Broadcast does not include internet streaming

The (NSW) Court of Appeal has rejected WIN’s argument that its exclusive licence to broadcast Nine Network’s content extended to “live streaming” over the internet.

Those of you who have emulated Burke and Wills and wandered out of the CBD of your state’s capital city may have discovered that free-to-air television is (a little bit) different. There are regional broadcasters who arrange at least some local news and advertising, but also carry a lot of the programming of the “big” broadcasters.

WIN Corporation is one such regional broadcaster. For many years, it had a “programming supply agreement” through which it took much of the Nine Network’s programming. Thereby bringing the joys of A Current Affair and the Block to those lucky enough to live in a place where WIN was a broadcaster.

The relevant clause (clause 2.1) said:

“Nine grants WIN the exclusive licence to broadcast on and in the licence areas covered by the WIN Stations the program schedule broadcast by Nine on each of the channels known as ‘Nine’, ‘NineHD’, ‘9Go’, ‘9Gem’, ‘Extra’ and ‘9Life’ (the ‘Nine Channels’), to be picked up by WIN at Nine’s NPC.”

The Court and the parties all agred that “exclusive” in this context meant that Nine could not license anyone else to broadcast its content in WIN’s territory. Nor could it “broadcast” its content in WIN’S territory itself.[1]

WIN’s case was that this clause also meant Nine could not allow people in WIN’s territory to access the content through Nine’s website too. (You may already be perceiving some practical difficulties with WIN’s argument, if right.)

The evidence showed that the scope of the grant had been the subject of some negotiation, with Nine contending for a narrow definition and WIN arguing for a broader definition. The trial judge had found this evidence of pre-contactual negotiations did not assist the interpretation exercise. Apart from anything else, it was inconclusive and incomplete.[2]

Barrett AJA pointed out that a playwright could grant an exclusive licence to perform his or her play at a particular time or place, but that did not prevent the playwright from granting someone else a licence to show the play as a film or to perform the play some other place or time. This was important because it meant (you will be surprised to read) that the scope of exclusivity depended on the terms of the grant. His Honour explained at [34]:

The important point is that a person who has a collection of rights and grants an exclusive licence in respect of only some of those rights does not, through the exclusivity undertaking, promise the grantee not to exercise (or allow others to exercise) the remainder of the rights that is not the subject of the grant. The exclusivity undertaking restricts the grantor only as regards the rights granted. Preclusion of the grantor in relation to the whole or any part of the remainder of the grantor’s rights could come only from some contractual stipulation over and above that which is implied by the exclusive quality of the grant.

Applying this, his Honour considered that WIN’s licence to broadcast was limited to the kinds of broadcasting it was licensed to engage in under the Broadcasting Services Act and only within the territories it held a commercial broadcasting licence for. So this meant its exclusivity related only to free-to-air broadcasting in its territory. In the judgment under appeal, Hammerschlag J had explained at [82]:

Where clause 2.1 refers to broadcasting on and in the licence areas covered by the WIN Stations this is, and can only be, a reference to free-to-air. The licence areas are the geographical delimitations imposed on WIN by its licences under the BSA. These licences cover only free-to-air. Unsurprisingly, it is common cause that the WIN Stations have only ever broadcasted free-to-air and under such licences. They are traditional television stations. They do not deliver by internet. Internet delivery is not geographically based in the same way as is free-to-air.

Barrett AJA also rejected WIN’s argument that exclusivity over internet streaming followed from the implied term not to do anything that would deprive the other party of the benefit of the contract. WIN argued it was necessary for the exclusivity to extend to internet streaming as the promise of exclusivity meant it was to be free from competition.

Judging from the number of people watching TV on the train, tram and buses these days, you might think WIN had something of a point.

Barrett AJA, however, considered the benefit for which WIN had contracted was exclusivity from competition in free-to-air broadcasting. Nine was not under a duty to maximise WIN’s return under the contract, but to ensure that WIN had exclusive rights to broadcast Nine’s programming by free-to-air transmissions. His Honour said at [73]:

In the present case, the PSA, according to its correct construction, required Nine to desist from engaging in free-to-air transmission of Nine programs in the WIN licence areas and from enabling persons other than WIN to undertake free-to-air transmission of those programs in those areas. The “benefit” of the contract, from WIN’s perspective, was the right to transmit the Nine programs free-to-air in the WIN areas without free-to-air competition by Nine or anyone to whom Nine had given transmission rights. Extension of the negative stipulation binding on Nine so as to forbid live-streaming would entail a restriction on Nine and a corresponding “benefit” to WIN over and above those created by the contract and, in that way, enlarge rather than support and underwrite WIN’s contracted benefit. The value of the benefit of the contract to WIN was, as in the Queensland case, dependent on many contingencies, some of which were in Nine’s control. But Nine was not obliged to maximise WIN’s return from the contract.

