Trumpet Software Pty Ltd, and Peter Robin Tattam, Applicants
OzEmail Pty Ltd, Sean Martin Howard and Dani Lynette Thompson, Respondents
In The Federal Court of Australia Tasmania District Registry General Division : No. TG 21 of 1995
Trumpet Software Pty Ltd, 1st Applicant, and
Peter Robin Tattam, 2nd Applicant
OzEmail Pty Ltd, 1st Respondent,
Sean Martin Howard 2nd Respondent, and
Dani Lynette Thompson, 3rd Respondent
JUDGE: Heerey J
DATE: 10 July 1996
MINUTES OF ORDER
The Court orders that:
1. Within fourteen days counsel bring in signed minutes of orders.
2. The directions hearing be adjourned to a date to be fixed by the Tasmanian District Registrar after consultation with the parties.
3. Liberty to apply is reserved.
4. The respondents (other than the third respondent) pay the applicants' costs to date including reserved costs, such costs to be taxed and paid forthwith pursuant to O 62 r 3(2).
5. The application against the third respondent is dismissed with no order as to costs.
REASONS FOR JUDGMENT
The first applicant Trumpet Software Pty Ltd (Trumpet) carries on the business of developing, marketing, distributing and supporting computer software, including a program known as Trumpet Winsock.
In April and August 1995 the first respondent OzEmail Pty Ltd (OzEmail) published Trumpet Winsock version 2.0B by arranging that it be distributed in diskette format, along with some other programs, as a give-away inserted in copies of computer magazines. Trumpet claims that OzEmail thereby infringed its copyright in Trumpet Winsock 2.0B and also contravened provisions of Part V of the Trade Practices Act 1974 (Cth).
The issues which have arisen in this trial are (i) whether Trumpet revoked any licence OzEmail might have had to publish the software, (ii) if not, whether OzEmail breached any conditions of its licence, and (iii) whether OzEmail misrepresented to readers of the magazines its relationship with Trumpet and its rights in relation to the software. The trial has been concerned only with questions of liability.
Trumpet, OzEmail and the Internet
The Managing Director of Trumpet is the second applicant Mr Peter Tattam.
For ten years prior to September 1994 Mr Tattam was employed in the Psychology Department
of the University of Tasmania. During this period, and independently of his employment
with the University, Mr Tattam developed the Trumpet Winsock program. Trumpet Winsock is a
program for establishing connection with the Internet.
In general terms, the Internet consists of a large number of computers throughout the world which are connected to each other, either directly through communication links or indirectly through other computers and communication links. The computers which are directly linked in this way are known as Internet hosts. Some Internet hosts, such as universities or large companies, only allow users within their organisations to connect to the Internet. Other Internet hosts, called Internet Service Providers (ISP), allow members of the public to connect to the Internet through the provider's computer. The individual user connects to the Internet by using a modem in conjunction with his or her computer. The modem provides the user with a telephone dial-in link to the chosen ISP who will usually charge a fee for providing access in this way. OzEmail is an ISP.
Data and software stored on the Internet are available to users anywhere in the world. Once particular information is found, it can be easily retrieved no matter where the user is or where the information is stored. Each of the Internet host computers contains a common set of programs which allow use of the Internet. Probably the most well known program is the World Wide Web which provides a graphical interface to the Internet, allowing users to move around the Internet easily.
Trumpet Winsock is a communications program for establishing a connection with an ISP, which in turn allows access to the Internet in the way already discussed. Other Internet based applications, such as World Wide Web browsers, use Trumpet Winsock to conduct communications on the Internet.
Since Trumpet Winsock was released in version 1.0A on 1 February 1994 it has achieved remarkable success within Australia and overseas. The American publication "More Internet for Dummies" (claimed sales of 9 million) instructs would-be users of the Internet in terms which assume that Trumpet Winsock is the best available software for obtaining access.
Much of the present case has been concerned with the legal rights and
obligations which arise from the marketing of computer software as shareware. I shall
discuss the nature of those rights and obligations in more detail at a later stage in this
judgment. For the moment, a brief description of the concept of shareware will suffice.
Conventional forms of software marketing require users to commit to buying the program before they have tried it. For example, if software is purchased from a retail outlet in diskette format in a sealed package, the user is committed either at the point of purchase or, at the latest, upon opening the package. Shareware on the other hand is a form of software marketing which gives the user an opportunity to evaluate the product; in other words, try before you buy. The owner of the software makes it available to users without charge for the purposes of evaluation. If users wish to acquire the software they must forward a registration fee to the owner. Programs which are being distributed as shareware will usually bear a description as such and will indicate some evaluation period (typically 30 days) after which users must pay a stipulated registration fee if they wish to continue using the software. The success of the shareware concept is thus to a large extent dependent upon the honesty of users, although more recently owners have developed the practical protection of a "timelock". This is a feature built into the program which operates to make it unusable after a given time unless registration is effected.
Distribution of shareware can either be in physical form, on diskette or CD-Rom, or through the Internet by installing it on a File Transfer Protocol (FTP) site. In the former case, there are distributors who make shareware available and charge for the diskette or CD-Rom to cover the cost involved in collating, duplicating and distributing the program, together with a profit element. This charge would not ordinarily be understood as including a licence fee for the use of the program. As mentioned, a licence fee is payable to the owner on registration if the user decides to keep the program after evaluation. If the shareware is on an FTP site, a user can simply download it. Again, a licence fee is payable to the owner upon registration.
Shareware is to be distinguished from freeware, which means software supplied with no charge and no expectation of remuneration.
Negotiations between OzEmail and Trumpet
In late 1994 the second respondent Mr Sean Howard, the Managing Director of OzEmail, telephoned Mr Tattam and put to him two proposals for OzEmail to undertake distribution of Trumpet Winsock. The first was a distribution in a forthcoming edition of the magazine Australian Personal Computer and the second a licensed distribution whereby OzEmail would include Trumpet Winsock in a software package diskette to be sold at a total retail price of $50. This was the first business contact Mr Tattam had had with OzEmail. Mr Howard told Mr Tattam that he would send detailed proposals. However Mr Tattam heard nothing further until 8 March 1995 when he received a fax from OzEmail signed by its Project Manager, Mr David Urquhart. The fax was in the following terms:
I believe you had a discussion some months ago with Sean Howard, OzEmail's Managing Director, regarding the distribution of your product Trumpet Winsock on the cover of a magazine.
I'd appreciate your confirmation of our understanding that we may freely distribute approximately sixty thousand copies of the unregistered version of Trumpet Winsock version 2.0 on the cover of the April, 1995 edition of Australian Personal Computer at no commercial gain to ourselves.
