Edmonds Judd

Business Briefs

Business Briefs

Eminem – importance of IP indemnities in agreements

The Court of Appeal[1] has ruled that the National Party must pay Eight Mile Style, the production company of prominent rapper Eminem, damages of $225,000 for breaching the copyright of Eminem’s song ‘Lose Yourself’. This decision highlights the importance of including intellectual property (IP) indemnity clauses in a contract.

An IP indemnity is designed to protect against loss for a breach of another’s IP rights. In this case, the National Party had bought the track ‘Eminem Esque’ to use in its 2014 election campaign advertisements. It relied on assurances from the licensor that it was not breaching copyright. The court found that using the track was, indeed, a breach of copyright.

A well-drafted IP indemnity clause in the agreement between the National Party and the licensor may have enabled the National Party to seek to recover its loss from the licensor.

Mainzeal directors’ appeal denied

A recent application by the directors of Mainzeal to have their damages and costs reduced has been denied by the High Court[2].

In 2018, Mainzeal’s directors were found to be in breach of their duties under the Companies Act 1993, relating to their dealing with the company’s debts and its insolvency. The appeal by the directors was to have the amount of damages reduced, arguing that the losses by the company were overestimated at the starting point. In the same claim, the liquidator also counter-claimed that the losses were underestimated when measured by the judge. The judge accepted both claims as being valid, but ultimately determined that the two claims cancelled each other out; the appeal was dismissed.

The directors remain liable for approximately $6 million each, as well as one director who is liable for $18 million. The directors have appealed to the Court of Appeal.

If you are a director, it’s important to know and understand your obligations and responsibilities to the company and
to shareholders.

Federated Farmers wants tougher labelling of plant-based products

Innovation has seen a number of plant-based meat alternatives grow in popularity. These plant-based products often use terms such as ‘milk, ‘patty’ or ‘steak’ to label their products. European authorities are currently looking at whether such terms should be restricted to use with animal-based products only. There is a similar movement in Australia to prevent almond and soy-based products being labelled as ‘milk’.

Here in New Zealand, Federated Farmers has indicated that it may push the government to follow suit, depending on the success of similar movements overseas.

HELL Pizza found itself in hot water with consumers after failing to disclose to customers that its ‘Burger Pizza’ used plant-based meat alternative, Beyond Meat, in its toppings. Such cases raise questions under the Fair Trading Act 1986, which prohibits ‘misleading or deceptive conduct’ in trade.

The success of overseas movements may have ramifications for local producers of plant-based products wanting to export their goods. It may also influence our government to toughen its stance on the labelling of plant-based products.

New regulations impose licensing regime for insolvency practitioners

The Insolvency Practitioners Regulation Act 2019 and the Insolvency Practitioners Regulation (Amendments) Act 2019 were passed in June and introduce new regulations and duties for insolvency practitioners to come into force in stages over the next year.

The Regulations will require all practitioners to obtain a licence and meet minimum standards as set out by the Registrar of Companies. Those who are already accredited under CAANZ or RITANZ will be provisionally considered ‘Licensed Practitioners’ when the licensing regime comes into force by June 2020. All practitioners will then have until October 2020 to apply for a licence from an accredited body.

If a practitioner accepts an appointment as liquidator for an insolvent company, but does not have a licence, they will be committing an offence and could be liable for a fine of up to $75,000. Additionally, if practitioners do not report serious problems about an insolvent company, including offences committed by shareholders, directors and the company itself, the practitioner could be liable for a fine of up to $10,000.

The Regulations also disqualify directors, creditors, auditors and/or receivers of the insolvent company (or a related company) from being appointed as its liquidator. An exception applies where a practitioner has only provided professional services to a company regarding solvency.

These are just some of the changes that the Regulations are designed to make over the next year in an attempt to improve regulation of the industry. Practitioners have limited time to get up to speed with the changes to comply with the new regime.

[1]    New Zealand National Party v Eight Mile Style, LLC [2018] NZCA 596.
[2]    Mainzeal Property and Construction Ltd (in liq) v Yan [2019] NZHC 1637.