G-STAR RAW C.V. v JEANSWEST CORPORATION (NEW ZEALAND) LTD [2013] NZHC 2461

G-STAR RAW C.V. v JEANSWEST CORPORATION (NEW ZEALAND) LTD [2013] NZHC 2461 [19 September 2013]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV 2011-404-3243[2013] NZHC 2461BETWEEN G-STAR RAW C.V.First PlaintiffG-STAR AUSTRALIA PTY LTDSecond PlaintiffAND JEANSWEST CORPORATION (NEWZEALAND) LTDDefendantHearing: 19 September 2013Counsel: D L Marriott for PlaintiffsA W Johnson for DefendantJudgment: 19 September 2013(ORAL) JUDGMENT OF HEATH JSolicitors:James & Wells, AucklandMartelli McKegg, AucklandIntroduction[1] G-Star Raw C.V. (G-Star), is a Dutch company that carries on business around the world as a clothing manufacturer and merchant. G-Star Australia Pty ltd is the exclusive distributor of G-Star branded products in Australasia. Together G- Star and the Australian company sue Jeanswest Corporation (New Zealand) Ltd (Jeanswest) for alleged copyright infringement in respect of the sale in New Zealandof denim designer jeans known as "5620 Elwood". These are part of a range ofElwood jeans.[2] I am dealing today with a number of interlocutory issues that require determination before the trial begins.[3] The cause of action based on infringement of copyright is premised on G-Star being the owner of copyright in the original artistic works. They are the original design drawings and manufacturing drawings for the "5620 Elwood" jeans. Jeanswest responds to the claim by asserting that no copyright subsists or, if it does exist, is of such limited scope that the alleged copyright works form part of the existing state of art and conform to existing trends of fashion. Jeanswest further states that the alleged copyright works involve limited (or no skill) and judgment in their creation To that extent, the particulars identified in its Statement of Defence are said to be common place and to lack qualities necessary to attract copyright protection.[4] That is but a broad and incomplete summary of the nature of the liability issue in this proceeding. The two critical issues involve (a) ownership of copyright in the original artistic works and (b) whether Jeanswest knew or had reasonable grounds to believe that copyright was vested in G-Star, at the time its jeans were sold.[5] In that regard, Jeanswest admits importing, distributing and selling various jeans in New Zealand, including ones named "Dean Biker Slim", and supplying them to a Jeanswest retail store in Christchurch. It says that such supply was limited to 63 pairs of the jeans.The original artistic works[6] The original design and manufacturing drawings no longer exist. They are thought to have been lost at some time in the past.[7] G-Star alleges that the person who developed the original artistic work was Mr Pierre Morriset, who is presently resident in France. At relevant times he was employed by another company (Depéche Hommes BV) which is said to have transferred the copyright to G-Star under an agreement dated 23 May 1995.[8] Mr Morriset's evidence is central to the nature of the design. His evidencewill be that he created the jeans known as "Elwood" in August 1995. He explainsthe circumstances in which the idea came to him and the five key design elements said together to give rise to the copyright works.The video-link application[9] As previously indicated, Mr Morriset is resident in France. He is said to be elderly and infirm. There is some evidence before me to suggest that he has suffered a stroke. A note from a medical practitioner in France, duly translated, provides support for the proposition that he should not travel to New Zealand to give evidence on account of his current state of health.[10] G-Star applies for an order that Mr Morriset's evidence be taken by video- link to France.1 The application is made very late. The trial is due to start next Monday, 23 September 2013, although, for reasons to be outlined later, that has been delayed one day.[11] There is nothing before me at present to identify the place in France from which a video link could be made available for Mr Morriset to give evidence, the hours it would be necessary for this Court to sit, given the time difference betweenNew Zealand and France and Mr Morriset's state of health, the way in whichdocuments and physical exhibits could be put adequately to Mr Morriset and who would be present when he gave his evidence from France.1 Evidence Act 2006, ss 103–105.[12] In addition, while Mr Morriset does speak English, he is not sufficiently proficient (I am told) in that language to enable him to give evidence in it. That means that an interpreter will also need to be engaged to interpret Mr Morriset'sevidence from French into English, and similarly with the questions put to him.[13] It is now well established that a good quality video link does not impinge significantly on the ability of a party to cross-examine the witness. The factors that are to be taken into account have been discussed in a number of authorities. All consider that, provided appropriate safeguards are put into place, no prejudice will be caused to the party required to cross-examine the witness. In particular, I refer to the judgment of Stevens J in Deutche Finance Ltd v Commissioner of Inland Revenue2 and to Allan J's more recent judgment in Yang v Chen.3[14] Although the evidence is sparse and the application is made late, with little or no explanation of the time at which Mr Morriset's condition came to the attention ofG-Star, the nature of Mr Morriset's complaint and the nature of the issue he isrequired to address, in my view, point towards a need for the evidence to be taken by video link. However, I am not prepared to make an order to that effect today. It will be necessary for significant steps to be taken overnight to finalise the arrangements to be put into place.[15] I propose to adjourn the hearing until 3.30pm tomorrow on the basis that a memorandum be filed by counsel for the plaintiffs, no later than 2pm tomorrow, identifying (in as precise terms as possible) the practical steps that need to be put in place to enable a video link to take place.[16] Counsel should consider in the context of their relevance to this particular case the protocols identified by Allan J in Yang v Chen4 and the factors to which I earlier referred.52 Deutche Finance Ltd v Commissioner of Inland Revenue (2007) 18 PRNZ 710 (HC).3 Yang v Chen HC Auckland CIV-2007-404-1751 13 May 2010, at paras [45]–[53].4 Ibid, at para [78].5 See paras [11] and [12] above.[17] Both counsel should discuss these issues prior to completion of a memorandum, to ensure that aspects of the procedure of concern to Jeanswest are adequately addressed. To the extent that G-Star may regard any particular concerns as unwarranted, I will hear argument on that tomorrow.