The distribution represents a marvellous opportunity to boost registration revenue for Trumpet Winsock at no cost to Trumpet Software International. OzEmail will bear all costs associated with this promotion. Of course we will distribute the Trumpet Winsock package in its entirety.
If the above meets with your approval please sign in the space provided below and fax this letter back to me on (02) 437 5888. Or if you require any clarification please call me direct on (02) 438 5909.
Authorised: Peter Tattam, Trumpet Software International
(sgd) David Urquhart
There were in evidence two earlier drafts of this fax in which Mr Howard
(not Mr Urquhart) had made some alterations in handwriting. Relevantly for present
purposes they were as follows.
The first draft contained the words "I would like your confirmation that you are happy for us to freely distribute ...". To the typed sentence referring to "a marvellous opportunity to boost registration revenue for Trumpet Software" were added in handwriting the words "at no cost to Trumpet!"
On the second draft Mr Howard crossed out typed words "I'd appreciate your confirmation of our understanding that we may freely distribute" and wrote above them the words "We'd like to move ahead on this & am writing to request your permission for us to distribute". The words "confirmation" and "permission" also appear separately in handwriting, each with a line drawn through it. The words "OzEmail will bear all costs associated with this promotion" were added in handwriting as were the words "Of course, we will include all relevant Trumpet licensing". The words "Could I trouble you to send your response by fax as we will need to rush to meet Australian Personal Computer's deadline for inclusion" had a line drawn through them. A line for Mr Tattam to sign on and the words "Authorised: Peter T" were added in handwriting.
Thus the drafts progressed from "I would like your confirmation" to "writing to request your permission" to "I'd appreciate your confirmation of our understanding". It looks as though Mr Howard toyed with the words "confirmation" and "permission". This was obviously something to which Mr Howard gave careful thought, and not just as to matters of style. I draw the inference that Mr Howard knew that he needed Trumpet's permission for the proposed distribution, altered the draft to reflect that fact, and then made a further alteration in the hope that by treating the distribution as a matter requiring "confirmation" Mr Tattam might be led into the belief that he was merely being asked to formalise and record rights of OzEmail which already existed. I do not accept Mr Howard's explanation in evidence that he at all times believed that OzEmail had permission (as a consequence of the general licence for shareware) and that he merely wanted to ensure Trumpet would not be in a position to withdraw that permission. Mr Howard well knew that, at the very least, this was not a conventional shareware evaluation exercise. Moreover it was common ground Mr Tattam had not given permission in the conversation the previous year. The terms of that conversation were such that Mr Tattam would have naturally expected that the question of permission, having been raised at least implicitly by Mr Howard, remained up in the air pending the provision of further detail by OzEmail.
On 10 March Mr Urquhart telephoned Mr Tattam and asked whether he had received the fax. Mr Tattam said that he had, but did not want OzEmail to proceed with the distribution because the current version of Trumpet Winsock did not have a timelock. At the time, Mr Tattam was working on a timelocked version of Trumpet Winsock which was eventually released as version 2.1. He was concerned that the mode of distribution proposed by OzEmail could lead to many people using the software without paying Trumpet the registration fee. However, he believed Trumpet would be substantially protected against that misuse if the distributed version of the software were timelocked. Mr Tattam told Mr Urquhart that he would agree to the distribution in the magazine of the timelocked version. He told Mr Urquhart that he would send OzEmail by electronic mail the timelocked version for this purpose. Mr Urquhart said that OzEmail required his (Mr Tattam's) signed written consent to the distribution.
Following this conversation Mr Urquhart sent a fax dated 10 March in the following terms (emphasis added):
I'd appreciate your confirmation of our understanding that we may freely distribute approximately sixty thousand copies of the unregistered, timelocked edition of Trumpet Winsock version 2.1 on the cover of the April, 1995 edition of Australian Personal Computer at no commercial gain to ourselves.
We're confident that the distribution will result in a tremendous boost to your registration revenue for Trumpet Winsock at [sic] of course this is at no cost to Trumpet Software International! Note that OzEmail will bear all costs associated with this promotion. Of course we will distribute the Trumpet Winsock package in its entirety.
If the above meets with your approval please sign in the space provided below and fax this letter back to me on (02) 437 5888. Or if you require any clarification please call me direct on (02) 438 5909.
Authorised: Peter Tattam, Trumpet Software International
(sgd) David Urquhart
However Mr Tattam did not reply to this fax and did not send the
timelocked version of Trumpet Winsock. Mr Urquhart tried on a number of occasions to
contact Mr Tattam by telephone during the day but without success.
On the evening of 10 March Mr Urquhart reported to Mr Howard that Mr Tattam had not sent the timelocked version of Trumpet Winsock. In his affidavit Mr Urquhart deposed Sean and I had previously agreed that the licence provisions in INSTALL.DOC [part of the Trumpet Winsock program] entitled OzEmail to distribute Trumpet Winsock 2.0 in the manner we intended. Sean asked me to recheck the licence provisions. I did so. I remained of the view that OzEmail was entitled to distribute Trumpet Winsock 2.0 in the manner intended.
(I interpolate the comment that as far as this case is concerned there is no practical difference between Trumpet Winsock versions 2.0 and 2.0B.)
Mr Howard claimed in evidence that Mr Urquhart, in passing on the substance of his telephone conversation with Mr Tattam, did not say that Mr Tattam had refused permission to distribute version 2.0B, but only that Mr Tattam was agreeable to the distribution of the timelocked version 2.1. I do not accept this. Mr Urquhart's evidence as to Mr Tattam's refusal was quite unequivocal. It was not a concession extracted in cross-examination. In his affidavit Mr Urquhart attributes to Mr Tattam the words, in reference to the proposed distribution of the existing version 2.0B, "No, I don't want you to do it". Mr Urquhart and Mr Howard were working together closely on this project. There was no motive for Mr Urquhart to conceal from Mr Howard any part of his dealings with Mr Tattam and every reason for him to report accurately, as of course Mr Urquhart said he did. A revealing insight into Mr Howard's true state of mind at the time is provided by the following passage in cross-examination:
Q. Now, had you known that Mr Tattam had said "I don't want you to do it" would you have gone ahead and done it? Would you have gone ahead and distributed version 2.0B in April?
A. I wouldn't have gone ahead without endeavouring to get in touch with Mr Tattam pretty urgently myself to explain that 2.1 wasn't forthcoming and we'd now committed to Australian Personal Computer because of the agreement and the permission he'd given us over the telephone. At the end of the day I suspect we would have gone ahead with 2.0B to mitigate our losses in any damages claim from Australian Personal Computer magazine.
