Do you have to pay for a software licence when you buy the business

It’s not an uncommon scenario: the client has bought a business, but some mission critical software is outdated and the licence is not transferable except on payment of a fee. What do you do: Pay the fee or “save” the money and keep using? Thawley J found that the licensor’s consent to some time to evaluate options meant Shepparton Partners (SPC) had an implied licence but thereafter infringed. Injunctions and $1,162,428.80 damages flowed.

I am guessing pretty much everyone in Australia at some point or another has experienced SPC’s canned fruit, vegetables or maybe fruit juices.

Some facts

To run its business, SPC Ardmona (SaleCo) used QAD’s enterprise resource planning ERP software. It used the ERP software for everything: for sales orders and inventory management, procurement, manufacturing planning and control, service and support project management, distribution and finance. SaleCo had a perpetual licence, but it was not transferable. SaleCo also paid an annual maintenance fee, which was paid up to 31 July 2019.

The version SaleCo used was the 2008 version. In 2018, however, QAD had approached SaleCo with a proposal to upgrade to the new, current 2017 version. SaleCo’s IT personnel agreed with the proposal but the price was sufficiently high that agreement required sign-off by SaleCo’s ultimate owner – Coca-Cola Amatil.

Coca-Cola Amatil had decided to sell the SPC business and didn’t want to spend that money. The sale eventually went through in June 2019 to SPC. Before the purchase went through, QAD had written to SaleCo and SPC stating it would consent to the transfer of the licence provided 3 conditions were met:

  1. Payment of a transfer fee of $424,392 and a maintenance fee for the next year of $177,816;
  2. Execution of an appropriate transfer agreement and a new licence agreement
  3. Satisfaction of conditions 1 and 2 before 30 June 2019, otherwise the offer was automatically withdrawn.

There was also a quote to upgrade to the new, current cloud-based version of $755,000 per annum (although the amount seems to have been negotiable).

SPC, however, considered the QAD 2008 version was not “fit for purpose” although not “useless” and persuaded QAD it needed more time to consider its options. By letter dated 27 June 2019, QAD extended the time for acceptance initially to 31 July. There were further meetings, discussions and email so that ultimately the time for acceptance was extended until November 2019.

In November 2019, QAD suspected that SPC was likely to go with a different vendor. It wrote to SPC pointing out it had had 5 months to make a decision and decision was required. SPC wrote back saying that responsibility for paying the transfer/licence fee was the responsibility of Coca-Cola Amatil or SaleCo.

SPC continued to use the QAD 2008 software until 28 September 2020 when it implemented Microsoft Dynamic 365 as its ERP software.

Even after 28 September 2020, however, SPC continued to use the QAD 2008 software for “non-production purposes” such as extracting historical information for quality control or financial reasons. Amongst other things:

  • before the changeover to Microsoft, SPC used the software in “day to day” use;[1]
  • SPC made modified or customised copies of the QAD 2008 software including “test and development reproductions”;
  • after the changeover to Microsoft, it made an ‘historical copy’ of the QAD 2008 software on a different server;
  • it also made “back-up” copies on its servers.

It appears that SPC expected it would need to keep using the QAD 2008 software for “non-production purposes” for another seven years.

An implied licence

Thawley J held (one would think largely uncontroversially) that the various ways SPC continued to use the QAD 2008 software involved reproductions of the whole or substantial parts of the software.

However, in the period from 27 June 2019 to SPC’s November letter,[2] SPC had an implied licence to use the software so use in that period was not infringing. The implied licence arose from the 27 June 2019 letter and the course of conduct between the parties until November.

Infringement and damages

Use after that period was not licensed and therefore infringed.

Thawley J awarded QAD $662,428.80 in compensatory damages and an additional $500,000 by way of additional damages.

The $662,428.80 amount was the transfer fee plus a maintenance fee for one year plus GST. Given the compensatory nature of damages under s 115(2), that was the loss QAD suffered.

