authorisation

CampaignTrack, Biggin & Scott and (not) authorisation

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The High Court has unanimously allowed Real Estate Tool Box (RETB) and other parties’ appeals against findings that they had authorised infringements of copyright in Campaigntrack’s “DreamDesk” software.

The High Court made a point of emphasising that whether a person can be found liable for authorising copyright infringement depends on “the proper inference to be drawn from all of the facts of the case.”

I am afraid that, as their Honours said, “It is therefore necessary to set out those facts in some detail.”

Some facts

Real estate agents use web to print software to quickly and efficiently generate promotional materials advertising the properties on their websites, in brochures and other advertisements.

Biggin & Scott is one such real estate agent.

Back in the mists of time, Biggn & Scott licensed software from Campaigntrack for this purpose. However, Biggn & Scott became disenchanted with Campaigntrack for some reason and in 2015 had switched over to software licensed from DreamDesk Pty Ltd (DDPL) imaginatively named “DreamDesk”.

DDPL’s DreamDesk software had been written for it by an one of its “officers”, Mr Semmens.

Before he wrote the DreamDesk software, Mr Semmens had written the Process 55 software that another competitor, Digital Group,[1] was licensing to real estate agents.

Mr Semmens’ fellow directors in Digital Group formed the view that he had stolen Digital Group’s intellectual property in Process 55 in writing DreamDesk. They confronted him about this and on 26 May 2016 he signed documents admitting the infringements.

Shortly after these documents were signed, Digital Group informed Mr Meissner, the princiapl of DDPL who, the trial judge found, was “shocked” by this revelation. Mr Meissner accepted DDPL could not continue with DreamDesk and set about trying to buy the rights to Process 55 or sell DreamDesk.

Meanwhile, Campaigntrack was unhappy about the loss of customers and set about a campaign to buy out its competitors and so corner the market.

In July 2016, CampaignTrack agreed to buy DreamDesk from DDPL, granting DDPL a licence to keep using DreamDesk until 3 October 2016. Shortly after, CampaignTrack also acquired the rights to Process 55.

Not wanting to fall back into the clutches of CampaignTrack, Mr Stoner from Biggn & Scott met with Mr Semmens on 3 August 2016. At Mr Semmens’s suggestion, Mr Stoner commissioned Mr Semmens to start work on the new software which became known as Toolbox. The letter of instruction stated in part:[2]

You are instructed to build a web to print delivery system that does not breach any other companies IP or ownership, in particular Dream Desk or Campaign Track. …. In simple terms we do not want any thing used that can be claimed as owned by the 2 companies above.

Mr Semmens provided assurances that he could do the job in time and would do so without infringing anyone’s copyright.

To undertake the project, Biggn & Scott and Mr Semmens incorporated RETB. Mr Stoner was the sole director and Mr Semmens was doing the design and coding, with some assistance from some of DDPL’s employees and in a workspace borrowed from DDPL.

On 29 September 2016, CampaignTrack’s solicitor, Ms McLean, emailed Mr Meissner and DDPL warning it had discovered improper access and duplication of code which CampaignTrack now owned and expressing concerns about RETB. The email stated CampaignTrack was prepared to grant a one week extension of DDPL’s licence to use DreamDesk provided it was used “in the ordinary course of business” only and demanding undertakings from all involved that there would be no use of the improperly obtained code.

By 6 October 2016, all the Biggn & Scott and DDPL parties had signed and provided the undertakings to Ms McLean – except Mr Semmens.

On 7 October 2016, Ms McLean advised Biggn & Scott and DDPL that the DreamDesk licence would not be extended beyond 10 October 2016 as Mr Semmens had failed to provide the undertakings.

On 10 October 2016, ToolBox became operational and Biggn & Scott switched its users of DreamDesk over to Toolbox.

In the pre-litigation correspondence that followed, the parties agreed to allow CampaignTrack’s expert, a Mr Geri from Ferrier Hodson, to inspect the Toolbox system and prepare a preliminary report.

On 19 January 2017, Mr Geri delivered his preliminary report. His conclusion was that it was “highly probable” there had been an infringement of CampaignTrack’s copyright in DreamDesk in the development of Toolbox. However, to confirm that opinion, he needed to undertake a forensic examination of the servers hosting Toolbox.

Through Ms McLean, CampaignTrack demanded that Biggn & Scott shut down Toolbox and provide Mr Geri with the requested access. Biggn & Scott refused, instead demanding proof of CampaignTrack’s ownership. The litigation followed.

It was not until 17 June 2018 that Biggn & Scott ultimately stopped use of Toolbox, having introduced a new system in April 2018.

At trial

The trial judge found that Mr Semmens had infringed CampaignTrack’s copyright in DreamDesk by reproducing a substantial part in Toolbox. Correspondingly, the users of Toolbox also infringed CampaignTrack’s copyright when they downloaded the software and ran it to generate their advertising collateral. Mr Semmens was also liable for authorising those infringements.

However, the trial judge rejected CampaignTrack’s cases against Biggn & Scott, Mr Stoner, Ms Bartels, DDPL and Mr Meissner alleging they had authorised Mr Semmens’ and the users’ infringements. As a result, his Honour found that CampaignTrack had not established that either the Biggn & Scott or DDPL parties had authorised either Mr Semmens’ or the users’ copyright infringements.

The Full Court

The Full Court (Greenwood and McElwaine JJ, Cheeseman J dissenting) allowed CampaignTrack’s appeal and found the Biggn & Scott and DDPL parties all liable for authorising infringement.

In the Full Court, the majority accepted that, before 29 September 2016, the Biggn & Scott and DDPL parties did not know about Mr Semmens’ infringing conduct and, until that date, were not obliged to take reasonble steps to avoid the infringements by Mr Semmens.

However, Ms McLean’s letter on 29 September 2016 put the Biggn & Scott and DDPL parties on notice of CampaignTrack’s claims. Accordingly, McElwaine and Greenwood JJ found that the Biggn & Scott and DDPL parties knew or had reason to suspect that Mr Semmens had infringed copyright and failed to sufficient steps to prevent infringements after that date.

