Burden v ESR Group (NZ) Limited [2015] NZHC 1649 (14 July 2015)

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This judgment was delivered by me on Tuesday 14 July 2015 at 4.45 pm pursuant to Rule 11.5 of the High Court Rules.

[1] The first defendant ESR Group (NZ) Limited (ESR) seeks an order under s 141(2) of the Copyright Act 1994 (the Act) for the release of various shipments of furniture detained by New Zealand Customs Service (Customs) between July 2014 and October 2014.

[2] The application is brought by ESR as an interlocutory one in the context of proceedings initiated by the first, second and third plaintiffs immediately after detention of the items. Those proceedings, in which ownership and authorship of the relevant works is directly in issue, have been set down for a three week trial commencing on 7 September 2015.

[3] The plaintiffs are in the business of designing, producing and exporting household furniture to North America, Europe, Australia and New Zealand. The first plaintiff is Mr Burden. He is an Australian citizen who resides partly in Australia and partly in Vietnam. He is the Managing Director of the second and third plaintiffs. The second plaintiff is registered in the British Virgin Islands (BVI) and the third is registered in Vietnam.

[4] The first four defendants are in the business of producing, importing and selling furniture. ESR is registered in Auckland and carries on business as a furniture importer and retailer. The second defendant is registered in the BVI and is a furniture supplier. The third defendant is Mr Morrow, an Australian citizen residing in Vietnam. He is a former employee of the first and third plaintiffs. The fourth defendant is a wholly owned subsidiary of the second defendant. Both companies are controlled by Mr Morrow.

[5] The fifth defendant is the Chief Executive of Customs. A memorandum has been filed on behalf of the Chief Executive stating that Customs will abide by the

Court’s decision but that it wishes to take part if costs are sought from it or if other

[6] Between July and October 2014 ESR imported into New Zealand items of furniture from Vietnam. Upon arrival of the items in New Zealand, Customs detained them on the grounds that they were pirated copies of works in which Mr Burden claims to own copyright.

[7] The current application relates to the release of these items of furniture. Before analysing the issues and arguments in this application, it is useful to first examine the procedural history and the legislative scheme in question.

[8] On 20 May 2013 the solicitors for Mr Burden and the second plaintiff gave written notice to the Chief Executive pursuant to s 136(1) of the Act. In that notice Mr Burden claimed ownership of copyright in furniture items labelled with particular brand names, and the second plaintiff claimed to be the exclusive licensee. The notice requested the Chief Executive to detain any copies of the particular works that are imported into New Zealand, alleging that these are pirated works. Annexed to the notice were a series of photographs of various furniture collections.

[9] The items currently detained were imported into New Zealand between July and October 2014. Following detention, the Chief Executive wrote to ESR informing it of the detention pending the determination of the Chief Executive as to whether the items were those to which Mr Burden’s and the second plaintiff’s notice related.

[10] In September and October 2014 the Chief Executive issued Notices of Determination in which she accepted the plaintiffs’ claim that the items imported by the defendant appeared to be pirated copies of works in which Mr Burden and the second plaintiff claim protection.

September 2014 alleging copyright infringement and breach of the Fair Trading Act

[12] For the purposes of the interlocutory application Mr Pietras did not contest the allegation that the furniture which has been detained is a copy of the third plaintiff’s so called Irish Coast Collection. The second amended statement of claim pleads that the second defendant, controlled by Mr Morrow, has either copied or authorised another to copy the plaintiffs’ copyrighted works.

[13] In that statement of claim Mr Burden pleads that he is the designer of the plaintiffs’ furniture products and that such products are realised from concepts and initial sketches drawn by him. These are described as the “preliminary copyright works”. The claim further pleads that the third plaintiff employs technical drawers who develop the initial sketches produced by Mr Burden into more detailed works. These are termed the “technical copyright works”. The claim pleads that the copyright in the technical drawings produced by the third plaintiff’s employees belongs to Mr Burden and that the relevant rights are licensed by him (it is not stated to whom), by way of a licence agreement dated 10 September 2012. That licence agreement has been provided on a solicitor/counsel basis subject to confidentiality undertakings. It was not in evidence.