Q. And you would have done that in the face of an objection from Mr Tattam?
A. Well, the alternative was - the answer is yes.
Mr Howard had got himself into a position where he was determined to go
ahead with the distribution regardless of what Mr Tattam said. That attitude was to emerge
even more clearly in relation to the August distribution.
At the time Mr Tattam received the fax of 10 March he had not finished work on the timelocked version of Trumpet Winsock. Over the following period of ten days he was aware from messages conveyed by his staff that Mr Urquhart was chasing him for a response to the fax and for the timelocked version. Mr Tattam was told that Mr Urquhart was annoyed that OzEmail had not received a written response, or the timelocked version, and that OzEmail was now running up against very tight publishing deadlines. Mr Tattam did not reply, partly because the timelocked version was not completed, partly because he was distracted by ill-health and other pressures, and also because he was still unsure as to whether he should deal commercially with OzEmail.
By about 24 March Mr Tattam believed that the software might be sufficiently timelocked to be distributed in the way requested by OzEmail. (As it turned out, this belief was premature; the final de- bugged timelocked version - Trumpet Winsock 2.1 - was not released until July.) So Mr Tattam signed the OzEmail fax of 10 March and requested a member of his staff to fax it back to OzEmail.
But before the fax could be successfully transmitted an e-mail from a Mr Chris Howells, the Managing Director of a company called NetComm, came to Mr Tattam's attention. In this e-mail Mr Howells said that OzEmail was making Trumpet Winsock 2.0B available at one of its FTP sites. Mr Tattam was distressed at this. He had recently adopted a policy that there should be no future distributions of Trumpet Winsock permitted until the timelocked version was ready. In addition, Mr Tattam misread Mr Howells' e-mail and took it as saying that OzEmail was reproducing Trumpet Winsock without a disclaimer notice. As a result of Mr Howells' e-mail the reservations which Mr Tattam had about dealing with OzEmail, because of what he considered to be a high-handed manner adopted by Mr Howard and Mr Urquhart, all resurfaced. He decided to terminate all negotiations with OzEmail. He retrieved the fax from his staff who had unsuccessfully attempted to send it to OzEmail earlier in the day.
On 3 April, after brief discussions with his Melbourne solicitors Arthur Robinson and Hedderwicks (ARH), Mr Tattam sent a letter to OzEmail in the following terms:
Oz-Email Pty Ltd
3 Apr 95
It has been brought to our attention that Trumpet Winsock 2.0B has been distributed across your network in breach of the shareware license covering its usage. In particular, I have been informed that the software has been distributed without an acceptable shareware notice and also the existing disclaimer of usage has been removed from the distribution. I include the said disclaimer for your perusal.
Disclaimer & Copyright
These programs are Copyright (C) 1991-1994 by Peter R. Tattam, All Rights Reserved.
It is provided as shareware with the following limitations:
These programs are shareware and are not to be resold or distributed for sale with other programs which are for sale. There is no warranty or claim of fitness or reliability. The programs are distributed AS IS, and as such neither the author nor Trumpet Software International Pty Ltd shall be held liable for any loss of data, down time, loss of revenue or any other direct or indirect damage or claims caused by these programs.
We have also received other reports that Oz-Email users may have been provided with a diskette containing the Trumpet Winsock along with an install package.
It is clear that the above actions would have required Oz-Email to reproduce the Trumpet Winsock program. In the absence of Oz-Email having permission for such reproductions, the reproductions constitute an infringement of my copyright. I require all unlicensed copies of all versions of Trumpet Winsock to be destroyed. Each of your clients is subject to the same copyright restrictions and we request that each client copy of the Trumpet Winsock in use be destroyed if it has not been registered directly with us.
Due to these copyright breaches, I am formally closing all negotiations regarding distribution of any Trumpet Software International products by Oz-Email Pty Ltd.
This letter is sent in full reservation of my rights in respect of the copyright infringements which have occurred to date.
Peter R. Tattam
(sgd) P Tattam
Trumpet Software International Pty Ltd.
CC. Ms Kath O'Connor
At the time he sent this letter Mr Tattam was not aware that OzEmail had
already distributed Trumpet Winsock 2.0B in the April issue of Australian Personal
Mr Howard replied by a letter dated 6 April which, amongst other things, informed Mr Tattam for the first time of the distribution with Australian Personal Computer. The letter pointed out that (as is now accepted by Mr Tattam) the software so distributed did include the disclaimer and copyright statement referred to in Mr Tattam's letter. The letter continued (emphasis in original):
OzEmail has, as you state, distributed Trumpet Winsock. It has done so in a manner which complies with the Trumpet Winsock licence agreement - your letter even reproduces the very clause which permits OzEmail to so distribute: "These programs are shareware and are not to be resold or distributed for sale with other programs which are for sale". This clearly permits OzEmail to distribute Trumpet Winsock in the manner in which it does. Trumpet Winsock has not been resold by OzEmail, nor has it been distributed for sale with other programs which are for sale.
Frankly, I am staggered by your attitude. OzEmail has complied with both the letter of Trumpet Winsock licence agreement and with the spirit of shareware distribution. It has distributed the unregistered version of Trumpet Winsock at great expense to OzEmail, distributed the entire Trumpet package of licensing files and notices, referred in the accompanying printed documentation to the fact that the version of Trumpet Winsock is unregistered, and even, though not required of OzEmail, implored users to pay to Trumpet the registration fee (OzEmail's 'Getting Started help file contains the words "Of course, working 'behind the scenes' in connecting you to the Internet will be Trumpet Winsock. For important information regarding Trumpet Winsock, please double-click on the Trumpet Winsock ReadMe icon". This icon leads the user to Trumpet's complete licensing file which contains the words "The product is released as shareware, and as such you are permitted to evaluate it for 30 days. If you are satisfied with its usefulness, a registration form is provided which you should fill out and send to Trumpet Software International. A registration fee is requested to maintain the development and support of this software").
I am not sure that you understand the concept of shareware: it encourages the complementary distribution of unregistered versions of software to as wide an audience as possible in order to encourage the largest number of individuals as possible to remit a registration fee to the author. To this end, OzEmail will no doubt contribute significantly to Trumpet Software International's revenue.
Rather than aiming your ill-conceived popgun at another software developer, why don't you act, as we have done, against an Australian company which licenses your software but blatantly pirates software from several of your fellow software developers? I think you know to which company I refer.
(sgd) Sean Howard
Australian Personal Computer Distribution - April 1995
Attached to the cover of the April issue of this magazine there were two diskettes accompanied by a coloured brochure which in folded form is about 10cm x 10cm. On the front are the words:
Australia's largest Internet access company
Invites you to five FREE hours of access to the Internet when you register.