The law

Section 36 of the Copyright Act 1968 provides:

(1) Subject to this Act, the copyright in a literary, dramatic, musical or artistic work is infringed by a person who, not being the owner of the copyright, and without the licence of the owner of the copyright, does in Australia, or authorizes the doing in Australia of, any act comprised in the copyright.

So, there is direct infringement by doing one or more of the acts comprised in the copyright (such as reproducing, or communicating to the public, the whole or a substantial part of the work). There is also infringement by someone who “authorises” someone else to do the infringing act(s). In deciding whether there has been authorisation s 36(1A) further provides three considerations that a court must take into account:[3]

In determining, for the purposes of subsection (1), whether or not a person has authorised the doing in Australia of any act comprised in the copyright in a work, without the licence of the owner of the copyright, the matters that must be taken into account include the following:

(a) the extent (if any) of the person’s power to prevent the doing of the act concerned;

(b) the nature of any relationship existing between the person and the person who did the act concerned;

(c) whether the person took any reasonable steps to prevent or avoid the doing of the act, including whether the person complied with any relevant industry codes of practice.

The High Court

At [63] – [65], the High Court referred to the examination of the concept of ‘authorisation’ by Gummow and Hayne JJ in the Roadshow case and confirmed that ‘authorisation’ for the purposes of copyright law had long extended beyond traditional concepts of agency and could be found where there was ‘indifference’.

The High Court also endorsed Gummow and Hayne JJ’s warning that ‘authorisation’ for copyright infringement purposes “is not to be identified by deconstructing the dictionary definitions of notions such as ‘sanction’, ‘approve’ and ‘countenance’.”

Having reviewed four prior High Court judgments, at [77], their Honours explained:

The foregoing survey of authorities demonstrates that what constitutes indifference amounting to authorisation depends upon a close analysis of the facts of each case. Mere neutrality or inattention will not suffice. The quality of the indifference, and the nature of the relationship between the infringer and the alleged authoriser, must be such as to justify a conclusion that there was sufficient involvement in the infringement as to amount to authorisation of the acts constituting the breach of copyright for the purposes of s 36(1) of the Copyright Act. The central factors to consider will be those matters in s 36(1A):[39] the person’s power to prevent the act of infringement; the relationship between that person and the infringer; and whether the person took any reasonable steps to prevent or avoid the doing of the act, including compliance with any relevant industry codes of practice. That necessarily requires consideration of whether a person knows or has reason to anticipate or suspect an infringing act is occurring or is likely to occur.[40] (citations omitted)

and at [88] their Honours posed the issue as what the particular person in the particular circumstances at the particular time (or times) ought to have done:

Proof of an allegation of authorisation by indifference requires findings, supported by evidence, that the person was in a position and had knowledge of facts, matters and circumstances sufficient to give rise to a duty to take reasonable steps to avoid or prevent the doing of an act by another person, or else be liable for the act of that person. That is not a general inquiry. It is directed to a particular state of affairs at a particular time or times. That inquiry requires an assessment of the reasonableness, again supported by evidence, of what the person did, and what the person, in that position with that knowledge, at that particular time or times, ought to have done.

The High Court than concluded that, in the circumstances of this case, the Biggin & Scott parties could not be said to have omitted to take reasonable steps they ought to have taken to prevent infringement. At [45], the High Court identified the primary judge’s unchallenged findings in relation to the Biggn & Scott parties:

(a) Mr Stoner and Ms Bartels trusted Mr Semmens not to infringe the intellectual property rights of DDPL or Campaigntrack P/L in developing Toolbox and they did not want Mr Semmens to misuse intellectual property belonging to others in developing it.

(b) Mr Stoner and Ms Bartels considered Mr Semmens to be a person who had the relevant expertise in building a software system and he could build the system in sufficient time given his expertise. They left the development of Toolbox to Mr Semmens and that was not unusual or surprising.

(c) Biggin & Scott was in a contractual relationship with, and could instruct, Mr Semmens. Its instruction to him was relevantly to build Toolbox without infringing any person’s intellectual property rights.

(d) Given the instructions to Mr Semmens, and that Mr Stoner and Ms Bartels trusted him, there was no independent audit of Toolbox or verification that Mr Semmens had not infringed another person’s intellectual property rights. In all likelihood, neither Mr Stoner nor Ms Bartels turned their mind to consider this.

(e) Mr Stoner did not instruct Mr Semmens to “tamper” with the commit log file.

(f) Mr Stoner, Ms Bartels and Mr Semmens were friends. The payment of Mr Semmens’ legal bills in this matter did not indicate any authorisation of the infringement of copyright.

(g) It had not been established that any of the Biggin & Scott parties knew, or should reasonably have known, that Campaigntrack P/L’s intellectual property had been used to develop Toolbox.

Accordingly, up to the sending of Ms McLean’s letter of 29 September, both the trial judge and all members of the Full Court accepted the Biggin & Scott parties did not know or have reason to suspect Semmens had infringed copyright in making ToolBox. Ms McLean’s letter of 29 September, or subsequent developments, did not change the result.

89 It was not established that the Biggin & Scott parties knew of or suspected Mr Semmens’ infringing acts at any relevant time. Although, following the letter of 29 September 2016, the Biggin & Scott parties had some reason to suspect that the infringing acts might be occurring, and although they had the necessary means to prevent these infringing acts, this Court cannot conclude that they defaulted in some duty of control by failing to take any further action. Given the manner in which the case was conducted at first instance, the Court cannot conclude that the Biggin & Scott parties omitted to take reasonable steps after 29 September 2016, being steps that they ought to have taken to prevent or avoid the infringing acts.

A similar conclusion was reached in relation to Mr Meissner and DDPL even though they made personnel available to Mr Semmens to write the infringing code and provided infrastracture necessary for him to undertake the work.

