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High Court of Australia Transcripts |
Last Updated: 12 May 2011
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Sydney No S23 of 2010
B e t w e e n -
PHONOGRAPHIC PERFORMANCE COMPANY OF AUSTRALIA LIMITED ACN 000 680 704
First Plaintiff
EMI MUSIC AUSTRALIA PTY LIMITED ACN 000 070 235
Second Plaintiff
SONY MUSIC ENTERTAINMENT AUSTRALIA PTY LIMITED ACN 107 133 184
Third Plaintiff
UNIVERSAL MUSIC AUSTRALIA PTY LIMITED ACN 000 158 592
Fourth Plaintiff
WARNER MUSIC AUSTRALIA PTY LIMITED ACN 000 815 565
Fifth Plaintiff
J ALBERT & SON PTY LIMITED
Sixth Plaintiff
and
COMMONWEALTH OF AUSTRALIA
First Defendant
AUSTRALIAN BROADCASTING CORPORATION
Second Defendant
COMMERCIAL RADIO AUSTRALIA LIMITED ACN 059 731 467
Third Defendant
FRENCH CJ
GUMMOW J
HAYNE J
HEYDON
J
CRENNAN J
KIEFEL J
BELL J
TRANSCRIPT OF PROCEEDINGS
AT CANBERRA ON THURSDAY, 12 MAY 2011, AT 10.02 AM
(Continued from 11/5/11)
Copyright in the High Court of Australia
____________________
FRENCH CJ: Yes, Mr Meagher.
MR MEAGHER: Thank you, your Honours. Your Honour, we handed up with our oral note of argument a note headed “Australian Music Quotas” which was intended to address the question asked by Justice Hayne. The relevant provision which was in force in 1968 is the provision which is set out in paragraph 3 of that note, which became section 114 - or which was at the time section 114 of the Broadcasting and Television Act and, as Mr Sheahan said, provided that:
(2) Not less than five per centum of the time occupied . . . shall be devoted to the broadcasting of works of composers who are Australians.
The existence of this requirement, in general terms, may be something which is taken into account as one of the interests which has to be balanced when exercising the powers under section 51(xviii) and also may be said to be something to be taken in the mix when addressing questions of just terms.
Your Honours, there are four matters which I wish to deal with having regard to what has been dealt with by others. The first concerns the notion of acquisition of property in circumstances where a statutory right has been extinguished or diminished and there is a question whether, in the circumstances, there has been an acquisition. The authorities make clear that a relevant factor is whether the statutory right, if it is one which does not have any existence outside the statute - - -
GUMMOW J: May it not be significant also to consider the nature of the contraction or diminution?
MR MEAGHER: Yes.
GUMMOW J: May some contractions or diminutions run foul where others do not, of the acquisition?
MR MEAGHER: Yes, I am not suggesting that there can be any general propositions in relation to these matters but, rather, suggesting that one of the matters that is relevant to consider is whether the law is, of its nature, susceptible to modification and extinguishment. The Commonwealth has addressed that question in part with respect to provisions of the 1911 Act. What I seek to do is to take the Court to some other provisions which indicate that the rights given by that Act were inherently liable to be modified.
GUMMOW J: It is inherently capable of what degree of change? That is what I am asking you.
MR MEAGHER: I will take your Honour to the provisions.
GUMMOW J: Some degrees may cross a boundary and others do not. So a new type of fair use defence might not cross the boundary. A requisition of a patent for the purposes of the Commonwealth or a military purpose might cross the line.
MR MEAGHER: We accept that, your Honour.
GUMMOW J: You see? The question is does this cap – where does the imposition of a cap of one per cent fall on that spectrum? That is what I am worried about. I just wanted to make it clear what is on my mind.
MR MEAGHER: Yes, and I will come to that when I am looking at that question. If I can take your Honours to the 1911 Act. Could I address first the provisions which contemplate adjustment or, indeed, repeal by the imperial Parliament. First, section 1(1) contains the expression:
Subject to the provisions of this Act -
As the Commonwealth points out the reference to the Act can be taken as a reference to the Act as amended from time to time. There is a further provision, though, in section 31 which has also been identified earlier in argument which provides that:
No person shall be entitled to copyright or any similar right . . . otherwise than under and in accordance with the provisions of this Act, or of any other statutory enactment for the time being in force -
So that it contemplates that the statutory rights created by this Act might indeed be replaced or adjusted by other statutory enactment. The position with respect to the self-governing dominions is addressed in sections 25 and 26. Section 25, which was the provision for the application for this Act to British dominions, contained a proviso that it should:
not extend to a self-governing dominion, unless declared by the Legislature of that dominion to be in force therein either without any modifications or additions, or with such modifications and additions relating exclusively to procedure and remedies -
Now, if one goes back to section 6(1) the remedies include “Where copyright in any work has been infringed” - a remedy by way of damages. We would submit that section 25 contemplates that in the declaration as to the application of the Act in Australia, the Australian Parliament could have amended it with respect to the remedies for damages which it provides by, for example, imposing a limitation or cap.
