Appeal Court overturns $4.1m award in asparagus grader copyright case
The Court of Appeal has overturned a High Court judgment which awarded Waikato company Oraka Technologies $4.1 million in damages in a copyright case involving an asparagus grading machine.
Oraka Technologies owner Michael Schwarz developed the world's first automatic asparagus sorter, known as the Oraka Grader, in the early 1980s.
The $200,000 machines, using electronic cameras, computers and specialised software to sort asparagus spears slashed companies' labour costs by between 30 and 50 percent.
In developing the machine, Schwarz asked Napier Tool & Die to prepare drawings for a cup that transported the asparagus for the Oraka Grader, and began manufacturing it for Oraka Technologies.
After Schwarz suffered a heart attack in 2000, his two adult children established a company called Oraka Graders, which has since manufactured and sold the machine.
However in 2001, businessmen Paul Daynes and Gordon Robertson set up a company in competition with Schwarz and Oraka. Their company, Geostel Vision, also used Napier Tool & Die to manufacture and sell a grading machine.
Robertson had been a sales agent for Schwarz and Daynes had worked on the software used by the Oraka grader.
The Court of Appeal in 2013 found that Daynes, Robertson, Geostel and Napier Tool & Die copied part of the machine, and a High Court hearing this year awarded Oraka Technologies $4.1m .
In the latest twist in the case, the Court of Appeal heard an appeal against the damages award.
Justices Stephen Kos, Christine French and Rhys Harrison set aside the award, on the grounds that Schwarz did not have any shareholding interest in Oraka Graders, the company his children had established to continue the business of Oraka Technologies.
"As a general rule, a party is only entitled to compensatory damages for losses that party has itself suffered. It cannot recover damages for loss suffered by a third party," they determined.
They said the High Court decision had awarded compensatory damages to the copyright owner for losses which were the losses of another separate legal entity.
Justice Kos and French said the case "cries out for a remedy. The difficulties facing the respondents are not, however, a failing of the law. They could have been avoided had there been a proper focus at the outset on the separate legal entities and the available remedies".
The two justices referred the case back to the High Court, so the amount of damages could be determined on the basis of a notional licence fee payable for each infringing use from the start of the infringement period to the expiry of Oraka Technologies' copyright. Justice Harrison disagreed, saying "the courts' resources are not infinite and have been more than proportionately expended on this contest".