Take-Two Interactive Software, Inc v Anderson

by John Victor Nicholas

FEDERAL COURT OF AUSTRALIA

Take-Two Interactive Software, Inc v Anderson [2021] FCA 1024

File number(s):	NSD 1751 of 2018
Judgment of:	NICHOLAS J
Date of judgment:	27 August 2021
Catchwords:	PRACTICE AND PROCEDURE – application to set aside judgment resulting from respondent's failure to comply with self-executing order – where self-executing order entered with the consent of the parties – where no satisfactory explanation advanced for failure to comply with order – whether arguable defence demonstrated – whether respondent would suffer prejudice were application refused – leave granted for respondent to defend claims referable to causes of action for which an arguable defence demonstrated
Legislation:	Competition and Consumer Act 2010 (Cth) sch 2 Copyright Act 1968 (Cth) ss 10, 116AN, 116AO Copyright Amendment Act 2006 (Cth) Federal Court of Australia Act 1976 (Cth) s 37M Federal Court Rules 2011 (Cth) rr 5.21, 39.05
Cases cited:	Amirbeaggi as trustee of the bankrupt estate of John Mamdouh Hanna v Kamel (No 3) [2020] FCA 1202 Re Luck (2003) 203 ALR 1
Division:	General Division
Registry:	New South Wales
National Practice Area:	Intellectual Property
Sub-area:	Copyright and Industrial Designs
Number of paragraphs:	71
Date of last submissions:	28 July 2021
Date of hearing:	21 June 2021 and 21 July 2021
Counsel for the Applicants:	Mr R Cobden SC with Mr W Wu
Solicitor for the Applicants:	Bird & Bird
Solicitor for the Respondent:	Mr A Macinnis of StevensVuaran Lawyers

ORDERS

NSD 1751 of 2018

BETWEEN:	TAKE-TWO INTERACTIVE SOFTWARE, INC First Applicant
	ROCKSTAR GAMES, INC Second Applicant
AND:	CHRISTOPHER ANDERSON Respondent
ORDER MADE BY:	NICHOLAS J
DATE OF ORDER:	27 AUGUST 2021

THE COURT DECLARES THAT:

1. The respondent has infringed the first applicant's copyright by:

(a) reproducing or making a copy of the whole or a substantial part of one or more of the GTA V Works (as defined in para 1 of schedule 1 to these orders) in material form in Australia, other than in accordance with the terms of a current licence from the first applicant;

(b) authorising users of the software titled "Infamous" ("Infamous Mod") to reproduce in a material form or make a copy in Australia of one or more of the GTA V Works or a substantial part thereof, other than in accordance with the terms of a current licence from the first applicant.

2. The respondent has procured or induced breaches of, and otherwise interfered with the performance of, the following agreements between one or more of the applicants and users of the Infamous Mod:

(a) versions of the agreement titled "Limited Software Warranty and License Agreement"; and

(b) versions of the agreement titled "Terms of Service".

3. The respondent has, by distributing, selling and offering for sale the Infamous Mod, contravened s 18(1) of the Australian Consumer Law (Cth) ("the ACL").

THE COURT ORDERS THAT:

4. Pursuant to s 115(2) of the Copyright Act 1968 (Cth) ("the Copyright Act"), the respondent be permanently restrained from doing any of the following acts, whether by himself, his servants, agents or otherwise:

(a) reproducing in a material form, or making a copy of, in Australia any one or more of GTA V Works or any substantial part thereof;

(b) authorising another person to reproduce in a material form, or make a copy of, in Australia any one or more of the GTA V Works or any substantial part thereof,

where such act is done in circumstances in which one or both of the following apply:

(c) the act is done in conjunction with the use of the Infamous Mod or any other cheat software by the Respondent or by the other person in paragraph (b); or

(d) the act done is not in accordance with the terms of a current licence from the first applicant.

5. Pursuant to s 232(1) of the ACL, the respondent be permanently restrained, whether by himself, his servants, agents or otherwise, from:

(a) causing the applicants or any player of the video game Grand Theft Auto V, to receive false or misleading data about any multiplayer game in play, including data about the status and statistics of any other player or any other data,

(b) whether by means of the Infamous Mod or otherwise.

6. The respondent do all things necessary and desirable that are within his power to do to cause the Infamous Mod to be made permanently inoperable, including but not limited to permanently disabling any authentication service upon which the Infamous Mod relies.

7. The respondent delete and not restore or recreate, or permit restoration or recreation of, all copies of the Infamous Mod (including source code, compiled code, updates, drafts or unpublished versions) in his possession, custody, power or control.

8. The respondent file and serve an affidavit on or before 4.00pm on 17 September 2021, specifying and verifying:

(a) the actions he has taken pursuant to order 6; and

(b) the deletions he has made pursuant to order 7.

9. An account be taken of the profits made by the respondent as a result of the infringements referred to in declaration 1 above, and an assessment of the quantum of the interest thereon pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth).

10. Unless the parties agree on the quantum of profits and interest referred to in order 9 above, the proceeding be listed before Nicholas J on a date to be fixed in accordance with order 15(d) for further directions.

11. The respondent pay the applicants' costs in the proceeding to date (except those costs specifically referable to the applicants' ACL claim pleaded in paragraphs 57–60 and 64(a) of the statement of claim), in an amount as agreed or as determined in accordance with the lump-sum costs procedure in the Court's costs practice note GPN-COSTS.