GUMMOW J: Well, it did deal with remedies by setting up the registrar, and getting better remedies if you were registered, did it not?
MR MEAGHER: That is so. All I am pointing out is that there was a contemplation that the Parliament could have gone further than it did. Then in section 26, there is a grant of express power:
The Legislature of any self-governing dominion may, at any time, repeal all or any of the enactments relating to copyright passed by Parliament –
So again, it contemplates that the Act might be repealed as in, or effectively appealed as in fact happened in 1968. Those provisions are provisions which indicate that the exclusive right created here by the statute is, of its nature, susceptible to modification. The underlying principle appears to be that if the right is, of its nature, liable to adjustment or defeasance, then upon such defeasance there would be no acquisition or no necessary acquisition to which section 51(xxxi) applies.
That is the first point I wish to address. The second concerns the decision in Tape Manufacturers 176 CLR and, in particular, the passage in the judgment of Justices Dawson and Toohey at page 528. At page 528 in the paragraph commencing “Section 135ZZM(1)” there is a reference to immunity and, stopping there, we accept that what section 109 does is provide a liberty to do something which would otherwise constitute an infringement. But the first point their Honours make in that sentence is that it is a right which is applicable to all. On the previous page, 527, in the sentence four lines from the end:
All that the section does is to confer a freedom generally to do something –
In that case the relevant act which would have constituted an infringement was to reproduce the work in a material form and theoretically that act could have been committed by anybody. In this case the relevant act is the act of broadcasting – that is, the act in relation to which the liberty on section 109 operates is the act of broadcasting – and, in our submission, the effect of sections 109 and 152 is to provide that liberty to all persons who were capable of broadcasting lawfully.
One gets that if one goes to the 1968 Act, first to section 109, which provides that copyright is not infringed by the making of a broadcast. Then if one goes to the definition, section 10, “broadcast” means by wireless telegraphy and “broadcasting” has a corresponding meaning. “Wireless telegraphy” – and I should say before I go there that the definitions of holders of licences for broadcasting stations and television stations and of wireless telegraphy licences refer to persons licensed under either the Broadcasting and Television Act or the Wireless Telegraphy Act – “wireless telegraphy” is given the same definition as it is given in the Wireless Telegraphy Act.
Now, the only persons who can take advantage of the liberty under section 109 are those in respect of whom an order can be made under section 152. The persons who fall within the description of “broadcaster” in section 152 relevantly include the Australian Broadcasting Commission, the holder of a licence for a broadcasting station, the holder of a licence for a television station or persons referred to in the provisions of section 91 of this Act who are relevantly prescribed persons who are the holders of wireless telegraphy licences.
The liberty which is provided by section 109 extends generally in the sense that it applies to all of those who could lawfully make a broadcast. In that sense then section 109 is not providing a liberty which is not co-extensive with the lawful activity which would otherwise constitute the infringement. It is not a provision which is selecting from the group of persons who might commit the act - a narrower class. If it did, there may be some argument for identifying that class as marked out and as possibly acquiring something. In Tape Manufacturers, as in here, the liberty was granted to all of those who could possibly have infringed.
CRENNAN J: Then there might be a distinction, might there not, though – I think Justice Gummow put this to you before – between a new liberty being a new fair use and a new liberty which puts you in the position of being a licensee, that is to say the liberty you have is a protection from being sued for infringement, which is no different from what you would get from the copyright owner directly as a licensee, that is to say, you are licensed or authorised to broadcast copyright work.
MR MEAGHER: Obviously that is a consideration and if the legislation specifically created a statutory licence in favour of a particular person, and there may be a stronger argument for the proposition that it constitutes an acquisition to which section 51(xxxi) applies. But if the provision is crafted such as this one is, in the context of a law which is creating and defining the rights, it is much easier to characterise it as one to which 51(xxxi) does not apply because it is, of its essence, exercising the grant of power under section 51(xviii).
CRENNAN J: But what it does is it takes from the copyright owner the ability to exploit the copyright commercially, in this particular context, which is quite a different thing from having a new fair use because a new fair use would not necessarily intrude on the copyright owner’s ability to commercially exploit – it would not necessarily intrude on that.