Some comments

From the outside, it is difficult to assess some aspects of the High Court’s reasoning.

For example, in both [77] and [88], their Honours referred to liability arising where the alleged authoriser knew or had reason to suspect there was an infringer. And, in [89], their Honours accepted that the Biggin & Scott parties had some reason to suspect infringements on receipt of Ms McLean’s 29 September letter. But, the High Court rejected reliance on the letter in this case.

In practice, such letters are typically relied on to fix the alleged infringer with knowledge. In this case, however, the letter immediately led to all the parties, except Mr Semmens, unreservedly giving the undertakings demanded by CampaignTrack. In addition, Mr Stoner and Ms Bartel were friends with Mr Semmens, he had the expertise which they did not, they had repeatedly sought assurances from him that he had complied with his instructions and they were entitled to trust him to carry out their genuine concern not to infringe.

Even so, in many situations, you might very well expect the alleged infringer to be put on inquiry when they learned, as the Biggin & Scott parties did within a few days, that Mr Semmens refused to give the underakings – according to his evidence, because he was concerned it would restrict him from working in his industry.

Likewise, one would often expect a preliminary report from a forensic IT expert would provide a sufficient basis to infer authorisation. The High Court held that it did not in this case:

84 As to the Geri investigation, it is notable that the Biggin & Scott parties permitted it to take place and co-operated with Mr Geri. That is entirely consistent with the Biggin & Scott parties continuing to trust Mr Semmens. Moreover, Cheeseman J was correct to characterise the Geri report as “inconclusive”.[44] Indeed, the “preliminary” conclusion that there was a “high probability” that Campaigntrack P/L’s intellectual property had been used to develop Toolbox was confined to matters already known to the Biggin & Scott parties: namely, that both DreamDesk and Toolbox had been developed by the same person, who had access to both systems during the production of Toolbox. Because Mr Geri could also not confirm his conclusion, there is no sensible basis for concluding that the ongoing faith in Mr Semmens’ compliance with his express instructions had now become unreasonable. …

The forensic IT expert’s opinion, however, was qualified. It acknowledged that many similarities were the sorts of things one would expect anyone in the industry to require and requested further access. Indeed, in the Full Court at [157], Cheeseman J had described the conclusion of a high probability of infringement as “no more than a speculative assumption” – in effect based on the fact that the same person wrote both programs.

As to the Biggin & Scott parties’ refusal to allow the further inspection of Biggin & Scott’s servers, the High Court continued at [84]:

…. it will be recalled that the relationship between the Biggin & Scott parties and Campaigntrack P/L had soured considerably since the refusal to extend the licence for DreamDesk. The Campaigntrack system was a competitor product with Toolbox. No doubt the Biggin & Scott parties saw the attack on them in that light. As such, in defence of Toolbox, they were entitled to insist upon proper proof of Campaigntrack P/L’s claims and to reject what appeared to them to be a fishing exercise. Such conduct is unremarkable in the tousled field of commercial disputation.

This might suggest that an alleged infringer may be entitled to take a robust position in the face of allegations, especially from a competitor with whom there is bad blood. However, in addition to the matters already canvassed, it is important to remember that the High Court’s conclusions are also predicated on references to how the case was run at first instance. On the High Court’s analysis, this meant the conclusions reached by the majority in the Full Court were not open on the evidence.

Finally, it is interesting to note that, in four of the five cases the High Court has considered liability for copyright infringement by authorisation, the High Court has ruled there was no authorisation.[4]

Real Estate Tool Box Pty Ltd v Campaigntrack Pty Ltd [2023] HCA 38 Gageler CJ, Gordon, Edelman, Steward and Jagot JJ)

  1. Mr Semmens was, with his brother-in-law Mr Farrugia, a founder Digital Group. By the time of the events relevant to this proceeding, Mr Semmens, Mr Farrugia and a third person, Mr Stewart, were the three directors of Digital Group.  ?
  2. The letter is set out in full in paragraph 17 of the judgment.  ?
  3. As the High Court noted in footnote 39, these matters have been derived from Gibbs J’s judgment in University of New South Wales v Moorhouse (1975) 133 CLR 1.  ?
  4. In this case, the High Court considered Adelaide Corporation v Australasian Performing Right Association Ltd (1928) 40 CLR 481; University of New South Wales v Moorhouse (1975) 133 CLR 1 and Roadshow Films Pty Ltd v iiNet Ltd (No 2) (2012) 248 CLR 42. The fifth case, Australian Tape Manufacturers Association Ltd v The Commonwealth [1993] HCA 10; 176 CLR 480, was directly concerned with the constitutional validity of the blank tapes levy which turned on whether or not the suppliers of blank cassette tapes on whom the levy was imposed ‘authorised’ the unlicensed copying of recorded music on to those tapes by purchasers.  ?

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Cartel conduct and IP licences and assignments

1 Comment / Antitrust, Copyright, Designs, Franchising, Patents, PBR, Trade marks, Trade Practices / / / , , , , , , , , , , , ,

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.

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Pokemon v Redbubble: the DMCA doesn’t apply Down Under

1 Comment / Copyright, Trade Practices / / / , , , , , , , , , , , , , , ,

Pagone J has awarded Pokémon $1 in damages and 70% of its costs from Redbubble for misleading or deceptive conduct and copyright infringement. An interesting aspect of the case is that Redbubble’s implementation of a notice and take down scheme under the DMCA didn’t save it from liability, but did influence the ruling on remedies.[1]

Redbubble provides a print on demand online market place by which artists can upload their works to the Redbubble website and purchasers can then buy the artworks or designs applied to desired products such as t-shirts, cups and the like. A person uploading a work to the marketplace warrants that he or she has the relevant intellectual property rights and indemnified Redbubble against infringement claims.

