reproduction

Aldi’s ‘benchmarking’ strategy

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Moshinsky J has held that the packaging for three of Aldi’s Mamia Baby Puffs products infringed Hampden’s copyright in the packaging for Little Bellies Puffs products. However, the packaging in another eight of Aldi’s Mamia products did not infringe the copyright in the packaging for various Baby Bellies products. Moshinsky J also held that Aldi was liable for additional damages for the proven infringements in light of Aldi’s ‘benchmarking’ strategy.

There was also an issue about ownership.

Illustration of the infringing packaging

Illustration of the non-infringing packaging

Some of the background

As you no doubt know, Aldi stores largely carry private label brands (i.e., Aldi’s own in-house brands). One of its private label brands is the Mamia range of baby products.[1]

In 2018, Aldi had embarked on a redesign of the packaging for the products in this range, starting with nappies and wipes.

In 2019, Aldi had moved on to the packaging for its snacking range. As part of this exercise, Aldi identified Hampden’s Little Bellies as the market leader. This led to Aldi instructing its design contractor, Motor Design:

Snacking range architecture needs to follow Baby Bellies with real photography.

This led, in 2020, to Aldi commencing to sell a number of Mamia food products – two varieties of Rice Cakes, three varieties of Fruit Snack Cereal Bars and three varieties of Fruit & Oat Bars.

In July 2020, Aldi also decided to introduce baby puffs products into its Mamia range. As with the earlier snacking products, Aldi identified and used the Bellies puffs products as the reference or benchmark products. Aldi launched three puffs products in August 2021. (It appears the packaging design went through at least 6 versions.)

The Puffs packaging

As noted above, Moshinsky J found that Aldi’s packaging for the blueberry, apple and cinnamon and carrot puffs infringed the copyright in Hampden’s corresponding Baby Bellies products.

The packaging for the blueberry puffs products illustrates this:

At [180], Moshinsky J found Aldi’s packaging reproduced the following layout and design elements of the Baby Bellies packaging:

(a) a small, oval-shaped cartoon character, with a large, light-coloured belly;

(b) a solid white background;

(c) a two-column layout;

(d) a rounded, childlike font;

(e) on the left side, text elements of varying sizes, “stacked” vertically;

(f) on the right side, photographic images of the product and ingredients, in a vertical composition; and

(g) a number in the upper-right corner.

His Honour considered at [181] that the combination of these elements cumulatively involved a degree of creativity or originality and, considered together, were qualitatively significant.

In so finding, Moshinsky J rejected Aldi’s argument that Hampden was seeking to protect the idea or ‘look and feel’. His Honour accepted at [183] that the elements were not taken precisely by Aldi but, nonetheless, all were present in Aldi’s packaging:

Aldi’s characterisation of the applicants’ claim as residing in the ‘look and feel’ of the Applicants’ Works rested on a submission that none of the listed design elements was taken ‘precisely’ by Aldi. I do not accept that submission. Each element listed above is present in item 9 of the Impugned Works. It is true that the identification of those elements involves some degree of abstraction, but the elements are not identified at so high a level of abstraction as to venture into the protection of ideas rather than their expression.

And, at [184], his Honour pointed out that focusing on the differences was contrary to Designer Guild where Lord Hoffmann had stated:[2]

…. In the present case, [the question] is whether the features which the judge found to have been copied from Ixia formed a substantial part of Ixia as an artistic work. That is certainly a question of judgment or impression. But why, in answering that question, should it be relevant to consider whether Ixia did or did not look like Marguerite?

The non-Puffs packaging

In contrast to the findings in relation to the puffs packaging, Moshinksy J held that the packaging for the other products did not reproduce a substantial part of the copyright in Hampden’s Little Bellies products.

For example, the Mamia rice cakes products did not infringe the copyright in either the Baby Bellies blueberry puffs or the Little Bellies products

The Mamia rice cakes products reproduced the layout and design elements of:

(a) a solid white background;

(b) a rounded, childlike font;

(c) on the bottom left, a green oblong shape with writing in it;

(d) on the right side, photographic images of the product and ingredients, in a vertical composition; and

(e) a number in the upper-right corner.

Unlike the puffs packaging, however, at [198] Moshinsky J considered what had been taken was not a substantial part of the copyright. Even in combination, they did not produce something of sufficient creative significance.