12. The respondent have leave to rely upon the affidavit of Christopher Anderson affirmed 10 May 2021 at the trial of the issues identified in paragraph 15 below subject to any proper objection.

13. The respondent's interlocutory application dated 7 May 2021 be otherwise dismissed.

14. The respondent pay the applicants' costs of his interlocutory application, to be included in the costs referred to in order 11 above.

THE COURT FURTHER DIRECTS THAT:

15. The proceeding be set down for trial on a date to be fixed, in relation to the remaining aspects of the applicants' claims; namely:

(a) whether the respondent has engaged in actionable conduct under s 116AN(1) of the Copyright Act;

(b) whether the respondent has engaged in actionable conduct under s 116AO(1) of the Copyright Act;

(c) if the respondent has engaged in actionable conduct under either or both sections, what remedies should be granted under s 116AQ of the Act,

(together, "the TPM Matters"), and

(d) unless the parties agree on the quantum of profits and interest, the taking of the account referred to in order 9 above.

16. The applicants are to file and serve any evidence in reply in relation to the TPM Matters on or before 4.00pm on 17 September 2021.

17. The proceeding be referred for mediation by a Registrar of the Court to conclude on or before 15 October 2021.

18. The proceeding be listed for a case management hearing at 9.30am on 22 October 2021 to fix a date for trial.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Schedule 1 – GTA V Works

1. The GTA V Works means the following works in each Relevant Version of the GTA V Executable and GTA V Library Files:

(a) "computer programs" within the meaning of s 10(1) of the Copyright Act, including the computer programs embodied in:

i. the GTA V Executable (including the GTA V Core);

ii. the executable GTA V Library Files; and

iii. the GTA V Source Code;

(b) "artistic works" within the meaning of s 10(1) of the Copyright Act, including the artistic works embodied in the non-executable GTA V Library Files (such as the graphics and models referred to in paragraph 3 above);

(c) "cinematograph films" within the meaning of s 10(1) of the Copyright Act, being the aggregates of the:

i. visual images embodied in the GTA V Library Files' graphics and models, that are capable of being shown as moving pictures; and

ii. sounds embodied in the GTA V Library Files' sound effects, being sound-tracks associated with those visual images;

(d) "sound recordings" within the meaning of s 10(1) of the Copyright Act, being the aggregates of the sounds embodied in the GTA V Library Files' sound effects.

The meaning of GTA V Works is affected by paragraphs 2–4 below.

2. The GTA V Executable means the GTA V executable computer file "gta5.exe" in the GTA V software which:

(a) consists of object code that is the result of compiling and linking corresponding source code of the GTA V computer program ("GTA V Source Code") into a machine readable format;

(b) is copied onto the hard disk of the computer of a player of GTA V ("Player") during installation of GTA V;

(c) contains instructions that are run by the Player's computer during gameplay;

(d) runs when the Player wishes to play GTA V, causing it to be executed on the Player's computer;

(e) when executed on the Player's computer, causes certain code contained in the GTA V Executable to be copied to the random-access memory in the Player's computer (this code being the GTA V Core). The GTA V Core is necessary to allow the elements of the game currently being played by the Player.

3. The GTA V Library Files means libraries of executable and non-executable files in the GTA V software, comprising:

(a) graphics, being in-game artworks, textures and colours;

(b) models, being 3D models of in-game characters and objects;

(c) sound effects, being sound files associated with in-game characters, actions and objects; and

(d) object attributes and values being instructions that dictate the behaviour of in-game objects and their associated sound effects.

4. Since the initial publication of the PC version of GTA V, the second applicant has developed, and the first applicant has published, new versions of the GTA V Executable and GTA V Library Files as new features and downloadable content ("DLC"). A reference to the GTA V Executable or the GTA V Library Files in this schedule include a reference to each and every version of the GTA V Executable or GTA V Library Files (including DLC) developed by the second applicant and published up to and including the date of these orders by the first applicant since the initial publication of GTA V (each a Relevant Version).

REASONS FOR JUDGMENT

NICHOLAS J:

1 Before me is an interlocutory application filed by the respondent on 7 May 2021 seeking to, in effect, set aside judgment awarded to the applicants due to the respondent's default of a self-executing order made on 16 April 2021 pursuant to r 5.21 of the Federal Court Rules 2011 (Cth) ("the Rules").

2 The 16 April 2021 order required the respondent to file and serve any evidence he sought to rely on at the hearing of the originating application by 4.00pm on 23 April 2021 or notify the Court that no such evidence would be filed or else the applicants would have judgment against the respondent. No such evidence was filed, nor was any notice received by the Court that the respondent did not intend to file any evidence. The respondent now seeks to vary the date of the self-executing order nunc pro tunc (in effect to cure the default) or to have the judgment set aside with leave granted for him to rely on his affidavit affirmed on 10 May 2021 at the hearing of the proceeding.

BACKGROUND TO THE PROCEDURAL ORDERS

3 The proceeding was commenced on an urgent ex parte basis in September 2018 by originating application and a statement of claim. Ex parte relief was granted followed by interlocutory injunctions that remain in place. The details of those orders do not need to be addressed in these reasons.