Special 2 disk Internet software pack - includes World Wide Web browser, a special modem offer plus access from $1 per hour.
Inside the brochure under the heading "Getting Connected" appears the following:
Step 2 Now you're ready for registration
This special offer includes free software and five free hours of off- peak Internet access when you register. The registration fee is $25. There are no minimum monthly fees, so after your five free hours of off-peak usage, you'll pay only for the time you're connected.
If you do not have an OzEmail ID and Password, double click on the OzEmail Account Registration icon, found in the OzEmail Program Manager Group. You'll then be asked to enter your name and address and a credit number for billing purposes. If you are a registered business and would like to establish an account please call OzEmail on 1-800 805 874 and request an account application form be sent to you. If you proceed with the automated registration Trumpet * will dial the OzEmail host and register your desired User ID and password to provide you with immediate access to OzEmail and the World-wide internet. If you choose not to proceed at this stage you may establish an account at any time by double clicking on the OzEmail Account Registration icon, found in the OzEmail Program Manager Group. * Unregistered version
The brochure also contains some description of the non-Trumpet programs
included on the disk, viz Oz Gopher and Quarterdeck's Next Generation Mosaic (Q Mosaic).
These are other Internet access applications and were distributed free of charge. Q Mosaic
was written by Quarterdeck Corporation and Oz Gopher was written by OzEmail. There is no
further mention of Trumpet. In particular, there is no mention of the payment of a
registration fee to Trumpet. Under the heading "OzEmail Access Charges" there
appear the words "Registration Fee - A one-off charge of $25" (i.e. for OzEmail)
and then, under the sub- heading "Connect Time Charges" there are details of
hourly charges payable to OzEmail for Internet access.
About 60,000 copies of the magazine were distributed. The diskettes contained certain alterations and additions to, and deletions from, the Trumpet software. These will be considered at a later stage. OzEmail obtained the Trumpet software for this distribution by downloading it from the University of Tasmania's FTP site.
Correspondence between Solicitors
On 10 May ARH wrote to Mr Howard. The letter asserted that all rights in Trumpet Winsock 2.0B (referred to in the letter as "the Software") "including all copyright in the Software" were owned by Trumpet and Mr Tattam (referred to in the letter as "the Owners"). The letter continued:
The Owners have recently learned that your company has authorised the reproduction of the Software on discs distributed on the front cover of the April 1995 edition of Australian Personal Computer ("APC"). The version of the Software so distributed had been modified so that the "LOGIN.CMD" file was configured so as to connect the user of the Software immediately to the OzEmail network.
We are instructed that your company sought the permission of TSI [Trumpet] to distribute the Software with APC and that that permission was not given. Further, the Owners have never given your company permission to reproduce the Software for the purposes of distribution or to distribute the Software with the LOGIN.CMD file modified as was done on the APC distribution.
TSI considers that your company's acts in reproducing or authorising the reproduction of the Software for distribution with APC infringe the Owners' copyright in the Software.
In addition, your company's conduct in distributing the modified version of the Software (as described above) is likely to lead members of the public to believe, contrary to the true position, that those modifications were made or authorised by TSI, that there is some commercial association between TSI and your company and that TSI endorses the OzEmail network. Those representations are false and accordingly your company, by its abovementioned conduct, has contravened the Trade Practices Act 1974 (including sections 52, 53(c) and 53(d) of that Act). Your company and any persons (including any officers of your company) who were involved in the contravention are liable, under Section 82, for any damages suffered by the Owners as a result of the contravention.
TSI has already raised its concerns with you by its letter of 3 April. In
essence, your letter of 6 April states that OzEmail's action are permitted due to the
Software having been distributed by TSI on a "shareware" basis. TSI does not
accept that its prior distribution of the Software on a shareware basis alters the legal
status of the Software or provides your company with any defence to an action for
copyright infringement or for contravention of the Trade Practices Act 1968 . In any
event, the modification and distribution of the Software by OzEmail was done for the clear
purpose of attracting custom to the OzEmail network. That purpose clearly takes your
actions outside the shareware concept.
The above infringements of copyright and false representations were clearly committed deliberately and with the aim of increasing the number of subscribers to the OzEmail network. The Owners have suffered and are continuing to suffer loss and damage as a result of their rights being infringed in this way. In particular, the Owners have not been paid any fee for the distribution of the Software with APC. The manner in which the Software has been distributed and packaged with the APC is also likely to result in a greater number of users proceeding to use the Software without registering the Software with TSI, leading to further loss by TSI. In addition, the distribution of the Software configured to operate only with the OzEmail network may jeopardise TSI's prospects for doing business with other network providers in Australia.
The letter then proceeded to request various undertakings from OzEmail, including the removal from its network of all unregistered copies of Trumpet Winsock and the payment of compensation to be assessed.
On 26 May OzEmail's Sydney solicitors Allen, Allen & Hemsley (Allens) replied. The letter asserted that OzEmail "did not seek permission of (Trumpet) to distribute the software with APC. There was no need". It was stated that Mr Urquhart telephoned Mr Tattam on 10 March "as a matter of courtesy" to inform him of OzEmail's intended distribution in the April 1995 edition. After referring to Mr Tattam's failure to sign and return the fax and send the timelocked version, the letter stated:
Running up against publishing deadlines, in the face of Mr Tattam's refusal to respond, OzEmail was unable to proceed with including a timelocked version of the Software. Accordingly it reverted to the generally available shareware release of the Software which OzEmail was, both in terms of the shareware licence for the Software, and in accordance with the underlying rationale behind release of the software as shareware as a distribution technique, entitled to distribute.
As we have mentioned, we are instructed that the Software was released by your clients as shareware. The rationale behind shareware is that distribution of the software concerned is maximised by permitting third parties to distribute the software. If the proprietor of software wishes to control the distribution of it, then the software would not be released as shareware. As shareware, the Software has been licensed generally to permit evaluation. If a would- be user is satisfied with the product then a registration form should be filled out and sent to TSI accompanied by the appropriate registration fee.
The letter went on to assert that there was no limitation on distribution of the shareware except where expressly provided by the licence contained in the software itself. The letter then argued that there had been no breach of these terms. It might be recalled parenthetically that notwithstanding the terms of this letter, in these proceedings OzEmail filed an affidavit of Mr Urquhart which has Mr Tattam saying in the telephone conversation of 10 March "No. I don't want you to do it" (i.e. distribute the untimelocked version 2.0B).
