The Aboriginal Flag

As you know, the Aboriginal Flag has been in the news a fair bit – the AFL even had to abandon plans to paint representations of it on footy grounds for the Indigenous Round: here, here and here.

Mr Thomas, the acknowledged author of the flag’s fantastic design,[^f2] has licensed it to various companies for different types of use including WAM Clothing. WAM Clothing has been making headlines aggressively enforcing its rights, including threatening the AFL for copyright infringement.

Now, the Senate has established a Select Committee to investigate what is to be done!

The terms of reference are (in full):

That a select committee, to be known as the Select Committee on the Aboriginal Flag, be established to inquire into and report on current and former copyright and licensing arrangements for the Aboriginal flag design, with particular reference to: 

a. who benefits from payments for the use of the Aboriginal Flag design and the impact on Aboriginal organisations, Aboriginal communities and the broader Australian community of the current copyright and licensing arrangements; 

b. options available to the Government to enable the Aboriginal Flag design to be freely used by the Australian community, including:

i. negotiated outcomes with licence and/or copyright holders:

ii. the compulsory acquisition of licences and/or copyright,

iii. ways to protect the rights and interests of the flag’s legally recognised creator Mr Harold Thomas; and

c. any other matters relevant to the enduring and fair use of the Aboriginal Flag design by the Aboriginal and Australian community.

Click the terms of reference here.

The fun part: if you are wanting to make a submission, you need to get it in by 18 September 2020 as the Committee is due to report by 13 October.

We thought we had come a long from the days when the Commonwealth Government (in the guise of the Reserve Bank) could appropriate David Malangi’s artwork for the wonderful design of the (now defunct) one dollar note; Johnny Bulun Bulun and a later group of artists including George Milpurrurru rightly successfully asserted their copyrights over blatant infringers.

Now, however, it seems many people think Mr Thomas shouldn’t have the same rights.

While Minister Wyatt ruled out buying the copyright last year, this year it seems that Mr Thomas might be refusing to sell or this Senate inquiry might be upsetting the negotiations.

Placitum (xxxi) of s 51 of the Constitution does give the Commonwealth power to compulsorily acquire property on just terms:

(xxxi) the acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws;

and, of course, placitum (xviii) confers power to make laws with respect to, amongst other things, “copyright”. It seems difficult to argue that a law to acquire one person’s copyright would not be a law with respect to copyright.[^f1]

Of course, an assignee of copyright takes subject to any licences that had previously been granted (and are still on foot): Copyright Act 1968 s 196(4). So, the Commonwealth would also have to have some power under the licence to Wam Clothing to terminate it or, presumably, acquire its property on just terms too.

[[^f2]: According to Shephard J’s judgment in Thomas, the Governor-General proclaimed the artistic work to be the flag of the Aboriginal People under s 5 of the Flags Act, back in July 1995. It seems from Sheppard J’s judgment, Mr Thomas came up with the design for use at the Aboriginal Day rally in Adelaide in 1971 “off his own bat”.

[^f1]: There are also the murky possibilities of placitum (xxvi).

Press publishers’ (new) rights Down Under

On 31 July, the ACCC published an exposure draft of the Bill aimed at forcing Google and Facebook to pay news businesses for the use of their news in services like Google Search, Google News and Facebook News Feed and Tab.

Some background

News media businesses claim that Google and Facebook make anywhere from $600 million to $1 billion a year from “using” the news the news media businesses publish.[1]

When Spain introduced a law to redress this “value gap”, Google responded by not including Spanish news in its services. Germany introduced a similar law, but publishers had to opt into the scheme, not out. Apparently, none did.

Last year, the EU introduced a press publisher’s right as part of its Digital Single Market (DSM) Directive.[2] When France implemented this (adopting the Spanish model), Google once again withdrew. The French Competition authority, however, has intervened.

Meanwhile, in Australia, the ACCC published the Final Report for its Digital Platforms Inquiry in July 2019.

Amongst other things, it concluded that Google and Facebook had become unavoidable trading parties for news media businesses wishing to reach audiences online. This created a significant imbalance in bargaining power.

In December 2019, the Treasurer directed the ACCC to facilitate negotations between the news businesses and Google and Facebook to develop a voluntary bargaining code to address this imbalance.

Those negotiations apparently not leading to the desired outcome, on April 2020, the Treasurer directed the ACCC to develop a mandatory bargaining code:

The Government has decided that the original timeframe set out in its response requires acceleration. The Australian media sector was already under significant pressure; that has now been exacerbated by a sharp decline in advertising revenue driven by coronavirus. At the same time, while discussions between the parties have been taking place, progress on a voluntary code has been limited according to recent advice provided by the ACCC following a request by the Government for an update. The ACCC considers it is unlikely that any voluntary agreement would be reached with respect to the key issue of payment for content.

The exposure draft bill and accompanying explanatory memorandum are the results of that process. I shall try only to describe what is being proposed.

What the bill will do[3]

The Bill will introduce a new Part IVB into the Competition and Consumer Act 2010.

Qualifying news business corporations may apply to the Australian Communications and Media Authority (ACMA) to register under the code: ss 52D and 52E.

Upon registration, designated digital platform corporations:

  1. must comply with minimum standards of conduct with respect to the registered news business’ “covered news content”;
  2. must participate in an arbitration to determine the remuneration payable to the registered news business for the use of its “covered news content”; and
  3. must not discriminate against the registered news business.

Designated digital platform corporations

The Bill will give the Treasurer power to designate by legislative instrument digital platform corporations and digital platform services that will be subject to the mandatory bargaining code: s 52C.

According to the explanatory memorandum, the designated digital platform corporations will be initially Google and Facebook, although other businesses may also be designated: [1.30]

The explanatory memorandum at [1.34] also “expects” that the services which will be designated are:

  • Facebook News Feed (including Facebook Groups and Facebook Pages);
  • Facebook News Tab (if and when released in Australia);
  • Instagram;
  • Google Discover;
  • Google News; and
  • Google Search.

News business corporations and news sources

A news business corporation may apply for registration of its news business(es) under the scheme if:

  1. the news corporation’s annual revenue exceeds $150,000 or exceeded $150,000 in three of the last five financial years: s 52G;[4]
  2. the news source(s) its seeks to register create and publish online content that is predominantly “core news content”: s 52H;
  3. the news source(s) operate predominantly in Australia for the dominant purpose of serving Australian audiences: s 52J; and
  4. the news source(s) adhere to professional quality standards: s 52K.

Once registered, the rights of the news business corporation extend to “covered news content”, not just its “core news content”.