[18] So far as an interpreter is concerned, I would prefer the interpreter to be engaged by this Court and to be sworn and to interpret what was said from France accordingly. Consideration will need to be given to whether a separate interpreter or translator would need to be in France where the evidence was being taken, to deal with any issues arising from the terms of documents to be put to the witness. Arrangements should be made to procure the services of a qualified interpreter through the New Zealand Society of Translators and Interpreters.[19] The application for Mr Morriset's evidence to be taken by video link isadjourned until 3.30pm tomorrow, on the terms outlined.Interrogatories[20] The next issue concerns an application by G-Star for leave to issue interrogatories against Jeanswest. While it may seem very late for an application of that type to be made, it is explained by the fact that it arises out of orders for discovery that were made by Venning J as recently as 26 August 2013.6[21] Two issues arise out of documents disclosed by Jeanswest.[22] The first concerns disclosure of the existence of a "freelance pattern-maker"who appears to have been working for Jeanswest, or an associated Australian company, in 2009. The document in issue is described in an affidavit of documentssworn on behalf of Jeanswest on 27 August 2013 in response to Venning J's orders asbeing one of Jeanswest Corporation Pty Ltd. The document is said to have come into existence on 27 November 2009. G-Star seeks to interrogate Jeanswest and, in effect, two Australian companies, Jeanswest Corporation Pty Ltd and Jeanswest Wholesale Pty Ltd. The issue appears to be one of imputed knowledge. That being6 G-Star Raw C.V. v Jeanswest Corporation (New Zealand) Ltd [2013] NZHC 2172, at para [11](a) and (b).so, something in the nature of an agency arrangement would need to be established for knowledge held by a third party to be imputed to Jeanswest. Knowledge is an important factor in the context of the contest as to ownership of copyright works and whether it was breached.[23] I am not prepared to grant leave for interrogatories to be asked in the terms stated in paragraph 5.1 of the current draft. I would be prepared to direct that questions be asked of the type raised in that part of the draft interrogatories provided the questions were limited to the knowledge of Jeanswest, or any person or entity acting on its behalf when dealing with the freelance pattern-maker. It will be necessary for the questions to be re-cast. Unless the parties can agree for information to be provided without the need for an order, I will consider its terms at 3.30pm tomorrow on receipt of a further draft.[24] The second aspect concerns a comment made by the solicitors for Jeanswest in a letter dated 28 August 2013 to the solicitors for G-Star. It advises in relation to communications to and from Jeanswest Corporation Pty Ltd, that they had been advised there were no such documents. Given the relationship that plainly exists between Jeanswest and Jeanswest Corporation Pty Ltd (for example, documents relating to the latter have already been discovered by the former) I consider it is appropriate to grant leave for Jeanswest to be interrogated on the questions set out in paragraph 5.2(a)–(d) (inclusive). Leave is granted for that purpose An answer to the interrogatories shall be provided no later than 9am on Monday 23 September 2013.Trial issues[25] I deal now with a number of trial issues raised by Mr Johnson, on behalf of Jeanswest. They were helpfully identified in a memorandum provided to the Court on 17 September 2013 to which (also helpfully) the solicitor for G-Star responded on the same day.(a) Additional discovery by G-Star[26] The first issue concerns the extent of discovery made by G-Star in response to the orders for discovery made against it by Venning J on 26 August 2013. MrJohnson has referred to correspondence to suggest that G-Star has not complied with the order. No affidavit verifying discovery was required by Venning J and none has been filed.[27] I consider that it is necessary for a duly authorised agent of G-Star to file and serve an affidavit setting out the documents in G-Star's possession or control, and those that have previously been in the plaintiff's possession or control that fall within the state of art order made by Venning J.7 That affidavit shall be filed and served by 9am on 23 September 2013.(b) Admissibility[28] The second issue concerns the relevance of a separate jean, known as the"Elwood 5864 Anniversary Jean", as evidence in the proceeding. Following discussions between myself and counsel it has been agreed that those jeans will be provisionally admitted into evidence as part of G-Star's case. The question ofrelevance may be debated later if objection were taken by Jeanswest to relevance, either during the trial or in final submissions.(c) Pleadings[29] The third point relates to the current state of the pleadings. The case will proceed based on the Second Amended Statement of Claim which G-Star does not propose to seek leave to amend. A Statement of Defence to that document has been filed. I direct the Registrar to remove from the Court file, and return to the solicitors for G-Star, the Third Amended Statement of Claim on the Court file, for which leave to file was refused by Venning J.(d) Trial date[30] Because of the number of issues yet to be resolved, I adjourn the hearing to begin at 10am on 24 September 2013. The hearing will be completed for that week at 3.30pm on Thursday 26 September 2013. It will resume again at 10am on 30 September 2013, with the whole of that week available to complete the case.7 Ibid, at para [11](a) and (c).Costs[31] So far as costs are concerned, all costs in relation to the video-link application will be borne by G-Star, given the lateness with which the issue has been raised. That includes costs relating to the engagement of an interpreter and to the establishment of the video-link for the purposes of Mr Morriset giving evidence.[32] It will be necessary for counsel to discuss the apportionment of costs between those relating to the video-link application and others. Should any judicial directions be required leave is reserved.[33] So far as the video-link application is concerned, costs are awarded on a 2B basis together with reasonable disbursements. Both to be fixed by the Registrar. Those costs will include costs to be incurred in relation to the hearing scheduled for 3.30pm tomorrow.[34] All other costs in relation to the interlocutory applications with which I have been dealing are reserved, to be dealt with as costs in the cause on delivery of a judgment on the merits.______________________________P R Heath J