On 14 June ARH replied. Their letter maintained that the distribution infringed Trumpet's copyright and asserted that since any distribution of the software results in the software being reproduced, the software was not able to be distributed without Trumpet's permission. The letter concluded:
As OzEmail may be aware, TSI is shortly to release version 2.1 of the Trumpet Winsock software. This software is not being released as shareware and is being made available strictly on the terms of the licence contained in that software. To avoid any future confusion by OzEmail, TSI hereby put OzEmail on notice that:
(A) TSI does not give its permission to OzEmail distributing Trumpet Winsock Version 2.1 (or any subsequent version) for any purpose whatsoever; and
(B) TSI does not give its permission to OzEmail making Trumpet Winsock Version 2.1 (or any subsequent version) available to the public, including by making the software available on any FTP site which is operated by or on behalf of OzEmail.
If TSI becomes aware in the future that OzEmail has infringed its copyright or taken any other action in contravention of TSI's rights then TSI reserves the right to rely on this letter to establish that OzEmail (and its directors and officers) were aware of TSI's rights in the software and that TSI had not given its permission to OzEmail performing certain actions in connection with the software.
Australian PC World Distribution - August 1995
Despite the stand taken by Trumpet in the above correspondence, OzEmail again distributed Trumpet Winsock 2.0B in diskette form in another magazine, Australian PC World, in its August 1995 issue. The diskette was accompanied by a brochure which, although not identical with the April brochure, contained the passages already referred to.
Alterations, Additions and Deletions
If software is distributed as shareware, it is, generally speaking,
important that potential users of the software receive all files in their original form so
that the software can be properly and fairly evaluated. If some of the files are deleted
or altered the software may not function at all or may function differently from the way
intended by the author. It is also possible that important information about the software
may not be revealed to the potential user.
To ensure potential users received all the files comprising the software Trumpet distributed them in "zipped" form, that is to say all files were packaged into one large file using the PKZIP program. The software could be "unzipped" by using another program called PKUNZIP. From Trumpet's viewpoint, according to Mr Tattam, this was done so that potential users of Trumpet Winsock would get all the files comprising the program and each file would be in exactly the form in which Trumpet distributed it.
Prior to its amendment by OzEmail, Trumpet Winsock 2.0B contained the following 16 files:
The amendments made by OzEmail, and their consequences, were as follows:
(i) Modifying the LOGIN.CMD file to effect automatic connection with OzEmail
When the software is first used after installation the LOGIN.CMD file will
request the user to enter the telephone number of the chosen ISP. Once that number has
been entered, it will be stored, along with the user's name or identification and
password, in the TRUMPWSK.INI file. On subsequent operation of the program, LOGIN.CMD will
inspect the TRUMPWSK.INI file, retrieve this information and send a command to the modem
to dial the number of the chosen ISP. LOGIN.CMD is a substantial part of the software,
comprising 1,901 bytes.
OzEmail wrote an entirely new LOGIN.CMD file, which had the effect that a user would automatically, and without the need for further modification, be connected to OzEmail as an ISP. This was a substantial change to the LOGIN.CMD file which, in its original Trumpet form, did not direct the use of any particular ISP.
(ii) Modifying the TRUMPWSK.INI file
This file, although one of the files comprising Trumpet Winsock, is not
included with the other files when the software is distributed. Rather the file
TRUMPWSK.INI is created by operation of the TCPMAN.EXE program when the software is first
run. The TRUMPWSK.INI file retains the information necessary for the Trumpet software to
be able to run in a Microsoft Windows environment. It comprises 726 bytes.
The TRUMPWSK.INI file which is generated by the OzEmail-altered software is different to the TRUMPWSK.INI file generated by the Trumpet Winsock software when TCPMAN.EXE is run. The OzEmail version of TRUMPWSK.INI allows the software to connect the user to OzEmail.
(iii) Deleting the README.MSG file.
The README.MSG file is a file to be read by the user on installation. The information contained in this file comprises six lines, as follows:
Version 2.0 Rev B
See install.doc for installation
The file winsock.zip contains all the files here.
************************************************************ This package is now shareware ************************************************************
Send bug reports to email@example.com
Peter R. Tattam
The evidence showed that a user would usually proceed first to the
README.MSG file. The file was not contained in the version distributed by OzEmail.
OzEmail's case was that it had been inadvertently deleted.
Mr Urquhart wrote a file called README.WRI which was never in fact included in the OzEmail-distributed software. If it had been included, it would ordinarily have been the first file read by a user. Under the sub-heading "TRUMPET WINSOCK" the README.WRI file read:
This version of Trumpet Winsock is unregistered shareware and you are strongly encouraged to register it. For more information regarding registration, please read the TRUMPET.DOC file in your directory once it is installed. Note that the unregistered version is provided to allow you to trial the software and is timelocked to expire after 30 days use. If you wish to continue trialing Trumpet Winsock, you may need to download a copy from OzEmail's home gopher in the shareware area.
Mr Urquhart said in evidence that README.WRI was originally prepared as part of the package of files to be inserted on the diskette to be distributed in April 1995. The shareware message was prepared when it was thought that OzEmail would be distributing a timelocked version of Trumpet Winsock. Mr Urquhart also said that he did not recall discussing the inclusion of the README.WRI file, or its subsequent exclusion, with Mr Howard. There was tendered a handwritten note of Mr Urquhart which read "Go over README.WRI, get SH approval". Mr Urquhart said that "SH approval" was a reference to obtaining Mr Howard's approval to his version of README.WRI, and that he "thought he was instructed not to include it by Mr Howard". Mr Howard during cross examination stated that he was not aware of README.WRI. When presented with documentary evidence of the README.WRI file, Mr Howard said he did not recognise it. I think it likely however, and I so find, that Mr Howard, because of his close working relationship with Mr Urquhart, was aware of the deletion of README.MSG, the creation of README.WRI and the non-inclusion of the latter in the software as distributed.
(iv) Deleting the INSTALL.TXT file
The information contained in the INSTALL.TXT file is exactly the same as
that in the INSTALL.DOC file except that the former is in ASCII format while the latter is
in Microsoft Word format. The inclusion of the INSTAL.TXT file in the software, according
to Mr Tattam, was intended to make it easy for users who do not have a Microsoft Word
processing program to read the contents of the software manual.
OzEmail deleted INSTALL.TXT from the software as distributed. INSTALL.TXT (and INSTALL.DOC) contain the copyright and disclaimer notice quoted in Mr Tattam's letter of 3 April 1995.
(v) Textual and formatting changes to the BYE.CMD file
This file issues commands to the modem to hang-up or close off the
telephone connection and thus end the running of the program. The OzEmail version of the
file differs from the original Trumpet version in that the OzEmail file is double spaced
and in the fourth line of the first section the third letter appearing after the word
"output" is an upper case "H" instead of a lower case "h"
with an adjoining zero. On occasion no letter appears at all at that point on this line.