4 In summary, the applicants' claims relate to the creation and distribution by the respondent of a computer program that is referred to in the evidence and this judgment as "the Infamous mod". Broadly, the Infamous mod allowed players playing a computer game known as Grand Theft Auto V ("GTA V") to gain certain advantages over other players by taking actions in-game that players who did not have the mod (or a similar mod) installed were unable to do. The applicants' allege that in developing, marketing and selling the Infamous mod the respondent induced players to breach their contracts with the applicants, infringed the applicants' copyright, circumvented the applicants' technological protection measures and access control measures (as defined in s 10 of the Copyright Act 1968 Cth) ("the Copyright Act")) and engaged in misleading and deceptive conduct. The respondent denies these allegations.

5 Procedural orders were made on 28 September 2018. These orders required (inter alia) that the respondent file and serve any defence on or before 19 October 2018. The time for the filing of the defence was first extended by consent on 22 October 2018 to 16 November 2018 and was further extended by consent on 19 November 2018, 20 December 2018 and 20 February 2019. The orders made on 20 February 2019 relevantly provided:

The Respondent is to file and serve any defence by 4pm on 26 February 2019, failing which, at the next case management hearing, the Respondent is to show cause, why judgment should not be entered pursuant to rule 5.23 of the Federal Court Rules 2011, on account of the Respondent's failure to comply with orders previously made in the proceedings in respect of filing a defence.

6 The respondent's defence was filed on 27 February 2019 with various orders made by consent extending the time for the applicants to file their reply to 7 June 2019. Some of this delay can be attributed to the respondent foreshadowing in correspondence the possibility that a further defence would be raised in an amended defence. At the time it was suggested that the amended defence would raise (inter alia) issues of waiver and estoppel relating to the operation of the End User Licence Agreement ("the EULA") and the Terms of Service ("the ToS") which are referred to in more detail later in these reasons. Orders were made on 16 May 2019 to enable to respondent to file an amended defence if he wished to do so. No amended defence was filed.

7 Orders were made on 13 November 2019 for the filing of affidavit evidence. Those orders required the applicants to file and serve their evidence in chief by 17 April 2020, the respondent to file and serve his evidence in chief by 17 July 2020, and the applicants to file and serve evidence in reply by 28 August 2020. These dates were later extended by consent to 12 June 2020, 17 September 2020 and 28 October 2020 respectively.

8 Most of the applicants' affidavit evidence-in-chief was filed and served on 12 June 2020. However, some confidential material was not served on the respondent until 7 July 2020 (approximately three and a half weeks out of time).

9 The time for compliance with order 3 of the 13 November orders (the date for the filing of the respondent's affidavit evidence) and order 4 (the date for the filing of the applicants' evidence in reply) were subsequently extended on 19 October 2020 to 4 December 2020 and 26 February 2021 respectively. The respondent did not file any affidavit evidence by that date. The proceeding was next listed for a case management hearing on 5 March 2021. On 4 March 2021, the Court received minutes of consent orders which were made that day including the following:

1. The time for the Respondent to comply with order 3 made on 13 November 2019, being that the Respondent file and serve his affidavit evidence in chief (including any expert evidence) on or before 17 July 2020, be further extended to 16 April 2021.

…

4. Pursuant to r 5.21 of the Federal Court Rules 2011 (Cth), and subject to any further order, unless the Respondent:

(a) files and serves evidence pursuant to order 1 above; or

(b) indicates in writing to the Court and the Applicants by 16 April 2021 that the Respondent does not intend to adduce evidence in chief in this proceeding,

then the Applicants have judgment against the Respondent, with remedies to be determined (see order 6(a) below).

…

6. The proceeding be listed for case management at 9.30 am on 29 April 2021 with a view to:

(a) in the event that the Applicants have judgment against the Respondent pursuant to order 4 above — providing directions for a hearing on remedies.

(b) in the event that the Applicants do not have judgment against the Respondent pursuant to order 4 above — setting the matter down for trial.

7. Liberty to apply on 3 days' notice, including in relation to order 4 above.

10 On the morning of 16 April 2021 the Court received an email from the respondent's solicitor requesting a one-week extension of the time within which his client was to file and serve his affidavit evidence. The email explained that the respondent's solicitors had sent a number of emails to the respondent but had not received any response. Emails sent by the respondent's solicitor to the applicants' solicitor indicated that it was unusual for the respondent not to respond and that the respondent's solicitor was concerned about his client's welfare. In response to the application for an extension of time, the applicants' solicitor said that her clients neither opposed nor consented to the proposed extension. I granted the request for an extension and made orders in the following terms:

1. The time for the Respondent to comply with order 3 of the orders made on 13 November 2019 be further extended to 4.00pm on 23 April 2021.

2. Pursuant to r 5.21 of the Federal Court Rules 2011 (Cth), and subject to any further order, unless the Respondent:

(a) files and serves evidence pursuant to order 3 made on 13 November 2019 as varied by order 1 above; or

(b) indicates in writing to the Court and the Applicants by 4.00pm on 23 April 2021 that the Respondent does not intend to adduce evidence in chief in this proceeding,

then the Applicants have judgment against the Respondent, with remedies to be determined (see order 6(a) of the orders of 4 March 2021).