Core news content and covered news content

The definition in s 52A of “core news content” is content that:

(a) is created by a journalist; and

(b) that records, investigates or explains issues that:

(i) are of public significance for Australians; or

(ii) are relevant in engaging Australians in public debate and in informing democratic decision-making; or

(iii) relate to community and local events.

The explanatory memorandum explains at [1.51] – [1.53] that “core” news content can relate directly to matters of public policy and decision making at any level of government such as political, court and crime reporting. The activities of private sector entities may also be included if of sufficient public importance.

Core news content is a subset of “covered news content” which, in addition to “core news content”, also includes:

content that is created by a journalist and is relevant in recording, investigating or explaining issues of interest to Australians.

According to the explanatory memorandum at [1.66] – [1.67] covered news content is intended to extend to:

sports and entertainment related news such as interviews with coaches and players, reporting about the entertainment industry and coverage of reality television.

(This is not intended to be an exhaustive description of what is included.) However, it does not include sports broadcasts or the results or scores of sports, “entertainment content such as drama or reality TV programming” or:

specialty or industry reporting, product reviews, talk-back radio discussions, content produced by academics and documentaries.

Professional quality standards

The Bill proposes two requirements for quality standards: s 52K. The news source:

  1. must be subject to the rules of the Australian Press Council, the Independent Media Council, the Code of Practice of the Commercial Television Industry or the Commercial Radio industry or the Subscription Broadcast industry, or rules substantially equivalent to these; and
  2. the news source must have editorial independence from the subjects covered.

The explanatory memorandum explains at [1.58] that the second requirement of editorial independence means the news source must not be controlled by a political advocacy group such as a political party, trade union or lobby group. It also means that the news source cannot be controlled by someone with a commercial interest in the coverage and gives the example of sports coverage owned or controlled by the sport’s governing body.

The minimum standards

Once a news business is registered, the digital platform corporation must comply with the minimum standards: s 52L.

These include, for each digital platform service:

  • listing and explaining what data is collected about users of the news business (s 52M);
  • explaining how the data about such users made available to the news business differs from the data the digital platform corporation collects about users of its service; and
  • explaining how the news business can access that additional data;
  • giving the news business notice of any changes to algorithms used by the digital platform service likely to have a significant effect on the ranking of the news content on the platform or specifically directed at the ranking of paywalled content: s 52N, 52O;
  • giving notice of other changes to policies or practices likely to have a significant effect on the display and presentation of the news business’ covered news content or advertising directly associated with that content: ss 52P and 52Q;
  • if requested, provide the news business with flexible content moderation tools so that the news business can remove or filter comments on the digital platform service about the news content: s 52S; and
  • develop a proposal, in consultation with all registered news businesses, to recognise original covered news content when ranking and displaying news content: s 52T; and
  • must discriminate between registered news businesses or registered news businesses and news business which are not registered: s 52W.

The arbitration scheme

In addition to the rights afforded it throught the minimum standards, a registered news business may also initiate a bargaining and arbitration process with the digital platform for the use of news content.

The registered news business (or its representative) inititates the bargaining process by giving notice “it wishes to bargain over one or more specified issues relating to its covered news content”: s 52Y.

While the publicly funded ABC and SBS may initiate bargaining, they cannot bargain about remuneration: s 52Y(6).

The parties must negotiate in good faith (s 52ZB) and can demand the provision of information and data relevant to the issues the subject of bargaining, a kind of discovery process: s 52ZC. This includes discovery about the benefits the digital platform derives from use of the news content.

Either party may refer the dispute to compulsory arbitration if:

  1. there has been at least one day of mediation; and
  2. the parties have not reached agreement within three months of bargaining starting: s 52FZ

Provided there has been at least a one day mediation, the parties can also agree to refer the dispute to compulsory arbitration after 10 days.

The arbitration itself is particularly interesting. It is “final offer” arbitration.

Although the news businesses can initiate bargaining over “issues”, the arbitral panel must make a determination about the remuneration payable by the digital platform corporation to the news business(es).

Ten days after the arbitration is established, both parties must submit their final offers about the amount of the remuneration. Once submitted, the parties cannot amend or withdraw their respective “final offers”. They may, however, submit a response to the other party’s final offer. The arbitral panel must accept one or other of the final offers: s 52ZO.

The only exception to this requirement is where the arbitral panel considers both final offers are “not in the public interest because they are highly likely to result in serious detriment to the provision of covered news content in Australia or Australian consumers.” In that case, the arbitral panel must adjust one or other of the final offers as required by the public interest.

The final offers must also be provided to the ACCC, which is authorised to provide its comments about the final offers to the arbitral panel before the panel hands down its decision: s 52ZS.

The “final offer” process has the considerable advantage that it avoids the expense and delay usually associated with rate setting proceedings for access to essential facilities or under the licensing schemes overseen by the Copyright Tribunal.

In deciding which final offer to accept, the arbitral panel must have regard to (s 52ZP):

  • the direct benefit (whether monetary or otherwise) of the registered news business’ covered news content to the digital platform service;
  • the indirect benefit (whether monetary or otherwise) of the registered news business’ covered news content to the digital platform service;
  • the cost to the registered news business of producing covered news content;
  • whether a particular remuneration amount would place an undue burden on the commercial interests of the digital platform service.

It is striking that the matters which must be taken into account do not include the benefits (direct or indirect) that the news business derives from being carried in the digital platform service.

Once the arbitral determination has been handed down, the parties must enter into a written agreement to ensure the digital platform corporation will pay the news business the remuneration determined in the arbitration: s 52ZT.

Sanctions

The ACCC may issue an infringement notice to a person who contravenes that person’s obligations under this scheme. The penalty for a corporation found to be in contravention is up to 600 penalty units: s 51ACF – i.e., up to $132,000.

In addition, s 76 of the Competition and Consumer Act 2010 will apply so that civil penalties may be imposed up to the greater of:

  • $10 million;
  • 3 times the total value of the benefits reasonably attributable to the non-compliance; or
  • 10% of the contravenor’s annual turnover in the previous 12 months.

EU’s DSM Directive

The EU’s press publisher’s right under the DSM Directive is an obvious inspiration for this new right for news businesses. There are a number of significant differences, in addition to the far greater detail elaborated into the Bill.

For example, unlike the DSM Directive, the Code to be imposed by the Bill is not tied to use of copyright or other (at this stage) recognised property right. Instead, the Bill creates a right to payment for some “intangible value”.

