Omnilab Media loses Federal Court appeal in VPF case

Three Australian judges have unanimously upheld a previous court decision against Omnilab Media and ex-Digital Cinema Network (DCN) director Michael Smith, determining that Smith had illegally passed DCN’s negotiation of VPF (virtual print fees) contracts to media outfit Omnilab.

On appeal all three justices on the Full Bench of the Federal Court agreed that: ‘Mr Smith, without the consent of DCN, diverted to … Omnilab … a business opportunity which belonged to DCN.’

Mr Smith’s actions were characterised by both the original trial judge and the appeal court judges as ‘fraudulent and dishonest’.

Martin Gardiner, Managing Director of DCN, said: ‘This judgement again vindicates DCN’s action against Michael Smith and Omnilab. It confirms the extent of Michael Smith’s illegal behaviours. The judgment also makes clear, as the original trial judge did, that Omnilab was not even a competitor in this space until Michael Smith passed on our valuable knowledge and contracts to them without our consent.’

The quashed appeal appears to end a long-running case that centred on a decision by the Independent Cinemas Association of Australia (ICAA) to employ an Omnilab company to continue virtual print fee (VPF) negotiations on its behalf, ending its original relationship with Digital Cinema Network (DCN), which began negotiating the VPF contracts for independent cinemas in 2008.

The ICAA intends to review the latest findings before determining its future course of action.

VPFs are rebates paid by US studios to help local cinemas upgrade from 35mm film to digital projection.