Omnilab Media has lost its Federal Court appeal against an earlier decision that it knowingly assisted a former Digital Cinema Network director to breach the Corporations Act.

It appears to conclude 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). The VPFs are paid by US studios to help local cinemas upgrade from 35mm film to digital projection.

DCN – under directors Martin and James Gardiner – started legal proceedings against Omnilab and former DCN director Michael Smith in September, 2010. The court's original decision, handed down in May, found that Smith, without the approval of his fellow directors, provided Omnilab with access to confidential information and that Omnilab improperly acquired DCN’s proprietary information.

Justice Besanko (one of the three judges hearing the appeal) agreed with Justice Gordon's original findings. Justice Besanko said Omnilab had participated in a plan whereby it obtained the benefit of the information and negotiations conducted by DCN director Michael Smith with the Hollywood studios, without DCN's consent and without paying any compensation to it.

"In my opinion, not only was her Honour’s conclusion that the Omnilab parties had actual knowledge of Mr Smith’s dishonest and fraudulent design open on the evidence she accepted, but in my respectful opinion it was the correct conclusion," Justice Besanko's written judgement said. 

Omnilab and Smith have been ordered to pay all court costs.

DCN managing director Martin Gardiner said the judgement again vindicates DCN's action against Michael Smith and Omnilab.

Since the decision, Omnilab has continued to represent ICAA in VPF negotiations. ICAA president Kieran Dell said it planned to review the latest 60-plus page finding, which was handed down on Monday, before deciding on a future course of action. An Omnilab spokesperson did not respond.

The full appeal judgement can be read here.

Contact this reporter at or on Twitter at @bcswift.

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