The DSM Directive expressly excludes from the obligation for payment:

  • hyperlinking; or
  • “the use of individual words or very short extracts of a press publication” – which seems a lot like the snippets returned in a Google Search for example.

At least since the Victoria Park Racing case, the High Court has declared that Australian law does not protect all intangible value, only those sources of value falling within recognised legal rights. Later, in the Blank Tapes case, the High Court struck down a “royalty” imposed on the sale of blank cassette tapes on the grounds it was not a payment for use of copyright and so was invalid as a tax or, possibly, an acquisition of property on other than just terms. It will be interesting to see whether the resort to an access regime – one in which the facility provider pays, not the user – changes the calculus.

Under the DSM Directive, the obligation to pay does not apply to articles or materials published before 6 June 2019.[5] Further, it applies to articles and materials only for two years following publication.[6]

Another difference is that art. 15.5 of the DSM Directive imposes an obligation to ensure that the authors of the press publication receive “an appropriate share” of the remuneration the press publisher receives from the digital platforms.

Google’s reaction has been swift. It has cancelled, or suspended, a licensing deal it had reached with a number of independent publishers. It has come out strongly against the scheme.[7] Now, when one initiates a search on Google or seeks to watch something on YouTube, one is met with the following banner:

Comments should be submitted to the ACCC by 28 August 2020

Exposure Draft Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2020


  1. For example, Mason and Kehoe, [‘Tech giants should pay media $600m: Costello’][600m]. Google disputes this and claims that the news media business gain much more value from its services than it receives.  ?
  2. Directive (EU) 2019/790 on copyright and related rights in the Digital Single Market and amending Directives 96/9/EC and 2001/29/EC, art. 15. For Communia’s outline and guidelines see here and here.  ?
  3. Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2020.  ?
  4. The $ may change as they are included in “curly” brackets.  ?
  5. It presumably being a coincidence that date was the 75th anniversary of the D-Day landings.  ?
  6. Strictly speaking, it is 2 calendar years commencing on 1 January following the year in which the article was published: art. 15.4.  ?
  7. For exmple, here and here. The ACCC has denounced Google’s position as misleading.  ?

More copyright reforms

Yesterday, the Government announced its plans for reforms to the Copyright Act 1968 to improve “access”.

No fair use – so much for all those expert reports!

Instead, according to the Press Release, the amendments will involve:

  • a new fair dealing exception for non-commercial quotation;
  • a limited liability scheme for use of orphan works;
  • amendments to the library and archive exceptions;
  • amendments to the educational use exceptions;
  • streamlining of the government use provisions.

There is a press release here. Apparently, the Government is planning to release an exposure draft of the proposed legislation later this year.

Lid dip, Carolyn Hough

Love was not in the air – Part 2

In a previous post, we looked at why Perram J held that Glass Candy’s “Warm in the Winter” and Air France’s “France is in the Air” reproduced a substantial part of the musical work in Love is in the Air, but not the literary work comprising the lyrics.

A further set of issues his Honour had to untangle was which acts involving the streaming and downloading of Warm or France infringed and who owned those rights.

You will recall that Glass Candy are an American electronic duo based in America who, in 2011, released “Warm in the Winter”. Glass Candy wrote and recorded “Warm in the Winter” in the USA. They made it available for streaming and download on, first, the Big Cartel website and then the IDIB website.[1] They or their rights management agent, Kobalt, also made the recording available through iTunes / Apple Music, Google Play, Youtube, Spotify etc.

Subsequently, Glass Candy provided a version of “Warm in the Winter” to Air France for use by the latter in its Air France: France is in the Air promotional campaign. Until this litigation started, Air France used “France is in the Air” in TVCs and radio advertisements in 114 countries (but not Australia), posted the advertisments on its Youtube channel (which could be downloaded from Australia) and, if you rang up its office from Australia and all its customer service operators were tied up, for its “music on hold” service.

Infringement, or not

Having found that Warm and France reproduced a substantial part of Love, Perram J turned to determing which conduct engaged in by Glass Candy, Kobalt and Air France actually infringed any copyright in Australia and who owned those rights.

In summary, Perram J held that:

(1) the streaming and downloading of Warm from the Big Cartel and IDIB websites infringed the copyright in Love;

(2) the streaming and downloading of Warm from the streaming services iTunes/Apple Music, Google, Play, Spotify and Youtube did not infringe copyright as it was licensed; and

(3) the playing of France to Australians via Air France’s music on hold service did infringe, but the streaming and downloading via Youtube did not.

The infringing acts

The streaming of Warm to Australia and its downloading by subscribers in Australia entailed a number of acts:[2]

(1) the making and recording of Warm;

(2) the uploading of a copy of Warm on to the servers of each streaming service;

(3) the making available of that copy to be accessed by end-users in Australia;

(4) the streaming of the recording to someone located in Australia; and

(5) in the case of downloads, the downloading of a copy of Warm on to the end user’s computer (or smart device) in Australia.

Making and recording – the reproduction right

The making and recording of Warm and France did reproduce a substantial part of Love but, having taken place in the USA (or the USA and France), were not infringements of the copyright in Australia.[3]

There does not appear to have been evidence about where the servers of the streaming services such as iTunes / Apple Music, Google Play, Spotify or Youtube were located, but Perram J was not prepared to assume they were in Australia. So loading the copy on to the streaming service’s server was not an infringing activity either.

Making the recording available to be accessed – the communication right[4]

Although storing the copies on the streaming services’ servers was not a reproduction implicating Australian copyright, Perram J considered that Glass Candy’s acts of communicating the copies of Warm to the streaming services (uploading them) could infringe copyright in Australia and the acts of streaming and downloading in Australia would be damage suffered by the copyright owner in Australia. At [376], his Honour said:

…. That act of infringement seems to me to occur by communicating Warm to iTunes (and if it had been proven the other online music services). That was the infringement. Each time thereafter that the streaming service raised revenue by streaming or downloading Warm that was evidence of the damage suffered by the Applicants or the profits made by Glass Candy. Viewed that way, whether the streaming and downloading of Warm from the online music services is a contravention is irrelevant.

From the context, however, it appears that that act of communicating the copy to the streaming service(s) was not an infringement alleged against Glass Candy. I am not sure how that “infringement” would work, however, given his Honour’s further findings.