At [197], his Honour had earlier drawn attention to significant differences in the Aldi design:

Unlike the Impugned Puffs Works, items 1 and 2 of the Impugned Works do not reproduce the design element of a small, oval-shaped cartoon character. The owl in items 1 and 2 of the Impugned Works is much larger, and does not resemble the cartoon character in item 1 of the Applicants’ Works. While it might be said that a large, light-coloured belly (with writing in it) has been reproduced, I do not consider that this can be considered separately from the character itself, which is not reproduced. Further, unlike the Impugned Puffs Works, items 1 and 2 of the Impugned Works do not reproduce a two-column layout. The ingredients near the bottom of the image stray into the middle of the work, and the MAMIA brand name is central, such that there is not a clear impression of two columns.

Turning to consideration of Hampden’s non-puff packaging:

Moshinsky J noted that the competing designs did both feature a large, oval-shaped cartoon character with a large, light coloured belly but Aldi’s design did not feature photographic images of the products in a vertical arrangment on the right side of the work.

At [203], Moshinsky J considered that the number of design elements that had been reproduced was too few to conclude that a substantial part of Hampden’s copyright had been reproduced:

…. Although the impugned work reproduces the design element constituted by a large, oval-shaped cartoon character, with a large, light-coloured belly (with writing in it), which may be considered to be a creative or original element, the other elements that have been reproduced are commonplace. While the question is to be approached qualitatively, the number of layout and design elements that have been reproduced can be relevant to the qualitative assessment. Here, the number of elements that have been reproduced is too few to conclude that the layout and design elements that have been reproduced, even if taken together, constitute a substantial part of item 2 of the Applicants’ Works.

Additional damages

As noted above, Moshinsky J found that it was appropriate to order additional damages against Aldi under s 115(4) in respect of the infringements. The infringements were flagrant and there was a need to deter similar infringements.

Aldi directed Modern Design to use the Hampden products as the benchmark products and both the Aldi personnel responsible for the range and the Modern Design personnel had referred closely to Hampden’s designs.

In her affidavit, Aldi’s witness had attempted to explain what Aldi meant by ‘benchmarking’:

… development of a Private Label product (or rebranding an existing Private Label product) also involves consideration of the packaging used by competitors. As part of this process a benchmark product is usually identified within the market. This is a product selected by Aldi or the Agency from amongst the range of on-trend products within an on-trend category which have been identified during the market investigation process I have described above. The purpose of the benchmark is to enable us to identify cues that customers may associate with the product type generally and then adapt them to develop the Aldi Private Label product. These cues can include:

(a) the packaging size;

(b) the use of colours known to relate to quality or characteristics – for example, purple is used for salt and vinegar flavours; and

(c) the presentation of aspects of packaging such as product name and key ingredients, and also the expected age range for consumers of the product.

(Moshinsky J’s emphasis).

Things did not improve in her cross-examination.

At [128], Moshinsky J found that he had difficulty accepting the witness’ evidence. Rather, his Honour inferred that ‘benchmarking’ meant:

a process of developing a packaging design that resembled the packaging of the benchmark product (albeit not too closely, because that would infringe the law).

It is also worth noting that Aldi’s legal advice had been that version 4 of the puffs packaging was too close to the Bellies packaging. The internal comment by Modern Design’s designer was “No shit”.

Aldi considered that a further design removing text from the owl’s tummy and amending that wording “should now move it far enough away from the benchmark”.

At [231], Moshinsky J found that Aldi had used the designs which had been developed by a trade rival for its own advantage. It took the risk that its use would exceed what the law allows. Consequently, Moshinsky J found Aldi’s conduct to be flagrant. In addition, Aldi continued selling the products in the infringing packaging after receipt of Hampden’s letter of demand.

An owership issue

Hampden, as its name might suggest, is an IP holding company. Its related company, Every Bite Counts (EBC), had arranged for B&B Studio to design the packaging for nine of the Bellies products in 2017 / 2018.

It also appears that B&B Studio prepared drafts or versions of four other packaging designs. These were sent to another company, Lacorium, where a Mr Mota amended or revised these to produce the final packaging designs for these four products.

Moshinsky J (at [144]) held that the terms of the B&B Studio assignment to Hampden that copyright “shall be assigned” on payment in full of the contract price were effective to assign copyright to EBC once the payment was made.

Aldi argued that “shall be assigned” was in effect an agreement that there would be a further document to effect the design on the basis of Acohs v Ucorp at [193]-[195]. However, Moshinsky J considered that the context in Acohs was very different and distinguishable.