The result of this modification is that the command sent by the software to the modem to end its connection for the user may not be effected. The evidence showed that the amended BYE.CMD file had the possible consequence of not allowing the modem to hang up. Mr Urquhart accepted that he must have been aware that the program amended by OzEmail had the potential to cause the BYE.CMD file to be modified in this way.
(vi) Changing the name of Trumpet file INSTALL.DOC to TRUMPET.DOC.
Mr Urquhart in evidence stated that this was done to make it clear that the file was a Trumpet file and not an OzEmail file.
(vii) Addition of non-Trumpet files OZREGO.EXE and STARTUP.WRI
In the diskettes distributed with the magazines, OzEmail included two files which did not originate with Trumpet, namely OZREGO.EXE and STARTUP.WRI. Mr Tattam conceded that the inclusion of these files was "not relevant to these proceedings save that their inclusion by OzEmail in its distribution of the Trumpet software required a modification to the way in which Trumpet releases (Trumpet Winsock) as an integrated software purchase".
Effect of Alterations, Additions and Deletions
Trumpet Winsock 2.0B was set up in a way that would direct the user to the
fact that the software was unregistered shareware and that it was distributed for
evaluation purposes only. A user of the Trumpet software would be alerted to these
messages on at least three occasions, namely in the README.MSG, INSTALL.DOC (or
INSTALL.TXT) and TCPMAN.EXE files.
The evidence showed that a user of a program would first generally view the README.MSG file. In this case, the README.MSG file clearly informed the user that the software package was shareware. The user would then be directed to the INSTALL.DOC file, which informs the user of the copyright and disclaimer information, registration details for registering the Trumpet software with Trumpet, and the status of the software as shareware. The user would then be directed to TCPMAN.EXE. It would be very difficult for a user to enter the details required in the TCPMAN.EXE file, and so to run the Trumpet software, without having read the INSTALL.DOC file. In the TCPMAN.EXE file the user is notified of copyright and that the Trumpet software is "an unregistered shareware version for evaluation only".
In the OzEmail-altered version of the software, the README.MSG file is deleted so the sequence referred to above does not occur.
Trumpet argued the conclusion to be drawn is that OzEmail, by the additions, deletions and amendments referred to above, set up the software so as to ensure the user would connect to OzEmail as an ISP to the exclusion of any other ISP, and also with the effect of either deleting or obscuring the shareware and registration messages. The evidence showed that the OzEmail-altered version of the software informed users in the "Getting Started" file that they could click on to an Internet application, such as OzGopher or Q MOSAIC, rather than first opening Trumpet. In such a case all that would appear in relation to Trumpet would be a Trumpet icon which, in the event that the user decided to double click on that icon, would display a message about shareware. But whether that happened would be chance at best.
In cross-examination of Mr Urquhart it was put that OzEmail actually encouraged the user to click directly on to an Internet application rather than first opening Trumpet. Mr Urquhart replied that "users would have been informed that they can do that, yes". In fact, in the "Getting Started" file written by Mr Urquhart, the following words appear:
If you are ready to connect to the Internet, all that you need to do is double click on either the OZGOPHER or Q MOSAIC icons in your OzEmail Internet slip program manager group.
If the user chose not to open or double click that Trumpet icon, and there would be no obvious reason to do so, then the shareware message would not appear. Counsel for Trumpet submitted that such amendment left the user without any clear direction that Trumpet is shareware or the need to register such shareware after the evaluation period. I agree.
In the last paragraph of the third screen in the "Getting Started" section titled "Connecting to the Internet" from one of the non- Trumpet files, the user is given the following information about Trumpet:
Of course working "behind the scenes" in connecting you to the Internet will be Trumpet Winsock. For important information regarding Trumpet Winsock, please double click on the Trumpet Winsock ReadMe icon.
If the user follows that suggestion, the information that appears is essentially that contained in the INSTALL.DOC file. This is the only information in the Getting Started section which provides the user with any information relating to Trumpet.
However, the information as it would appear to a user of the OzEmail- altered version of the software is different in appearance to the information in the Trumpet software, in that the information in the OzEmail software is not formatted correctly. It is in what is known as "garbage" format. Mr Tattam said that this is because the OzEmail software instructs Windows Write to review a file which is formatted in Windows Word. Users may see the first screen and think the information is incorrect or "garbage", and not read further, thus not reading the messages concerning shareware and registration.
Further, the evidence showed that in relation to the OzEmail software distributed in August, the user is invited to double click on the Trumpet Winsock Read Me icon, but that icon does not exist under that name, and is to be found under the name Trumpet Winsock Marval.
Infringement of Trumpet Copyright
It was not in dispute that the program known as Trumpet Winsock 2.0B
consisting of 16 files was, taken as a whole, a computer program in which copyright
subsists: see Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42
FCR 470 at 507. The compilation of files constituted a computer program for the purposes
of the Copyright Act (Cth): s 10(1).
It was also not in dispute that Trumpet and Mr Tattam were joint owners of the copyright. The program was a "literary work" and by virtue of s 31(1)(a)(i) and (ii) of the Copyright Act Trumpet and Mr Tattam had the exclusive right, amongst other things, to reproduce the work in a material form and to publish the work.
I find, and indeed it was not disputed, that OzEmail reproduced, caused to be reproduced, or authorised reproduction of, a substantial part of the Trumpet Winsock 2.0B program by
(a) reproducing the program in the logical space of a computer owned or controlled by OzEmail known as its FTP site;
(b) making or authorising the reproduction of the program in a material form on diskette in the Australian Personal Computer April 1995 issue; and
(c) making or authorising reproduction of the program in a material form on diskette in the Australian PC World August 1995 issue.
Accordingly, unless it can make out its defence of licence, OzEmail infringed the copyright of Trumpet and Mr Tattam because it did, or authorised the doing of, an act comprised in the copyright: s 36(1). Licence in this context means "consent" or "permission": Computermate Products (Aust) Pty Ltd v Ozi-Soft Pty Ltd (1988) 20 FCR 46 at 49.
Revocation of Licence
Determinative of this case in my opinion is the proposition that, prior to
the distributions complained of, Mr Tattam expressly told OzEmail that he objected to
OzEmail using Trumpet Winsock 2.0B and thus revoked any licence OzEmail might have had.
OzEmail does not complain, nor could it, of any breach of contract by Trumpet in failing to provide the timelocked version Trumpet Winsock 2.1 for distribution. OzEmail simply went ahead and distributed what Mr Tattam had told them he did not want distributed, namely version 2.0B.