The alleged infringements the subject of the proceeding

That left as infringing acts being pursued by the Applicants:

(1) the streaming of Warm to Australians from the Big Cartel and IDIB websites – an exercise of the communication right;

(2) the making of the copies of Warm by users in Australia from the Big Cartel and IDIB websites – an exercise of the reproduction right; and

(3) the streaming of Warm to Australians from the streaming services – also an exercise of the communication right;

(4) the making of the copies of Warm by users in Australia from the streaming services – (at [276]) an exercise of both the communication right (by the streamng service) and the reproduction right (by the end-user); and

(5) in the case of France, the playing of “music on hold” to callers from Australia.

These allegations gave rise two problems: (a) who was the owner of the relevant right and (b) what licences of these copyrights had been granted. The issues that arose are a good illustration of the kind of tracing the chain of title fun the long term of copyright requires you to engage in to make sure you have identified the right person as the copyright owner.

In summary, Perram J found that Boomerang had no standing to sue anyone for infringing the communication right as it was not the owner of the relevant copyright; APRA was. Boomerang was the owner of the copyright in respect of the reproduction right, but its interest was partial or concurrent with AMCOS’ interest as the exclusive licensee of that right.

However, the streaming and downloading from the streaming services, iTunes / Apple Music, Youtube, Google Play and Spotify did not not infringe as those services held licences from APRA and AMCOS for those acts.

The copyright and ownership – a chain of title history

Harry Vanda and the late George Young – the Easybeats, Flash in the Pan – composed Love is in the Air in 1977.

In 1978, they assigned all their copyright in the literary and musical works comprised in Love to Alberts.

Subsequently, in 2016, when Alberts sold its business to BMG, it excluded from the sale the back catalogue of songs written by Vanda, Young and a third member of the Easybeats, Stevie Wright. Alberts instead assigned these rights to Boomerang – a new company owned by members of the Albert family.

However, in 1972 Vanda and Young had become members of the Australasian Performing Right Society (APRA), the collecting society for public performance rights and, as it was before the introduction of the broadly based communication right[5] by the Copyright Amendment (Digital Agenda) Act 2000, the cable diffusion right.

When Vanda and George Young became members of APRA, like everyone else who becomes a member, they assigned to APRA the exclusive rights:

(a) to perform in public; and

(b) to transmit via a diffusion service,

in all of their existing copyrights and any copyright works made in the future while still a member of APRA.[6]

So, the rights in Love is in the Air assigned by Vanda and Young to Alberts did not include the public performance or diffusion rights, as they had already been assigned to APRA.

An interesting point to note here is that the assignment to APRA in 1972 was not an assignment of the broad communication right, as there was no such right under Australian law at that time. Further, the repeal of the diffusion right and its replacement with the broad communication right did not affect that earlier assignment. The earlier assignment did not catch, however, the broader rights encompassed in the communication right, apart from the diffusion service, when the broader right came into force as the terms of the assignment were limited just to the diffusion right.

After the assignments from Vanda and Young, Alberts had also entered into agreements which affected the rights of reproduction and communication.

In 1986, Alberts had entered into a licence with AMCOS granting AMCOS the exclusive rights to authorise the making of records from the Alberts catalogue, including Love. Over time this was amended so as to include the making of digital records. The exclusive licence included the right to authorise the making of reproductions for the purposes of broadcasting in Australia. There were, however, three exclusions from these exclusive rights: they did not extend to making reproductions for inclusion in advertisements, or cinematographic films for the purpose of being broadcast in Australia. They also did not extend to licensing a number of named record companies.

In 1992 and again in 2005, Alberts had also entered into assignments with APRA. The 2005 assignment included an assignment of the right of communication to the public (introduced by the Digital Agenda Act in 2001).

Finally in 2016, after the assignment from Alberts of its copyright in Vanda, Young and Wright works, Boomerang also granted an exclusive licence over its copyright to AMCOS and assigned its public performance and communication rights to APRA.

At [299], Perram J found Boomerang and AMCOS had mutually abandoned the earlier licence granted by Alberts and replaced it with the 2016 licence.[7] The 2016 licence granted AMCOS exclusive rights to authorise reproduction of Love to make records, for digital downloading and communication to the public. AMCOS was not licensed to authorise use of Love in advertisements or synchronisation into a film.

A summary

So, at [326] and [342] Boomerang had no standing to sue Glass Candy or Air France in respect of any streaming or the playing of ‘music-on-hold’ as APRA was the owner of the relevant rights.

Boomerang was the owner of the reproduction right (at [334] – [335], [342]), but its interest was concurrent with AMCOS as the exclusive licensee under s 119 and s 120. AMCOS of course also had concurrent rights under those sections.

Which acts of streaming / downloading infringed?

The straightforward case on infringement was the streaming and downloading from the Big Cartel and IDIB websites. The position of iTunes / Apple Music, Google Play, Spotify, Youtube was complicated by licences those entities had from APRA and AMCOS.

iTunes / Apple Music, Spotify et al.

The evidence showed that sales of Warm through Apple’s services amount to $85.41 (although some of these were probably to the Applicants’ solicitors).

Perram J held that the streaming and downloading of Warm from these services did not infringe as they held licences from APRA and AMCOS which permitted these acts.

In January 2010, Apple Pty Ltd had entered into a licence agreement with APRA and AMCOS. By cl. 9.1, the licence was a non-exclusive licence to:

(a) reproduce AMCOS Works;

(b) authorise the reproduction of AMCOS Works;

(c) communicate in the Territory the APRA Works (including authorising their electronic transmission from Your Digital Music Service to Your customers);

(d) authorise Your Affiliates to communicate the APRA Works to customers in the Territory as necessary in the course of providing the Digital Music Service,

in the form of Downloads (whether by You, or Your customers in the Territory, onto storage devices) for the purpose of Sale or to complete a Sale, including in the form of Clips provided at no charge for the sole purpose of demonstrating the Clip to customers and potential customers of Your Digital Music Service …

Love was included in the APRA and AMCOS Works.

Perram J held that the rights to reproduce and communicate to the public included the rights, not just to reproduce or communicate the whole of Love, but also a substantial part of it through the operation of Copyright Act 1968 s 14. As Warm and France reproduced a substantial part of Love, they were covered by the licences. At [352], his Honour explained:

Because Love is in the AMCOS and APRA catalogues it follows that since 2010 Apple has been fully licensed to provide digital streaming and downloading of Love. And because the doing of an act in relation to a work is taken by s 14 of the Copyright Act to include a reference to the doing of that act in relation to a substantial part of the work, it also follows that Apple has at all material times been licensed by APRA and AMCOS to make available for streaming or digital download a substantial part of Love. Of course, the Applicants’ principal contention in this case is that making Warm available for streaming or digital downloading involves the communication or reproduction of a substantial part of Love. However, it would appear that iTunes is lawfully entitled to make Warm available for streaming or downloading even if it does involve a communication or reproduction of a substantial part of Love. Consequently, the Applicants can have no possible case against Apple for making available Warm for streaming or downloading from iTunes.