[14] Section 141(2), under which ESR brings this application, occurs within Part 7 of the Act which is identified as “Border protection measures”. The scheme of the Act is as follows:

The purpose of that notice is, among other things, to assist Customs in identifying potential infringements or, in the language of the Act, “pirated copies”.

(1) Any person may apply to the court for an order that a notice accepted under section 136(3)(a) be discharged, and the court may make such an order accordingly.

(2) Any person may apply to the court for an order that an item detained under section 140 be released, and the court may make such an order accordingly.

(3) Any person may apply to the court for a decision on whether or not an item the subject of a determination made under section

137(3) is a pirated copy that has been imported other than for private and domestic use, and the court shall make such a decision accordingly.

(4) Notice of proceedings under subsection (3) shall be served on the chief executive.

(5) In proceedings under subsection (3), the court shall issue directions as to the service of notice on persons having an interest in the item that is the subject of proceedings, and any such person is entitled—

(a) to appear in those proceedings, whether or not that person was served with notice under section 139; and

(b) to appeal against any order made in those proceedings, whether or not that person appeared in the proceedings.

(6) No order made in proceedings under subsection (3) shall take effect until the end of the period within which notice of an appeal may be given or, if before the end of that period notice of appeal is duly given, until the final determination or abandonment of the proceedings on the appeal.

[16] In their statement of claim the plaintiffs seek, among other things, a declaration that the imported items are pirated copies and were imported for other than private and domestic use. The Chief Executive has accepted the proceeding as one brought under s 141(3). No issue is taken in that respect.

[17] ESR’s primary submission is that the detention of the items is improper because Mr Burden (who is an Australian citizen) is not the owner of the copyright in the works referred to in the s 136 notice on which the detention was based. ESR says further that copyright (if any) reposes in either the second or third plaintiff and, in either case, is unenforceable in New Zealand because the second and third plaintiffs are, respectively, BVI and Vietnamese registered companies whose copyright is not enforceable in New Zealand under s 232 of the Act.

[18] ESR then submits that the s 136 notice was deficient and that this is a relevant consideration in terms of any application under s 141(2). It says that in the notice Mr Burden claims copyright ownership in an unrealistic number of items, that the images of the items provided to Customs by Mr Burden and the second plaintiff were of insufficient detail for Customs to properly identify infringing copies and that the notice contains internal contradictions.

[19] Next ESR submits that an application under s 141(2) invites an approach akin to one followed in an application for interim injunction. It says that the court should ask itself whether there is a serious question to be tried and should then consider the balance of convenience between the parties. It submits that the answers to both questions favour the defendants.

[20] The plaintiffs dispute that an approach akin to that on an interim injunction

factual assumptions only properly tested in the substantive proceeding. In respect of the s 136 notice, the plaintiffs submit that the current application is not an appropriate vehicle for ESR to challenge the notice, and say that ESR has already raised its concerns regarding the notice with Customs, which were rejected.

[21] Counsel have not been able to identify any decisions under s 141(2). In G Sucess Co Ltd v Chief Executive Officer New Zealand Customs Service¹²Fisher J considered an analogous provision in the former Trade Marks Act 1953. Sections

54A to 54M of that Act, introduced with effect from 1 January 1995, provided, in relation to trade marks, for a framework very similar to that in Part 7 of the Copyright Act. G Success Co Ltd concerned the application of s 54G(2), which provided that:

(2) Any person may apply to the Court for an order that any goods detained under s 54F of this Act be released, and the Court may make such a decision accordingly.