In 2021, EBC purported to assign the copyright in the designs to Hampden with effect from 2018. At [145], MOshinsky J pointed out the assignment could not have retrospective effect but held it was effective to assign EBC’s rights to Hampden from the date of the deed. This also included the right to sue for past infringements.

Moshinsky J was prepared to treat the designs finalised by Mr Mota as works of joint authorship. Section 10(1) defines:

work of joint authorship means a work that has been produced by the collaboration of two or more authors and in which the contribution of each author is not separate from the contribution of the other author or the contributions of the other authors.

At [135], Moshinsky J stated that the collaboration required for joint authorship “does not require the authors to work directly with one another.” Accordingly:

alterations made by Person A to an earlier work created by Person B can, depending on the circumstances, result in a work of joint authorship of Person A and Person B together.

At [150], his Honour recorded that the works were based on the designs prepared by B&B Studio “and involved only limited input from Mr Mota”. Although his contribution was limited, it was sufficient to constitute him an author. Furthermore, the B&B Studio employees had provided feedback to Mr Mota on his drafts. As a result, Moshinsky J considered that the works were the product of collaboration between B&B Studio employees and Mr Mota and the works were works of joint authorship.

Although Lacorium had not assigned copyright to Hampden, as works of joint ownership both B&B Studio and Lacorium were the intial owners of the copyright and B&B Studio had assigned its rights to Hampden in a separate document. Accordingly, Moshinsky J held that Hampden had standing to sue for infringement as the owner of the interest in the copyright originally vesting in B&B Studio.

What happens next

Whether either side will appeal – or, rather, seek leave to appeal – is not clear yet as it appears final orders on the infringement findings have not yet been made.

Moshinsky J dismissed Aldi’s cross-claim in respect of unjustified threats on the basis of three letters as they were directed to the puffs packaging which he had found infringed. However, there is, or may be, an outstanding issue in relation to a fourth letter which is yet to be resolved.

Meanwhile, in the UK

The Court of Appeal has allowed Thatcher’s Cider’s appeal finding that Aldi’s benchmarking strategy took unfair advantage of Thatcher Ciders well-known trade mark.

Hampden Holdings I.P. Pty Ltd v Aldi Foods Pty Ltd [2024] FCA 1452

  1. You may have come across an earlier imbroglio in which Aldi’s Chazoos Cheezy Twists infringed the Twisties trade mark although, more recently, its Moroccanoil product packaging was exonerated.  ?
  2. Extracted by his Honour at [170].  ?

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

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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.  ?

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Love was not in the air

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

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

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

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

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

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

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

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

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

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

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

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

Infringement, or not

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

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

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

Love is in the air, everywhere I look around

Love is in the air, every sight and every sound

And I don’t know if I’m bein’ foolish

Don’t know if I’m bein’ wise

But it’s something that I must believe in

And it’s there when I look in your eyes

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

The chorus is:

Love is in the air

Love is in the air

Whoa, oh, oh, oh

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

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

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

Block 1

Love’s in the air, whoa-oh

Love’s in the air, yeah

We’re warm in the winter

Sunny on the inside

We’re warm in the winter

Sunny on the inside.

Woo!

Block 2

Love’s in the air, whoa-oh

Love’s in the air, yeah

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

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

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

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

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

The musical work

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The literary work

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

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

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

Love was not in the air Read More »

In which the lawyers don’t lose themselves

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Eminem is suing a New Zealand political party for infringing his copyright in New Zealand in Lose Yourself.

A bit of background here.

Part of the barrister’s opening for Eminem plays the two songs and is attracting social media commentary on what is said to be the surrealist way lawyers in court behave.

Meanwhile, we all get to express an opinion (however well informed) on whether there’s an infringement or not.

Lid dip: Therese Catanzariti

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Program formats and copyright

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Channel 7 has lost its bid to get an interlocutory injunction against Channel 9’s show Hotplate.

Channel 7 claimed Hotplate infringes Channel 7’s copyright in the dramatic works consisting of the combination and series of incidents, plot, images and sounds that make up My Kitchen Rules:

  1. MKR Series 1, Episode 1;
  2.  the whole of MKR Series 1;
  3.  the whole of MKR Series 5; and
  4.  the whole of MKR Series 6.

Nicholas J found that Channel 7 had a reasonably arguable case, but did not agree with Channel 7 that it was a strong prima facie case. Then, his Honour considered the balance of convenience weighed in Channel 9’s favour.

