justice Hunt held that it was sufficient for a publication to hold a person up to serious ridicule, even if no blame or culpability is attributed to that person in the publication.

Riewoldt and Dal Santo may draw inspiration from the Ettinghausen case in any defamation proceedings they wish to issue.  Indeed, Riewoldt’s carefully constructed words at a recent press conference appeared to have been taken directly from the Ettinghausen ‘playbook’.  Riewoldt expressed outrage at the publication of the photographs and stressed that the photograph in which he appears was taken without his consent by his team mate only moments after he had got out of bed.

In any defamation claim, Riewoldt and Dal Santo would presumably rely on an imputation of serious ridicule or, alternatively, an imputation that they had willingly posed for the photographs and, in so doing, engaged in lewd or indecent conduct. 

Theft / trespass

Assuming that Gilbert did take the photographs in question, and that those photographs were misappropriated by the girl (as Gilbert alleges in the material filed with the Federal Court), it is possible that the girl could be investigated and prosecuted for theft, and that Gilbert could bring a claim against her for trespass to goods.  The latter action is actionable per se and, accordingly, Gilbert would not need to establish that he has suffered any actual loss.

Surveillance Devices Act 1999

It has also been suggested that the girl may be exposed to prosecution under the Victorian Surveillance Devices Act 1999.  Under section 7 of that Act, it is an offence to knowingly use an optical surveillance device (which would include a camera) to record private activity to which a person is not a party.  (Obviously, section 7 would only be relevant if the girl actually took the photographs.)  The section does not apply, however, if each party to the private activity gave his or her express or implied consent to the use of the device – and the girl would no doubt argue that Riewoldt and Dal Santo each consented (either expressly or impliedly) to the photos being taken.

Section 11 of the Act, however, might apply. This section makes it an offence for a person to knowingly communicate or publish a record of a private activity that has been made as a result of the use of an optical surveillance device (arguably what has happened here). The relevant section does not require a person to have taken a photograph in order to be liable for its dissemination. The maximum penalty for breach of this section is 2 years imprisonment or a fine of 240 penalty units, which equates to over $25,000.

Partner: Paul Kallenbach

St Kilda footballer obtains injunction to restrain publication of nude photographs

Posted by Sandip Mukerjea

The ongoing saga between members of the St Kilda Football Club and a 17 year old female supporter who claimed earlier this year to be carrying one player's child found a new stage this week – the Federal Court of Australia.

In what has been a remarkable endorsement of the power and reach of online social media, much of Melbourne was fixated on their computer screens on 20 December 2010, as the girl in question intermittently posted nude and semi-nude photographs of three St Kilda players on various platforms, including Facebook, Twitter and Formspring.  By early evening, one of the players concerned had obtained an interim injunction from the Federal Court, restraining both Facebook and the girl from further publishing the relevant photos or any other photographs.  The matter is due to come back before the Court for an interlocutory hearing on 23 December 2010. 

Monday's events raise a number of interesting and vexed legal questions concerning rights of privacy and free speech.  Many of these issues have been canvassed by us previously, including during our Melbourne office's CLE week earlier this year.  We'll bring you some further analysis on these issues in the coming days. 

Of more immediate interest is the effectiveness of the current injunction.  Facebook took swift action to close down the girl's account once served with the injunction, in the process removing the photos from its website.  In stark contrast, the girl has stated publically that she is yet to be served with the injunction, and that she proposes to release further photos involving other AFL players in the coming days. 

The law in this area is quite settled.  A person with knowledge of the existence and contents of an injunction, but who nonetheless engages in conduct which has the effect of frustrating the terms of that injunction, commits a contempt of court for which significant civil (and possibly criminal) penalties may be imposed.  The contrasting responses of Facebook and the girl highlight the difficulties faced by plaintiffs where a defendant is unperturbed by legal constraints and the possible consequences of his or her own actions.  In such circumstances, the injunction may not be worth the paper it is written on, in terms of its effectiveness in preventing further harm to the plaintiff.  Similar enforcement issues are faced by plaintiffs who obtain injunctions against websites based overseas (although, in this case, Facebook has elected to comply with the terms of the interim injunction).

A related issue which the plaintiff will need to deal with at the hearing on 23 December , is whether the injunction ought be continued notwithstanding that the relevant photos have spread, virus-like, across the world wide web.  Again, it is settled law that equity will not intervene to grant injunctive relief to restrain the publication of material that is already in the public domain.  In such cases, damages are considered the more appropriate and adequate remedy.