At one level, the result is not too surprising. “We” have been generally aware at least from the Optus Now here and here controversies several years back that the major sporting organisations were generating very substantial revenues from internet streaming in addition to the broadcast (pay and/or free-to-air) rights. If you are drafting an exclusive licence relating to the right to communicate to the public, therefore, you will need to pay careful attention to what exactly is intended to be included: the whole right to communicate to the public, broadcasting (in some one or many of its multifarious forms), internet streaming etc.

WIN Corporation Pty Ltd v Nine Network Australia Pty Ltd [2016] NSWCA 297 (McColl JA, Sackville and Barrett AJJA)


  1. Barrett AJA conveniently collected the well-established propositions at footnote 15: “15. As a matter of general principle, an “exclusive” licence confers relevant rights upon the licensee to the exclusion of the whole world, including the licensor: Carr v Benson (1868) 3 Ch. App. 524 at 532; Reid v Moreland Timber Co Pty Ltd (1946) 73 CLR 1; [1946] HCA 48 at 5 (Latham CJ) and 15 (McTiernan J applying Heap v Hartley (1889) 42 Ch. D. 461). A “sole” licence resembles an “exclusive” licence but does not operate to exclude the grantor: see, for example, Black & Decker Inc v GMCA Pty Ltd (No 2) [2008] FCA 504; (2008) 76 IPR 99 at [131] (Heerey J).”  ?
  2. WIN Corporation Pty Ltd -v- Nine Network Australia Pty Limited [2016] NSWSC 523 at [71] – [80].  ?

Selected links from the last week (or so)

Here is a selection of links to IP-related matters I found interesting this week:

Patents

Trade marks

Copyright

Designs

Not categorised

I hope you find something interesting. If you did or have a question, leave a comment or send me an email

Apportionment of liability for IP infringement

Beach J has ordered that Lucky Homes (the builder) and Mr Mistry (the owner) pay Henley Arch $34,400 by way of compensatory damages and, respectively, $25,000 and $10,000 additional damages. There was no apportionment of liability under the Wrongs Act. Instead, Beach J also ordered that the builder pay to Mr Mistry however much he pays of the compensatory damages and half of the additional damages he pays.

Time and space mean that this post will look at the apportionment issue. Issues arising from the damages findings may get covered in a later post.

Some facts

In 2010/2011, the Mistrys had Henley Arch build them a home. In 2013, they started negotiating with Henley Arch for it to build another home, their dream home, based on another Henley plan, the Amalfi. They requested, and Henley arranged for, a number of modifications to the basic plan. Their preferred facade would have cost $10,000 more than the “basic” facade.

In October 2013, just before they were to sign the final contracts with Henley, they were introduced to Lucky Homes. Lucky Homes was prepared to build the home with their preferred facade and “some” changes for pretty much the same price as the “basic” facade that Henley would build. The Mistrys got Lucky Homes to build the house for them instead.

Apportionment

Perhaps the point of most general application to all IP statutes is Beach J’s ruling that the state law provisions allowing liability to be apportioned between wrongdoers under s 24AI of the Wrongs Act 1958 (Vic) had no application to copyright infringement.

As is often the case in these types of cases, the builder – Lucky Homes – says the owners – the Mistrys – told me they owned the copyright and, of course, the Mistrys claim Lucky Homes the builder said he would make sufficient changes that there would not be any copyright issue.

While not impressed with the witnesses for either camp, Beach J accepted the Mistrys’ version of events this time.

The Mistrys had provided Lucky Homes with a copy of Henley’s pro forma plan for the Amalfi rather than the customised version Henley had modified to meet their particular requirements. The pro forma plan had Henley’s copyright notice clearly marked on it. Mr Shafiq, for Lucky Homes, had annotated the pro forma plan with the various changes the Mistrys wished to make, such as converting a powder room to a prayer room. According to the Mistrys, Mr Shafiq told them he would make 15 or 20 changes so that the redesign would not infringe Henley’s copyright. Mr Shafiq had also tried to persuade the drafting service Lucky Homes used to lie about which drawings had been used as the starting point for the building plans.

Following the findings of infringement and how much damages would be, the first question was whether there was power to apportion liability.

The Copyright Act, like the other Commonwealth intellectual property statutes – the Patents Act 1990, the Trade Marks Act 1995, the Designs Act 2003, the Plant Breeders Rights Act 1994, does not include provisions to apportion liability.[1] So, the Mistrys invoked the Victorian Wrongs Act.