Similar conclusions followed in respect of the other streaming services which also had licences with APRA and AMCOS.

As Apple did not infringe by streaming or authorising the downloading of Warm, so also Glass Candy could not be liable for authorising the (non-)infringement.

There was an additional wrinkle on this part of the case. Kobalt admitted there had been streaming from Google Play, Spotify and Youtube, but Glass Candy did not. Perram J considered the evidence did not actually establish there had been streaming or downloading from these services so, if the licences did not cover these activities, Kobalt alone would have been liable by reason of its admissions.

The Big Cartel and IDIB websites

The evidence showed that Warm had been downloaded 12 times for $11.50 in revenue from Big Cartel and only once from IDIB. There were also payments to Kobalt Australia of $266.60 from AMCOS and $366.43 from APRA. Warm was still being advertised for sale for $1 from the IDIB website.

The position of downloads from the websites Big Cartel and IDIB was straightforward. The evidence showed Padgett uploaded Warm or caused it to be uploaded and Ida No received payments from time to time from the sites. Therefore, at [348] they were liable for authorising the communications to the public and downloading from those websites.

The position of streaming was more complicated. Padgett and Ida No had licensed their distribution / streaming rights to BMI in 2010. APRA’s own records recorded BMI as the owner of copyright in Warm for the public performance and communication rights. IDIB had also licensed streaming rights in relation to its website to Kobalt US. At [390], this meant that the person liable for authorising the streaming from the idib website was either BMI or Kobalt US, neither of which was a party. The receipt of royalties by Kobalt Australia from APRA was not sufficient to find it liable for authorising the streaming.

I am not sure why, if Padgett and Ida No had licensed their rights to BMI or Kobalt USA, they were nonetheless not liable for authorising infringing conduct by those entities or authorised by them.

Air France

The case against Air France for streaming promotional videos from Youtube failed because of Youtube’s licence from APRA for the reasons Apple’s licences protected streaming and downloading. There was still liability for the music-on-hold, however, as Air France did not hold a licence from APRA.

Remedies

Glass Candy contended that any damages would be de minimis and so relief should be withheld.

At [432] Perram J rejected this argument. First, his Honour found that the copying of Love had been deliberate so the infringements were flagrant. That meant additional damages may well be awarded. In addition, his Honour anticipated that the compensatory damages award might not be so modest:

Further, whilst it is tempting to think that the damages might be limited by the apparently modest infringements I have found, the Respondents (other than Kobalt) will no doubt have to deal with a contention by the Applicants that their damages should be assessed on a foregone licence basis. Without wishing to lend colour to that contention, damages on that basis may not be so modest.

[Boomerang Investments Pty Ltd v Padgett (Liability)][2020] FCA 535[8]


  1. Italians Do It Better – a record label jointly owned by Padgett (aka Johhny Jewel) and a DJ, Mike Simonetti.  ?
  2. Similar analysis applies to the uses of France by Air France which, additionally involved the transmission of France via a diffusion service to callers on hold.  ?
  3. As noted in my previous post, Perram J may have been interested in exploring whether or not an Australian court could hear and determine questions of infringement under US law.  ?
  4. Copyright Act 1968 s 31(1)(a)(iv): the exclusive right to communicate the work to the public.  ?
  5. Copyright Act 1968 s 31(1)(a)(iv): the exclusive right to communicate the work to the public.  ?
  6. Of course, that would not apply to copyright which had been assigned to someone else before becoming a member of APRA.  ?
  7. As Alberts successor in title, Boomerang was bound by the terms of the 1986 licence granted to AMCOS: Copyright Act 1968 s 196(4).  ?
  8. The applicants’ subsequent attempt to have the Reasons revised or to re-open their case was given short shrift.  ?

Love was not in the air

but don’t go humming (or whistling or singing) that refrain in public!

There are probably not that many Australians who aren’t familiar with John Paul Young’s Love is in the Air[1] either as a popular song from the 70s or featuring prominently in the movie, Strictly Ballroom.

Glass Candy are an American electronic duo based in America who, in 2011, released “Warm in the Winter”. Glass Candy wrote and recorded “Warm in the Winter” in the USA. They made it available for streaming and download on, first, the Big Cartel website and then the IDIB website.[2] They or their rights management agent, Kobalt, also made the recording available through iTunes / Apple Music, Google Play, Youtube, Spotify etc.

Subsequently, Glass Candy provided a version of “Warm in the Winter” to Air France for use by the latter in its Air France: France is in the Air promotional campaign. Until this litigation started, Air France used “France is in the Air” in TVCs and radio advertisements in 114 countries (but not Australia), posted the advertisments on its Youtube channel and, if you rang up its office and all its customer service operators were tied up, for its “music on hold” service.

Boomerang, APRA and AMCOS sued Glass Candy, Air France and Kobalt for infringing the copyright in the musical work and the literary work comprised of the lyrics of Love is in the Air in respect of only the streaming to Australia, downloading by customers in Australia and playing the music on hold to customers in Australia.

The making of the recordings in the USA, the streaming and downloading outside Australia and the running of Air France’s advertisements in those 114 other countries were not part of the case.[3]

Perram J has found that Glass Candy and Air France have infringed the copyright in the musical work comprising Love is in the Air, but the streaming and downloading through iTunes, Youtube, Spotify, Google Play and others did not.

Following the Kookaburra case, Perram J recognised that infringement required a three step analysis:

  • first, identifying the copyright work in which the copyright in Australia subsists;
  • secondly, identifying the part (or parts) of the allegedly infringing work which is said to have been reproduced from the copyright work – involving identifying some sufficiently similar matter which has been copied from the copyright work; and
  • thirdly, determining that the taken part (or parts) were the whole or a substantial part of the copyright work.

To these steps, one should also add two further requirements:

  • identifying the act or acts said to infringe and which right or rights comprised in the copyright that act (or those acts) implicated (e.g. reproduction or communication to the public); and
  • identifying who owned the relevant copyright acts

It’s a long story. Perram J devoted 434 paragraphs to get there. Given that, this post will look at why Perram J found Warm and France did, or did not, infringe Love. A later post may look at the untangling of the ownership.

Infringement, or not

The central question was whether “Warm” and “France”[4] reproduced a substantial part of either the musical work or the literary work comprised in “Love”.