11 The respondent did not file or serve any evidence by 23 April 2021 in accordance with the order 3 made on 13 November 2019 as varied including by the order made on 16 April 2021 ("the self-executing order"). Nor did the respondent's solicitor indicate in writing to the Court that he did not intend to adduce any such evidence. In the result the respondent failed to comply with the self-executing order. Subject to any further order, the applicants are entitled to judgment against the respondent with remedies to be determined.

12 There is nothing in the evidence to suggest that the respondent was not aware of the terms of the orders made on 4 March 2021 or 16 April 2021. Indeed, the self-executing order made on 4 March 2021 was made with the consent of the parties from which it can be inferred that the respondent provided instructions to his solicitor to consent to those orders.

13 The proceeding was next listed before me for a case management hearing on 29 April 2021. At that hearing the respondent's solicitor, Mr Macinnis, applied for an order varying the time for compliance with the self-executing order nunc pro tunc. I indicated that an interlocutory application should be filed accompanied by affidavit evidence explaining the reasons for the default. I also indicated that the affidavit should exhibit any affidavit evidence the respondent wished to rely upon at the hearing of the proceeding were the interlocutory application to be granted.

14 Following the case management hearing I made orders (inter alia) requiring the respondent to file and serve any interlocutory application together with supporting affidavit by 4.00pm on 7 May 2021. The respondent, Mr Anderson, filed his interlocutory application along with an affidavit made by him just before 4.00pm on 7 May 2021. Mr Anderson's affidavit was not signed or witnessed as required by the Rules, but the affidavit was subsequently affirmed by him on 10 May 2021. In my view, nothing turns on the fact that the affidavit served on 7 May 2021 was not affirmed until after that date.

15 The respondent's interlocutory application seeks the following orders:

1. An order that Orders 1 and 2 made on 16 April 2021 be varied nunc pro tunc to delete "23 April 2021" in each place occurring and to insert "7 May 2021" in place of each deletion.

2. In the alternative to order 1:

a. An order (in accordance with Note 2 to Rule 5.23 of the Federal Court Rules 2011 (Cth) setting aside the default judgment entered against the Respondent by reason of the operation of Order 2 of the orders made on 16 April 2021; and

b. An order that the Respondent have leave to rely upon the affidavit of Christopher Anderson affirmed on 7 May 2021.

16 The interlocutory application was first listed for hearing before me on 19 May 2021. That listing was subsequently adjourned to Monday, 21 June 2021 at the request of the respondent. There is nothing noteworthy about the adjournment itself, however, it was not until Friday, 18 June 2021 (approximately one-month after the original listing date) that a further affidavit to be relied on by the respondent in support of the interlocutory application was filed. This affidavit was affirmed by the respondent's solicitor, Mr Macinnis. His affidavit purported to reply to the affidavit evidence filed by the applicants, but most of its content is properly described as evidence in chief that sought to explain the respondent's default.

APPLICABLE PRINCIPLES

17 Rule 5.21 provides:

5.21 Self-executing orders

A party may apply to the Court for an order that, unless another party does an act or thing within a certain time:

(a) the proceeding be dismissed; or

(b) the applicant's statement of claim, or alternative accompanying document referred to in rule 8.05, be struck out; or

(c) a pleading of the respondent be struck out; or

(d) the party have judgment against the other party.

18 For the purposes of the Federal Court of Australia Act 1976 (Cth) ("the Act") and the Rules a judgment relevantly means a judgment or order, whether final or interlocutory.

19 The respondent seeks, in para 2 of his interlocutory application, an order "setting aside the default judgment" entered by reason of the operation of the self-executing order. I do not think it is correct to say that a default judgment has been entered against the respondent. In my view, the judgment which the respondent seeks to set aside is in fact the self-executing order which, in the events that happened (but subject to any further order), now entitle the applicants to have remedies determined for the copyright infringement and other causes of action referred to in their statement of claim. Accordingly, the interlocutory application is to be approached on the basis that the respondent seeks to have that judgment either varied or set aside with the consequence that the applicants would no longer have any present entitlement to have remedies assessed.

20 The applicants accept that the judgment is an interlocutory judgment and accordingly may be varied or set aside pursuant to r 39.05(c) of the Rules: Re Luck (2003) 203 ALR 1 at [4]. They do so on the basis that the order was expressed to be "subject to further order". However, that is not the only basis for concluding that the relevant order was interlocutory. It was interlocutory because it did not finally determine the rights of the parties.

21 The power contained in r 39.05(c) of the Rules must be exercised judicially and consistently with the overarching purpose of s 37M of the Act. Section 37M of the Act relevantly provides:

37M The overarching purpose of civil practice and procedure provisions

(1) The overarching purpose of the civil practice and procedure provisions is to facilitate the just resolution of disputes:

(a) according to law; and

(b) as quickly, inexpensively and efficiently as possible.

(2) Without limiting the generality of subsection (1), the overarching purpose includes the following objectives:

(a) the just determination of all proceedings before the Court;

(b) the efficient use of the judicial and administrative resources available for the purposes of the Court;

(c) the efficient disposal of the Court's overall caseload;

(d) the disposal of all proceedings in a timely manner;

(e) the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute

…

22 In assessing whether the power contained in r 39.05(a) should be exercised to set aside a judgment entered consequent upon the failure of a respondent to appear, it is necessary to consider whether the party seeking to set aside the judgment has demonstrated that there is a satisfactory explanation for their failure to appear and that there exists an arguable defence to the other party's claim: Amirbeaggi as trustee of the bankrupt estate of John Mamdouh Hanna v Kamel (No 3) [2020] FCA 1202 at [10]–[12] per Yates J.