Additional damages were appropriate as SPC at all times knew it needed QAD’s consent to the transfer of the licence and that it was its responsibility to obtain that consent. Consequently, its infringement was flagrant. Also there was a need for deterrence.

Cross-claim against the vendors

SPC did run a cross-claim against Coca-Cola Amatil and SaleCo arguing that they had breached the business purchase agreement by failing to pay QAD the transfer and licence fees.

These claims were said to arise essentially from the vendors’ obligations to use “best endeavours” to obtain a transfer of the licence and do whatever they lawfully could, including rendering all reasonable assistance, to permit SPC to have the benefit of the licence of the QAD 2008 software. There were also obligations on SaleCo to hold its rights in the assets of the business on trust for SPC.

The wording of the business purchase agreement was perhaps not as clear as it could be: it did make specific provision that the vendors did not have an obligation to pay fees and charges for certain key assets.

In the result, however, Thawley J concluded there had been no breach of their obligations by the vendors. At all times, the managing director of SPC knew that payment of the transfer and maintenance fees would be SPC’s responsibility. A key indicator of this had been the fact that all negotiations with QAD were undertaken throughout the enitre period by SPC. Coca-Cola Amatil and SaleCo were never involved.

If you are a software vendor in this sort of situation, you may need to be careful about the terms you let the new owner evaluate your software. In the end, it wasn’t a financial problem for QAD because it only intended to charge a one-off fee. If the fee had been time based, say annual, it could have lost out. Purchasers and vendors also need to be clear about whose responsibility it is to pay the fees. Even if it were the vendor’s responsibility, the purchaser in SPC’s position was the one directly liable for infringement. An indemnity, or claim for breach of contract, would not be much help if the vendor has disappeared or distributed its assets after completion.

QAD Inc v Shepparton Partners Collective Operations Pty Ltd [2021] FCA 615 (Thawley J)


  1. Day to day use involved users connecting to the software using a user name and password. The QAD 2008 object code on SPC’s application software was then loaded into the server’s RAM and the code stayed in RAM until the server was shut down or (more likely) the user logged off: [79]  ?
  2. Or possibly 10 December 2019 when QAD formally notified SPC the licence was terminated.  ?

AGL, Greenpeace and free speech

AGL, one of Australia’s largest suppliers of electricity, gas and telecommunications, owns copyright in and has registered as a trade mark its AGL “logo”:

TM No 1843098

Greenpeace started running a campaign about AGL’s business “Still Australia’s Biggest Climate Polluter” which included the online banner:

You can see why that might upset someone at AGL.

That caused AGL to sue Greenpeace for copyright infringement and trade mark infringement.

Burley J has largely dismissed the claims.

Burley J held that there was no copyright infringement for uses like the example above as they were fair dealing for purposes of parody or satire.

Some other uses, however, did not make such use of irony, sarcasm or ridicule, or humorous juxtaposition, as to qualify as parody or satire. This seems largely to have turned on the absence of the pointed tag line Australia’s Greatest Liability in an example such as:

A Greenpeace protest poster image

These uses also did not qualify for the defence of fair dealing for the purposes of review or criticism. They did not, for example at [92], “rise above the level of protest statements that are critical of AGL as a company, and would not be understood to represent criticism of review, whether of the AGL logo or any other work.”

Burley J also rejected AGL’s case on trade mark infringement: Greenpeace was not using the AGL logo as a trade mark. At [102], his Honour explained

The use of the modified AGL logo is to identify that brand, and the company that it represents, as the subject of criticism. [Consumers]would not perceive Greenpeace to be promoting or associating any goods or services by reference to that mark. Rather, it is the use of the modified AGL logo to refer in terms to AGL and the goods and services that AGL provides: see, for example, Irvings Yeast-Vite Ltd v Horsenail (1934) 51 RPC 110 at 115 (Lord Tomlin), cited in Shell Company at 426 (Kitto J).