The evidence showed Google searches in which paid (sponsored) and organic search results listing “Pokémon” products such as t-shirts bearing Pokemon’s Pikachu character[2] which could be ordered from the Redbubble site. The sponsored links were paid for and arranged by Redbubble through the Google Merchant Centre and the products themselves were offered for sale through Google Shopping. From the tenor of the judgment, I think that the designs were uploaded by third parties, but Redbubble arranged the “fulfillers” who printed and shipped the t-shirts (and other products) with the designs printed on them.

Pagone J found that Pokémon owned the copyright in the images of the Pokémon characters depicted on the various products in evidence. Further, the images were uploaded without Pokemon’s consent.

Pagone J found therefore that Redbubble had infringed Pokemon’s copyright and misrepresented, contrary to sections 18[3] and 29(1)(g) and (h) of the Australian Consumer Law, that the products were official or authorised Pokémon products.

In finding that there had been misrepresentations that the products were sponsored or approved by Pokémon, Pagone J referred, amongst other things, to the fact that the “sponsored” links did include the word “sponsored” (although this meant in fact that the products were sponsored by Redbubble, not Pokemon). His Honour also found significance in the fact that:

There was nothing on the Redbubble website to inform the consumer that there was no connection, authorised or otherwise, between Redbubble on the one hand and [Pokemon] (or any other entity authorised to exploit Pokémon products) on the other.

Copyright subsistence and ownership

Pokémon was able to prove it owned the copyright in the artistic works through the evidence of its attorney responsible for obtaining copyright registration in the USA. Although the attorney, Mr Monahan, had not been personally present when any works were created, Pagone J considered his evidence sufficient. At 36, his Honour said:

…. He conceded in cross?examination that he had not stood over the shoulder of any creator and, therefore, that he did not have direct eyewitness, or other direct, knowledge beyond that gained from “detailed consultation with the client” but that “with respect to each series of the cards, [he had] consult[ed] with the client to determine which – for instance, which Japanese card they derive[d] from, or [… where] the artwork comes from”. His specific and direct evidence was that of consulting with the client to determine that the works were made by the Japanese company and were made as the Japanese card, although, as mentioned, he did not fly personally to Japan and had not been witness to the creation process. It had been his specific professional responsibility to obtain and secure registrations in accordance with lawful entitlements and requirements. He was confident in that context of his conclusion that the Pikachu work was not a copy based upon an animation cell because of his experience over many years of consulting with the client as his professional obligations and legal duties. In specific response in cross?examination about being confident in giving evidence that the pose of Pikachu was not derivative of any other pose already published, Mr Monahan said that every investigation he had done about the card making process enabled him to say that the cards were generated on their own and were not derivative of the animation, “common poses notwithstanding”.[4]

Further, unlike Perram J in Dallas Buyer’s Club, Pagone J also accepted that the certificate of copyright registration in the USA identifying Pokémon as the claimant to copyright ownership was sufficient to enliven the presumption under s 126B(3) of the Copyright Act. (Given the history of the provision recounted by his Honour, one might think this should not be too controversial: afterall, how many other countries out there have a copyright registration system?)

Copyright infringement

Pagone J then held that Redbubble had infringed the copyright in three ways. First, his Honour held that Redbubble infringed by communicating the infringing images from its website. Although the images were uploaded by third parties, Redbubble made the communication for the purposes of [s 22(6)][22]: Pagone J distinguished Redbubble’s position from that of ISPs like iiNet at [48]:

In the present case Redbubble does not provide the content of the communications in the sense of being the originator of any of the 29 images on its website said to be infringements of the Pikachu work. In each case the originator was the artist who had placed the image on the Redbubble website. Redbubble, however, was responsible for determining that content through its processes, protocols and arrangements with the artists. Redbubble’s position is not like that of an internet provider. Redbubble is the host of the website with the infringing material. It has a user agreement with artists which deals with matters including the possibility of infringing materials, an IP policy, and a team dedicated to deal with impermissible content.

Secondly, offering the products for sale online was sufficient to enliven s 38 which, amongst other things, extends to exhibiting “infringing” articles in public by way of trade.

Although there appear to have been some rather unspecific complaints about copyright infringement by Pokémon between 2012 and 2014,[5] Pagone J found that Redbubble knew, or ought reasonably have known, that the products were infringing from the date of the letter of demand from Pokémon’s external solicitors on 25 November 2015.[6]

Thirdly, Pagone J held that Redbubble had infringed Pokemon’s copyright by authorising the manufacture of the infringing products when orders for their purchase were placed.

In this respect, it is worth noting that Redbubble had implemented and acted on a notice and takedown system under the (US) DMCA.[7] Pagone J recognised, therefore, that Redbubble did not expressly authorise infringement and took conscious, considered and reasonable steps, both proactively and responsively, to prevent infringements.[8] These, however, were not enough. At [67], his Honour said:

The business established by Redbubble carried the inherent risk of infringement of copyright of the kind complained of by [Pokemon]. It is true that Redbubble sought to mitigate the risk, but it was an inevitable incident of the business, as Redbubble chose to conduct it, that there were likely to be infringements. It could have prevented them by taking other steps but for business reasons Redbubble chose to deal with the risk of infringement by a process that enabled the infringements to occur. Such infringements were embedded in the system which was created for, and adopted by, Redbubble. There may have been a sound commercial basis for Redbubble to manage the risks of infringement as it did, but in doing so it authorised the infringements which occurred.

Remedies

Pokémon sought $44,555.84 in damages by way of lost royalties for the consumer law breaches and only nominal damages for copyright infringement. As already noted, however, Pagone J awarded only $1 in total.

The evidence did not establish that sales made by Redbubble were lost sales by Pokémon. There was, for example, no evidence that many of the sales were sales of kinds of products sold by Pokémon or its licensees. For example, his Honour said:

…. Many of the items sold through the Redbubble website involved a “mash up” of images, such as the combination of Pikachu and Homer Simpson. The finding of an infringing use of a work, or an impermissible representation in trade, does not necessarily lead to the conclusion that the sale made by the infringement or upon the misrepresentation was necessarily a sale that would have been made by the wronged party. The unreliability of such an assumption in this case can be seen from the fact that the infringements were in the use of the image in mash ups in, and in items that were not sold or authorised for sale by [Pokemon]. ….