The question for the Court will be whether the spread of these images on social media websites, online discussion boards and chat forums, constitutes the entrance of those images into the public domain.  In a recent case, coincidentally also involving AFL footballers, the Victorian Supreme Court held that the disclosure of confidential drug test results pertaining to three AFL footballers on various internet chat forums, discussion boards and even on a subscription television channel, did not constitute the passing of that information into the public domain, as the information had yet to be published through any mainstream communication channels, for example, on free to air television or in a reputable newspaper. 

That conclusion may seem at odds with a 21st century society seemingly obsessed with online social media.  Any such inconsistency will need to be addressed by the Federal Court on 23 December – assuming either Facebook or the girl show up.

Partner: Paul Kallenbach

No copyright in White and Yellow Pages directories in Australia – Telstra’s appeal fails

Posted by Jessica Childs and Paul Kallenbach

The Full Federal Court’s landmark decision this week in Telstra Corporation Limited v Phone Directories Company Pty Ltd [2010] FCAFC 149 suggests that the ‘sweat of the brow’ – the expending of skill and labour in creating a database or other work – is not, of itself, sufficient to attract copyright protection under the Copyright Act 1968 (Cth). Something more is required – that something being that the work in question must originate from some independent intellectual effort of a (human) author.

Telstra’s undoing, it seems, was its reliance on a highly computerised process used for producing the White Pages and Yellow Pages directories. Chief Justice Keane, and Justices Perram and Yates, unanimously upheld Justice Gordon’s first instance decision that copyright does not subsist in Telstra’s directories (you can find our alert on the Federal Court first instance decision here).

Why Telstra appealed

Telstra asserted that Justice Gordon ought to have found that copyright subsisted in the directories. This was on the basis that Her Honour:

• failed to appreciate that the effort of the individuals involved in selecting, ordering and arranging the information in material form was original intellectual effort;
• failed to appreciate that the effort in identifying and advising on the selection of material for inclusion, how it should be presented, and in ensuring the completeness and accuracy of those entries and their ultimate presentation in the directories, constituted original intellectual effort;
• failed to appreciate that original intellectual effort was involved in the use of computer systems to give effect to certain ‘rules’ encoded in Telstra’s computer systems (these rules were used to identify and correct anomalies in the directories); and
• wrongly disregarded the original intellectual effort required for the maintenance and operation of the various computer systems used in the production of the directories.

The central concept of 'authorship'

The Full Court rejected Telstra’s arguments, and approved Justice Gordon's emphasis on the relationship between authorship and originality under Australian copyright law. In doing so, it accepted the respondent’s argument that the directories were compiled not by the individuals engaged to facilitate the process, but by a ‘computerised process of storing, selecting, ordering and arranging … data’.

It mattered not, according to the Full Court, that Telstra had expended considerable time, effort and cost in collecting and verifying the directories’ constituent facts. Rather, what mattered was whether the individual author(s) of the directories created a work that was an original expression of those facts. The Court held that this could not be the case, as the directories were brought into the form in which they were published primarily through an automated process.

In the words of Chief Justice Keane:

the directories were compiled, not by the individuals engaged to facilitate the process, but by a computerised process of storing, selecting, ordering and arranging the data to produce the directories ...

His Honour held that the activities of individuals in the gathering of the data, its transmission to the Genesis Computer System (which processed and stored the data), and the verification and pagination of the directories, were simply not sufficient intellectual effort to constitute the activity of ‘compilation’ for the purposes of the Copyright Act.

Telstra argued, in the alternative, that the directories were produced by the ‘collaboration of the individuals involved in compiling them’ and were therefore works of 'joint authorship' under the Copyright Act. The Full Court also rejected this argument, holding that the contributions of each of the groups of individuals responsible for producing the directories were made quite separately, and was not ‘collaboration’ of the kind contemplated in the definition of ‘joint authorship’ under the Copyright Act.

Presumption of copyright subsistence

Section 128 of the Copyright Act provides (in summary) that if a literary work was first published in Australia and a name purporting to be that of the publisher appeared on copies of the work as first published, then, unless the contrary is established, copyright will be presumed to subsist in the work and the person whose name so appeared will be presumed to have been the owner of that copyright.