Prima facie case

Nicholas J thought this might well cause Channel 7 some difficulties. At [15] his Honour said:

There may be a difficulty in framing the case in this way.  My understanding of Seven’s case is that it claims copyright in the dramatic work that constitutes the format for the MKR television program which was first reduced to material form in Series 1, Episode 1 (see Seven’s outline of submissions para 11). If that is correct, then one would expect subsequent episodes of MKR merely to reproduce the dramatic work (ie. the format) first seen in Series 1, Episode 1.  The alternative approach involves treating every subsequent episode of MKR as an original dramatic work that has its own original format.  This seems inconsistent with the way in which Seven has argued its case.  In any event, it is not necessary to explore this issue in any detail for present purposes.  In due course Seven will need to explain precisely how it puts its case.

Channel 9 contended that many of the key elements of MyKitchen Rules were common place and unoriginal. The makers of Hotplate, Endemol, also pointed to a catalogue of what it said were very substantial differences between the 2 shows:

(a) The Hotplate is based on professional restaurateurs, and established restaurant businesses, whereas MKR involves amateur cooks in their kitchens.

(b) The restaurants and contestants for The Hotplate were selected because they were varied examples of different restaurant styles and the best characters, not because they are from a particular State (as is the case for MKR) – as a result, two restaurants are in Sydney, one is in Brisbane, one is in Perth, one is in Mandurah (in Western Australia) and one is in regional Victoria.

(c) The restaurant businesses featured in The Hotplate focus on different cuisines in order to show different cooking styles, including Italian, Japanese, French, seafood, modern Australian and Asian fusion.

(d) In Round 1 of The Hotplate, the contestants are required to cook meals from their existing menu, and must be prepared to cook anything on the menu since they are not given advance notice of which two entrees, two mains and two desserts will be ordered by the judges, whereas in MKR the contestants select their own menu of one entree, one main and one dessert. The Hotplate shows the contestants preparing meals, but does not show them shopping for ingredients as for MKR.

(e) When their restaurant is featured, the contestants in The Hotplate wear what they generally wear in their day-to-day business – they are not provided with a branded apron as they are for MKR or for Masterchef (another well-known cooking program).

(f) In Round 1 of The Hotplate, the other restauranteur contestants provide their scores to the judges in a bill folder, but in Round 2 (after the restaurant makeovers), the other contestants must deliver their scores directly to the contestants whose restaurant is being featured on the night.

(g) The judges in The Hotplate give feedback to the contestants about everything from the ambiance and decor of the restaurant to the service to the overall menu to the specific dishes they serve – this is aimed at assisting the restaurateurs with how they can improve their businesses as a whole, not just the cooking. This is not an element of MKR since the program does not involve actual restaurant businesses.

(h) In Round 2 of The Hotplate, the contestants are given an amount of money to undertake renovations and makeovers of their restaurant’s furniture, colour scheme and decor in addition to updating of the restaurant’s menu. Again, this is not an element of MKR since the program does not involve the renovation or makeover of restaurant businesses. This information may be confidential to Nine. I have not had time to check while preparing this affidavit.

(i) In Round 3 of The Hotplate, the contestants cook meals from their newly renovated restaurants for diners. This is not an element of the MKR program since it does not involve restaurants or their diners.

Balance of convenience

Nicholas J accepted that Channel 7’s losses would be difficult to quantify. His Honour considered, however, that Channel 9’s losses would also be particularly difficult to quantify. The factor which appears to have tipped the balance, bearing in mind the problematic strength of Channel 7’s claim that its rights were infringed, was the disruption to Channel 9’s broadcasting schedule. 3 episodes of Hotplate had already broadcast and it was unrealistic to expect Channel 9 could simply resume where it left off, or start over again, if it successfully defended the infringement claim. At [41] and [42], his Honour said:

During the course of argument it was suggested by Senior Counsel for Seven that if Nine was restrained from broadcasting further episodes of Hotplate, it would be able to resume broadcasting them at a later date on the assumption that no permanent injunction was granted. I doubt that this would be as simple as the submission seemed to suggest. Presumably it would be necessary for Nine to re-broadcast the first three or more episodes. I think it would be difficult for Nine to re-establish the program’s momentum after it was abruptly halted by injunction and then “shelved” for however many months it takes to determine the proceeding and any subsequent appeal.