Boomerang et al. contended that the substantial parts of “Love” reproduced in “Warm” (and “France”) were the music and lyrics (1) for the phrase “love is in the air” in (a) the first two lines of the verses and (b) the chorus and (2) the couplet comprising the first two lines of each verse.

In case you are one of those Australians who can’t recite it from memory, you will recall the first verse is:

Love is in the air, everywhere I look around

Love is in the air, every sight and every sound

And I don’t know if I’m bein’ foolish

Don’t know if I’m bein’ wise

But it’s something that I must believe in

And it’s there when I look in your eyes

At [83]: Perram J linked to an audio file of the first two lines.

The chorus is:

Love is in the air

Love is in the air

Whoa, oh, oh, oh

At [87]: Perram J linked to an audio file of the chorus.

Love in the single version released by John Paul Young runs for about 3:28. The phrase “Love is in the air” in the verses runs for about 2.2 seconds, appearing eight times for a total of 20 seconds.

By way of comparison, the relevant parts of “Warm” were the first two lines in two blocks:

Block 1

Love’s in the air, whoa-oh

Love’s in the air, yeah

We’re warm in the winter

Sunny on the inside

We’re warm in the winter

Sunny on the inside.

Woo!

Block 2

Love’s in the air, whoa-oh

Love’s in the air, yeah

I’m crazy like a monkey, ee, ee, oo, oo!

Happy like a new year, ee yeah yeah, woo hoo!

I’m crazy like a monkey, ee, ee, oo, oo!

Happy like a new year, yeah, yeah, woo hoo!

As published in 2011, Warm had a running time of about 6 minutes 45 seconds. The sung line “love is in the air” appeared in Warm at about 1:00–1:02, 1:07–1:09, 2:00–2:02 and 2:08–2:10 of the recording. His Honour linked at [95] to the audio files for the phrase “love is in the air” by way of comparison.

The musical work

A first point of interest is that Perram J accepted at [66] – [77] the musical work included the “instructions to the singer on what sounds to make with the mouth”. This included the sounds comprising the sung lyric including “the non-literary phonetic instructions”:

l?v ?z ?n ði e?, ??vri we?r a? l?k ??ra?nd

l?v ?z ði e?, ??vri sa?t ænd ??vri sa?nd.

However, it did not include the quality of John Paul Young’s actual performance (which was part of the copyright in the sound recording and the performer’s right).

Perram J accepted that the comparison between Love and Warm depended on aural perception and not a ‘note-for-note comparison’.

Applying the ‘ordinary, reasonbly experienced listener’ test, Perram J held at [99] – [104] that the passages in the musical work accompanying the phrase “Love’s in the air” in the Warm blocks was objectively similar to the musical work accompanying that phrase in lines 1 and 2 of Love’s verses, but not in the chorus. At [109], lines 1 and 2 as a couplet were not.

Perram J accepted that there were differences between the relevant parts of Love and Warm. The transcription of the respective scores were different, the difference in styles – disco vs death disco, the presence of a moving bass line in Love, but not Warm were, on the aural test, not significant. It was:

common ground that the vocal lines of both … comprise five notes, the first two or three notes … being in same pitch, the next note dropping down in pitch by a minor third, and the next note returning up in pitch by a minor third.

and according to the experts ‘the pitch and rhythmic content of the opening vocal phrase is notably similar’ between Love and Warm and that ‘there is a basic aural connection between this phrase and the corresponding phrases in Warm’.

At [110] – [202], Perram J considered and rejected Glass Candy’s claim that they were not aware of John Paul Young’s recording of Love before Warm was composed and had not copied it. Rather, his Honour found that they had deliberately copied Love in making Warm.

Perram J then held that the objectively similar part of Love copied into Warm was a substantial part of the copyright in the Love musical work.

Glass Candy argued that the musical phrase for “love is in the air” was ‘too slight and too mundane’ to be a substantial part of Love. It was only five notes in length, did not contain much musical information and, as Vanda conceded, it was a ‘fragment of a melody’. Further, it was too slight to be a copyright work in its own right.

Perram J held, at [205] – [208], however, that the phrase as a sung lyric was original and an essential part of Love, even if it was not a copyright work in its own right. The issue was whether it was a substantial part of Love is in the Air. Assessed qualitatively, therefore, it was a substantial part of Love.

Perram J accepted that the phrase ‘love is in the air’ is a common English idiom and that ‘by industrial combing of the archives’ examples of the melody could be found, but for the purposes of the musical work the literary meaning of the phrase was not relevant. The issue was:

whether the line ‘love is in the air’, as a set of instructions, sung by a human to that melody and with its accompanying orchestration is original. In my view, that question answers itself.

In undertaking the comparison, his Honour discounted parts of the musical work in Love not included in Warm, such as the tambourine track.

His Honour also considered that a cumulative total of the phrase occurring in Love of 20 seconds was not insignificant quantitatively.

The literary work

In contrast to his finding on musical work, Perram J at [216] – [219] rejected the case on infringement of Love as a literary work. The phrase ‘love is in the air’ as a commonplace was a famous idiom which nobody owns. It was not sufficiently original to be a substantial part of the literary work on its own.

Boomerang Investments Pty Ltd v Padgett (Liability) [2020] FCA 535


  1. Which of course is really Vanda and George Young’s Love is in the Air performed by John Paul Young.  ?
  2. Italians Do It Better – a record label jointly owned by Padgett (aka Johhny Jewel) and a DJ, Mike Simonetti.  ?
  3. At [16], Perram J speculated this might have been because the action would “probably” have needed to brought in the USA and the potential for a jury trial might have been unattractive. There is a suggestion in his Honour’s reasons that he would have liked to explore an Australian court hearing claims for infringement under US law, presumably based on the Supreme Court’s ruling in Lucas Films v Ainsworth.  ?
  4. For present purposes, the main difference between “Warm” and “France” is that the latter substituted the word “France” for “warm” in the phrase “Love is in the air”.  ?

Trumpet blowing

It’s that time of the year again when IPSANZ’ annual copyright and designs update comes up.

This year it takes place on 30 July, online – for those of you on the eastern seaboard starting at 1:00pm.

Registration is free for IPSANZ members, A$50 for non-members in Australia and A$46.50 for NZ and international non-members..

For registration and other details, including times for NZ and the other states and territories, go here.

Ordinarily, I would say “hope to see you there!”, but ….

Still, I do hope you can join in.