23 The interlocutory application before me raises broader considerations because it concerns not merely a failure to appear, but a failure to comply with orders of the Court made with the express consent of the parties requiring affidavit evidence to be filed by a certain time and which, in the case of the self-executing order, expressly provided for the consequences that would follow (in the absence of some other order) in the event the order was not complied with.

THE PARTIES' SUBMISSIONS

24 In the present case it was submitted by Mr Macinnis for the respondent that Mr Anderson's default had been cured with the filing of Mr Anderson's affidavit, that his delay could be explained, and that the evidence gave rise to a "triable" defence. Mr Macinnis submitted that it would be unjust in those circumstances to prevent Mr Anderson from defending the proceedings.

25 The applicants' counsel submitted that the delay was significant and largely unexplained, and that the evidence of the delay was itself filed out of time. They submitted that Mr Anderson's evidence did not show any arguable defence. They submitted that the interlocutory application should be dismissed with costs.

CONSIDERATION

26 The question is whether the judgment should be either varied or set aside so as to relieve the respondent of the consequences of his default. There are, in my opinion, four main considerations relevant to the present application: first, the respondent's explanation for his default; second, whether the respondent has an arguable defence to the claims pleaded against him; third, what prejudice the respondent will suffer in the event that the orders sought by him are not made; and fourth, what prejudice the applicants will suffer in the event that the orders sought are made. Also relevant are broader considerations relevant to the interests of justice including the overarching purpose referred to in s 37M of the Act.

Explanation for the delay

27 Mr Macinnis submitted that the delay was caused by a combination of the following factors:

(1) The voluminous nature of the applicants' evidence and their delayed response to a request regarding the possible waiver of confidentiality to allow Mr Anderson to see some confidential material prior to the preparation of his affidavit;

(2) The respondent's poor financial situation which prevented him from organising an expert witness; and

(3) The respondent's representatives' inability to contact the respondent in the weeks leading up to the expiry of the self-executing order.

In support of these submissions the respondent relies on Mr Macinnis' affidavit of 18 June 2021 and some passages of Mr Anderson's affidavit of 10 May 2021. However, there is nothing in Mr Anderson's affidavit that provides any explanation for his failure to comply with the self-executing order or why he failed to contact Mr Macinnis in the period between 4 March 2021 and 16 April 2021 to provide him with instructions.

28 As the applicants' counsel submitted (and the respondent accepted) the question of confidentiality was resolved by correspondence between the parties on 5 November 2020. The date for the filing of the respondent's evidence had been at that time extended by consent to 4 December 2020 and was subsequently extended to 16 April 2021. Even if the confidentiality issues had delayed the respondent prior to this date, the confidentiality regime cannot account for the delay after the letter of 5 November 2020. Critically, the confidentiality regime had been settled between the parties before the self-executing orders were made.

29 Nor do I accept the respondent's submission regarding the volume of evidence filed by the applicants. All of the applicants' evidence was served by 7 July 2020. No issue was raised with the Court at that time (or at any time prior to the hearing of the interlocutory application) concerning the amount of material filed by the applicants. In circumstances where the respondent has had access to all of the material for over ten months I do not accept that the volume of material provides any explanation for his failure to comply with the self-executing order requiring his affidavit evidence to be filed first by 16 April 2021 and then by 23 April 2021.

30 Mr Macinnis submitted that the respondent's poor financial position contributed to the respondent's delay. In support of this submission the respondent relied on Mr Macinnis' affidavit. The highest that evidence can be put shows that Mr Anderson did not provide funds to his lawyers. It does not establish that Mr Anderson was unable to provide any such funds or that he was impecunious.

31 The affidavit of Mr Anderson does not add greatly to the submission. Mr Anderson's affidavit indicates that he is presently unemployed, and that he expects that he will owe money to the Australian Taxation Office. It also includes references to the balance of a PayPal account containing the proceeds he earned by selling the Infamous mod. It says nothing about his net financial position or whether he owns any other assets.

32 Further, the evidence on which Mr Anderson seeks to rely comprises a single affidavit which appears to have been drafted by himself. The fact that Mr Anderson may be impecunious does not explain the lengthy delay in preparing and filing that affidavit.

33 Mr Anderson's affidavit does not explain what he was doing during the period in which Mr Macinnis submitted Mr Anderson was "incommunicado" or why he was not communicating with his lawyer in the lead up to expiry of the self-executing order. While it appears from Mr Macinnis' affidavit that he tried to contact the respondent using the incorrect mobile number, it is equally apparent that Mr Macinnis had other methods to communicate with Mr Anderson, including by email. In circumstances where Mr Anderson was aware both of the self-executing order and the potential consequences if he were to fail to comply with it, the lack of any explanation in Mr Anderson's affidavit as to why he did not respond to Mr Macinnis is significant.