Section 24AF provides that an apportionable claim is:[2]

(a) a claim for economic loss or damage to property in an action for damages (whether in tort, in contract, under statute or otherwise) arising from a failure to take reasonable care; and

(b) a claim for damages for a contravention of section 18 of the Australian Consumer Law (Victoria).

Beach J said neither of these requirements were satisfied. In particular, at [266] a claim for copyright infringement is not a claim for failure to take reasonable care.[3] And at [267], the Mistry’s attempt to invoke s 87CD of the Competition and Consumer Act 2010 was “misconceived”. Moreover, his Honour at [267] considered that the Copyright Act provides a complete scheme for a copyright owner to recover damages from both the primary infringer and an authoriser. Therefore, it “overrode” the provisions of the (State enacted) Wrongs Act.[4] Accordingly, apportionment was not possible. However, the respondents could (and did) cross-claim against each other.[5]

The cross-claims

Lucky Homes cross-claimed against the Mistrys on the basis that the building contract included a warranty and indemnity that the Mistrys owned the copyright in the plans they provided.

That didn’t get up in view of the copyright notice on the pro forma plans and the Judge’s acceptance of the Mistrys’ case that Lucky Homes through Mr Shafiq had claimed it could change the plans sufficiently to avoid infringement.

Conversely, those findings meant that the Mistrys’ cross-claim for misleading or deceptive conductive succeeded. Therefore, Beach J ruled that Lucky Homes should pay the Mistrys all of the moneys they paid to Henley on the compensatory damages.

Beach J also ordered Lucky Homes to pay Mr Mistry half the additional damages he pays. Mr Mistry was entitled only to damages for loss (i.e., here the additional damages he was ordered to pay to Henley) to the extent the loss was causally connected to Lucky Homes’ misleading or deceptive conduct. His Honour considered that much of Mr Mistry’s conduct that warranted the award of additional damages against Mr Mistry was not causally connected to Lucky Homes’ misleading or deceptive conduct. So, on a “rough and ready assessment … given the modest amounts involved” his Honour arrived at 50%.

Henley Arch Pty Ltd v Lucky Homes Pty Ltd [2016] FCA 1217


  1. Unlike s 236 of the Australian Consumer Law through s 87CD of the Competition and Consumer Act 2010.  ?
  2. Disregarding irrelevant exceptions.  ?
  3. Don’t rush off to add negligence claims to your pleadings now. Although not referred to by Beach J (as it wasn’t in issue), s 24AF(3) says that the fact that a claim is an apportionable claim under s 24AF(1) does not limit liability under any other law. That appears to mean that liability for infringement would stand even if the negligence claim could be apportioned.  ?
  4. Presumably on the basis of s 109.  ?
  5. A practical consequence of this is that the copyright owner can get its money from either or both sets of respondents. That is, vis a vis Henley, both Lucky Homes and the Mistrys are on the hook for all the compensatory damages awarded. If only one has the money to pay the award, Henley could be paid the full amount by that party and the “paying” party would be left to try to recover a proportion from the impecunious respondent.  ?

Selected links,from last week

Here is a selection of links to IP-related matters I found interesting this week:

Patents

Trade marks

Copyright

Remedies

Not categorised

I hope you find some interesting. If you did or have a question, leave a comment or send me an email

Selected links from last (couple of) weeks

Here is a selection of links to IP-related matters I found interesting this past week (or two):

Patents

Trade marks

Copyright

Not categorised

I hope you find some interesting. If you did or have a question, leave a comment or send me an email

Selected links from last week

Here is a selection of links to IP-related matters I found interesting last week:

Patents

Trade marks

  • Is the US Olympic Committee’s [#TwitterBan Fair or Foul?](https://t.co/kmG0Avith) compare
    Telstra ‘Go to Rio’ campaign cleared by Federal Court, AOC case dismissed

Copyright

Remedies

  • Want An Enforceable Online Contract? Don’t Use A Footer Link Called “Reference”–Zajac v. Walker (USA)

Designs

Not categorised

Future of the profession

I hope you find some interesting. If you did or have a question, leave a comment or send me an email

Selected links from last week

Here is a selection of links to IP-related matters I found interesting this week:

Patents

Trade marks

Copyright

Not categorised

I hope you find some interesting. If you did or have a question, leave a comment or send me an email

Selected links from around the web

A selection of (mostly) IP-related links I found interesting last week:

Patents

US Federal Circuit Finds § 101 Patent Eligible Subject Matterin BASCOM

Patenting From China: how Chinese innovators are using the parent system

Copyright

USA: Apple’s New Music Royalty Proposal Would Make Streaming Costlier for Free Services Like Spotify