US DMCA Safe Harbors Review

The US Copyright Office has published a report about its review of §512 of the Digital Millenium Copyright Act – the service provider safe harbors. (Australia has its own safe harbour provisions in section 116AA and following of the Copyright Act 1968 but, as their availability is limited to a much narrower classe of “service providers”, they have not proved of much interest.)

According to the US Copyright Office’s report, this is the first comprehensive review of the operation of the safe harbors in the 20 years since their enactment.

The Copyright Office says its report does not recommend any wholesale changes to the scheme. However, there are “certain areas where Congress may wish to fine-tune” the section to better balance its operation. There are 12 recommendations about:

  • the definition of service provider who may qualify for the safe harbors;
  • the requirements for a repeat infringer policy
  • what level of knowledge of an infringing activity should a service provider have before the safe harbor no longer applies
  • appropriate identification of the allegedly infringing content and its location
  • the penalties for misrepresenting infringement claims or counter-notices
  • the extent to which a rights holder must take into account fair use before issuing a take-down notice
  • the extent to which notification standards reflect current technological developments
  • the time frames for response to counter-notices disputing a take-down notice
  • the mechanisms for subpoena-ing service providers for information about alleged infringers
  • the scope of injunctions
  • possible non-statutory approaches
  • alternative stakeholder proposals including web-site blocking and notice and staydown proposals which the Copyright Office considers require further study.

In addition to the review of the operation of the safe harbors and recommendations, there are also chapters on how the “online ecosystem” has developed since the enactment of the DMCA and legal approaches in other countries including our very own “site blocking” laws.

US Copyright Office summary

Full Report: Section 512 of title 17, May 2020

Repeal of s 51(3)

The bill repealing (amongst other things) s 51(3) of the Competition and Consumer Act did get passed and has received royal assent.

The repeal takes effect on 13 September 2019.

So, if you thought you were relying on s 51(3)’s protection, you have a bit less than 6 months to get your house in order.

Your licences and assignments of IP rights probably will not get you into trouble for the most part unless you have market power. But that is not exactly a hard and fast rule so you should discuss your arrangements with your lawyers ASAP.

As discussed in this post, one area of potentially significant concern is where the IP holder has its own retail outlets and also licenses other retail outlets – e.g. not uncommon for franchisors who have their own outlets and franchisees. There is a concern that may give rise to criminal cartel conduct.

If you want to know about the prohibitions on cartel conduct, Ian Wylie has published a paper “Cartel conduct or Permissible Joint Venture?

On Tuesday, the ACCC also announced it hopes to publish draft guidelines by “mid-2019” and finalise them before 13 September. Amongst other things, these proposed guidelines will outline:

how the ACCC proposes to investigate and enforce Part IV in relation to conduct involving intellectual property rights. They will also provide hypothetical examples to illustrate conduct that the ACCC considers is likely or unlikely to contravene Part IV.

Hells Angels v Redbubble

Redbubble’s online market place has survived the Hells Angels’ copyright infringement claims, but did infringe their registered trade marks. The reasoning, however, leaves questions hanging over Redbubble’s business model.

Redbubble provides an online market place. Artists can upload their artwork and potential buyers can browse the site to purchase the artwork or merchandise such as t-shirts and coffee cups emblazoned with the artwork. If a purchase is made for, say, a t-shirt with a particular artwork printed on it, Redbubble’s system arranges for the order to be placed with a fulfiller and ultimately shipped in packaging which bears a Redbubble trade mark.

The claims in this case related to uploaded images of a Hell’s Angels membership card featuring a helmeted death’s head in profile:

and registered trade marks featuring versions of the death’s head: Trade Marks Nos 526530,723291, 723463, 1257992 and 1257993.

At 552 paragraphs long, this post is going to be a high level overview only.

Copyright

A key feature in the case is that Hells Angels Motorcycle Corporation (Australia) Pty Ltd is not the owner of the copyright or the registered trade marks. It contended it was the exclusive licensee in Australia of those rights; the exclusive licences having been granted by Hells Angels Motorcycle Corporation, a US corporation.

The Hells Angels lost the claim of copyright infringement. They did so, however, because they could not prove Hells Angels USA was the owner of the copyright. As a result, Hells Angels Motorcycle Corporation (Australia) Pty Ltd could not be the exclusive licensee.

Reaching this conclusion required Greenwood J to explore, amongst other things, the notion of publication and whether the supply of membership cards was supply of copies of the work to the public. And the non-applicability of the US “work for hire” doctrine in ownership disputes under Australian law.

Redbubble is still in trouble.

First, if the applicants had been able to prove title to the copyright, Redbubble would have infringed.

Contrary to Hells Angels’ arguments, Redbubble was not liable for infringement by uploading the images. That was done by the artists in question. In the examples in question, the acts involved uploading images to websites outside Australia. For example, Example 1 was uploaded by an individual in Virginia in the USA. So the uploaders themselves were not liable as their actions did not involve any act done in Australia. At [428] – [429], Greenwood J ruled that, even though the images were made available online to the public in Australia, the artists (uploaders) did not infringe because they did no act in Australia.

…. the act of the artist in uploading the image to the website and thus making the work available online to the public must be an act “done” (that is, an exercise of the exclusive right), “in Australia” and therefore, none of the artists in the examples in suit can be regarded as a “primary infringer” in the territorial sense contemplated by s 36(1) because the relevant act was not done “in Australia”.

His Honour found, however, that Redbubble would be liable for communicating the images to the public in Australia as it was the person who was responsible for determining the content of the communication for the purposes of s 22(6) when a potential customer in Australia viewed the image on the website. Redbubble’s business model was crucial here. At [435], his Honour explained:

The business model as described by Mr Hosking and its working operation as described by Mr Kovalev makes it plain that Redbubble is not in the nature of an ISP linking a user to remote websites. It is not an intermediary providing a transmission service between particular participants. It owns, operates, manages and controls the website and conducts a transactional enterprise in which it facilitates the uploading of images, the interrogation of those images in Australia, relevantly, by users, with a view to enabling sales to consumers of articles bearing the relevant images. It has a detailed business model in which it derives revenue from each transaction and controls every step of the transactional engagement between an artist and a buyer. It confirms the sale. It facilitates payment. It organises a fulfiller to apply the work to the relevant goods. It facilitates delivery of the goods to the buyer. It generates email responses which not only confirm the order but track every step of the transaction. It affixes its own trade marks to the goods. It says that it does not directly do that but there is no doubt that an essential part of its business model is ensuring that fulfillers affix the Redbubble trade marks to the goods. The labels bearing the trade marks are on the goods as delivered to each buyer. Although I will address the trade mark case shortly, the reference to Redbubble’s trade marks, in this context, is simply to note another feature of the extent of Redbubble’s engagement in and association with each transaction. It is Redbubble’s business. But for the Redbubble website, the transactions would not occur. The artworks would not be available online to consumers in Australia to consider and appraise with a view to purchasing a product bearing the artwork. The entire focus of the business model is to enable works to be made available online so that consumers can pick and choose amongst the works so as to have them applied to goods. It would be difficult to imagine a more directly engaged participant than one deploying the business model adopted by Redbubble. Although Redbubble describes itself as the “agent” of the artist (presumably as principal), the relationship is not, in truth, a relationship of agent and principal. Redbubble acts as an “independent contractor” to “facilitate the transaction” as the Redbubble User Agreement and Appendix A to the Services Agreement makes plain: [245] and [246] of these reasons. The artist, in truth, is not the “seller” in the classic sense in which that term might be understood because Redbubble is the supplier as the facilitator of all of the essential elements of the transaction with the consumer in an analogous way to that discussed in:  International Harvester Company of Australia Pty Ltd v Carrigan’s Hazeldene Pastoral Company [1958] HCA 16;  (1958) 100 CLR 644 at 653; Heidelberg Graphics Equipment Ltd v Andrew Knox & Associates Pty Ltd (1994) ATPR 41326 at 42, 31011, notwithstanding that the nature of the technology is different to the forms of distribution arrangement in those cases.


His Honour would, if necessary, have also found Redbubble liable for authorising the conduct if it had been infringing.

Trade Marks

Secondly, Greenwood J found Redbubble liable for infringement of the Hells Angels’ registered trade marks on works such as t-shirt designs featuring the death’s head logo.

The crux of this finding came back to Redbubble’s business model. Greenwood J accepted that the artist who uploaded the image was using the trade mark as a trade mark. Unlike the copyright test, there was no requirement that the artist be in Australia. However, so was Redbubble.

At [460] – [461], his Honour explained:

As to Redbubble, that company is “in the business” of facilitating the supply of products bearing the uploaded image of Ms Troen (in this example) or, put another way, Redbubble is in the business of facilitating the supply of clothing bearing, put simply, the registered trade marks of HAMC US (in this example). Redbubble is not the “seller” of artwork. However, it is the supplier, in the sense that it is responsible for all of the transactional supplyside elements of a transaction for the supply of goods bearing the applied works. (emphasis supplied)


Redbubble has created a business model designed to enable users, in Australia (and, for that matter users in all jurisdictions in which the website is accessible), to find images through the website comprised of, in this example, Ms Troen’s image made up of the identified trade marks of HAMC US. Redbubble enables images containing the relevant trade marks to be presented to buyers of particular goods (nominated by the artists from the website categories of those goods to which the work can be applied) expressly for the purpose of facilitating the supply of goods (clothing, in this example) to which the marks are applied. It does so by and through the functions and protocols of the website engaged by Mr Hansen (and other potential viewers of the image), in Australia.

His Honour elaborated on why Redbubble’s conduct attracted liability at [462] – [469]. While this and two other examples infringed, his Honour found that, on the particular facts, Example 2 was not infringing use.

Greenwood J’s reasons also include an extended consideration of whether Hells Angels Australia was an authorised user; ultimately concluding it was.

Greenwood J, however, rejected Hells Angels’ claims that use of “Hells Angels” as search terms, or key words, within the Redbubble site was infringing. At [542] explaining:

542. …. However, I am not satisfied that this use, in itself, is use of the word marks as a trade mark, at this point in the functionality of the website. I take that view because I am not satisfied that using the term as a search term to find a relevant image is use of the term as a “badge of origin” of Redbubble. It is, undoubtedly, a use which is designed, quite deliberately, to lead a consumer by the “search nose” to images, marks, devices, livery and badging somehow or other connected with the Hells Angels Motorcycle Club.

….

544. … use of the word marks … as a search term is a search step along the way to use of the image and thus the registered trade marks, as trade marks but use of the word marks at the point of searching is not, in itself, in my view, use as a trade mark. (original emphasis)

It appears that, at the stage of entering the search term, it is not being used to identify things offered under the aegis of the Hells Angels, but just to locate things about the Hells Angels in some way.

This is the second ruling at first instance where Redbubble has been found to infringe.

While Redbubble’s business model does leave it exposed along the lines indicated above. It is worth noting that Greenwood J awarded only nominal damages of $5,000 in respect of two of the three infringements. His Honour did not allow even nominal damages in respect of the third infringement, Example 4, as it was online for a short period, viewed only 11 times and no sales resulted.

Greenwood J expressly rejected any claim for exemplary damages. His Honour does not go into reasons. Perhaps, Redbubble’s business model did protect it. The evidence was clear, for example, that Redbubble had a policy relating to infringement claims and implemented it promptly.

Hells Angels Motorcycle Corporation (Australia) Pty Limited v Redbubble Limited  [2019] FCA 355

Cartel conduct and IP licences and assignments

Will your assignments and licences of intellectual property, such as in a typical franchise agreement, expose your client to liability for cartel conduct or will you be ready to apply for an authorisation?

One of the bills pending before Parliament contains the long pursued (by the ACCC) repeal of s 51(3) of the Competition and Consumer Act 2010.

Section 51(3) exempts from most of the prohibitions in Pt IV of the Competition and Consumer Act terms and conditions in assignments and licences of intellectual property which most of us take for granted.

The rationale for repeal is that most transactions involving IP do not have anti-competitive effects or purposes and, if they do, they should not be exempt from the competition laws.

Rodney De Boos, a consultant at DCC with many years’ experience in licensing and commercialisation of IP, however, points out that this explanation was developed before the provisions banning cartel conduct were introduced into the Act. And, he contends, typical arrangements in IP agreements which allocate, for example, territories or customers will constitute cartel conduct and so need authorisation if the parties are not to be in breach of the cartel provisions.

As Rodney explains, a cartel provision are certain types of specified provisions between competitors.

Now, it may well be that an assignor and assignee, or a licensor and licensee, will not be competitors. There are many types of arrangements, however, where the Competition and Consumer Act will deem them to be competitors. An obvious example is the case of a franchisor who has retail outlets (either itself or through a related body corporate) as well as retail franchisees. Other arrangements involving IP could also be similarly problematical.

You can read Rodney’s concerns in more detail here.

The bill repealing s 51(3) has already passed the House of Representatives and is due to be debated by the Senate in the sittings coming up.