Without attempting any exhaustive exposition as to the scope of s 54G(2), I would have thought that at least its primary purpose is to provide an opportunity for vindication of an importer's rights under s 54F(3)(d) and (e). Those paragraphs entitle the importer to release of the goods if the trade mark proprietor has either failed to act in time (i.e. bring proceedings and give appropriate notice under s 54G(3) within the requisite time limit (s 54F(3)(d))) or has brought the proceedings in time but since abandoned them (s 54F(3)(e)). I would not exclude the possibility of other grounds, for example lack of any seriously arguable case that there was a trade mark infringement or lack of any seriously arguable case that the importation was for other than private and domestic use, or something of that nature. However in cases like the present one, where the dispute is whether or not the signs on the importer's goods infringe the trade mark, I do not see how the matter could be resolved in the absence of the registered proprietor. The obvious procedure for resolving the parties' substantive rights in that

situation is a full civil action between the private litigants, whether under s 54G(3) or in conventional civil proceedings for infringement.

[23] Fisher J also recognised at [19] the possibility that an importer might bring an interlocutory application under s 54G(2) within the context of proceedings brought by the copyright owner “if there were some basis for thinking that release might be possible in advance of a full trial on the merits”. It is on that obiter observation that the defendants rely in the present case.

[24] In my view Fisher J’s observations are directly applicable to s 141(2) of the Copyright Act. I agree with his conclusion as to the primary purpose of these sections, and, like him, would not exclude other potential bases of application, in particular the absence of a seriously arguable case in terms of copyright and/or infringement.

[25] In a very detailed minute issued by Associate Judge Bell in these proceedings on 6 March 2015, his Honour said:

[31] It seems to me that in terms of that decision, the defendants can rely on s 141(2) in the following circumstances:

defence. To the contrary. On the approach of Fisher J, they will need to show that the case will be a foregone conclusion in their favour. The test will be similar to that applied in a defendant’s summary judgment application under r 12.2(2) of the High Court Rules. On that, the leading decision is Westpac Banking Corporation v MM Kembla NZ Ltd [2001] 2

[26] The test on a defendant’s application for summary judgment, referred to by

[64] The defendant bears the onus of satisfying the Court that none of the claims can succeed. It is not necessary for the plaintiff to put up evidence at all although, if the defendant supplies evidence which would satisfy the Court that the claim cannot succeed, a plaintiff will usually have to respond with credible evidence of its own. Even then it is perhaps unhelpful to describe the effect as one where an onus is transferred. At the end of the day, the Court must be satisfied that none of the claims can succeed. It is not enough that they are shown to have weaknesses. The assessment made by the Court on interlocutory application is not one to be arrived at on a fine balance of the available evidence, such as is appropriate at trial.

[27] I do not consider there to be any material difference between Associate Judge Bell’s “foregone conclusion test” (and analogy with a defendants’ summary judgment application) and Fisher J’s absence of seriously arguable case test. A hopeless case should not result in continued detention of seized goods and I see no reason in terms of either principle or procedure why that might not be tested by way of an interlocutory application brought in s 141(2) proceedings.

[28] However, in my view the proposition that the Court should, in the context of such an application, invoke the full suite of inquiries relevant to an application for interim injunction, including a balance of convenience analysis, goes beyond what was contemplated by Fisher J and is not supported by the legislative framework. The Act does not require an interim injunction application to be made. Had that been the legislative intent it could have been simply expressed. Nor has the applicant suggested anything in the legislative history which would support such an approach.

[29] However, if I am incorrect in that conclusion, I would, for reasons I subsequently set out, find that, in this case, the balance of convenience favours continued detention of the goods until the now imminent trial.

[30] Extensive affidavit evidence has been filed in support of and opposition to the application. It is replete with disputes as to:

¹⁴Westpac v Kembla [2000] NZCA 319; [2001] 2 NZLR 298 (CA), (2000) 14 PRNZ 631.

[31] Resolution of these conflicts is not possible within the context of the defendants’ interlocutory application. The “obvious procedure” as Fisher J termed it in G Sucess Co Ltd for dealing with such issues is a full civil action. The fact that such action has been commenced and diligently case-managed to a trial which is now less than eight weeks away, makes continued prosecution of the interlocutory application somewhat unusual.