Vimeo’s Second Circuit DMCA Safe Harbor Win Over Capitol Records

Trade Mark

English High Court summarily dismisses Seretide combination color mark

Internet

USA: “Modified Clickwrap” Upheld In Court–Moule v. UPS

Trade – TPP

TPP at risk from ‘Hatch(ed)’ accusations that Australia’s data exclusivity steals US patents

Living in the future

A Technical Glitch or what might Facebook Live do to the world (as we know it)

The obsolete associate – Law21 or more AI in Big Law

Feel free to leave a comment or email me

Copyright Wars

With the Productivity Commission purporting to be undertaking an “evidence-based”[1] review of intellectual property arrangements with a heavy focus on copyright, Rebecca Tushnet has a timely review of Peter Baldwin’s The Copyright Wars: Three Centuries of Trans-Atlantic Battle.

For my part, I thought the French and other “romantics” invented moral rights before the Fascists (but I guess we’ll have to read the book to see how that is supported).

When the book was published, the Economist starkly illustrated the tension between the “two” systems and Prof. Johns took a more cautionary view.


  1. For “evidenced based” policy analysis, see Nicola Searle’s review of another interesting book: Paul Cairney’s The Politics of Evidence-Based Policy Making.  ?

Productivity Commission reports on IP (in draft)

The Productivity Commission has released its draft report into Intellectual Property Arrangements.

You will be startled to learn that the Productivity Commission has discovered Australia is a net importer of intellectual property. We buy more IP from the rest of the world than we sell to it. Fig. 2 in the Report indicates Australian IP earned AUD1 villion from overseas, but we paid out about AUS4.5 billion for the use of their IP. The Productivity Commission then notes that we provide surprisingly strong IP protection for a country in our position.[1] This finding guides the Productivity Commission’s recommendations which might broadly be characterised as: take the least restrictive option in terms of IP protection (where our international obligations permit).

The Productivity Commission explained its position this way:

Intellectual property (IP) arrangements need to balance the interests of rights holders with users. IP arrangements should:[2]

• encourage investment in IP that would not otherwise occur;

• provide the minimum incentives necessary to encourage that investment;

• resist impeding follow-on innovation, competition and access to goods and services. (emphasis supplied)

So, for example, after much gnashing of economists’ teeth about the (let’s face it, indefensible) term of copyright protection, the Productivity Commission considers that the appropriate term of protection is somewhere between 15 and 25 years.[3] However, what it actually recommends is rather more limited:

4.1: remove the current unlimited term of protection for published works.[4]

5.1: implement Parliament’s At What Cost? IT pricing and the Australia Tax recommendation to make it clear that it is not an infringement of copyright to circumvent geoblocking.

5.2 repeal the remaining parallel import restrictions for books.

5.3 amend the Copyright Act 1968 to replace the current fair dealing exceptions with a broad exception for fair use.

The latter two, so far, have elicited the loudest complaints here and here.[13] Meanwhile, the US’ Register of Copyrights is celebrating the first anniversary of her Fair Use Index.

18.1 expand the safe harbours to online service providers.[5]

Patents

The Productivity Commission reports that there are 120,000 active patents registered in Australia. 93% of these have been granted to non-residents. There are also 25,000 – 30,000 applications each year; of which about 60% ultimately proceed to grant.

According to the Productivity Commission, however, there are too many granted patents which do not contribute social value and are not “additional” – in the sense that they would not have been made if there was no patent protection.[6]

This needs to be remedied. However, the Productivity Commission acknowledges that international agreements put constraints on our freedom of action. There are 10 recommendations for patents.

The key recommendation for standard patents is yet another go at raising the threshold of inventive step.

an invention is taken to involve an inventive step if, having regard to the prior art base, it is not obvious to a person skilled in the relevant art.

This looks very similar to what we already have. As the Productivity Commission envisages matters, however, there are important differences. First, it reverses the onus currently expressed in s 7(2). According to the Productivity Commission, the current position is the opposite of where the onus lies in the USA, Japan, the EU and the UK (amongst others). Rather than a challenger having to prove the invention is obvious, therefore, the patentee will have to prove it is not.