Given the notice and take down processes put in place by Redbubble, Pagone J was not prepared to find the infringements were “flagrant”, warranting the award of additional damages under s 115(4)

Pokémon Company International, Inc. v Redbubble Ltd [2017] FCA 1541

  1. Implementation and compliance with the DMCA scheme explicitly affected the ruling on additional damages.  ?
  2. Even if you haven’t played it, you must have seen all those people milling around in parks at lunchtime trying to “capture” these imaginary Pokémon Go “critters”. Pokemon itself has an even longer history. There are also trading card games and a successful television series which has been broadcast in Australia since 2000 and distributed on over 57,000 DVDs.  ?
  3. If you are not sweltering in the southern summer sun, s 18 provides “A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.” And s 29(1)(g) and (h) prohibit making false or misleading representations in trade or commerce about sponsorship, affiliation or approval.  ?
  4. Curiously, at [44] (when discussing ownership by proof of a certificate), his Honour also said Pokémon had not proved ownership on the basis of authorship.  ?
  5. In fact, Pagone J subsequently found that Redbubble did in fact remove listings when Pokemon notified it that they were infringing.  ?
  6. It is less than clear from the judgment what action Redbubble took in response to the letter of demand. Ordinarily, one would assume that it had continued engaging in the infringing conduct but that seems a bit surprising given Pagone J records that Redbubble did comply with other take down notices once the subject of complaint had been properly identified.  ?
  7. The DMCA, being US legislation, does not provide protection from infringement in Australia under the Australian Copyright Act 1968. Redbubble also purported to operate under the corresponding Australian provisions ss116AA – 116AJ but, of course, it is not a carriage service provider and so they do not apply either.  ?
  8. Cf. esp. Section 36(1A)(c)[s36].  ?

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Another Infringed Innovation Patent And A Delivery Up Question

Leave a Comment / Patents / / / , , , , , , ,

Product Management Group (PMG) has lost its appeal from Middleton J’s finding that it infringed Blue Gentian’s innovation patents for a self extending/collapsing garden hose.

The appeal seems like a fairly straightforward application of construction principles and demonstrates, yet again, how slender an innovation need be to secure a monopoly for eight years.

There may, however, be a question for the future whether or not the “substantial contribution” to the working of the “invention” required by s 7(4) must be a positive contribution to the working of the invention.[1]

An interesting point is the Order Middleton J made for delivery up. His Honour did not just require delivery up of PMG’s unsold stock and componentry. In addition, by paragraph 3(c), his Honour ordered that PMG should contact the customers to which it hold sold the infringing products, offer them a refund and request that they return the products to PMG.

Nicholas J considered this travelled well beyond the purpose of an order for delivery up. His Honour considered that purpose was to relieve the infringer from the “temptation” of further infringing and so, in that sense, was in aid of the injunction. Nicholas J considered that an order requiring a party to try and retrieve property to which it no longer had any legal title could not fairly be described as in aid of delivery up and so would have set aside that part of the Order.

In circumstances where the Court had not been favoured with any oral submissions and only brief mention in written submissions, however, Kenny and Beach JJ were not persuaded that his Honour’s discretion miscarried and their Honours would let it stand in this case. However, they warned:

But our rejection of this ground should not be taken as any endorsement of this form of order for the future. We doubt that such an order would ordinarily be appropriate. We do not need to comment further.

This may pose an interesting dilemma for “convicted” infringers: object to such an order or, as the purchasers’ use of an infringing product would itself be an infringement, risk having the successful plaintiff require discovery and then suing the individual customers for infringement too.[2]

Product Management Group Pty Ltd v Blue Gentian LLC [2015] FCAFC 179

  1. Compare Kenny and Beach JJ at [178] to Nicholas J at [284].  ?
  2. On the approach taken vy Yates J in Winnebago (No 4). Of course, the plaintiff might not be willing to pursue individual purchasers of garden hoses, but what about Bunnings and the other hardware chains?  ?

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Online copyright infringement reforms announced

2 Comments / Copyright / / / , , , , , ,

The Attorney-General and the Minister for Communications have issued a joint media release announcing the Government’s response to July’s Issues Paper:

  1. First step: they have written to “industry leaders” and told them to come up with an agreed industry code for a “graduated response” regime[1] to be registered with the Australian Communications and Media Authority (ACMA) under Part 6 of the Telecommunications Act 1997;
  2. Second step: if the “industry leaders” cannot come up with an agreement within 120 days [2]:

    the Government will impose binding arrangements either by an industry code prescribed by the Attorney-General under the Copyright Act 1968 or an industry standard prescribed by the ACMA, at the direction of the Minister for Communications under the Telecommunications Act.

  3. Third step: the Government will also amend the Copyright Act to enable rights holders to get injunctions ordering ISPs to block access to websites outside Australia that provide access to infringing content.

Well, at least, Option 1 in the Issues Paper seems to have died a deserved death.[3] The media release does not mention, however, whether or not the Government will extend the “safe harbour” provisions to “service providers” and not just “carriage service providers”.

The letter the Government sent to “industry leaders” did provide some general direction about the contents of the anticipated industry code:

  • that ISPs take reasonable steps (including the development of an education and warning notice scheme) to deter online copyright infringement on their network, when they are made aware of infringing subscribers, in a manner that is proportionate to the infringement
  • informing consumers of the implications of copyright infringement and legitimate alternatives that provide affordable and timely content
  • providing appropriate safeguards for consumers
  • fairly apportioning costs as between ISPs and rights holders
  • ensuring smaller ISPs are not unfairly or disproportionately affected, and
  • include a process for facilitated discovery to assist rights holders in taking direct copyright infringement action against a subscriber after an agreed number of notices

and included the exhortation:

Any code must be sustainable and technology neutral. It should be educative and attempt to address the reasons that people are accessing unauthorised content. Consumer interests must be given genuine consideration in your negotiations.

