Posts Tagged ‘Copyright’

Property in the proceeds of infringement

Thursday, February 7th, 2013

In a decision which no doubt has some further distance to run, Newey J (sitting in the Chancery Division of the High Court in England) has ruled that the owner of copyright does not have a proprietary interest in the proceeds (read profits) made by an infringer of the copyright.

Harris et al. are alleged to be the person (or persons) behind the Newzbin file sharing sites which, amongst other things, have been found to infringe the movie studios’ copyrights in a range of films (here and here, where Arnold J ordered the ISPs to block access).

In December last year, the Newzbin sites appear to have closed down, claiming they had run out of money.

Having obtained freezing orders (formerly called Mareva injunctions) against the assets of the defendants (such as the house in which Mr Harris lives and the Maclaren car he parks in its driveway), the movie studios sought “proprietary injunctions” over the assets as well. This seems to involve a court determination that the assets in question were the property of the movie studios rather than the defendants. For example, Newey J explained the difference between the (already in place) freezing order and the injunctions now sought by reference to Millett LJ’s description:

“The courts have always recognised a clear distinction between the ordinary Mareva jurisdiction and proprietary claims. The ordinary Mareva injunction restricts a defendant from dealing with his own assets. An injunction of the present kind, at least in part, restrains the defendants from dealing with assets to which the plaintiff asserts title. It is not designed merely to preserve the defendant’s assets so as to be available to meet a judgment; it is designed to protect the plaintiff from having its property expended for the defendant’s purposes”.

The movie studios based their argument on observations in the Spycatcher cases that Peter Wright may have held the rights in Spycatcher on constructive trust for the Crown in view of his breaches of duties of confidence and fidelity.

Newey J seems to have rejected this claim partly on the basis that there were cases binding on him (albeit apparently disapproved by the Privy Council) ruling that there was no such proprietary interest and partly on the basis that s 18 of the Copyright Act 1956 had expressly deemed the copyright owner to be the owner of infringing copies and provided remedies in conversion and detention. That remedy, however, had been repealed by the Copyright Design and Patents Act 1988 as unjust and unfair.

There are some interesting issues for Australians.

First, the conversion/detention remedy on the basis of deemed ownership has not been repealed (but is now discretionary) – see s 116 (but the Full Court may not be too keen on the remedy – see [94] of French and Kiefel JJ (as their Honours then were).

Secondly, in Lenah Game Meats, Gummow and Hayne JJ did say at [102]:

A cinematograph film may have been made, as in Lincoln Hunt, in circumstances involving the invasion of the legal or equitable rights of the plaintiff or a breach of the obligations of the maker to the plaintiff. It may then be inequitable and against good conscience for the maker to assert ownership of the copyright against the plaintiff and to broadcast the film. The maker may be regarded as a constructive trustee of an item of personal (albeit intangible) property, namely the copyright conferred by s 98 of the Copyright Act[96]. In such circumstances, the plaintiff may obtain a declaration as to the subsistence of the trust and a mandatory order requiring an assignment by the defendant of the legal (ie statutory) title to the intellectual property rights in question[97]. Section 196(3) of the Copyright Act provides that an assignment of copyright does not have effect unless it is in writing signed by or on behalf of the assignor.

Gaudron and Callinan JJ also agreed.

Newey J considered, however, that:

i) The point under consideration (viz. whether copyright in a film made unlawfully was subject to a trust) was rather different to that with which I am concerned (viz. whether a copyright owner has a proprietary claim to the fruits of infringement); and

ii) The Australian approach to constructive trusts is by no means the same as that in this jurisdiction. In particular, as the Full Court of the Federal Court of Australia noted in Grimaldi v Chameleon Mining NL (No. 2) [2012] FCAFC 6 (in paragraph 574)

His Lordship’s second point may be thought to be a second factor why an Australian court might take a different approach to his Lordship’s conclusion.

As to the first point, one might well think, if such a constructive trust arose, that the trustee would have to account for the fruits of the use of the trust property and possibly even handover such fruits as were still in his possession.

Finally, the Privy Council’s rejection of the authority binding on Newey J (and the determination of the movie studios) may well indicate that Newey J’s decision is just the first step in the war.