Secondly, the Productivity Commission sees the current requirement that there be only a scintilla of invention being raised. The Productivity Commission sees this low threshold being reflected in the limitation on “obvious to try” being something which the skilled addressee would be directly led as a matter of course. Instead, the Productivity Commission considers that the test should be at least:

whether a course of action required to arrive at the invention or solution to the problem would have been obvious for a person skilled in the art to try with a reasonable expectation of success (as applied by the Boards of Appeal of the EPO).[7]

This change would be buttressed with appropriate comments in the Explanatory Memorandum and, additionally, the insertion of an objects clause into the Act. The latter would be intended to ensure that the Courts focused on the social objectives of the Patents Act including, in particular, the public interest.[8]

On the more colourful fronts, the Productivity Commission also recommended repeal of the abomination innovation patent and amendment of s 18 explicitly to exclude from patentable subject matter business methods and software.[9]

Pointing to analysis which estimates the net present value to R & D of the extension of term for a pharmaceutical patentat at year 10 at $370 million – of which only $7.5 million would accrue to Australia because our industry is so small – while the cost to the Australian government and consumers of the same extension of term is estimated at $1.4 billion, the Productivity Commission also wants a significant tightening up of the regime for extending the term of pharmaceutical patents. The Productivity Commission also opposes any extension of the period of data protection for therapeutic goods, including biologics.[10]

The Productivity Commission also recommends exploring raising the renewal fees payable, particularly in later year’s of a patent’s life.

Registered designs

The Productivity Commission considers the registered design system deficient but, as we have committed to it internationally and there is no better alternative, we are stuck with it.

However, continuing the net importer theme, Australia should not go into the Hague system “until an evidence-based case is made, informed by a cost–benefit analysis.”

Trade marks

I’m just going to cut and paste here: the Government should:

  • restore the power for the trade mark registrar to apply mandatory disclaimers to trade mark applications, consistent with the recommendation of the Advisory Council on Intellectual Property in 2004 (the only people that won’t support this are in the place that counts – IP Australia)
  • repeal part 17 of the Trade Marks Act 1995 (Cth) (Trade Marks Act)
  • amend s. 43 of the Trade Marks Act so that the presumption of registrability does not apply to the registration of marks that could be misleading or confusing
  • amend the schedule of fees for trade mark registrations so that higher fees apply for marks that register in multiple classes and/or entire classes of goods and services.
  • require the Trade Marks Office to return to its previous practice of routinely challenging trade mark applications that contain contemporary geographical references (under s. 43 of the Trade Marks Act). Challenges would not extend where endorsements require goods and services to be produced in the area nominated
  • in conjunction with the Australian Securities and Investments Commission, link the Australian Trade Mark On-line Search System database with the business registration portal, including to ensure a warning if a registration may infringe an existing trade mark, and to allow for searches of disclaimers and endorsements.

Also, s 123 should be fixed up so that parallel importing does not infringe.

Like the rest of us, the Productivity Commission is bemused by the Circuits Layout Act and recommends implementing “without delay” ACIP’s 2010 recommendation to enable “essentially derived variety declarations to be made in respect of any [plant] variety.”

On competition policy, s 51(3) should be repealed and the ACCC should develop guidelines on the application of our antitrust rules to IP.

Innovatively, the Productivity Commission also recommends free access to all publications funded directly by Government (Commonwealth, State or Terriroty) or through university funding.

There are also at least 17 requests for further information.

If you are inspired to make a further submission, you should get it in before 3 June 2016.[11]


  1. Not much discussion here whether the best way to get more technological development is through a strong IP regime or to,scrap the IP system and fully commit to free riding.  ?
  2. Despite the tentative nature of this declaration, it is the first “Main key points”.  ?
  3. Draft finding 4.2.  ?
  4. The Government is trying to do this – see schedule 3 of the exposure draft of the Copyright Amendment (Disability Access and Other Measures) Bill (pdf).  ?
  5. See schedule 2 of the Disability Access and Other Measures bill.  ?
  6. You will have to read Appendix D to find out how the Productivity Commission works out which patents are socially valuable and “additional”.  ?
  7. The EPO cases the Productivity Commission referred to are T 149/93 (Retinoids/Kligman) (1995) at 5.2 and T 1877/08 (Refrigerants/EI du Pont) (2010) at 3.8.3.  ?
  8. Here, the Productivity Commission notes that the Full Federal Court rejected reference to the public interest in Grant.  ?
  9. Dr Summerfield tells you why he thinks that’s a bad idea over here and of course, the Europeans (including the UK in that) do not have all sorts of complications carrying out their nice, clean exclusion.  ?
  10. In an interesting departure from its overarching premise that patents do not really contribute much to innovation because there are other protections such as lead time and trade secrets, the Productivity Commission warns that reliance on data secrecy is sub-optimal compared to patent protection.  ?
  11. Bearing in mind they have to submit their Final Report to Government by 18 August 2016.  ?
  12. In between buying your books from Amazon and Bookdepository, some references to the larger economic issues affecting booksellers here.  ?