There is no more detail on what sanctions, if any, would apply.[4]

The media release also includes a warning, of sorts, to the right holders:

The issue of affordability and accessibility of legitimate content is a key factor in reducing online copyright infringement. The Government welcomes recent action by content owners and expects industry to continue to respond to this demand from consumers in the digital market.

It will be interesting to see if the “industry leaders” can come up with an agreed code, given they have failed to reach agreement for over a decade now. Even if the Government is forced to impose a code, it may also be interesting see which ISPs join in the scheme. If there is an industry code and significant ISPs join in, would that be a basis for reconsidering the High Court’s ruling of non-authorisation in the iiNet case which was predicated, at least in part, on the ability of subscribers to jump ship from iiNet to another ISP if sanctions were imposed.

Lid dip: David Andrews.

  1. That is a system whereby subscribers get some number of notices that their account is (allegedly) being used to infringe copyright and warning them to stop or …. All the media release says at this stage:  ?

    The code will include a process to notify consumers when a copyright breach has occurred and provide information on how they can gain access to legitimate content.

  2. According to the letter the Government sent to “industry leaders”, the industry code must be agreed by 8 April 2015. (Update: you can now read the letter via this link (scroll down).At the moment, I don’t seem to be able to find a copy of the letter, which was attached to the media release, online.)  ?
  3. The media release says that the effectiveness of these measures will be reviewed in 18 months as in “a world of rapid changes in technology and human behaviour, there is no single measure that can eliminate online copyright infringement.”.  ?
  4. Yesterday’s press reports suggested that “harsh measures” like internet throttling would not be available.  ?

Online copyright infringement reforms announced Read More »

Online copyright infringement – back to drawing board

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The way the press is reporting it, the Minister for Communications – one of the two Ministers who released the Online Copyright Infringement discussion paper in July – recognises it’s back to the drawing board in light of the (apparently) unanimous disapproval.

SMH

News

You can find the submissions received here (apparently they are being uploaded over time).

Will the ISPs voluntarily sit down and negotiate a warning system with the copyright owners? Do we really want the copyright owners and the ISPs coming up with their own scheme without “our” input?

Online copyright infringement – back to drawing board Read More »

Copyright, ISPs and authorisation 2

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I should note for the record, that the Government did officially release its Online Copyright Infringement discussion paper (pdf) on 30 July 2014.

Responses are required by 1 September 2014.

There are 3 main proposals:

  • extend the definition of ‘authorisation’ by amending ss 36(1A) and 101(1A)
  • introduce power for rights owners to obtain orders against ISPs to block access to infringing websites (like s 97A in the UK)
  • give some real scope to the “safe harbours” by extending their availability from “carriage service providers” to “service providers”.

The discussion paper does say in relation to ‘extended authorisation’:

The Copyright Act would be amended to clarify the application of authorisation liability under sections 36 and 101 to ISPs.

It’s not clear how this will be done. While the discussion paper does specifically identify amendments to ss 36(1A) and 101(1A), the proposed changes apply generally to everyone and not specifically to ISPs. It is also not immediately clear how the proposed changes in fact cause ISPs to become liable for authorisation.

It does seem to be a policy still in development.

The Minister for Communications linked the reforms to some positive action about the very high prices Australians are charged for online access to copyright materials such as recorded music, movies, software etc. compared to the prices charged overseas. [1]

He and the Attorney-General may also have different ideas about who should bear the costs of the scheme.

  1. A transcript of my talk to the Copyright Society on the House of Rep’s committee report “At What Cost: The IT Pricing Inquiry and Copyright” can be found in Vol 31(2) Copyright Reporter 1 (attributed to Nick Smith).  ?

Copyright, ISPs and authorisation 2 Read More »

Another copyright in project homes case

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Some 5 years after it went hunting, Tamawood[1] has successfully sued Habitare (now with administrators and receivers and managers appointed) for infringing copyright in house plans.

Copyright in some plans was infringed (Torrington v Duplex 1 & Duplex B); but not in others (Conondale / Dunkeld v Duplex 2 & Duplex A).

One point of interest: Habitare commissioned Tamawood to develop plans for 2 new houses for it. These plans were submitted to the Brisbane City Council to obtain development approvals. The relationship with Tamawood broke down, however, and Habitare continued to use the plans. Collier J found that the “usual” (i.e. Beck v Montana)[2] implied licence did not apply here. It did not apply because Tamawood did not get paid the “usual” fee for doing the job: rather, it agreed to prepare the drawings at no cost on the basis that it would build the houses once development approval had been obtained. Once the deal fell through and Habitare decided not to proceed with Tamawood as the builder, therefore, its rights to use the plans terminated.

Continuing with the licensing theme, Mondo (which Habitare eventually used to design the houses in dispute) did infringe copyright by creating the infringing plans Duplex 1 and Duplex B plans. It did not infringe Tamawood’s copyright, however, when it downloaded the Torrington plans from Tamawood’s website. Tamawood made the plans available on its website for the whole world to see and download so Collier J considered Mondo’s purpose in using the downloaded plans to design competing houses was not relevant.[3]

(Mondo did succeed in its cross-claim against Habitare and 2 of its principals for misleading or deceptive conduct: they told Mondo that the copyright issues with Tamawood had been sorted out or resolved.)

A second point of interest is that the builder of Habitare’s infringing houses, Bloomer Constructions, successfully made out the “innocent infringer” defence provided by s 115(3). Cases where this defence has been relied on successfully are as rare as the proverbial hen’s teeth. It seems to have been because the builder became involved very late in the day: it had no knowledge of Tamawood’s involvement in the earlier stages and the plans it was provided with had Mondo’s name or title block.