MR MEAGHER: The same argument, in my submission, your Honour, could have been made in Tape Manufacturers.
GUMMOW J: And it was not, but that does not matter. The question is what do we do about it now?
MR MEAGHER: We submit that Tape Manufacturers is correct, and that the question - - -
GUMMOW J: The problem may be that Tape Manufacturers is expressed in a great level of generality.
MR MEAGHER: I am not submitting that the point I am making now is the only point which produces the consequence that this law is not characterised as one to which section 51(xxxi) applies. I am simply identifying one aspect of the law, which in Tape Manufacturers was regarded as significant, and putting it as a matter which must be weighed in the balance with the other factors, the principle of which, we would submit, is the fact that this Act properly characterised – and having regard to its practical effect – is an exercise of the core power given under section 51(xviii). It is a law which is addressing the creation, defining and conferring of property rights in intellectual property.
To the extent that it would be incongruous for such a law to be subject to section 51(xxxi), then the authorities, principally Nintendo, support the proposition that it should not be characterised as a law for the acquisition of property to which that section applies. But I am not suggesting that there is only one test. The authorities make it plain that there are a number of different ways one can approach this problem, and indeed the authorities are not uniform in suggesting which is the correct way home in any particular case. All one can do identify features such as the one I have identified, suggesting because it does not pick out or select an individual or an individual group of interests as the beneficiaries of the diminution or extinguishment, it can more easily be characterised as not being a law which involved an acquisition. That is the submission.
Another matter which in the same context I wish to address very shortly is the provisions of sections 87 and 91 to make this point. Section 87 creates a television broadcast and sound broadcast right and section 91 identifies the circumstances in which that right subsists, namely on the making of a television broadcast or a sound broadcast the simple proposition is that section 91 operates irrespective of the circumstances or relationship which obtains between the owner of the copyright in the published sound recording and the broadcaster.
It equally applies in circumstances where there is an agreement or licence, where there is an exercise of the liberty under section 109, or where indeed there is no agreement or licence at all, so that one cannot say that the right which arises on the broadcast which may itself involve, or may otherwise have involved an infringement, is as a result of the exercise of the liberty under section 109. It stands quite apart from that.
The final matter I wish to address is the question of just terms. In that context, can I just note that we do not press paragraph 99(b) of our written submissions. I do not suggest your Honours necessarily have to go to it but we no longer contend for the propositions in that paragraph. What I wanted to do in relation to this question of just terms is to make some observations about - - -
GUMMOW J: Just looking at your written submissions, are you developing the last sentence in paragraph 98?
MR MEAGHER: I am sorry, your Honour, I did not hear you.
GUMMOW J: The last sentence in paragraph 98 of your written submissions?
MR MEAGHER: Yes, that is what I am going to seek to do now in the context of what the Solicitor-General has already put to the Court. The first proposition is that the right which is said to have been diminished and which is said to have been the subject of the acquisition here is the content of the exclusive broadcast right in the sound recording under the 1911 Act. It is not that content under the 1968 Act. Even if one accepts the repatriation argument that is put for the plaintiffs, the subject matter of the so-called acquisition is whatever right existed under the 1911 Act.
The second proposition is that the accepted measure of the value of that right which we say would be the relevant comparator for the purpose of assessing just terms is the amount which would have been paid for a licence had one been negotiated taking account of the actual bargaining strengths and weaknesses of the parties at the relevant time and critically assuming the position under the 1911 Act continued to obtain.
Can I then take the Court - and the Solicitor-General has done this to some extent, so I will seek to be brief about it - to the position as it obtained in 1968, particularly as to the respective bargaining positions of the parties. This is dealt with principally in paragraphs 138 and 139 of the special case. Paragraph 138 notes that in the 1950s in the United States and Canada record companies did not seek royalty payments and then in 139, as at the late 1950s, a large number of records being released in Australia and broadcast were either imported from the United States or pressed in Australia from masters that had been made in the United States. In (b):
it was the stated position of the commercial broadcasters that s.19 of the 1911 Act did not confer any protection in respect of sound recordings first published in a place outside the area covered by the 1911 Act, such as the United States;
(c) the commercial broadcasters and the ABC refused to pay any royalties in respect of the radio broadcasting in Australia of records made and published in the United States which had been imported into Australia or of records pressed in Australia from masters made in the United States -
The different position between the parties, that is the record companies and the broadcasters, stemmed from a particular view as to the construction of the 1911 Act, which lies between considering the provisions of section 1(1) and section 19(1). Section 19(1) provided that:
Copyright shall subsist in records . . . in like manner as if such contrivances were musical works, but the term of copyright shall be fifty years from the making of the original plate from which the contrivance was directly or indirectly derived, and the person who was the owner of such original plate at the time when such plate was made shall be deemed to be the author of the work –
The argument or the position taken by the broadcasters was that the right came into existence upon the making of the plate, which in order to give or to provide some limitation to the operation of section 19, must be taken to have been a place where the maker resided or, if it was a body corporate, it was deemed to reside. There is a provision there in subsection (1) that the person who was the owner at the time shall be deemed to be the author of the work –
and, where such owner is a body corporate, the body corporate shall be deemed for the purposes of this Act to reside within the parts of His Majesty’s dominions to which this Act extends if it has established a place of business within such parts.