34 Notwithstanding the lack of a satisfactory explanation for the respondent's default, it is appropriate in the circumstances of this case to consider the evidence filed by the respondent for the purpose of determining whether it would be in the interests of justice to set aside the judgment.

Existence of an arguable defence

35 At the hearing of the interlocutory application, Mr Macinnis indicated that he had instructions that all evidence Mr Anderson wished to rely upon at the hearing was contained in Mr Anderson's affidavit. He submitted that, based on that evidence, the respondent had a "triable" defence and that to dismiss the respondent's application in those circumstances would be unjust.

36 Over the course of the hearing of the interlocutory application Mr Macinnis identified four arguments based on Mr Anderson's affidavit that he submitted gave rise to an arguable defence. In summary, the respondent's defence is that:

(1) When executing the Infamous mod no copy of the GTA V works was made by a user, and in creating the Infamous mod the respondent (and his associate(s)) did not copy any part of the GTA V works;

(2) The Infamous mod is not a circumvention device and, therefore, the respondent did not manufacture a circumvention device;

(3) The respondent lacked knowledge of the terms of the agreements between players using GTA V (with the Infamous mod installed) and the applicants and he therefore did not induce any breach of contract; and

(4) The respondent was not operating in trade or commerce, nor via a telecommunications device and his actions are therefore not captured by the Australian Consumer Law.

37 I will consider each of these propositions in turn remembering that the question is whether Mr Anderson has raised a triable issue rather than whether Mr Anderson is likely to succeed in his defence of the proceeding.

The authorisation issue

38 Mr Macinnis submitted that merely by running the Infamous mod an end user does not reproduce any part of the relevant copyright works. He further submitted that in making the Infamous mod no part of the GTA V works was reproduced by Mr Anderson. For those reasons he submitted that Mr Anderson did not infringe the applicants' copyright.

39 These submissions and the related sections of Mr Anderson's affidavit (even if accepted as correct) cannot give rise to an arguable defence because they do not answer the applicants' pleaded case.

40 The applicants' pleaded case is (in essence) that by using the Infamous mod players breached the applicants' EULA and the ToS such that they no longer had a licence to use the relevant GTA V copyright works. When a player then loads the GTA V application, that player reproduces the GTA V works in RAM without a licence and therefore infringes the applicants' copyright.

41 The evidence relied on by the respondent in support of his defence does not address this issue. It is not to the point that "[n]o copy of the … GTA V Works … was created in the memory of the user's computer just because they were running Infamous" or that "[n]o portion of the GTA V works was copied by Infamous". The key issue in relation to authorisation is whether the players (or end users) lost the benefit of their licence to use the GTA V works by installing and using the Infamous mod. If so, the end users infringed the applicants' copyright when they ran the GTA V application by making an unauthorised copy of the works in RAM and the respondent, who knowingly facilitated and encouraged their actions, is liable for his authorisation of those acts.

42 The first of the respondent's arguments does not rise to the level of an arguable defence.

The circumvention device issue

43 In his affidavit, Mr Anderson admits that the Infamous mod interfered with what he refers to as Real Time Memory Analysis ("RTMA") and Telemetry which comprise tools used by the applicants to detect cheating players. In his affidavit Mr Anderson otherwise denies circumventing other access control mechanisms.

44 On the evidence before me, there is nothing to indicate whether the anti-cheat tools the respondent admits he interfered with (or circumvented) are technological protection measures within the meaning of s 116AO (as defined in s 10) of the Copyright Act. Mr Anderson's affidavit stated that "[t]he taxonomy of technological protection measures is somewhat malleable, and it not my intent to assert the technological protection measures described … below are necessarily [access control technological protection measures] and [technological protection measures] (respectively) if the applicant's [sic] opine otherwise".

45 In his affidavit Mr Anderson states somewhat cryptically that:

My descriptions of the various elements of what the applicants claim as TPM and AC TPM does constitute an admittance that any elements so described were employed for the purpose of copyright protection and are therefore TPM or AC TPM in the legal sense.

46 On the evidence before me there is nothing to indicate whether the anti-cheat tools the respondent admits he interfered with (or circumvented) are access control technological protection measures as defined in s 10 of the Copyright Act. In order for the anti-cheat tools to come within that definition, it would be necessary that they, in the normal course of their operation, control access to copyright works. Based on Mr Anderson's description of the anti-cheat tools, they do not control access to the work. I therefore accept that the respondent has, at least on the evidence before me, an arguable defence to the claims made against him under ss 116AN and 116AO of the Copyright Act.

The knowledge issue

47 Mr Macinnis submitted that the respondent did not have knowledge of the particular terms of the agreements entered into between the applicants and the end users who used the Infamous mod. He submitted that, lacking such knowledge, the respondent could not knowingly induce a breach of contract and could not be liable for copyright infringement by authorisation. He also submitted that the applicants did not enforce the relevant contractual terms by allowing players who used unauthorised mods (including the Infamous mod) to continue playing GTA V. He submitted that the applicants therefore waived the related terms of the agreements.

48 The evidence relied on in support of this latter submission appears in Mr Anderson's affidavit at [14]–[16] where he states:

14. Players who cheat do not have their license to Grand Theft Auto V terminated.

15. During my considerable involvement in the GTA V player community, I have never heard of anyone having their permission to play GTA V denied, or by extension, having their license revoked.