There is evidence from Ms Officer to show that Nine considers Hotplate to be a key piece of its programming that Nine has decided to broadcast in prime-time slots not only with a view to achieving high ratings for Hotplate itself, but also with a view to boosting the ratings of some of Nine’s other programs.

Seven Network (Operations) Limited v Endemol Australia Pty Limited [2015] FCA 800

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Project home appeals

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The Full Court has partially allowed Tamawood’s appeal, and denied Habitare’s appeal from Collier J’s findings about copyright infringement.

Tamawood designs and builds homes; Habitare is (or was) a developer. Habitare arranged for Tamawood to design some houses for a development it was working on. The plans were submitted to the local authority for, and received, planning approval. Tamawood and Habitare were unable to agree the basis on which they would go forward. Habitare decided to get Mondo Architects to draw up the building plans to carry the project forward and used Bloomer to build the houses. At first instance, Collier J found some of Mondo’s plans infringed, but others did not.

On appeal, the Full Court upheld Collier J’s ruling that Habitare’s licence to use the plans with planning approval terminated when Habitare decided not to proceed with Tamawood. This was because the basis of the licence was that Tamawood would not charge for preparing the drawings on the understanding it would build the houses. Use (ie., reproduction) of the plans outside those terms was unlicensed.

On appeal, Tamawood also successfully challenged Collier J’s conclusion that its copyright in “Stad 939 Conondale/Dunkeld”:

Stad 939 Conondale/Dunkeld
Stad 939 Conondale/Dunkeld

was not infringed by Mondo Duplex 1:

Mondo 1 Duplex with patio
Mondo 1 Duplex with patio

Two points of interest here. First, the Full Court was unanimous in holding that Collier J had erred by ascertaining whether Mondo Duplex 1 sufficiently resembled Stad 939 Conondale/Dunkeld and then considering whether or not there had been copying. The question of copying needs to be resolved first although, in doing so, the degree of resemblance may lead to an inference of copying.

Secondly, for Jagot and Murphy JJ, the degree of resemblance, Mondo’s access to Tamawood’s plans and the significant difference between Mondo’s plans before that access and after all contributed to a conclusion of copying. Their Honour’s then applied Eagle Homes v Austec to find reproduction of a substantial part on the basis that the copyright work could still be seen in the accused plans. For Jagot and Murphy J the changes in the floor plan were minor. At [168]:

The footprints of the duplexes are identical but for the addition of the patio at the rear of the Mondo Duplex 1 plans. The internal and other external differences all result from two changes – swapping the position of bedroom 1 with bedroom 2 and swapping the position of bedroom 3 with the living/entry space. All changes appear consequential on these two basic changes in location. The changes, however, are minor, in the sense that the overall relationship between the internal spaces and the exterior remain the same. ….

Greenwood J dissented on this point at [89] – [90], considering that the layout and traffic flows, shapes and proportions and relationships of the rooms and other spaces were sufficiently different. His Honour considered that the common placement of Beds 1 and 2 and associated wet areas along the external walls of the duplex rather than the party wall was rational and for obvious reason.

Otherwise, the Full Court affirmed her Honour’s ruling at first instance.

Tamawood Limited v Habitare Developments Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) [2015] FCAFC 65

 

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Larrikin Merry As It Can Be

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While on the subject of Mars and darkened conference rooms, Men at Work have been found to infringe Larrikin’s copyright in Kookaburra Sits on the Old Gum Tree.

It would seem (from newspaper reports) that 2 bars were a substantial part – shades of the old Colonel Bogey newsreel case.

The video on the Age’s website has the clips of every kid’s favourite folk song and that flute riff.

Richard Acland highlights the crucial comparison in a vacuum:

Even though there was evidence that the pitch, key, rhythm, melodic shape, harmony, musical sentences and context are different, Justice Jacobson found that there was nonetheless a reproduction of a substantial part of Kookaburra in Down Under. This is not to say that Kookaburra amounted to a substantial part of the pop song.

but it all seems rather academic when Jacobson J found at [111]:

Mr Hay also accepted that for a period of about two or three years from around 2002, when he performed Down Under at concerts, he sometimes sang the words of Kookaburra at about the middle of Down Under, at the point at which he reached the flute line.

Looks rather like the crucial battle was last year’s fight over whether or not the Girl Guides or Larrikin owned the copyright in the first place.