This, with all due respect, has to be right. His Honour’s approach, however, demonstrates with stark clarity the problem with the reasoning in the “parallel import” cases like the Full Court’s (overruled) decision in E & J Gallo Winery v Lion Nathan Australia Pty Ltd, most recently confirmed in the Scandinavian Tobacco case at [21] – [56] (although one could argue, apart from the Gallo case, the goods weren’t in fact parallel imports).

AGL Energy Limited v Greenpeace Australia Pacific Limited [2021] FCA 625 (Burley J)

p.s. AGL might feel doubly aggrieved by this as, back in the 1980s, it had successfully sued for copyright on the basis that there was no parody defence. It only took another (almost) 20 years, but the Act did finally get amended to bring in that revolutionary development.

Fearless Girl – the sequel

The Fearless Girl replica statue is currently on display in Federation Square without any disclaimer (and has been for some time). In the wash-up from his Honour’s earlier reasons dismissing State Street Global’s claims, Beach J has now ordered that it can continue to be displayed either without any plaque or alternatively, with a plaque which states:

This statue is a limited edition reproduction of the original “Fearless Girl” statue in New York that was sculptured by the artist Kristen Visbal. The original statue was commissioned and is owned by State Street Global Advisors Trust Company. This reproduction is owned by Maurice Blackburn who purchased it from the artist. Maurice Blackburn has no association with State Street.

In his Honour’s principal reasons, Beach J had ruled that the display of the Fearless Girl replica and the way it had been used by Maurice Blackburn did not make any of the misrepresentations of association alleged by State Street Global. His Honour did also observe that the use of disclaimers for a period including about 3 months pursuant to an interlocutory injunction ordered by his Honour would have dispelled any misrepresentation of association (if it had been made).

State Street Global argued that a disclaimer should be required because of the uncertainty about what Maurice Blackburn might do with the replica statue in the future and might even sell it. Maurice Blackburn pointed out that, as his Honour had dismissed the claims of misrepresentation, there was no basis for any disclaimer. It also argued any disclaimer should await the determination of any appeal.

At [19], Beach J considered “SSGA seek too much, and MBL concede too little.”

At [21], Beach J considered there was sufficient material to warrant the exercise of his discretion. This appears to reflect his Honour’s summary of State Street Global’s contention:

SSGA say that absent appropriate disclaimers, there is nothing to stop MBL from engaging in the conduct that led to the present proceeding. SSGA say that having regard to uncertainty around MBL’s future intentions regarding the use or display of the replica, there remains a real risk that MBL’s use of the replica could give rise to future contraventions of the Australian Consumer Law. They note that I did accept that members of the Australian public may have known about the original Fearless Girl statue and the name “Fearless Girl”, and that such members may have associated the original statue and the name “Fearless Girl” with certain gender equality issues.

Pointing out that State Street Global’s proposed disclaimer was “an incomplete statement, fashioned to facilitate commercial advantage.  After all, MBL owns the replica, not SSGA.  And the artist was quite entitled to sell the replica to MBL for a use not inconsistent with the master agreement”, his Honour made an order in the form indicated.

One might think it unusual that there would be an injunction against future conduct which has not been found to occur. The “no plaque” option reflects this, but also means the name “Fearless Girl” cannot be used in a way which dilutes State Street Global’s association.

State Street Global Advisors Trust Company v Maurice Blackburn Pty Ltd (No 3) [2021] FCA 568

Fearless Girl!

Beach J has ruled that Maurice Blackburn did not breach any of State Street Global’s rights in the Fearless Girl statue by arranging for a replica to be displayed at the launch of a campaign to address the gender pay gap.

Image of Fearless Girl bronze sculpture in alley with tour group in background
Image by maggavel from Pixabay

In 2016, State Street had commissioned Kristen Visbal to create a life-size bronze statue which became known as “Fearless Girl” in connection with a campaign to promote State Street’s Gender Diversity Index exchange traded fund, known as the “SHE fund”.