[32] Nevertheless, ESR submits that if I look exclusively at what the plaintiffs say in their affidavits, I can safely conclude that they have no seriously arguable case and/or that judgment for the defendants is a foregone conclusion.

[33] Two affidavits were filed by the plaintiffs in opposition to the application, the first by Mr Burden himself, and the second by Mr Trinkler, who was an employee of the third plaintiff between late 2002 and September 2006.

[34] I replicate below, in the same table form submitted by Mr Pietras for ESR, those passages in the respective affidavits which he says support his submission in terms of the “hopelessness” of the plaintiffs’ case and what he says is the significance of each passage. I have numbered these statements sequentially:

Witness		Evidence/Statement	Significance
Ian James Burden
1.	I believe it is important to mention that PGT’s working drawings at the time bore the following notice which Hillsdale’s representatives would have seen: “This drawing and design is the legal intellectual property of Plantation Grown Timbers Limited. Any attempt to copy in part or full is considered theft and will result in PGT exercising its legal right under the law.”		Mr Burden admits here that the alleged copyright is owned by his British Virgin Islands or Vietnamese company. The British Virgin Islands and Vietnam are not convention countries for the purposes of the New Zealand Copyright Act. Therefore there cannot be any copyright enforceable in New Zealand.
2.	At paragraph [9] of his affidavit, Mr Elting says that all of the products depicted in his affidavit were supplied by PGT “in response to the product imagery” Hillsdale supplied to PGT, and that from Hillsdale’s perspective “they are not designs which belong to” PGT. I completely reject those assertions.		Mr Burden is saying here that the furniture designs in question belong to PGT. PGT is not an entity formed or in resident in a convention country. Therefore there cannot be any copyright enforceable in New Zealand.
3.	Again, I reject any allegation, whether express or implied, that the Plantation Grown Timbers copyright works* were copies from any other work ...*		Mr Burden admits here that his British Virgin Islands or Vietnamese company owns the alleged copyright. Both countries are non- convention countries, and so there is no copyright effective in New Zealand.
4.	*PGT’s product images* are initially drawn to scale without dimensions (master drawing) and there are typically multiple copies of the master drawing made.		Calling the drawings *“PGT’s product images”* again suggests the alleged copyright is owned by PGT, which is from a non-convention country. The significance is that there can be no copyright enforceable in New Zealand.
5.	As I have stated earlier in this affidavit, the Plantation Grown Timbers copyright works* were produced by me and my then employees of my companies ...*		The same comments above apply. Mr Burden is telling us here that the alleged copyright is owned by his company (which is form a non- convention country). His statement indicates that any work he did in the matter was work in his capacity as an employee/officer of his company

			– i.e. how else is he able to refer to *“Plantation Grown Timbers copyright works”.*
6.	Technical drawers employed by the Third Plaintiff then develop my sketches into drawings ...		The third plaintiff is a Vietnamese company. Therefore there cannot be any copyright enforceable in New Zealand; for the same reasons given above.
7.	Those items are not Hillsdale products – they are PGT products ...		Mr Burden indicates here that the designs belong to PGT, i.e. an entity of a non-convention country. Therefore the above comments apply here also.
8.	Working drawings are sometimes updated, or annotated, by different people at PGT for a variety of reasons, which is standard practice at PGT during the process of arriving at a product that will be sold in one of PGT’s furniture collections.		Mr Burden is telling us here that PGT implements the design process, which is consistent with his comments that PGT owns the alleged copyright. Our above comments therefore apply regarding non-convention countries and no copyright enforceable in New Zealand.
Joseph Trinkler
9.		The Irish Coast Collection was PGT’s first multi-step finished range ...	This indicates the alleged copyright belongs to PGT, which does not enjoy the benefits of being from a convention country for copyright purposes in New Zealand.
10.		Every PGT design* that I saw and worked with always came from Mr Burden.*	Mr Trinkler confirms here that any design work done by Mr Burden was done in his capacity as an employee of PGT. Why else would he say “every PGT design ...”.