The alternative argument relied upon the operation of section 1(1)(a) - - -
GUMMOW J: Is the maker, by 19(1), assimilated to an author? It has to be, I suppose.
MR MEAGHER: That is the question and this question was addressed by Sir Garfield Barwick in his opinion and that opinion formed the basis of the view and position which the broadcasters took, that is that this only applied in respect of records, to records made in the King’s dominions, not to records first published and that was the issue. The relevance of the issue was that Canada was within the King’s dominions and if records, because of the simultaneous publication provisions, were published within 30 days, or 14 days, I think it is under this Act, they could be taken to be first published in the King’s dominions and the argument was that they thereby attracted the protection of this Act.
As the Solicitor-General pointed out, a significant bargaining position hung on the outcome of that dispute, because if the broadcasters were right, they had access to something in excess of 60 per cent of the sound recordings which they might otherwise pay free of any royalties, because they were not protected, and that was the relative bargaining position as it existed at the time of the 1968 Act.
To take the matter slightly further, when the submissions were made by the parties to those in government, and the government position waxes and wanes, eventually it is the position as recorded in the Cabinet note which the Solicitor-General took the Court to. The Parliament enacted a law which preserved the position under the 1911 Act by withdrawing the notion of first publication as giving rise to a broadcast right and it did that by enacting section 105 of the 1968 Act, which in its terms provides that:
Copyright subsisting in a sound recording by virtue only of subsection (3.) of section 89 –
which is first publication in Australia –
is not infringed by the causing of the recording to be heard in public or by the broadcasting of the recording.
So that two things follow and then I will take your Honours to the opinion of Sir Garfield Barwick. Two things follow, the first is that on the view of the operation of the 1911 Act which the broadcasters were contending for, you could never ever get copyright in US recordings, because they would be made in the United States so that there could never be an adjustment in the bargaining position of the parties which was the consequence of the protection of US sound recordings under the imperial Act. That was the first point.
The second point is that when the Parliament came to pass the 1968 Act, it in effect accepted the correctness of the broadcaster’s position to the extent that it enacted section 105 which preserved their argument and one then sees why the caps were introduced. They were not introduced to impose any limit on what might be recovered in respect of the pre-1968 recordings protected under the 1911 Act. It was to address something which could not happen under that Act, but which could happen under the 1968 Act which would indeed improve the position of the record companies, vis-à-vis the broadcasters, so in effect it was not intended to operate as a cap to prevent recovery of what might otherwise have been recovered; it was inserted in the legislation to protect against a change of circumstances which could only happen under the 1968 Act.
Now, I have said to the Court I will take you to the opinion of Sir Garfield Barwick. It is in volume 3 of the bundle at page 1511 behind tab 81. I take the Court to page 1530 which is a more clearly typed version of the opinion. I am not obviously going to take the Court through the opinion, but could I just identify the passages that we would invite the Court to read.
At the bottom of 1533, the paragraph commencing, “This copyright springs into existence” – so 1533, the bottom paragraph – and then over the page, the paragraph commencing, “Further, it appears to us” and then the paragraph commencing, “Sec. 19 literally construed”. That paragraph contains the conclusions to the operation of the Act being limited to plates made within the jurisdiction. Then one sees clearly the consequences of the opinion, if you like, at page 1535 in relation to the questions and answers:
Question 4: Does Sec. 19 confer copyright in Australia on a record manufacturer in respect of a record where –
(a) The original plate and pressing have been made in the United States.
No.
(b) The original plate has been made in the United States and the pressing in the Commonwealth of Australia.
No, and then there are affirmative answers to (c), (d) and (e) because the plate has been made in England or in the Commonwealth.
GUMMOW J: This is quite independent of the Cawardine argument.
MR MEAGHER: Yes and so – I wanted to go back and revisit Cawardine but the position between these parties before the 1968 Act were that there were two issues in play. One was the Cawardine point and the second was the point as to whether a US sound recording was protected if first published in Canada or whether it was denied protection because the protection attached to recordings made in the United Kingdom or the Commonwealth.