Larrikin Music Publishing Pty Ltd v EMI Songs Australia Pty Limited [2010] FCA 29

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IceTV Second Look

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IceTV publishes an electronic tv program guide or schedule. The ABC and SBS provide their program schedules, but the commercial free-to-air networks refused. Mr Rilet sat down and watched 3 weeks of Channel 9 programming, writing down the time and title of each program. He then made up a program schedule ‘predicting over’ what would be broadcast. As the broadcast date neared, however, IceTV employees checked up to 3 other program guides and made corrections to the ‘predicted over’ guide as appropriate. (A summary of the changes made to 2 particular days can be found at [179 – 181] of Gummow, Hayne and Heydon JJ’s reasons.) Mr Rilet and IceTV presumably engaged in the same kind of work for the other commercial networks.

The High Court unanimously held that IceTV’s use of time and title information (‘slivers’ in Bennett J’s evocative phrase at first instance) did not reproduce a substantial part of Nine’s copyright in [one or other programming schedule]. (It is necessary to be a bit vague here since, as in Feist, the alleged infringer mistakenly (as it now turns out) conceded copyright subsistence in something, to the evident frustration of all High Court judges.)

One thing the Court was unanimously agreed upon is that “copyright does not protect facts or information”, it protects forms of expression. See e.g. [28] per French CJ, Crennan and Kiefel JJ and [70] and [102] per Gummow, Hayne, Heydon JJ.

28.   Copyright does not protect facts or information[24]. Copyright protects the particular form of expression of the information, namely the words, figures and symbols in which the pieces of information are expressed[25], and the selection and arrangement of that information[26]. That facts are not protected is a crucial part of the balancing of competing policy considerations in copyright legislation. The information/expression dichotomy, in copyright law, is rooted in considerations of social utility. Copyright, being an exception to the law’s general abhorrence of monopolies[27], does not confer a monopoly on facts or information because to do so would impede the reading public’s access to and use of facts and information. Copyright is not given to reward work distinct from the production of a particular form of expression[28].

The judgments both bear strong indications that Australian copyright law should change track and follow the line pursued by the US Supreme Court in Feist. 

Both judgments appear to affirm that copyright involves a balancing of the competing interests of creators (and owners) and users or the public.

The fun, or future controversies, begin in what follows.

For French CJ, Crennan and Kiefel JJ, there appears to be a different approach according to whether one is considering questions of originality and substantiality in connection with subsistence of copyright or in connection with infringement.

French CJ, Crennan and Kiefel JJ appear to consider that copyright will subsist so long as what is expressed (in a material form) originates from the author in the sense of not being copied from somewhere else. See [33] and [48].

Their Honours accepted that infringement fell to be tested by ascertaining whether or not the time and title information in IceTV’s guides was a substantial part of the relevant Nine program guide. This required consideration of “the degree of originality of the particular form of expression of the part [taken].” at [52]

Just because the part taken originated from the author did not necessarily make that part a substantial part of the original copyright work – “[o]riginality in the context of infringement has a broader aspect.” at [38].

The time and title information reproduced by IceTV did not require much in the way of mental effort at [42]. Its chronological arrangement was obvious and prosaic at [43].

According to their Honours at [54]:

the critical question is whether skill and labour was directed to the particular form of expression of the time and title information, including its chronological arrangement. The skill and labour devoted by Nine’s employees to programming decisions was not directed to the originality of the particular form of expression of the time and title information. The level of skill and labour required to express the time and title information was minimal[83]. That is not surprising, given that, as explained above, the particular form of expression of the time and title information is essentially dictated by the nature of that information.

That is, the work engaged in by Nine employees in choosing what programs to broadcast and at what times could be excluded from consideration. It was not relevant to the originality of the form of expression. On this approach, it will be necessary to divine at what stage of the process the author(s) actually start engaging in making the work (i.e., expending skill and labour on the form of expression). Therefore, the Full Federal Court’s decision in Milwell v Olympic would appear to have been wrongly decided.

Drawing this line may well prove extremely challenging in practice, although presumably no more difficult than it may be to identify a sufficient spark of creativity or independent intellectual effort if the inquiry arose at the stage of copyright subsistence.

Gummow, Hayne and Heydon JJ in what is a dense and closely reasoned opinion which is going to require far more consideration and reflection appear to have taken a rather different approach.