[35] At the hearing an issue arose as to whether Vietnam and the BVI are convention countries for the purposes of the Act, and if not, whether copyright held by parties domiciled in those countries could be enforced in New Zealand. Further discussion between counsel and the Bench identified that the primary inquiry, at least

_{since 31 December 1995,}¹⁵_{is as to the status of
those countries under the Order in}

Council contemplated by s 232. I invited further submissions which were received on 19 and 20 June and 3 July 2015.

[36] Section 2 of the Act provides that “convention country, except in Part 9, means an entity that is a party to an international agreement relating to copyright.”

[37] Section 2 also defines the term “prescribed foreign country” in the following

(b) that is declared by Order in Council made under section 232 to be a foreign country to which any provision of this Act applies; and, with respect to the application of any provision of this Act to such a country, the provision shall be read subject to the terms of that Order in Council

[38] Section 18(2) provides that a work qualifies for copyright only if the author, at the material time, was a citizen or subject of a prescribed foreign country, or resident in it, or incorporated in such a country.

[39] Section 232 governs the application of the Act to other “entities”. Subsection (1) provides that the Governor General may by Order in Council on recommendation of the Minister apply any provision of the Act (other than a provision of Part 9) to any entity specified in the Order. Entities may be, among other things, a state, territory or political organisation.

(4) The Minister must not recommend the making of an order applying any provision of this Act to any entity unless satisfied that—

(b) Provision is or will be made under the law of or applicable to the entity giving reciprocal protection to copyright owners in respect of works generally or (as the case requires) works

or cases of the class or classes to which the order applies that provision of this Act.

[41] The most recent Order of Council is the Copyright (Application to Other Countries) Amendment Order 2000 (the Order). The Order does not list the BVI or Vietnam as countries to which the Act applies.

[42] Both counsel agree that Vietnam is a signatory to a number of relevant conventions or treaties, including the Berne Convention for the Protection of Literary and Artistic Works, and the Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPs Agreement). The Berne Convention was extended to the BVI by the United Kingdom, but the territory is not itself a signatory to the Convention.

[43] In its supplementary submissions ESR submits that the absence of the BVI and Vietnam from the Order indicates that companies incorporated in those countries are not entitled to the protection afforded by the Act. Counsel says that to allow protection for a company incorporated in a non-listed country would subvert the clear intention of s 232 and that whether the BVI or Vietnam have signed the Berne Convention or the TRIPs Agreement is therefore irrelevant. Counsel submits that the ownership and authorship of the copyright in this case belongs to the second and third plaintiffs, neither of which is incorporated in a country recognised by the Order. In framing its submission this way ESR effectively concedes that the reference to convention countries in its original submissions and in the table set out in [34] was misplaced.

[44] In his supplementary submissions, counsel for the plaintiffs says that he has contacted the Ministry of Foreign Affairs and Trade (MFAT) and the Ministry of Business, Innovation and Employment (MBIE), the latter of which was able to provide certain information about countries whose copyright may be protected in New Zealand. Counsel submits that according to the information provided by MBIE, the current Orders of Council are out of date and are in the process of being updated. Counsel submits that countries which are signatories to the Berne Convention and the TRIPs Agreement are entitled to reciprocal protection.

[45] That seems to me unlikely. Sections 18(2) and 232 read together contemplate, in my view, a requirement that any foreign national seeking to uphold copyright in a New Zealand Court will, at least from 31 December 1995¹⁶be a citizen, resident or incorporated in a country recognised by the Order, which at this stage BVI and Vietnam are not.

[46] However, the plaintiffs’ primary submission is that Mr Burden is an Australian citizen (Australia being recognised under that Order), and that he is the author and owner of the copyright, which he will prove in the substantive proceedings. Mr Hazel says that ESR falls far short of showing that it is a foregone conclusion that the claimed copyright reposes in an entity incapable of enforcing its rights in New Zealand.

[47] Overall, I have come to the conclusion that, although the affidavits of Messrs Burden and Trinkler raise a number of questions which will need to be addressed at trial if the plaintiffs’ claims are to succeed, a seriously arguable case exists.

