Chhabra v McPherson as Trustee for the McPherson Practice Trust  FCAFC 228 (13 December 2019)
Unsuccessful appeal by Chhabra and Ramrakha against a judgement of the primary judge, Yates J rejecting their claim for copyright infringement.
The appellants were partners in a Sydney law firm. In 2010, Chhabra was involved in the creation of an international network of law firms. Chhabra was one of the founding members of this network to trade under the Kaden Boriss name. A Singapore company was set up to act as a service entity in August 2010 but was subsequently wound up and deregistered in October 2011. Prior to deregistration, this company engaged another Singapore company, Pulse Creative, to create logos for the Kaden Boriss network shown below and agreed to assign present and future copyright in the relevant artistic works to the service entity upon payment of all fees, but there was no assignment prior to deregistration of the service entity in October 2011.
The appellants law firm registered the Kaden Boriss business name in NSW in August 2011 and used this name and the logos in Sydney from September 2011 and subsequently in Perth and Canberra from February 2012.
The respondents were partners in a law firm which joined the Kaden Boriss network in July 2013 and used the logos until 1 October 2017. The terms of the arrangement were outlined in an email sent by Chhambri to the respondents on 25 April 2013 which was also copied to Batra who was another founder of the Kaden Boriss network based in India.
By 2016, the relationship between Chhabra and Batra had deteriorated and, in December 2016, the appellant’s law firm withdrew from the network. The respondents’ law firm decided to remain in the network and not form a new alliance with the appellants’ law firm. Around that time, Chhabra asserted that he was the owner of the Kaden Boriss name and logos. The appellants’ law firm refused to transfer the business name registration to the respondents’ law firm.
The appellants claimed that the respondents used the logos and the Kaden Boriss name pursuant to a bare licence revocable at will. They claimed to have revoked the licence on 3 and 9 January 2017. They alleged that the respondents had, by continuing to use the name and logos, infringed copyright subsisting in the artistic works.
On 11 January 2017 Batra sent an email to Chhabri and copied the respondent’s law firm which was relied upon by the appellants to support an alternative claim (neither pleaded nor argued at trial) that the respondents’ licence was revoked with Batra’s consent at that time.
On 12 January 2017, Pulse Creative entered into a Deed confirming the assignment of copyright in the logos to Chhabri and Batra following payment of their fees in September 2011.
Chhabri alleged that Batra had previously assigned his interest in the future copyright in email correspondence in August 2010 around the time of setting up the Singapore service company.
The Full Court, Greenwood, Charlesworth and Burley JJ construed s197 of the Copyright Act and agreed with the primary judge that Chhabri and Batra were the co-owners of the copyright in the logos. The August 2010 email correspondence was ambiguous and concerned the Kaden Boriss brand name rather than copyright in any logo to be developed.
The primary judge noted that multiple owners of the same copyright will usually be treated as tenants in common of the copyright and not as joint tenants. Ordinarily, a co-owner cannot do an act comprised in the copyright without the consent of the other co-owner. However, the primary judge did not find it necessary to decide this issue and the Full Court found no appealable error with this and it was unnecessary to decide the question in the context of the appeal because there was also no error in the primary judge’s findings that Chhabri’s words or conduct in January 2017 would have been ineffective to revoke the licence in accordance with its terms, even if Chhabri was the sole owner of the copyright or even if he acted as a co-owner with Batra’s consent.
The primary judge concluded that the licence was not gratuitous, but rather was contractual having regard to the terms of the 25 April 2013 email. It could not be revoked without just cause for so long as the respondents’ firm participated in the Kaden Boriss network. It was not revocable at will and without advance notice. Significantly, the respondents’ law firm’s participation in the network obliged them to use trade indicia that had been developed for, and approved for use in, the network rather than other indicia of their own design and creation. The requirement for revocation for just cause was necessary for the reasonable or effective operation of the contract.
The primary judge, by way of obiter, observed that, even if the licence was a gratuitous or bare licence, it would not necessarily follow that it was revocable at will. It would have been destructive of the purpose for which the respondents’ licence to use the Kaden Boriss logos was granted and unconscionable to permit the licensors to revoke the licence peremptorily. The primary judge went on to comment that the licensors would have been estopped from denying the continuing right of the respondents to use the logos as members of the Kaden Boriss network. The Full Court considered that, if there was any error in the obiter remarks of the primary judge on the assumption that the licence was gratuitous, the error would not be material to the outcome of the appeal.
The Full Court also found that the 11 January 2017 email from Batra to Chhabri and copied to the respondent’s law firm could not be relied upon as consent for revocation of the respondents’ licence. That email made no reference to the acts of revocation relied upon by the appellants and it was not apparent from that email that Batra was even aware of those acts. Consequently, the primary judge did not err in concluding that there was no evidence of Batra’s consent.
Finally, the case at trial proceeded on the basis that the Confirmatory Deed of Assignment dated 12 January 2017 had retrospective effect. However, the Full Court commented that it does not necessarily follow that, in the circumstances of this case, the respondents may be held to have infringed the appellants’ copyright at any time in the period before the Confirmatory Deed was made. Further, it was not necessary to decide whether the Confirmatory Deed operated retrospectively to enable the appellants to claim damages from 9 January 2017.
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