Finally, a curiosity: the reasoning on authorisation liability manages not to refer to Roadshow v iiNet at all, but refers extensively to University of NSW v Moorhouse. In the event, Habitare apparently conceded it would be liable for authorising the infringements of the others. Two of its principal officers, Mr Peter O’Mara and a David Johnson, managed to escape liability, however. While they were heavily involved in the business, their involvement was mainly on the finance side rather than sales and marketing. Collier J seems to have found that, within Habitare, responsibility for the conduct that infringed had devolved on to 2 other officers, Shane O’Mara – Peter O’Mara’s son – and a Mr Speer. Her Honour also considered that, by engaging Mondo as architects, Peter O’Mara and Johnson took “reasonable steps to prevent or avoid the doing of the infringing act”.[4]

Tamawood Limited v Habitare Developments Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) (No 3) [2013] FCA 410

  1. Yes, it is that Tamawood.  ?
  2. See _e.g. Concrete Constructions_ at [71] – [75] per Kirby and Crennan JJ).  ?
  3. There is no discussion in the judgment of whether Tamawood’s website included a notice purporting to limit the use of the site, for example, to “personal use” or “private and non-commercial use” (whatever either of those may mean) or in any other way.  ?
  4. See s 36(1A)(c). No claim for authorisation or procurement appears to have been pursued against Shane O’Mara or Speer.  ?

Another copyright in project homes case Read More »

Roadshow: second look

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Now I’ve had some time to look at the Roadshow decision, I think it falls near the territory of the House of Lords’ Amstrad ruling but doesn’t go as far as the Supreme Court of Canada’s CCH Canada ruling.

The only issue before the High Court was whether or not iiNet (the ISP) was liable for authorising the infringements of copyright committed by 11 of its subscribers, who made available online various infringing copies of films through BitTorrent (even though it can be used for lawful purposes, I think I’ll let you go find your own copy if you’re so inclined). Given that iiNet had no role in BitTorrent, its subscribers’ choices to use BitTorrent or what they downloaded with BitTorrent, the film companies sought to put iiNet’s liability on the basis that (at [5]):

  • the provision by iiNet to its customers (and to other users of those customers’ accounts) of access to the internet, which can be used generally and, in particular, to access the BitTorrent system;
  • the infringement of the copyright in the appellants’ films by customers of iiNet who have made the films available online in whole or in part using the BitTorrent system;
  • the knowledge by iiNet of specific infringements, as drawn to its attention by notices from the Australian Federation Against Copyright Theft (“AFACT”), representing the appellants;
  • the technical and contractual power of iiNet to terminate the provision of its services to customers infringing copyright; and
  • the failure by iiNet to take reasonable steps to warn identified infringing customers to cease their infringements and, if appropriate, to terminate the provision of its services to them. [1]

As you no doubt know by now, the High Court ruled unanimously that iiNet did not auhorise the infringements of the film companies’ copyrights.

The first thing to note is we’ve got those 2 teams giving separate judgments again: (French CJ, Crennan and Kiefel JJ; Gummow and Hayne JJ). Not quite sure where that is going although 2 members of team 1 will still be there after June 2013.

Next, all 5 judges agreed whether someone is liable for authorising is largely a question of fact to be determined in all the circumstances.

Then, despite what we had all thought since Moorhouse, all 5 judges agree that “authorise” does not mean “sanction, approve, countenance”. “Countenance” in particular includes connotations which ‘are remote from the reality of authorisation which the statute contemplates’ (at [68]) and go well beyond the ’core notion of “authorise”’ (at [125]).

Instead, in deciding whether or not there has been an authorisation all 5 judges directed attention to the 3 criteria specified in 101(1A) and 36(1A):

(a) the extent (if any) of the person’s power to prevent the doing of the act concerned;

(b) the nature of any relationship existing between the person and the person who did the act concerned;

(c) whether the person took any other reasonable steps to prevent or avoid the doing of the act, including whether the person complied with any relevant industry codes of practice.

All 5 judges recognise that the 3 s 101(1A) criteria are not exhaustive; they are the starting point (at [68]) and essential (at [135]), however, in this case at least they are the only criteria considered.

In applying these 3 factors, the 2 judgments reach pretty much the same conclusions:

(78) The extent of iiNet’s power was limited to an indirect power to prevent a customer’s primary infringement of the appellants’ films by terminating the contractual relationship between them. The information contained in the AFACT notices, as and when they were served, did not provide iiNet with a reasonable basis for sending warning notices to individual customers containing threats to suspend or terminate those customers’ accounts. For these reasons, iiNet’s inactivity after receipt of the AFACT notices did not give rise to an inference of authorisation (by “countenancing” or otherwise) of any act of primary infringement by its customers.

(146) The present case is not one where the conduct of the respondent’s business was such that the primary infringements utilising BitTorrent were “bound” to happen in the sense apparent in Evans v E Hulton & Co Ltd[165], and discussed earlier in these reasons[166]. Further, iiNet only in an attenuated sense had power to “control” the primary infringements utilising BitTorrent. It was not unreasonable for iiNet to take the view that it need not act upon the incomplete allegations of primary infringements in the AFACT Notices without further investigation which it should not be required itself to undertake, at its peril of committing secondary infringement.

These conclusions, however, summarise the results of a very multi-faceted and many layered inquiry. Any “power” that iiNet had was too “indirect” or “attenuated” essentially because:

  • iiNet had no involvement in BitTorrent or a user’s choice to use BitTorrent or what the user used BitTorrent for;
  • unlike Grokster (pdf) and Kazaa, iiNet did not encourage its users to use BitTorrent or seek to profit specifically from their infringing use;
  • iiNet did have a contractual power to suspend or terminate an account for breach (including for copyright infringement) but:
    • its obligation was to provide internet access which could be used for non-infringing or infringing purposes, not just infringing purposes;
    • terminating an account would not stop the user just using a different account, possibly with a different ISP;
    • iiNet would be liable for breach of contract if it suspended or terminated a user in response to an allegation and it turned out the user was not in fact infringing copyright. [2]

A third consideration highlighted in both judgments was the inadequate notice of infringements given through the AFACT notices. Remember, in keeping with Gibbs J, [3] the film companies argued that iiNet had knowledge that its requirement that users not infringe copyright was being ignored.