[48] The essence of what Mr Burden says is that he is and always has been the designer of the plaintiffs’ furniture products which he realises from concept to initial sketches. Mr Trinkler supports him in that allegation with the statement identified as number 10 in Mr Pietras’ table above. Although there may well be issues in terms of whether Mr Burden’s employment by or directorship of either the second or third plaintiff carries with it the implication that copyright in the concept or sketch drawings was that of his companies and not his own, the pleaded licensing arrangements (which significantly predate seizure of the goods by Customs) are a strong indicator to the contrary. In the ordinary course, an estoppel would be available against any assertion of ownership by the companies if that pleading is made out.

[49] There is, I think, danger too in the very critical (possibly overly pedantic) way in which ESR seeks to construe Mr Burden’s and Mr Trinkler’s references to “PGT’s” designs, images, or copyright works in their affidavits. I do not, reading the

_{evidence as a whole, see this as the unambiguous concession (in terms
that PGT =}

the BVI company) which Mr Pietras urges on me. Indeed the acronym appears to be used as a generic or shorthand reference to all or some of the plaintiffs.

[50] Mr Burden first uses the acronym in paragraph 10 of his affidavit where he says:

Mr Elting claims that Plantation Grown Timbers Limited (PGT) referred to itself as a ‘furniture’ sourcing company that contracted with local Vietnamese manufacturers.

[51] Plantation Grown Timbers Ltd is the former name of the second plaintiff. The name change occurred in December 2008.

[52] However, immediately following the comments referred to above, Mr Burden says:

Mr Elting’s description of PGT’s business is wrong. In 2002 the Plaintiffs were involved in the business of designing, producing and exporting ranges of furniture products ...

So the acronym in that context is being used generically to describe all of the plaintiffs, including the first plaintiff, as the alleged designer and copyright holder.

[53] Elsewhere in his affidavit Mr Burden also uses the acronym in a way which clearly references both the BVI and Vietnamese companies. An example is at [15], where he says:

It is worth mentioning that Mr Morrow was a previous employee of the Second and Third Plaintiffs with complete and unfettered access to the relevant designs and drawings that were contained on a computer which Mr Morrow took when he left PGT.

[54] Clearly as founder of the PGT companies Mr Burden closely identifies himself with them. His affidavit in parts lacks the precision one would expect, but I would not, at an interlocutory stage, dismiss the claims on that basis alone.

[55] That is not to underestimate some of the difficulties the plaintiffs face in their proceedings. For example, the notation which appears on the working drawings

is, on the face of it, inconsistent with the claims now made. Mr Burden says that:

Ironically, the Third Defendant was the one who added that notice to PGT’s drawings in the early 2000s in response to PGT’s products being copied ...

The nature of the third defendant’s instructions will no doubt be an issue in the trial.

[56] Likewise, Mr Burden’s own admission that his initial sketches were developed into drawings “with details such as a product’s measurements and joinery” by “[t]echnical drawers employed by the Third Plaintiff” may well have implications in terms of the claim and he will need to support his pleaded allegation that copyright in “the technical drawings produced by the Third Plaintiffs’ employees belong[s] to the First Plaintiff”. At the moment that is a matter of inference only from Mr Burden’s paragraph 10 reference to employee “develop[ment] [of] my sketches into drawings” (emphasis added) and his reference to then “review[ing] those drawings” with consequential amendments as appropriate.

[57] However, in my assessment, all of these issues are appropriately considered in the context of the imminent trial. The plaintiffs’ basic proposition that copyright reposes in an Australian national (Mr Burden) who is capable, by virtue of Australia’s status under s 232 of the Act, of enforcing his rights in a New Zealand court, is not so completely untenable that ESR’s application should be resolved against the plaintiffs at this stage.