Twentieth Century Fox Film Corporation v Harris [2013] EWHC 159

Lid dip: Fiona Phillips

Patents, copyright and competition

Wednesday, October 3rd, 2012

Judge Posner, one of the authors of the leading modern text on the economics of intellectual property (amongst many other things), has published a controversial blog post questioning whether patents and copyright law, but particularly patents, are granting excessive protection.

Judge Posner accepts that patents for pharmaceuticals are the “poster child for patent protection”, but contrasts that to patents for computer software.

The IPKat explores some aspects of this part of Judge Posner’s critique.

In his judicial capacity, Judge Posner recently dismissed both Apple’s and Motorola Mobility’s attempts to use their respective patent portfolios to extract injunctions and damages from the other (pdf of the Opinion).

On copyright, Judge Posner is particularly concerned about the term of protection: currently (i.e., until Mickey Mouse next nears expiry) 70 years after the death of the author(s) for published works and the very restrictive approach to “fair use”. Amongst other things, Judge Posner refers to the music companies’ practice of requiring licences for “samples”.

Wonder what he would make of the Kookaburra that scotched Men at Work?

The 1709 blog delves into this part of his Honour’s views.

Copyright walkabout

Tuesday, October 2nd, 2012

I am present IPSANZ annual copyright update for 2012:

  • in Brisbane at Corrs Chambers Westgarth’s offices on 9 October; and
  • in Melbourne at the RACV Club on 18 October.

Details via the links above.

No damage for infringing copyright in questionnaire

Wednesday, August 29th, 2012

Besanko J has awarded Insight SRC $32,510.00 for the infringements of its copyright in the School Organisational Health Questionnaire by the Australian Council for Educational Reseaarch (ACER). The award consisted of $10 nominal damages and $32,500 by way of additional damages. There are some interesting points about ownership, assignment and damages.

The questionnaire consisted of 57 questions arranged under 12 headings or modules. ACER reproduced some 25 of these questions from 5 modules between 2006 and October 2009 as part of a project with Independent Schools Victoria.

There was no dispute that copyright subsisted in the questionnaire or that ACER had reproduced a substantial part. Rather, ACER disputed Insight SRC’s title to the copyright and whether Insight SRC had suffered any damage.

Ownership

ACER’s basic point was that, as Dr Hart made the questionnaire in the course of his employment by the Victorian Department of Education, the Department (or the Crown) and not Dr Hart was the owner of the copyright pursuant to s 35 or the Crown Copyright provisions (here and here) of the Copyright Act 1968. If Dr Hart was not the original owner of the copyright, Insight SRC had no title since its rights depended on a chain of assignments starting with Dr Hart and not involving the Department (or the Crown).

Besanko J agreed with ACER that Dr Hart had created the questionnaire while employed by the Victorian Department of Education. However, his Honour found that Dr Hart and the Department (through Dr Hart’s superior) had agreed Dr Hart would retain ownership of the copyright and so s 35(6) and s 176 were excluded by the operation of s 35(3) and s 179.

The interesting point here is that the agreement between Dr Hart and his superior was purely oral but, as Besanko J pointed out, unlike the case with assignments pursuant to s 196 or s 197, there was no requirement for an agreement which excluded the operation of s 35(6) and s 176 to be in writing.

Besanko J did also find that s 176 would not have applied as Dr Hart, although an employee of the Department, was not acting under the control or direction of anyone in the Department in creating the questionnaire.

Assignment

Insight SRC claimed to be the owner of the copyright in the questionnaire by assignment. The assignment of copyright to it was made on 1 October 2009; that is, after ACER had ceased its infringing conduct.[1]

The main point of interest is that prior to 12 May 2011, none of the assignments – to Hart Cultural Lodges or Insight SRC – included the right to sue for past infringements. Deeds assigning the right to sue for past infringements from Dr Hart to Hart Cultural Lodges and then from Hart Cultural Lodges to Insight SRC were executed only on 12 May 2011.