It was accepted that iiNet knew that more than half of its user’s usage involved BitTorrent (although not all of that constituted infringements). (at [38], [92]; but iiNet was no different to any other ISP in that regard).

The film companies also sent iiNet on a weekly basis AFACT notices which purported to set out information about subscriber’s accounts that were being used to communicate infringing copies. By the trial, iiNet accepted that these AFACT notices did in fact identify infringements. There were, however, a number of problems.

Most importantly, when the notices were sent, there was no explanation of how they were prepared or how they worked (not that that would have made any difference to how iiNet would have treated them) [4]; it was only after discovery and provision of expert evidence that iiNet could understand them sufficiently to accept their veracity ([34] and [75], [138]).

This raises the question: what is iiNet’s situation now that it has had explained to it and accepted as reliable the AFACT notices? That seems rather less clear.

The ‘reasonableness’ of iiNet’s inaction was at least in part predicated on its lack of knowledge given the problems with the AFACT notices.

First, French CJ, Crennan and Kiefel JJ say at [69], however,  that there cannot be liability for authorisation without power to prevent the primary infringement and, as already noted, any such power is lacking or too indirect. Gummow and Hayne JJ do not make so explicit a statement (and their Honours endorse imposition of liability where infringement is “bound” to happen). Nonetheless, their Honours do at several points emphasise the presence or absence of control, or direct power to control, the primary infringement as key facts. For example, [127] and in contrast to Moorhouse at [144] from which iiNet’s situation was “well removed”.

Secondly, the High Court seemed very reluctant to leave iiNet with the burden of having to check back to see whether a particular user was still infringing particularly in circumstances where it would have been dependent on the use of the film companies’ technology to do so. So French CJ, Crennan and Kiefel JJ said:

(74) Whatever responses iiNet received to warnings, iiNet would be obliged to update the investigative exercise underlying the AFACT notices either itself or by reference to subsequent AFACT notices (allowing an appropriate interval for compliance with a request to cease infringement) before proceeding further.

(75) Updating the investigative exercise in the AFACT notices would require iiNet to understand and apply DtecNet’s methodology – which, among other things, involved a permission to DtecNet from AFACT to use the BitTorrent system to download the appellants’ films. Before the filing of experts’ reports in the proceedings, the information in the AFACT notices did not approximate the evidence which would be expected to be filed in civil proceedings in which interlocutory relief was sought by a copyright owner in respect of an allegation of copyright infringement. Also, any wrongful termination of a customer’s account could expose iiNet to risk of liability. These considerations highlight the danger to an ISP, which is neither a copyright owner nor a licensee, which terminates (or threatens to terminate) a customer’s internet service in the absence of any industry protocol binding on all ISPs, or any, even interim, curial assessment of relevant matters.[5]

Thirdly, both judgments refer with approval to the Blank Tapes case and the majority’s recognition there that manufacturers of products such as blank tapes and video recorders, which have both lawful and unlawful uses, will not be liable for authorising copyright infringement even if they know it is likely that their products will be used to commit infringements (at [53] and [130]).

Both judgments conclude with calls for the legislature and/or co-operative industry codes to deal with the challenges these issues pose. It had seemed that a co-operative industry code required the near death experience in the Full Federal Court for motivation, but at least the 5 major ISPs kept plugging away.

Finally, what is the status of Moorhouse itself? Here the difference with Amstrad and CCH Canadian comes clearest. The House of Lords plainly thought Moorhouse was a copyright liability too far and, as the Roadshow High Court interpreted the judgment, limited authorisation to cases where the defendant granted, or purported to grant, the primary infringer the right to do the infringing act. The Supreme Court of Canada went even further and held that a law library was not liable for authorising infringements by photocopying in largely similar circumstances to Moorhouse (if one can overlook any difference between a reference library for lawyers and a university library). In contrast, the Roadshow High Court explained that the University was liable in Moorhouse because of the extent of its control over the photocopier, the books and the primary infringer’s activities: the circumstances in Roadshow were “well removed” from those in which liability was imposed on the University (at [144], see also [69]). This approach may reflect the legislative codification of criteria from Gibbs J’s judgment, but it also reflects the way iiNet put its case (at [60] – [61]).

Roadshow Films Pty Ltd v iiNet Ltd [2012] HCA 16

  1. Slightly different formulation by Gummow and Hayne JJ at [142].  ?
  2. [66] – [70], [73]; [139] Gummow and Hayne JJ go so far as to point out that termination would deny the user access to the internet for non-infringing activities. Despite the criticisms directed at Higgins J’s opinion in Adelaide Corporation, all 5 judges appear to agree with his Honour’s view that a right to terminate a contract was wholly disproportionate (but, of course, there are all those other factors to, er, factor in). The Grokster / Kazaa point is made explicitly only by Gummow and Hayne JJ at [101]  ?
  3. See e.g. at [58] and at [14] in austlii’s online version of Moorhouse.  ?
  4. See the evidence recounted by Jagot J at [308] – [318] in the Full Court.  ?
  5. See also the summary of iiNet’s argument at [62] and Gummow and Hayne JJ at [138] – [139] and [143].  ?

Roadshow: second look Read More »

Roadshow v iiNet

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The High Court has unanimously dismissed Roadshow’s appeal in the case against iiNet.

On a first look, there are some references suggesting that our law is being brought back in line with the UK (CBS v Amstrad) and Canada (CCH Canada v Law Society of Upper Canada). Consideration will have to await further review.

Although unanimous, there are 2 judgments: as in iceTV, French CJ, Crennan and Kiefel JJ in one and Gummow and Hayne JJ in the second.

Roadshow Films Pty Ltd v iiNet Ltd [2012] HCA 16

Roadshow v iiNet Read More »

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