In attempting to circumvent the ‘authorship’ requirement, Telstra argued that the presumption in section 128 should apply in the present case, since its name appeared on the directories when they were first published in Australia.

The Full Court rejected this assertion, finding that there is simply no scope for section 128 to operate in circumstances where the evidence showed that copyright does not subsist in a particular work – which was the case in relation to the directories.

Looking forward – the protection of databases in Australia

In an age where automated processes reign supreme, humans craft ‘rules’ for machines to execute. This Full Court’s decision has confirmed that many databases simply will not meet the requirements for copyright to subsist (an outcome that many thought to be the result of the High Court’s earlier decision in IceTV Pty Ltd v Nine Network [2009] HCA 14).

Chief Justice Keane recognised that the decision ‘may give rise to a perception of injustice’ on the part of those whose databases have been appropriated – but it is a matter for the legislature to determine whether statutory reform should be adopted (for example, along the lines of the European Union’s 1996 Database Directive).

An appeal to the High Court by Telstra is unlikely, given the approach taken last year by the High Court in the IceTV decision. No doubt, Telstra and other businesses who rely on databases will push for legislative reform – and in the meantime will adopt ever more vigilant technical measures (to prevent website scraping) and ever more onerous contractual measures (to proscribe users from data mining).

Partner: Paul Kallenbach

Welcome to Minter Ellison's Technology, Media & Telecommunications blog!

Posted by Paul Kallenbach, Partner

The TMT blog will provide legal insights and commentary, case updates, and news covering the areas of technology, intellectual property, media and telecommunications, both in Australia and internationally.

Please feel free to add your comments and use the blog as a platform to exchange views, insights and ideas.

We hope that you will find the blog useful and informative.

Best wishes

Minter Ellison’s TMT team

'Materially' rethinking termination clauses

Posted by Kaela Snibson

In many technology and outsourcing agreements, the right to terminate is triggered when a party is in 'material breach' of the contract.  But what does this actually mean?  More specifically,  what degree of non-compliance in this context satisfies the 'materiality' requirement?

• Any breach of a main obligation, no matter how minor?
• A failure to comply with 2 out of 250 of the technical specifications?
• A once-off delay in delivery?

Considering that deliverables under these contracts must often comply with complex and technical specifications – making 100% compliance difficult, if not practically impossible – particular thought should be given to the drafting of termination clauses.

The recent NSW Court of Appeal decision of Lucas Stuart Pty Ltd v Hemmes Hermitage Pty Ltd [2010] NSWCA 283 highlights this.  The facts of the case were as follows:

• Lucas Stuart Pty Ltd (the applicant) was contracted by Hemmes Hermitage Pty Ltd (the respondent) to construct ‘The Ivy’, an iconic restaurant and function centre in Sydney.
• The respondent issued a Notice under the contract alleging the applicant had 'not materially complied' with its contractual obligations due to various defects in the works. The Notice also provided a reasonable time frame for the applicant to correct the defects.
• The applicant failed to comply with the terms of the Notice and the respondent (as it was entitled to) called on undertakings it had provided as security for performance.
• The applicant sought an injunction to restrain the respondent from calling on the undertakings, alleging that there was a serious question to be tried in relation to whether or not the existence of defects constituted material non-compliance with its obligations, as the Notice stated.

The Court held that failing to comply with a material or main obligation under a contract does not automatically amount to material non-compliance (rejecting the finding of the lower court that it did).  What is required, in the Court's view, is a material failure to comply with obligations, with those obligations being looked at as a whole.

The lesson? Avoid ambiguity, and ensure the intentions of all parties are accurately reflected by:

• defining 'material breach' with reference to breach of specific clauses.
• making it clear when breach of a term should not be considered material.
• clearly stating the severity of breach required, for example, any breach (no matter how minor), repeated breach (with 'repeated' defined) or unremedied breach (with a clear time frame for remedy).

Partner: Oliver Barrett

How the ‘x’ in ‘docx’ may shift the balance of power in US patent infringement cases

Posted by Boris Milivojevic

You may have noticed when upgrading from Microsoft Office 2003 to Office 2007 or later that Microsoft Word documents are now by default saved in the ‘docx’ file format. The ‘x’ denotes that Microsoft has moved to an XML-based file format. XML is a ‘mark-up language’ which tells your computer how text should be displayed in a document. Not a big deal, you might have thought – except that, by incorporating a particular feature relating to ‘custom XML’ in migrating to its XML-based file format, Microsoft is alleged to have infringed a patent held by i4i, a Canadian software company. (While XML is a royalty-free standard, companies are still free to file patents on inventions that implement the standard.)