After a review of the case law, including Trendtex and the High Court’s ruling in Equuscorp v Haxton, Besanko J accepted that Australian law now permitted the assignment of “bare” rights to litigation provided the assignee had a pre-existing genuine commercial interest in enforcing the claims of the assignor:

…. It must now be taken to be established in Australia that the circumstances in which a bare or mere right of action may be assigned include a case where the assignee has a pre-existing genuine commercial interest in enforcing the claims of the assignor.

While Besanko J was somewhat bemused why there was an assignment to Hart Cultural Lodges, his Honour considered that the ownership of the copyright in the questionnaire was a sufficient pre-existing genuine commercial interest to validate the late assignment of the right to sue for past infringements.

Damages

ACER generated some $213,000 in revenue from its infringing use of the questionnaire. Independent Schools Victoria in turn earned some $807,000 from supplying the questionnaire to its associated schools in infringement of the copyright.

Besanko J refused to award Insight SRC general damages; his Honour awarded nominal damages of $10 only.

The basis for this refusal to award general damages was that all Insight SRC obtained through the assignment of the right to sue for past infringements was whatever rights Dr Hart had to assign. Dr Hart himself had no right to general damages because:

118 …. Dr Hart was not personally conducting a business involving the use of the [questionnaire] between the beginning of 2006 and 1 October 2009 and it has been no part of their case before me that Dr Hart personally would have exploited any commercial opportunities with ISV. Furthermore, Dr Hart did not claim that he could recover any such loss as the major shareholder of Insight SRC and that the Court could lift the corporate veil. On the other hand, what Dr Hart did have as the copyright owner was a right to nominal damages for infringement of copyright and a right to claim additional damages under subs 115(4). An award of nominal damages is appropriate to vindicate the invasion of a copyright owner’s proprietary right….

That is, as Dr Hart was not himself in the business of selling the questionnaire, he could not claim the profits lost on the sales made by an infringing “competitor” – he was not in competition with ACER.

If general damages had been available, Besanko J would have assessed them at $130,000. Rather questionably (with respect),[2] his Honour started with the revenue earned by ACER and reduced that amount by its costs to reflect the profits it made.

Besanko J would not have made any allowance for the revenues made by Independent Schools Victoria as that was not how Insight SRC put its case. The judgment does not explain why Insight SRC did not pursue such a claim. Presumably, it would not have claimed a share of Independent Schools Victoria’s revenues if it [or its exclusive licensee, rather] had secured the contract instead of ACER.

Additional damages

Besanko J found that ACER’s infringement was flagrant and awarded $32,500 by way of additional damages pursuant to s 115(4). ACER had a permissions unit to secure copyright licences where necessary and well knew of its obligations not to use copyright for commercial purposes without an appropriate licence. The fact that the officer in charge of ACER’s program did acknowledge Dr Hart’s authorship in footnotes did not save ACER either.

The amount of any additional damages is highly discretionary and notoriously difficult to predict. Given his Honour’s finding that ACER made $130,000 profit[3] and the permissibility of taking into account that profit in assessessing the amount of additional damages,[4] the award may seem surprisingly low given his Honour’s characterisation of the infringement as flagrant.

Insight SRC IP Holdings Pty Ltd v The Australian Council for Educational Research Limited [2012] FCA 779


  1. The situation was rather more complicated: Dr Hart had assigned, or purported to assign, his copyright in the questionnaire to Hart Cultural Lodges (Dr Hart’s family trust) by two deeds, both dated 30 June 2009 and Hart Cultural Lodges in turn assigned its interests to Insight SRC by deed dated 1 October 2009. Dr Hart was the director and major shareholder of Insight SRC. To complicate matters further, Insight SRC granted an exclusive licence to another “Insight” company of which Dr Hart was also the director and major shareholder. That other Insight company having been the operating entity between 2006 and 2009, but not having a written agreement in place to qualify it as an exclusive licensee in terms of the Act.  ?
  2. See Aristocrat Technologies v DAP Services (Kempsey) [2007] FCAFC 40 at [3], [18]-[20].  ?
  3. At [190] in the face of ACER’s claim at [151] that it made no profits at all.  ?
  4. See Aristocrat Technologies v DAP Services (Kempsey) [2007] FCAFC 40 at [48]-[54] and Facton Ltd v Rifai [2012] FCAFC9 at [40]–42] and [48].  ?