16. In addition to previously mentioned examples confirming this policy, there are numerous additional official messages published by Rockstar confirming this

…

49 The argument that the applicants waived conditions of the EULA or the ToS is not pleaded in the respondent's defence. A defence to that effect was foreshadowed earlier in this proceeding and orders were made to allow the respondent to file an amended defence. He did not do so. No leave has been sought to amend the defence to allege that the applicants expressly or impliedly waived any terms of the EULA or the ToS.

50 Mr Macinnis also submitted that:

… there were so many combinations and permutations of the end user licence agreement and the terms of service, that we were not in a position to be aware at a specific time of the terms of the contract, and therefore, that element of inducing breach of contract is not made out …

51 Counsel for the applicants submitted that any variations between the particular agreements (in relation to terms barring cheating or the use of unauthorised mods) were immaterial. He submitted that all versions of the EULA and the ToS over the relevant period contained a term or terms that barred players from cheating or using unauthorised mods. He further submitted that Mr Anderson must have been aware of the substance of those terms and that the argument put forward by Mr Macinnis is untenable. This submission was (in part) based on the fact that Mr Anderson had himself played GTA V and in doing so must have accepted the EULA and the ToS prior to downloading and launching the GTA V application.

52 The relevant evidence appears at [8]–[10] of Mr Anderson's affidavit where he says:

8. The version of the EULA and Terms of Service shown before downloading and installing the latest GTA V installer consist of a single undated document, viewable in a small window or optionally printable, and does not represent the current versions of either the EULA or the Terms of Service. those documents and are undated. [sic]

…

8.1. … The contents appear to be derived from license documents consistent with similar documents dated on or around October 2013, rather than the more recent versions updated on 22 January 2018 which came into force approximately 5 months before the applicants signed and released this installer.

8.2. The same outdated and undated documents are included in later releases, including releases made after the operative license agreements were again updated on 18 September 2018, which is the same date that this matter was filed, are therefore not mentioned in the applicant's claim.

Entry into the EULA and the Terms of Service (GTA V's Online Mode)

9. The version of the EULA and Terms of Service shown before a user first enters GTA V's Online Mode – as distinct from the previously mentioned document which is shown during installation of GTA V itself – are also not the current versions of those documents, are undated, and cannot be saved to disk, printed, or viewed in any fashion outside the limited game interface provided.

9.1. Copies of these documents were obtained on or around 15 January 2019, by taking more than 100 screenshots, identifying, and separating each paragraph, inverting the colours, then pasting each paragraph into a Microsoft Word document.

…

Alternative EULA and Terms of Service documents

10. I am informed and believe that there have been at least six versions of Rockstar's "End User License Agreement" ("EULA") and the Rockstar's "Terms of Service" ("TOS") have been operative since GTA V was first released on 17 September 2013 and when I became aware of the applicant's claim.

…

53 As the evidence of Mr Anderson indicates, there were a number of different versions of the EULA and the ToS that applied over the relevant period when the Infamous mod was operating. However, what Mr Anderson's affidavit does not contain is any suggestion that he was unaware of the existence or content of the EULA or the ToS.

54 Relevant extracts from the EULA and the ToS appear as an annexure to the affidavit of Mr Anderson. There does not appear to be any disagreement between the parties as to the relevant terms which include the following:

October 2013 EULA

LICENSE CONDITIONS

You agree not to:

…

cheat or utilize any unauthorized robot, spider, or other program in connection with any online features of the Software;

…

Except as otherwise prohibited by applicable law, Licensor may limit, suspend, or terminate the license granted hereunder and access to the Software, including, but not limited to, any related services and products, at any time without notice for any reason whatsoever.

…

This Agreement automatically terminates when …

or upon your failure to comply with terms and conditions of this Agreement, including, but not limited to, the License Conditions above.

October 2013 Terms of Service

…

CODE OF CONDUCT

…

you will not cheat or utilize any unauthorized robot, spider, or other program in connection with the Online Services …

January 2018 EULA

LICENSE CONDITIONS

You agree not to, and not to provide guidance or instruction to any other individual or entity on how to

…

cheat (including but not limited to utilizing exploits or glitches) or utilize any unauthorized robot, spider, or other program in connection with any online features of the Software

…

Licensor may limit, suspend, or terminate the license granted hereunder and access to the Software, including, but not limited to, any related services and products, on thirty days' notice, or immediately for any reason beyond the Company's reasonable control or if you breach any term of an agreement or policy governing the Software, including this Agreement, Licensor's Privacy Policy and/or Licensor's Terms of Service.

…

This Agreement automatically terminates when … or upon your failure to comply with terms and conditions of this Agreement, including, but not limited to, the License Conditions above.

January 2018 Terms of Service

CODE OF CONDUCT

…

you will not cheat or utilize any unauthorized robot, spider, or other program in connection with the Online Services

…

you will not provide assistance, guidance, or instruction to any other individual or entity regarding any of the above.

55 The respondent has failed to establish that he was at the relevant time unaware of these terms, or that he has an arguable defence to any of the applicants' claims based on any such lack of knowledge. All versions of the EULAs and the ToS that applied during the relevant period include terms barring players (or users) from cheating or using unauthorised mods.