That said, their Honours might be thought to have been making a similar point to French CJ, Crennan and Kiefel JJ at [170]:

in assessing the quality of the time and title information, as components of the Weekly Schedule, baldly stated matters of fact or intention are inseparable from and co-extensive with their expression. It is difficult to discern the expression of thought in statements of which programmes will be broadcast and when this will occur. If the facts be divorced from the other elements constituting the compilation in suit, as is the case with the use by IceTV of the time and title information, then it is difficult to treat the IceGuide as the reproduction of a substantial part of the Weekly Schedule in the qualitative sense required by the case law. (emphasis supplied)

The way this is put suggests the importation into Australian law of a merger-like doctrine known to US law.

Similarly, their Honours’ reasons refer in a number of places to the need for there to be “independent intellectual effort” in the creation of the work for it to be an original copyright work. Accordingly, Gummow, Hayne and Heydon JJ concluded at [152] that:

the Court should accept the submission by Ice that the originality of the compilation being the Weekly Schedule lay not in the provision of time and title information, but in the selection and presentation of that information together with additional programme information and synopses, to produce a composite whole. (emphasis supplied)

There are indications, however, that other considerations are at play.

First, their Honours in a number of places expressly rejected resort to tests such as misappropriation, skill and labour and protection of the interests sought to be protected by copyright as substitutes for the statutory test.

Secondly, at [172] – [183], their Honours expressly affirmed Bennett J’s finding at first instance that IceTV had not in fact copied anything from Nine’s copyright material by writing down time and title information while watching the programs actually being broadcast on tv. This process appears to be similar to the proposition which their Honour’s endorsed at [77] from the Spicer Committee that no-one infringed a football club’s copyright in a list of its players and their numbers by making a list by watching the game.

If that be a correct understanding, the rest of the reasoning would be obiter dicta albeit extremely highly persuasive dicta in Australian courts!

Their Honours devoted considerable space to considering who was the author, or were the authors, of the program schedules. So much so that on the second day of the High Court appeal Nine sought to rely on copyright in yet a different program schedule. This may well have longer term ramifications as their Honours noted at [145]:

to emphasise the difficulties of adapting the provisions of Pt III of the Act to cases such as the present, where multiple works and authors might be identified and the requisite expression of “authorship” of each may be dictated by a specific commercial objective. The point is illustrated sufficiently by contrasting the provisions of the Act and the evidence with the proposition that “the work” was a single work represented in the Nine Database and “first published” upon dissemination to the Aggregators of the Weekly Schedule in “Excel” and “text” format.

Their Honours then went on to refer at [151] to a host of matters that the evidence would need to address to try and make out such a claim and pointedly drew attention to the absence from the Australian Copyright Act of any provision similar to s 9 in the UK’s CDPA 1988 which deems the author of a computer generated work to be the person who made the arrangements necessary for the work to be created. Earlier, at [139], their Honours indicated that IceTV’s alleged appropriation of “the fruits of Nine’s skill and labour” might not be capable of resolution in the absence of legislation such as the EU’s Directive on the Legal Protection of Databases.

Finally, in this quick overview, it is worth noting that Gummow, Hayne and Heydon JJ sought to deflect over anxious consideration of the impact of Data Access on copyright law. In that case, the majority had endorsed Mason CJ’s rejection of the “but for” test of infringement and recognition that substantiality for the purposes of determining infringement depended on the originality of the part taken. According to Gummow, Hayne and Heydon JJ at [159], however, Data Access is concerned with the special problems arising from the extension of copyright protection to computer programs and the consequent protection of functionality in that particular context.

IceTV Pty Ltd v Nine Network Australia Pty Ltd [2009] HCA 14

IceTV Second Look Read More »

A new law of copyright Down Under?

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The High Court has unanimously allowed the appeal in IceTV.

IceTV did not reproduce a substantial part of Nine’s copyright in its program guides by reproducing the time and title information from those guides.

At least that means people in Australia will be able to use PVRs without the shackles imposed by the TV networks.

IceTV Pty Ltd v Nine Network Australia Pty Ltd [2009] HCA 14 (lid dip Joshua Gans via Twitter)

More detailed consideration will require further time. Meanwhile, 2 points to ponder:

First, French CJ, Crennan and Kiefel JJ delivered one joint opinion. Gummow, Hayne and Heydon JJ delivered a second joint opinion.

Secondly, in their joint opinion, Gummow, Hayne and Heydon JJ trail a very long coat on the Feist-ian “spark of creativity”:

187.   One final point should be made. This concerns the submission by the Digital Alliance that this Court consider the Full Court’s decision in Desktop Marketing[196] and, to the contrary of Desktop Marketing, affirm that there must be “creative spark”[197] or exercise of “skill and judgment”[198] before a work is sufficiently “original” for the subsistence of copyright.