The completed statue was installed and unveiled in Bowling Green Park on Wall Street, famously appearing to confront the Charging Bull statue.[1] This had been a wildly successful campaign with, amongst other things, over 4.6 billion Twitter impressions (?) and a “mere” 745 million Instagram impressions (?) in the first 12 weeks!

In 2019, Maurice Blackburn and a number of corporate and super fund backers negotiated an agreement with Ms Visbal for a fee of USD250,000 permitting them to display a Fearless Girl replica in Federation Square Melbourne[2] in connection with a campaign for Equal Pay Day.

After Maurice Blackburn sent out invitations to the unveiling of the Fearless Girl replica in Federation Square, State Street sued Maurice Blackburn and some of its co-funders for pretty much everything they could think of:

  • interference with contractual relations;
  • false, misleading or deceptive conduct in trade and commerce contrary to the Australian Consumer Law and passing off;
  • trade mark infringement; and
  • copyright infringement.

All the claims failed.

Beach J’s reasons for judgment run for some 1191 paragraphs over 274 pages. So, more considered analysis will have to await a later day (or days).

The central issue seems to have been the very specific nature of State Street’s rights to control further reproductions of the work and the careful way Maurice Blackburn had used Fearless Girl.

The terms State Street and the artist had negotiated included a clause granting State Street the exclusive rights:

to display and distribute two-dimensional copies, and three-dimensional Artist-sanctioned copies, of the Artwork to promote (i) gender diversity issues in corporate governance and in the financial services sector, and (ii) SSGA and the products and services it offers. …. (emphasis supplied)

and Ms Visbal also agreed that no other party could be authorised to use “the Artwork” as a logo or brand ….

Beach J held that the way Maurice Blackburn had used Fearless Girl in connection with the Equal Pay Day campaign did not fall within the scope of State Street’s exclusive rights. It also was not use as a logo or brand. Michaela Whitbourn has a nice summary.

However, it looks like there will need to be a further hearing to determine whether, and if so, how Maurice Blackburn may use and display its Fearless Girl replica in the future.

State Street Global Advisors Trust Company v Maurice Blackburn Pty Ltd (No 2) [2021] FCA 137


  1. Those of you out there with long(-ish) memories, might recall that that juxtaposition caused its own ‘moral rights’ controversy. Fearless Girl was later moved in April 2018 to its current position in front of the New York Stock Exchange.  ?
  2. Fed Square, of course, is not without its own controversies!  ?

News media “use” right

The Government has introduced into Parliament the Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2020.

This is the Bill to enact legislation to make Google and Facebook pay the news media owners for “use” of their news.

For some commentary on the earlier exposure draft, see here.

There have been some notable changes. These include:

  • When setting the amount of the payment, there will now be a requirement that the value the media organisation receives from having its material “used” by Facebook or Google, as the case may be, is taken into account: see proposed section 52ZZ;
  • The public broadcasters, the ABC and the SBS, reportedly will be able to negotiate for payment whereas previously they were excluded;
  • Opinion pieces, not just “news”, may qualify as material the “use” of which must be paid for, not just “news” written by journalists: s 52A

The Channel 9 newspaper reports that the retiring MD of Channel 9 is spitting chips over the inclusion in the value calculus of the benefit the news organisation receives from Facebook’s, or Google’s, “use”.

It still remains far from clear what, if any, rights of the news publishers are actually being “used” and for which payment will be required. What impact, if any, will the definition of “making content available” as including “a link to the content is provided on the service” have on the scope of the communication right conferred by copyright? Similarly, will the inclusion within that definition of “an extract of the content is provided on the service” affect the interpretation of what is, or is not, a fair dealing?

There is a little peep behind the curtain into the sausage making process here.

Meanwhile, media reports indicate the bill will be referred to a Senate committee for inquiry.