In early 2008, i4i filed a suit against Microsoft in the Eastern District of Texas alleging that Microsoft infringed its custom XML patent. Under US law, i4i's XML patent is presumed to be valid, and Microsoft, as the party seeking to invalidate the patent, has the burden of proof to show that the patent is invalid.

When applying for a patent in the US, the US Patent and Trademark Office (USPTO) subjects applications to a review before the patent is granted. The applicant must submit all relevant prior art they are aware of, and the USPTO also searches for all relevant prior art. However, due to the limited resources of the USPTO, often not all of the prior art material is considered when granting a patent, creating grounds for alleged patent infringers to argue that the patent is invalid.

In attempting to invalidate i4i's patent, Microsoft pointed to prior art in the form of i4i's SEMI-S4 software, which i4i had developed and sold in 1993. Microsoft alleged that i4i's SEMI-S4 software contained the ‘custom XML’ code that i4i later patented in 1998. If true, this would have constituted a violation of section 102(b) of Title 35 of the US Code (the equivalent of Australia's Patents Act 1990 (Cth)), and render i4i’s patent invalid.

i4i argued that the SEMI-S4 software did not contain the subsequently patented code. Importantly, the code was destroyed after the SEMI-S4 project was completed and could not be put into evidence. This made the standard of proof which Microsoft had to satisfy in order to show patent invalidity a high one. In the end, Microsoft was unable to convince a jury that there was 'clear and convincing' evidence that i4i’s patent was invalid.

Microsoft has now sought to take this issue to the US Supreme Court, arguing that, because the SEMI-S4 software was prior art that the USPTO had not considered in granting i4i’s patent, Microsoft should not have to provide ‘clear and convincing’ evidence that i4i’s patent is invalid. Microsoft has asserted that it should only have to establish a ‘preponderance of evidence’ – the civil standard in US law, broadly equivalent to the Australian ‘balance of probabilities’ standard. In other words, Microsoft argued that it should only have to prove that it was ‘more likely than not’ that i4i’s patent is invalid.

The US Supreme Court has agreed to consider this issue. Interestingly, if the US Supreme Court does agree with Microsoft that it does not have to provide ‘clear and convincing’ evidence that i4i’s patent is invalid, such a decision may be indicative of the Court’s shift away (in more recent times) from interpreting US patent law in favour of patent rights holders.

This shift is exemplified by the case of eBay Inc v MercExchange LLC 547 U.S. 388 (2006).  In that case, the US Supreme Court reversed decades-old court practice, and unanimously held that an injunction should not be automatically granted on a finding of patent infringement.  Instead, as is the Australian approach, it held that a court must consider a number of balancing factors in determining whether or not an injunction is appropriate.

The eBay decision not only significantly favours alleged patent infringers, but brings US law into closer alignment with Australian law.  Before the eBay decision, injunctions provided a strong bargaining chip for patent holders – the spectre of having infringing products banned from the marketplace often forced alleged patent infringers to settle, rather than go to trial and test the validity of the patent.  Today, even if patent infringement cases do go to trial, the eBay decision means that a compulsory licence is the more likely remedy, and the royalties payable under this licence are likely be lower than a patent holder could have negotiated with the looming spectre of a permanent injunction.

If the US Supreme Court now decides to lower the evidentiary standard for prior art to a ‘preponderance of evidence’, this will further shift the balance of power towards alleged patent infringers.

Indeed, such a decision (had it been handed down earlier) might have had a material impact on cases such as the CSIRO’s now-settled Wi-Fi patent dispute with various US tech companies, in that it may have made the Wi-Fi patent easier to invalidate (and potentially waylaid any settlement).

These cases may have also led to a different outcome in cases such as that of RIM, the maker of the BlackBerry, which in 2006 agreed to pay NTP Inc, a Virginia-based patent holding company, US$612.5 million to settle a patent dispute, as it could not invalidate NTP’s patent and an injunction may have shut down the BlackBerry system in the US.

Will the judicial tide continue to turn against patent owners?

Partner: Paul Kallenbach