188.  It is by no means apparent that the law even before the 1911 Act was to any different effect to that for which the Digital Alliance contends. It may be that the reasoning in Desktop Marketing with respect to compilations is out of line with the understanding of copyright law over many years. These reasons explain the need to treat with some caution the emphasis in Desktop Marketing upon “labour and expense” per se and upon misappropriation. However, in the light of the admission of Ice that the Weekly Schedule was an original literary work, this is not an appropriate occasion to take any further the subject of originality in copyright works. 

(emphasis supplied)

That might come as a surprise to someone who read the transcript of Desktop‘s failed special leave application.

A new law of copyright Down Under? Read More »

iiNet and the movie studios

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Some points worth pondering arising from the recent pleadings fight

Both the movie studios and iiNet brought motions for summary judgment and/or to strike parts of the other side’s pleadings relating to the claims that (1) iiNet authorised infringement, (2) iiNet was liable as a primary infringer for actually reproducing the allegedly copied films and (3) whether or not iiNet was also liable in conversion.

The movie companies are obviously suing iiNet for authorising the (alleged) infringing activities of iiNet’s subscribers on a theory similar to the successful theories in Cooper v Universal.

Part of iiNet’s defence is that the notice it received of the claimed infringements were ‘mere allegations of copyright infringement’. The judge considered this sufficient to make iiNet’s point:

56.   The Court has no difficulty in understanding such pleading as being a statement that the AFACT notifications did no more than bring to iiNet’s attention an allegation of copyright infringement. Whether the notifications from DtecNet of alleged infringement are sufficient to prove infringement by iiNet’s users or might be used as evidence that iiNet was aware of the infringement of its users is necessarily a matter requiring evidence and thus is a matter for determination at the hearing. So considered, there is nothing further which needs to be added to the pleading. The Court rejects Roadshow’s assertion that such statement is inadequate.

 That is, iiNet appears to be defending the allegation of authorising copyright infringement in part by contending it did not have sufficient knowledge of what was going on to have the necessary control. As the quote shows, however, whether or not iiNet’s position will be good enough to win the day remains to be seen.

The other fights which are of potentially more general interest relate to the movie companies’ allegations that iiNet is itself a direct or primary infringer (not just an authoriser) or liable in conversion under s 116.

In relation to conversion, the judge considered it wasn’t clear whether the movie companies were alleging that the ‘infringing copies’ alleged to be converted were the data electronically transmitted across iiNet’s network (facilities) as temporary or transient copies stored in iiNet’s switches and servers or in some other way.

43.   It does not follow from the fact that the Court may find that the iiNet users have ‘electronically transmitted’ the films that the Court will necessarily have to find that the data so transmitted constitutes an ‘infringing copy.’ For example, the Court could find as a fact that the users have ‘electronically transmitted’ the whole or substantial part of the films by reference only to the conduct of the users without the Court having to consider the involvement of the technical process by which that transmission occurs. In such instance, the Court’s finding in relation to the conduct of the iiNet users may have no bearing on whether it finds that the data transmitted is, while in transmission, a copy of the film as defined, meaning an article or thing in which the visual images or sounds comprising the film are embodied. The data would need to be a copy for it to constitute an infringing copy, and there would have to be an infringing copy for there to be conversion.

The judge described the movie companies’ claims as novel but, at this stage of the proceedings, refused summary judgment and required them

47.   … to specify exactly what the ‘infringing copies’ are; how they are created; and at least one instance of them, as is required by O 58 r 16 of the Rules

Thirdly, it does appear that the movie companies contend that iiNet directly infringes because any temporary/transient copies of infringing material stored in its network or on its servers as users download or transmit them are infringing reproductions. Unlike the conversion claim, the judge considered this adequately pleaded:

50.   The issues the Court has raised regarding the definition of ‘infringing copy’, and whether that could apply on the facts pleaded, do not arise in relation to this claim. If it is found that there was transient storage of the whole or substantial part of the films, this may give rise to there being a ‘copy’ for the purposes of s 86(c) of the Copyright Act, and consequently the problems discussed above in relation to ‘electronic transmission’ do not apply.

Roadshow Films Pty Ltd v iiNet Limited [2009] FCA 332

Earlier background on the case here and here.

iiNet and the movie studios Read More »

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