The effect of wrongful revocation of a contractual licence and the remedies available therefor have been much debated topics: see Cowell v The Rosehill Racecourse Co Ltd (1937) 56 CLR 605 and Meagher, Gummow and Lehane "Equity: Doctrines and Remedies" (3rd Ed) pp 576- 582. However, any licence which might have existed by virtue of Trumpet's distribution of the program as shareware through FTP sites such as the University of Tasmania's was not contractual, at any rate as far as OzEmail was concerned. There was no consideration moving from OzEmail. It may be that a bare licence not supported by consideration can still only be revoked on giving the licensee reasonable notice: Computermate 20 FCR at 49. However, OzEmail did not seek to make out a case of lack of reasonable notice. Rather its case appeared to be that, because of the distribution of Trumpet Winsock 2.0B as shareware, there came into effect a licence which could not be revoked at all - and presumably even if notice, however reasonable, were given. This would be a surprising consequence for a licence not supported by consideration. It is in my opinion without foundation.
I find that the licence could be revoked at any time by Trumpet and was revoked in the course of the conversation between Mr Tattam and Mr Urquhart on 10 March 1995. In any event, no question of reasonable notice could arise in the circumstances of this case because OzEmail was seeking permission for future use. The present case is quite different from that of a bare licensee who, for example, has brought goods on to the licensor's land and thus might be entitled to notice for a period of time sufficient to enable the removal of the goods.
In Computermate (loc cit) the Full Court go on to say:
However, where the bare licence has been acted upon by the licensee to the detriment of the licensee, in an appropriate case there may be an estoppel against the licensor preventing the revocation of the licence, either at all or otherwise than upon notice: Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387.
Although OzEmail sought to raise an estoppel argument of a different kind,
to which I shall refer shortly, there was no case advanced of an estoppel which operated
to prevent or impede revocation of the licence. No doubt OzEmail acted to its detriment in
making arrangements with the publishers of the magazines, but even on OzEmail's case this
was not done in reliance on any conduct of Trumpet. In colloquial terms, OzEmail appears
to have taken a punt that necessary permission would be forthcoming from Trumpet or that,
whatever happened, Trumpet would not sue.
In any case, there was never in existence a licence for OzEmail to deal with Trumpet Winsock 2.0B by distribution with the magazines in the way that it did in April and August 1995. It will be necessary to deal with this aspect in a little more detail when I turn to the alternative issue as to whether any terms of an existing licence were breached. However at this stage, and fundamentally, it seems to me that the purpose of the use of software as shareware is for evaluation by the potential user. This was not what OzEmail sought to do. Its aim was to use the software as a give-away in the hope of encouraging subscribers to its ISP service. This was not evaluation of the program for OzEmail's own possible use, or distribution to other potential users for their evaluation.
Terms of the Licence (if not revoked)
Subject to revocation, there was no dispute that, from the point of view of a potential user, the shareware licence in this case conferred a licence to use the software for a period of 30 days for the purpose of evaluation. However Trumpet contended that if the publication of the program as shareware conferred any rights of distribution by intermediaries such as OzEmail to third parties, then such licence was subject to the conditions that distribution should be
(i) without other software;
(ii) without modification, addition or deletion;
(iii) in its entirety; and
(iv) without charge and not for commercial gain
to enable such third parties to use the software for a period of 30 days for the purpose of evaluation.
There was evidence called on both sides as to the nature of terms and
conditions of shareware licensing. Such evidence was given by witnesses (albeit persons of
considerable experience in the computer industry) in terms of personal assertion as to
whether shareware did, or did not, involve particular restrictions or obligations. But
evidence of trade usage is receivable not as opinion but as evidence of fact as to how
custom is followed in a particular trade. The evidence fell well short of that required to
establish custom in the legal sense. In Majeau Carrying Co Pty Ltd v Coastal Rutile Ltd
(1973) 129 CLR 48 at 61, Stephen J, with whom the other members of the Court agreed,
referred to the statement of Jessel MR in Nelson v Dahl (1979) 12 Ch D 568 at 575
describing the alleged existence of a custom as a question of fact, and, like all
other customs, it must be strictly proved. It must be so notorious that everybody in the
trade enters into a contract with that usage as an implied term. It must be uniform as
reasonable, and it must have quite as much certainty as the written contract itself.
Stephen J also adopted the following passage from "Browne on Usage and Custom" (1875) as being a correct statement of the law:
Seeing that custom is only to be inferred from a large number of individual acts, it is evident that the only proof of the existence of a usage must be by the multiplication or aggregation of a great number of particular instances; but these instances must not be miscellaneous in character, but must have a principle of unity running through their variety, and that unity must shew a certain course of business and an established understanding respecting it.
See also Protean Enterprises (Newmarket) Pty Ltd v Randall  VR 327.
The juristic basis for any terms to be included in a licence for the use
of software might be better founded in the analogous doctrine of implied contractual terms
as expounded by the Privy Council in BP Refinery (Westernport) Pty Ltd v Shire of Hastings
(1977) 180 CLR 266 at 283. Such doctrine applies by analogy rather than directly because,
as already mentioned, the licence under consideration was not a contractual one. But it
must have some terms and conditions. In my opinion the most rational approach is to apply
the BP Westernport criteria. And the contractual analogy is a close one because the
shareware licence would mature into a contract if a user were to effect registration -
rather like goods taken on a sale or return basis. The evidence of computer experts I find
of assistance, not as direct evidence of trade custom in the legal sense but as indicating
how this particular trade operates and providing an informed background against which the
BP Westernport criteria can be applied.
In particular two criteria are apposite, namely (i) whether the supposed condition is necessary to give business efficacy, in the light of the fundamental purpose of shareware, which is that of evaluation, and (ii) whether it is so obvious that it "goes without saying".
(This may be a convenient place to note that I do not regard the express term of copyright disclaimer quoted in Mr Tattam's letter of 3 April 1995 as necessarily exclusive. It is sufficient that any implied condition is not inconsistent.)
Applying those criteria, I think it is essential that, in the case of a distributor dealing with shareware, it be distributed in its entirety and without modification, addition or deletion. The whole purpose of evaluation is to enable the end user to evaluate the product as produced by the author. I do not however see as essential for business efficacy or so obvious that it goes without saying any restriction that the software not be distributed with, or accompanied by, any other software. To take the instant case, it does not seem to be an objectionable feature that Trumpet software was accompanied by other software which was complementary in the sense that it would also assist users of the Internet, subject to the proviso that such software was sufficiently separately identified and did not interact in a way which interfered with the operation of the Trumpet software.