[58] Next, ESR claims that there were defects in the s 136 notice accepted by Customs as sufficient, and that the goods should now be released. The notice is in the following form:

IAN JAMES BURDEN of 11-13 QUEEN GUINEVERE’S PLACE, SOVEREIGN ISLANDS, QLD 4216, AUSTRALIA claims that the works set out at Schedule 1 to this Notice are works in which IAN JAMES BURDEN owns the copyright.

PLANTATION GROWN TIMBERS (INTERNATIONAL) LIMITED of 3rd Floor J&C Building, Wichams CAY1 Road Town, Tortola, British Virgin Islands is the exclusive licensee of the works set out at Schedule 1 to this Notice in which IAN JAMES BURDEN owns the copyright and is duly authorised to lodge this Notice.

The title of the works is as stated in the list of works attached as Schedule 1,

The full name of the author is IAN JAMES BURDEN. The author is still living. PLANTATION GROWN TIMBERS (INTERNATIONAL) LIMITED is the

The country and year of simultaneous publication of the work was Australia (2002), New Zealand (2002), United States (2002), Canada (2002), United Kingdom (2002) and Vietnam (2002).

The status of the author at the time of first publication was Australian citizen.

The chief executive of the New Zealand Customs Service is requested to detain any pirated copies of the works set out at Schedule 1 to this Notice that are in, or at any time come into, the control of the New Zealand Customs Service.

(including the Irish Coast Collection) said to be “protected” by the notice.

		Mr Pietras describes as “sales catalogue style photographs” which are too small, he says, for any Customs officer to make an assessment of
		“piracy”.
	4.	There is a notation at the bottom of the Irish Coast Collection photographs in terms “This collection is the intellectual property of ©
		Plantation Grown Timbers (International) Limited”. This shows that the copyright belongs to a company incorporated in the BVI and not
		entitled to protection under the Act.
[61]	Th	e current application is one exclusively under s 141(2) and Mr Hazel

emphasises that when ESR wrote to Customs pointing out alleged deficiencies in the notice, Customs’ response was to invite an application testing it under s 141(1). I note that ESR has at no stage made an application under s 141(1).

[62] Unlike an application under s 141(3), there is no requirement that either a s 141(1) or s 141(2) application be served on Customs. There is accordingly no more expectation that Customs would be engaged in a s 141(1) argument than a s 141(2) argument. In the event of success on either application the goods are to be released (s 140(1)(a) and (b)). That suggests to me that the issues a Court may consider in its discretion under s 141(2) do not necessarily exclude a review of the notice on which the detention is based. Obviously, no order can, in the context of a s 141(2) application, be made discharging the notice, but if a Court were nevertheless to come to the view that the notice was invalid, I see no reason in principle why it should be precluded from considering that issue in the context of a release application. With extant proceedings running under s 141(3) I consider, however, that a clear case of invalidity would need to be shown.

[63] The criticisms in relation to the alleged authorship within one year and adequacy of the images do not fall into that category. Whether the various furniture items were all designed in 2002 is a trial issue. And even if that date is incorrect and design extended into the following one or more years, I would not have considered

that went to validity. Rather, it would be the likely subject of an amendment to the notice.

[64] In terms of the images, reg 4 of the Copyright (Border Protection) Regulations 1994 provides that:

(1) Every person giving a notice under section 136(1) of the Act shall furnish to the Chief Executive evidence in support of the claim that an item is a work, or items are works, as the case may be, in which the person owns the copyright.

[65] The photographic material annexed to the notice was clearly sufficient for Customs to identify likely “piracy” in respect of the impounded goods. The case is not one where the evidence was self-evidently deficient.

[66] I accept as more problematic the apparent contradiction between Mr Burden’s claim to ownership of copyright in the body of the notice and the notation which appears under the photographs of the Irish Coast Collection. The © symbol in the statement indicates to me that the intellectual property being referred to is copyright, but I cannot exclude the proposition that what is being invoked is the licensing arrangements pleaded in paragraph 17 of the second amended statement of claim. Again these issues are in my view best addressed in the context of the full trial.