ALRC’s Copyright and Digital Economy Issues Paper

Monday, August 20th, 2012

The ALRC has published an Issues Paper for its inquiry into Copyright and the Digital Economy.

In an attempt to provide some structure to the anticipated submissions, the Issues Paper propounds some 55 questions over a range of topics including:

  • should (maybe that should include “can”) Australia adopt a “fair use” exception (questions 52 – 53) – an earlier assessment by the CLRC (pdf – see p.7 for the recommendations);
  • is there a need for greater freedom for “transformative uses” such as ‘sampling’, ‘remixes’, and ‘mashups’ (questions 14 – 18)
  • to what extent should copying for private and domestic use be permitted more freely, including should Optus be able to provide its Optus TV Now service (questions 7 – 13);
  • orphan works (questions 23 & 24);
  • library and archive exceptions (questions 19 – 22);
  • data and text mining (questions 25 – 27);
  • educational institutions (questions 28 – 31);
  • Crown use (questions 32 – 34);
  • retransmission of free-to-air broadcasts (questions 35 – 39);
  • do the statutory licensing schemes work efficiently in the digital environment and are new licences needed (questions 40 – 44);
  • should there be any other free use exceptions and should any existing exceptions be done away with (questions 48 – 51);
  • to what extent should people be able to “contract out” of copyright exceptions (questions 54-55) – see what the CLRC thought (pdf).

The Issues Paper is available on the web, as a pdf, an ePub and also in rtf components. (So far as I can see, it does not appear to be available in “dead tree” form.)

Submissions are sought by 16 November 2012. The ALRC itself is required to report by November 2013.

If you are looking for an overview of what is already in place, the Australian Copyright Council’s take is here (pdf).

Apotex v Sanofi: the (un)implied licence

Friday, August 3rd, 2012

In addition to finding Sanofi’s patent infringed, the Full Court affirmed Jagot J’s conclusion that Apotex had no implied licence to reproduce the copyright in Sanofi’s product information documents (PID).

Before a (medicinal) drug can be offered for sale in Australia, it must be registered in the Australian Register of Therapeutic Goods by the Therapeutic Goods Administration. One of the requirements for registration is the submission of a PID, describing the drug, what it can be used for and how and providing warnings about potential problems and risks.

Apotex argued that it was industry custom or usage for the suppliers of generic drugs simply to provide PID for their generic drugs in substantially the same terms as the originator’s PID. It provided evidence of many cases where this had happened, including a number of cases in which Sanofi’s generic arm had simply re-used a competitor’s original PID itself. This included:

13 drugs of which Sanofi-Aventis was the innovator and 22 generic versions of the same drug,
the top 10 drugs by value on the PBS and 62 generic versions of the same drug,
some eight drugs of which companies other than Sanofi-Aventis were the innovators and generic versions of those drugs of which Sanofi-Aventis was the issuer.

The TGA did not require PID submitted by generics to be in the same terms as the originator’s PID. If a generic’s PID was different in substance or terms, however, the TGA may require the generic to submit additional safety or efficacy data to support registration of its own formulation.

On the last day of trial, Sanofi was also allowed to introduce evidence showing that some generics did in fact prepare and register their own PIDs rather than just copy the originator’s PID.

In this state of affairs, the Full Court unanimously upheld Jagot J’s conclusion that the evidence of an implied licence was at best equivocal and so rejected the implication. (Keane CJ [80]-[81], Bennett and Nicholas JJ [98]-[208])

It is difficult to resist the impression that, if instead of being sober judges their Honours (at least Bennett and Nicholas JJ) were teenagers, the suggestion that a licence could be implied between parties who were not in any type of contractual or consensual relationship would have been met with:

rofl.

As to the public interest, Parliament was forced to intervene (at the legislative equivalent of the speed of light) and create yet another specific defence and, in due course, Jagot J found that Apotex could rely on it as a defence (for acts done after the amendment came into force).

So far, 2012 is not proving an easy year for those trying to claim they have an implied licence to protect themselves from infringement allegations.

Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd (No 2) [2012] FCAFC 102

TPM exceptions review

Wednesday, August 1st, 2012

Following my post on the ALRC’s reference re exceptions in the digital environment, a couple of people kindly pointed out the Attorney General’s department is also conducting a review of the exceptions to technological protection measures.

A technological protection measure is … well, anyway, since the Sony v Stevens stuff up, the definition has been “fixed up” to close that gulf by adding access control technological protection measure as well.

Section 116AN provides for a number of exceptions – e.g. interoperability, encryption testing, security testing, online privacy, law enforcement and national security, libraries – and s 116AN(9) provides a regulation making power to create additional exceptions.

The existing “additional” exceptions are found in Schedule 10A of the Copyright Regulations.

The US Copyright Office is currently a large way through its 5th 3 year “ad hoc” rulemaking exercise for the counterpart arrangements under the US Act.

The review’s home page is here and the pdf of the issues paper is here.

Submissions about the exceptions should be in by 17 August 2012

Responses to those submissions should be in by 5 October 2012.

(Congratulations to the AGD for a sensible, structured approach to submissions which recognises that some people will definitely have something to say about what other people submit!)

Lid dip:

Alison Bradshaw

@ADA_ellenbroad

A few exercises in parody?

Monday, July 2nd, 2012

Gotye and Kimbra had that smash hit “Somebody I used to know“.

via Prof. Tushnet at the 43(B)log, there comes “The Star Wars I used to Know” (99USc or $1.69 in the Oz iTunes store).

Prof. Tushnet gives extra points for the artwork. I wonder about that, does it go too far? I guess there is that dig at the artwork too …

While we’re having fun:

Walk off the Earth did this theatrical cover of Gotye/Kimbra.

Then, in the Key of Awesome really took the sledgehammer to it.

Copyright Act 1968 (Cth) s 41A.

(see: it was IP related)

ALRC terms of reference finalised

Monday, July 2nd, 2012

The Government has announced the finalised terms of reference for the Australian Law Reform’s inquiry into copyright:

I refer to the ALRC for inquiry and report pursuant to subsection 20(1) of the Australian Law Reform Commission Act 1996 the matter of whether the exceptions and statutory licences in the Copyright Act 1968, are adequate and appropriate in the digital environment.

Amongst other things, the ALRC is to consider whether existing exceptions are appropriate and whether further exceptions should:

  • recognise fair use of copyright material;
  • allow  transformative, innovative and collaborative use of copyright materials to create and deliver new products and services of public benefit; and
  • allow appropriate access, use, interaction and production of copyright material online for social, private or domestic purposes.

As one might expect, the ALRC is directed not to duplicate work being undertaken by other inquiries and the like. It turns out that, amongst other things,  these include

not duplicate work being undertaken on: unauthorised distribution of copyright materials using peer to peer networks; the scope of the safe harbour scheme for ISPs; a review of exceptions in relation to technological protection measures; and increased access to copyright works for persons with a print disability.

Anyone know what that work is?

The ALRC is required to deliver its report by 30 November 2013.

Terms of reference here.

The price of digital downloads in Australia

Thursday, May 3rd, 2012

Apparently inspired by this report, Senator Conroy, the Orwellian named Minister for Broadband, Communications and the Digital Economy,[1] has acted to announce a new inquiry to be undertaken by the House of Representatives’ Standing Committee on Infrastructure and Communications.

Reports here and here.

According to that second report, someone trailed a coat on the issue last week when ACCC Commissioner Ed Willett appeared before the Joint Committee on the National Broadband Network.

Now, as a purchaser of digital files, I am hardly unbiased but it does seem hard to justify price differentials of 50% or more. Seems like there is economic reasoning that challenges the Gerry Harvey-esque explanations.

Only problem, almost 20 years ago, the Prices Surveillance Authority recommended (what became in effect) this provision and some record companies got into big trouble trying to circumvent their own corresponding provision, but it would seem nothing has changed. Gartner analyst, Brian Prentice, reported here might be on to something suggesting the problem is the territorial nature of copyright itself. A (copyright) world without borders. Imagine!


  1. He is afterall the man who wants to impose filtering on the internet.  ↩