The trade and commerce issue

56 The trade and commerce issue is relevant to two alternate claims made by the applicants against the respondent. The first, which is pleaded in [57]–[60] of the statement of claim, alleges that end users of GTA V were when playing the game doing so in trade or commerce. Neither party made any submissions directed to the strength of this claim and it is one in respect of which the respondent would most likely have a strongly arguable defence. As will be discussed later in these reasons, the applicants have indicated that they no longer press this aspect of their ACL claims.

57 The second way in which the misleading and deceptive conduct is put in [61]–[64] of the statement of claim is founded on the proposition that the respondent was himself engaged in trade or commerce, and that by supplying the Infamous mod to end users without warning them that their use of it might breach their EULA and ToS with the consequence that any further playing of GTA V by them may give rise to liability for copyright infringement. The respondent's liability for misleading and deceptive conduct is said to result from his failure to warn end users who he supplied the Infamous mod to of that possibility.

58 The respondent submitted that the respondent was not operating "in trade or commerce" or over a telegraphic or telephonic service when he designed and sold the Infamous mod and as such the claims pursued by the applicants under sch 2 of the Competition and Consumer Act 2010 (Cth) must fail.

59 Counsel for the applicants submitted (in short) that the respondent had accepted that he was operating in trade or commerce and by way of an internet or telephone service in his defence. Further he submitted that the size of the respondent's operations and its nature meant that he was operating in trade or commerce.

60 In his affidavit, Mr Anderson accepts that he (and his team) marketed and sold the Infamous mod from 2017 to 2018, and that over this period he received payments for Infamous via his personal PayPal account. In that time, the total revenue that flowed into Mr Anderson's PayPal account relating to the Infamous mod (on Mr Anderson's calculations) was $268,919.77 of which $158,782.39 was paid out as "wages" with hosting expenses and refunds totalling another $28,610.42. The remaining $81,526.96 is recorded by Mr Anderson as his profit from the venture.

61 Based on Mr Anderson's calculations the evidence reveals that he received a significant revenue stream from the Infamous mod. The evidence further reveals that the Infamous mod was marketed in various internet forums and that he paid "wages" to other members of his development team. These factors all weigh against an argument that Mr Anderson was not operating in trade or commerce at the relevant time. On the evidence contained in Mr Anderson's affidavit there is no arguable defence that Mr Anderson was not operating in trade or commerce at the relevant time.

Prejudice

62 The prejudice to Mr Anderson in the event that the self-executing order is not varied or set aside is that he will be precluded from defending the proceeding. However, this presupposes that he has an arguable defence to the various claims made against him. I am not persuaded that Mr Anderson has any arguable defence to any of the other claims made by the applicants with the exception of those based on ss 116AN and 116AO of the Copyright Act.

63 So far as the applicants are concerned, they are well resourced corporations which, it may be inferred, derive substantial income from the GTA V works. The prejudice they would suffer in the event that the self-executing order was varied or set aside to allow Mr Anderson to defend the proceeding is that they would be required to continue to litigate against Mr Anderson in circumstances where he has on his evidence no arguable defence to most of the applicants' claims in circumstances where Mr Anderson claims to be impecunious.

64 I do not suggest the prejudice that will be suffered by the applicants is substantial but I do think it is certainly greater than that which would be suffered by Mr Anderson in the event that neither of the orders he seeks is made.

Other considerations

65 The fact that Mr Anderson's affidavit evidence has now been filed is a significant matter to weigh in the balance when determining whether to make either of the orders he seeks. However, it is also relevant that the evidence that he has filed fails to establish an arguable defence in relation to most of the applicants' causes of action, and reflects what appears to be a misunderstanding of the case pleaded against him.

DISPOSITION

66 I am not persuaded that it is in the interests of justice to make an order varying or setting aside the self-executing order made on 16 April 2021.

67 The applicants are entitled to declaratory and injunctive relief in an appropriate form for copyright infringement and also, subject to proof, any applicable pecuniary remedy. I note that I was informed at the hearing of this interlocutory application that the applicants have previously elected for an account of profits and that they do not seek any other pecuniary remedy. The applicants are also entitled to declaratory and injunctive relief in an appropriate form for unlawful interference with contractual relations.

68 In relation to the claims for misleading and deceptive conduct, the applicants have informed me that they no longer press the case pleaded in paras 57–60 and 64(a) of the statement of claim. In those circumstances, there will be no declaration based on the allegations contained in those paragraphs. However, in my view there should be a declaration made in respect of the applicants' conduct as pleaded in paras 61–64 of the statement of claim.

69 My present view is that it would not be appropriate to grant the applicants any relief for contravention of either s 116AN or s 116AO of the Copyright Act. On the very limited evidence before me, I am not persuaded that the applicants have shown that they are entitled to any relief for contravention of either of those sections. I am not disposed to grant the applicants the declaratory or injunctive relief they seek in the absence of further evidence which it will be open to them to call at a trial of the proceeding confined to the issues arising under s 116AN and s 116AO of the Copyright Act and the quantification of the applicants' claims for pecuniary relief.

70 In relation to costs, the respondent should pay the applicants' costs of the proceeding to date as taxed or agreed except such costs referable to the claims made at paras 57–60 and 64(a) of the statement of claim.

71 Orders accordingly.

I certify that the preceding seventy-one (71) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Nicholas.

Associate:

Dated: 27 August 2021