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

A case about works of artistic craftsmanship

Spoiler alert: it wasn’t!

State of Escape (SOE) sells the Escape bag:

2 images of a soft carry-all tote bag in blue perforated neoprene with sailing rope handles; one image with the sides expanded; the other closed.

SOE claimed Ms Schwartz and her company, Chuchka, were infringing copyright in the Escape bag as a work of artistic craftsmanship by importing and selling the Chuchka bags. SOE also alleged that the sale of the Chuchka bags was misleading or deceptive conduct and passing off.

Despite Ms Schwartz’ denials, Davies J found that the Chuchka bag was copied from the Escape bag and, if copyright subsisted in the Escape bag, numerous versions of the Chuckha bag would be infringements. SOE did not have a registered design and SOE was selling at least 50 or 60 Escape bags a day. So, subsistence of copyright came down to whether or not the Escape bag was a work of artistic craftsmanship.[1]

The Escape Bag

The Escape bag is a soft, oversized tote bag. It is made from perforated neoprene fabric with handles made from sailing rope which wrap around the body and base of the bag. It also has an internal, detachable pouch made from perforated neoprene and press studs at either end for expansion.

The bags are made by hand. They feature hand punched holes where the rope goes in, a heat seal tape finish along the top line of the bag and other contact points.

The Escape bag was designed over several months of trial and error in 2013 by Ms MacGowan who, with Ms Maidment, is a co-founder and director of SOE.

Ms MacGowan gave evidence that she designed the bag to be both beautiful and practical. She chose perforated neoprene as it was aesthetically pleasing and light:

The bag did not have any lining. I did not want it to have any embellishments. I did not want anything disguising something that was not beautiful. I wanted the whole thing to be beautifully created. I hand cut all the patterns. I wanted the inside to be as beautiful as the outside. I wanted to challenge ingrained ideas that a bag had to be a certain way. My focus was, ‘This is what it is’. I did not want the bag to be like something else. Everything in the design had to be there for a reason. For instance, there was a risk that binding could ruin the curve of the bag. I ended up putting binding on the top edge because I was concerned it would fray. There were a lot of things that I felt strongly about.

Ms MacGowan said she did not want to use leather or webbing for the handles as she considered they did not fit with the design aesthetic. She spent many months with her sewing machine working out how to fix the rope to the bag so it retained its round profile and was not merely glued. Ms MacGowan explained:

It really complemented the neoprene beautifully. And also it was very important that I had to find rope that matched back with the fabric beautifully because it was really about creating an impression of the whole than the individual parts. So that was also very, very important.

Ms MacGowan’s evidence explained design issues she had to confront and resolve including:

  • how to sew the rope on to the bag rather than glue it;
  • how to stop the fabric from ripping at pressure points where the rope joined the bag;
  • stopping the raw cut neoprene edges at the top of the bag from fraying;
  • reinforcing the pressure points under the press studs and rope entry points;
  • using a glue lined heat shrink black tubing to fix the rope to the bottom of the bag;
  • attaching the rope to the four bottom corners which would otherwise be exposed to the risk of damage;
  • providing a pocket for valuables;
  • finishing the inside seams to look like the rest of the bag.

Burge v Swarbrick

At [77], Davies J and counsel for the parties managed to divine nine guiding principles from the High Court’s decision in Burge v Swarbrick to determine whether the Escape bag qualifed as a work of artistic craftsmanship:

(a) the phrase “a work of artistic craftsmanship” is a composite phrase to be construed as a whole: Burge at 357 56, 360 [66]. It is not permissible to inquire separately into whether a work is: (a) artistic; and (b) the manifestation of craftsmanship;

(b) in order to qualify as a work of artistic craftsmanship under the Copyright Act, the work must have a “real or substantial artistic element”: Burge at 356 52;

(c) “artistic craftsmanship” does not mean “artistic handicraft”: Burge at 358 59;