[67] For these reasons I do not consider that the “foregone conclusion” test

[68] If I am incorrect in my conclusion that balance of convenience considerations are not invoked on a s 141(2) application, then I would find that, overall, these favoured the plaintiffs.

[69] The single most important factor in this context is the proximity of trial. I accept that the decision will almost inevitably be reserved and there is always the possibility that appeal rights are exercised. In the event the plaintiffs fail but then appeal, a renewed application could be made under s 141(2). I adopt the same

approach as Fisher J in G Sucess Co Ltd in declining but not dismissing ESR’s application. That also acts as a form of security against any application by the plaintiffs to adjourn the trial or any other failure to prosecute their alleged rights with diligence.

[70] I take into account ESR’s argument that it is being deprived of sales (it says of approximately $30,000 per month, although its profit on this was not evidenced). That is, however, a matter readily calculable in damages.

[71] From the plaintiffs’ perspective there is not only the issue of lost sales, which should also be reasonably assessable, but the additional problem that the volume of product ESR wishes to introduce into the market may drive down the overall price of the plaintiffs’ furniture. Damages in that context may not be the mirror image of ESR’s gains (the plaintiffs are yet to elect between an account of profits and damages). That, in turn, opens up additional difficulties in quantification.

[72] I accept that that recoverability of damages or profits by the plaintiffs against ESR is a more straightforward proposition than the corollary. ESR is, on the evidence, clearly a substantial and profitable company and amenable to enforcement action. By contrast, no reciprocal enforcement arrangements exist for recovery of damages against either the second or third plaintiffs and evidence of the second plaintiff’s failure to pay costs of €73,693 awarded against it in Irish proceedings

suggests an unsatisfactory approach to its civil obligations.¹⁷However, Mr Burden

is an Australian citizen and deposes to substantial assets in that country. I accept his reference to a valuable property in Queensland as being unencumbered is incorrect but, in the parallel Burden & Ors v Debonaire Furniture Ltd proceedings,¹⁸he deposed that, although there was a registered mortgage on the title, he had forgotten about it because there was a zero balance outstanding.¹⁹Nevertheless, Brown J held,

_{and I agree, that there is no guarantee the Australian property would be
available as a}

source of ultimate payment (his Honour was concerned with costs but the same principle applies to damages). The balance of convenience in this respect favours ESR but it is not such as to overwhelm the other considerations and, in particular, trial proximity.

[74] I award costs to the plaintiffs on a 2B basis. If any difficulty arises in calculation, memoranda can be filed. They are to be exchanged in advance so as to limit areas of disagreement.

[75] Leave is reserved to ESR to bring its application on for hearing again in the event of failure on the part of the plaintiffs to prosecute their proceedings diligently.

UNDER	The Copyright Act 1994 and the Fair Trading Act 1986
IN THE MATTER OF	Alleged infringement of copyright; and brach of the Fair Trading Act
BETWEEN	IAN JAMES BURDEN First Plaintiff PLANTATION GROWN TIMBERS (INTERNATIONAL) LIMITED Second Plaintiff PLANTATION GROWN TIMBERS (VIETNAM) LIMITED Third Plaintiff
AND	ESR GROUP (NZ) LIMITED & ORS First Defendant continued over

Hearing:	10 June 2015 Further submissions received on 19 and 20 June and 3 July 2015
Counsel:	G Hazel and S P Rosanowski for the Plaintiffs A J Pietras for the First to Fourth Defendants Appearance of Fifth Defendant excused (abiding decision)
Judgment:	14 July 2015

	(a)	proceedings under s 141(3) or equivalent substantive proceedings have already been determined in favour of the defendants; or
	(b)	proceedings under s 141(3) have been abandoned; or
	(c)	the time limits under s 141(1)(e) have not been met; or
	(d)	the defendants can show, by an interlocutory application, that the plaintiffs do not have a seriously arguable case against them.
[32]	The	defendants seem to be relying on the last one. It will not be

High Court of New Zealand Decisions

Burden v ESR Group (NZ) Limited [2015] NZHC 1649 (14 July 2015)