Finally, I do not think any condition can be imposed denying the distributor the right to make any charge or commercial gain. Since the distributor is conducting a business, it would be irrational to suppose that any charge made would be confined to cost recovery. There would be no point in the distributor dealing with shareware (a dealing which, if properly conducted, will obviously be to the benefit of software owners) if there were no profit element. Once a profit element is accepted, I do not see how it can be limited, as was suggested in argument, to a "small" or "modest" profit. The quantum of the profit can only be left to market forces. Of course such distribution would need to be free of the misleading and deceptive conduct of the kind that occurred in the present case.
As already discussed, there were in the present cases significant changes made by OzEmail, without Trumpet's permission, which would impact adversely on Trumpet's commercial interests, namely all those identified above, except (vi) and (vii). In particular the alterations had the effect that users were routed to OzEmail as an ISP. This could quite conceivably damage Trumpet's position as an independent marketer of software for Internet access and its commercial relationship with other ISPs. Moreover, the notification of Trumpet's rights to payment from users who decided to keep the software were seriously obscured.
In summary therefore I find that, even if any licence in favour of OzEmail had not been revoked, OzEmail breached conditions of the licence by the changes it made to the Trumpet Winsock 2.0B program.
It goes without saying of course that a software owner and a distributor can negotiate a contractual basis for the distribution of shareware on any terms whatever that are mutually satisfactory. The present litigation has only arisen because OzEmail found that course inconvenient.
The respondents pleaded a defence under s 115(3) of the Copyright Act which is as follows:
Where, in an action for infringement of copyright, it is established that an infringement was committed but it is also established that, at the time of the infringement, the defendant was not aware, and had no reasonable grounds for suspecting, that the act constituting the infringement was an infringement of the copyright, the plaintiff is not entitled to an account of profits in respect of the infringement whether any other relief is granted under this section or not.
However in final submissions counsel for the respondents, properly in my opinion, conceded that this defence was not available to OzEmail and Mr Howard. The respondents did however seek to rely on s 116(2)(b) even though it was not pleaded. That provides as follows:
A plaintiff is not entitled by virtue of this section to any damages or to any other pecuniary remedy, other than costs, if it is established that, at the time of the conversion or detention -
(b) where the articles converted or detained were infringing copies - the defendant believed, and had reasonable grounds for believing, that they were not infringing copies.
On the evidence this defence is not available to the respondents. In the
conversation of 10 March 1995 Mr Tattam made it clear to Mr Urquhart that there was no
permission to distribute version 2.0B. Mr Urquhart's knowledge is the knowledge of OzEmail
for this purpose. Further Mr Howard was, as I find, well aware of the substance of what
had in fact taken place in the conversation between Mr Urquhart and Mr Tattam.
By the time of the August distribution withdrawal of permission had been confirmed in the most explicit terms in Trumpet's letter of 3 April and ARH's letters of 10 and 14 May. I do not believe Mr Howard when he claims that he believed Trumpet's solicitors were only prohibiting the use of version 2.1 or subsequent versions. Mr Howard is an intelligent man and the terms of these letters, and Mr Tattam's verbal refusal on 10 March, are not open to doubt. The whole point of the arrangement for the supply of the timelocked version 2.1 was that the distribution of version 2.0B was unacceptable to Trumpet. The August distribution, made in the teeth of the protests of Trumpet and its solicitors, speaks eloquently of the disdain which OzEmail had for the legitimate rights of Trumpet.
Counsel for the respondents submitted there was an estoppel arising from Mr Tattam's failure to complain of some of the alterations at the earliest time he became aware, or should have been aware, of them. This argument is in my opinion without substance, especially in a context where Mr Tattam complained vigorously from the outset about OzEmail's conduct; the failure to detail each and every issue does not destroy his rights. In any event, it is clear from their conduct that OzEmail would have ignored any protest. No case of reliance is made out.
The Trade Practices Act
The relevant provisions are:
52(1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
53. A corporation shall not, in trade or commerce, in connexion with the supply or possible supply of goods or services or in connexion with the promotion by any means of the supply or use of goods or services -
(c) represent that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits they do not have;
(d) represent that the corporation has a sponsorship, approval or affiliation it does not have;
(f) make a false or misleading representation concerning the need for any goods or services; or
Also the definition of "services" in s 4 includes any rights (including rights in relation to, and interests in, real or personal property), benefits, privileges or facilities that are or are to be provided, granted, conferred in trade or commerce ...
Since copyright is a form of personal property, the grant of a copyright
licence and the benefits and privileges thereby conveyed is a "service".
The claims made under the Trade Practices Act can be conveniently considered under two headings. First, that OzEmail's conduct would mislead or deceive readers of the magazines into believing that OzEmail had the permission, licence or authority of Trumpet to publish the software.
I think this claim is made out. Put broadly, I think the ordinary purchaser or reader of the magazine would think that the distribution of the diskettes (a striking form of marketing and one likely to attract potential buyers of the magazine) could not have happened without some kind of arrangement or connection between the owner of the software and OzEmail: cf Targetts Pty Ltd v Target Australia Pty Ltd (1993) ATPR 41-231 at 41,193.
A second and more serious representation alleged is that the conduct of OzEmail would be likely to mislead or deceive readers of the magazine, and those who ran the programs on the diskette, into believing that the users of the software did not need to obtain a licence from Trumpet in order to use the software.
I am also satisfied that this would be so. Counsel for Trumpet argued, correctly in my view, that the manner in which the software has been promoted and configured by the respondents would be likely to create this impression. The brochures refer to "free software". For many, probably most, users Trumpet's shareware message would have been obscured. This happens if the software is activated through use of an Internet application as OzEmail's user guide direct the user to do. Further the emphasis on OzEmail's fee of $25.00 (the same price as the Trumpet registration fee) would tend to mislead the user into thinking that that was all that was payable.
Involvement of Mr Howard
In the terms of his own affidavit Mr Howard was "closely involved in all stages of the project" by which the Trumpet software was modified and distributed. He appears to have been the driving force. He was "involved" in the contraventions of the Trade Practices Act within the meaning of s 75B(1)(a),(b) and (c).
At a late stage in the proceedings it was announced by counsel that the application against the third respondent Ms Dani Thompson should, by consent, by dismissed with no orders as to costs.
I will direct that within fourteen days counsel bring in signed minutes of
orders to give effect to the foregoing reasons. The orders should include declarations as
to my findings on liability and appropriate directions for the next stage of the
proceedings. Liberty to apply is reserved. The directions hearing will be adjourned to a
date to be fixed by the Tasmanian District Registrar after consultation with the parties.
There will be an order that the respondents (other than the third respondent) pay the applicants' costs to date including reserved costs. Those costs should be taxed and paid forthwith pursuant to O 62 r 3(2). Although the issues of quantum and other relief remain unresolved, I do not think any significant amount of the work done to date can be isolated and treated as not relevant at all to liability.