(d) a prototype may be a work of artistic craftsmanship “even though it was to serve the purpose of reproduction and then be discarded”: Burge at 359 60;

(e) the requirements for “craftsmanship” and “artistic” are not incompatible with machine production: Burge at 358–9 5960;

(f) whilst there is a distinction between fine arts and useful or applied arts, when dealing with artistic craftsmanship there is no antithesis between utility and beauty or between function and art: Burge at 359 61;

(g) a work of craftsmanship, even though it cannot be confined to handicraft, “at least presupposes special training, skill and knowledge for its production… ‘Craftsmanship’… implies a manifestation of pride and sound workmanship – a rejection of the shoddy, the meretricious, the facile”: Burge at 359 61, citing George Hensher Ltd v Restawile Upholstery (Lancs) Ltd [1976] AC 64 (Hensher) at 91 per Lord Simon;

(h) although the matter is to be determined objectively, evidence from the creator of the work of his or her aspirations or intentions when designing and constructing the work is admissible, but it is neither determinative nor necessary: Burge at 360 [63]–65. In determining whether the creator intended to, and did, create a work possessing the requisite aesthetic quality and requisite degree of craftsmanship, the Court should weigh the creator’s evidence together with any expert evidence: Burge at 360 64 and 65; and

(i) in considering whether a work is one of “artistic craftsmanship”, the beauty or aesthetic appeal of the work is not determinative. The Court must also weigh in the balance the extent to which functional considerations have dictated the artistic expression in the form of the work: Burge at 364 8384.

Having set out the High Court’s statement of principle at 83, Davies J emphasised at [79] the High Court’s factual conclusion at [73] in application of that principle:

Taken as a whole and considered objectively, the evidence, at best, shows that matters of visual and aesthetic appeal were but one of a range of considerations in the design of the Plug. Matters of visual and aesthetic appeal necessarily were subordinated to achievement of the purely functional aspects required for a successfully marketed “sports boat” and thus for the commercial objective in view.

The Escape bag was not a work of artistic craftsmanship

Ms MacGowan’s evidence at [84] was that “the overall appearance of the bag as an object was fundamentally the most important thing.” She explained that “simplicity, beauty and originality” were her guiding principles:

“something free of embellishments, that was so pure in its form, structure and makeup that it embodied beauty in simplicity.”

SOE’s expert, a Ms Beale, agreed; considering the Escape bag “unique”. In cross-examination, however, she accepted that the uniqueness arose from the “decision decision” to use perforated neoprene and sailing rope “rather than in any contribution to the creation of those underlying materials.”

Ms Schwarz’ expert, Mr Smith, considered the use of perforated neoprene and sailing rope to be “strong design features”, but neither of them in itself was “new”. Mr Smith considered that combining 2 or more features that had been in common use over many years “[was] an evolution in styling rather than a completely new design”.

While Davies J reported that the experts agreed the Escape bag was a quality product, at [105] her Honour reported the experts agreeing that:

the Escape Bag is constructed using a standard construction method of “stitched together and then turned out” and other elements conform to what is generally expected of this style of bag – significant skill, training or knowledge was not required beyond what was expected in the design or manufacturing process”.

Davies J accepted that Ms MacGowan aspired to produce something of beauty, but that was not determinative as, following Burge, whether something was a work of artistic craftsmanship had to be determined objectively. At [109], her Honour declared that assessment required looking at the bag as a whole and “not by disintegrating the design choices made by Ms MacGowan within the functional limitations of the bag she created.” (emphasis supplied) While Ms MacGowan set out to design a stylish bag, at [110] her Honour found that “the function and utility of the bag as a carry all bag governed the overall design of the bag.”

Davies J considered on the evidence that significant design features resulted from and served functional considerations.

In the result, Davies J considered that, in designing the Escape bag, Ms MacGowan was not an “artist-craftsperson”: she had no special training, skill and knowledge relating to the design of handbags. The central aesthetic choices were the decisions to use perforated neoprene and sailing rope. Those two choices alone were not sufficient to constitute the resulting bag as a work of artistic craftsmanship.

At [121] – [122], her Honour explained:

[121] I also accept the submission for the respondents that Ms MacGowan did not approach the design and manufacture of the Escape Bag as an artist-craftsperson. She had no special training, skill and knowledge relating to the design and manufacture of handbags and many of the issues she encountered were purely functional in nature – for example, preventing the raw edges of neoprene from fraying, reinforcing the point where the rope handle enters the bag, and how to sew the sailing rope onto the bag while retaining the roundness of the rope.

[122] Further, I do not regard the selection and use of perforated neoprene as the fabric for the Escape Bag or its use in combination with sailing rope as involving an act of artistic craftsmanship. Both materials were readily available commercial materials capable of being used to manufacture a carry all bag without some particular training, skill or knowledge. At its highest, the use of those materials to make an everyday bag was an evolution in styling. Whilst Ms Beale was of the view the combination of those materials made the Escape Bag “unique” she accepted in cross-examination that the uniqueness to which she referred related to “design decision” to use those materials, rather than in any contribution to the creation of those materials.

At one level, the decision can be seen as raising a high bar for designs applying the “form follows function” theory of design rather the embellishment of embellishment’s sake. That seems to follow, however, from Burge. The suggestion that “revolution” rather than “evolution” is required might also be thought concerning.

While Davies J emphasised at [121] the functional nature of issues to be resolved, one might question the ways they could be resolved and the aesthetic choices that might be involved.

There may also be troubling aspects of the level of skill required to be demonstrated. The experts agreed that the level of skill exhibited by Ms MacGowan was not “beyond what was expected in the design or manufacturing process”. Are then works of artistic craftsmanship limited only to those exhibiting rare levels of skill? It is important to remember that the point of protecting works of artistic craftsmanship is to encourage real artistic effort by silversmiths, potters, woodworkers, hand-embroiderers and many others whose work does not qualify as a sculpture, engraving, drawing, painting or any of the other categories named in paragraphs (a) and (b) of the definition of artistic work.[2]

In that respect, it does not appear that Ms MacGowan could be characterised as an “artist-craftsperson”. Davies J appears to have considered that the innovation lay in the choice of materials – perforated neoprene and sailing rope – in an otherwise fairly standard bag design. In that case, the result should be uncontroversial especially as the objective was always large scale production.

Nonetheless, the decision highlights yet again the problematic decision to include what was intended to be an expansive, and expanding, category of subject matter as an exception to a defence.

On the “passing off” related allegations, Davies J (mercifully) found SOE did not a reputation in the features of the bag alone reputation. Her Honour also considered, where the competing bags sold for around, respectively, $300 and $100, the branding of the products brought into play the well-known principle from Parkdale v Puxu:

Speaking generally, the sale by one manufacturer of goods which closely resemble those of another manufacturer is not a breach of s 52 if the goods are properly labelled. There are hundreds of ordinary articles of consumption which, although made by different manufacturers and of different quality, closely resemble one another… the normal and reasonable way to distinguish one product from another is by marks, brands or labels. If an article is properly labelled so as to show the name of the manufacturer or the source of the article its close resemblance to another article will not mislead an ordinary reasonable member of the public.

State of Escape Accessories Pty Limited v Schwartz [2020] FCA 1606


  1. See Copyright Act 1968 s 77 and see paragraph (c) in the definition of artistic work in s 10(1). Copyright was claimed in the first, finished bag Ms MacGowan made or, alternatively, the first 8 bags supplied to the first customer. At [47], the first finished bag differed from the 8 bags supplied to the customer in that it did not include heat shrinkable tubing, the internal pouch was differently designed and there was no branding.  ?
  2. See paragraph 260 of the Gregory Committee report quoted by the High Court in Burge at para. 49  ?

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.  ?