Now, the next point I wanted to note was that in – the plaintiffs do not contend that section 152 – sections 109 and 152 to the extent that they impose a collective bargaining regime involves any unjust terms. One has to remember, first, the cap is not applied to what might be the way in which the equitable remuneration might otherwise be arrived at for an individual copyright owner. The second is, it is not even applied to a collective bargain which addresses the parties’ negotiating positions under the 1911 Act.
The collective bargain which sections 109 and 152 contemplate is one which involves a broadcaster, on one hand, and the owners, whether specified or unspecified, whether identified or unidentified, of all of the published sound recordings which could possibly be broadcast during the relevant period.
CRENNAN J: I think Mr Cobden accepted the convenience of collective arrangements.
MR MEAGHER: There are two aspects of convenience. One is that it provides a mechanism for resolving disputes between copyright owners as a group and the broadcaster. The second is it also provides a means of resolving disputes between the copyright owners inter se. Section 152(6)(b) and (c), one cannot always assume that all of the copyright owners will be members of a collecting society and what the Tribunal is required to do is to determine an amount and then to specify the persons among whom it is to be divided and then to specify how it is to be divided.
GUMMOW J: In default of agreement?
MR MEAGHER: In default of agreement. But one has to assume the possibility of no agreement. So the regime which is applied is one which, in our submission, has significant benefits to copyright owners.
If one was looking at a question of just terms, one would have to take that into account in some way or otherwise regard it as within the purview of the legislature acting reasonably between the Commonwealth and its subjects. But, as I said earlier, the plaintiffs do not suggest that the collective bargaining mechanism involves any acquisition other than on just terms. So the question then is, how would one go about being satisfied that this bargaining mechanism which applies to bargains under the 1968 Act rather than the 1911 Act, with the caps, could produce outcomes which were less favourable to the owners of the copyright under the 1911 Act than they would have obtained in a notional bargain, assuming that Act still applied? That is the sort of question which - - -
GUMMOW J: There is an ambiguity when you say “the onus”. It assumes a collectivity of the 1911 people, you see what I mean?
MR MEAGHER: Yes. I am perhaps glossing over some of those problems.
GUMMOW J: They would not have the benefit of the collectivity that can be imposed under 152.
MR MEAGHER: No. If one then looks in the material to which this Court can have regard to see whether the caps under the new regime were likely to produce that outcome, one first has to look at the bargains which were made in the period beforehand, and the Solicitor-General has addressed the Court about that.
In the period between 1933 and about 1954 the material indicates that the bargains were principally between EMI on one hand and the commercial broadcasters on the other and that there was no outcome which was more than about 0.5 per cent, and those bargains were not only in respect of the United Kingdom or local sound recordings. They included US sound recordings because EMI asserted – and in the negotiations it was dealt with – that they also had licences entitling them to the protection or to the benefit of those protected sound recordings. So that in the period from 1934 to 1955 where the whole subject matter was dealt with, there is no suggestion of a bargain which would have come anywhere near the caps.
Then in the period from 1956 until 1970, which was after the broadcasters took a hard line in relation to the US sound recordings, the value of the free time is somewhere around 0.4 per cent or less. So there is nothing in those circumstances which suggests on a reasonable basis an outcome which is going to be more than one per cent. If one throws into that mix the fact that the US sound recordings could never come into the mix under the 1911 Act, as the broadcasters asserted, the bargaining position reflected in these earlier arrangements would not have changed.
Then the only other material to which we submit some regard might be had is the outcome in the WEA Records Case 48 before the Tribunal. If I could ask the Court just to go briefly to that decision. It is in 48 ALR. If the Court goes to page 127, I just want to indicate some of the percentages. Page 127, line 35 suggests that the broadcasting of protected recordings, that is under the 1968 Act, expresses as a percentage of all recordings was somewhere around 50 to 60 per cent, so that there were 40 per cent not
protected principally one expects from the United States. If one then goes to page 129, one sees that Stereo FM, this is at line 30:
If one looked at the music content of the programmes in the absence of commercials, the percentage of music content would rise to 84 per cent.
So it was a heavy format music station likely to be at the extreme end of value from the point of view of the copyright owners. Then if one goes to 140, one sees that the remuneration which was fixed as a percentage of gross earning was 0.45; one gets that about line 45. Even if one assumed that under the 1968 Act US sound recordings became protected so as to increase the use of protected recordings to 100 per cent and one assumed that the same rate of remuneration, the 0.45 per cent, would not get to or over one per cent, it would be somewhere around 0.7 or 0.8 per cent, all of that ignores the fact that this remuneration is fixed with respect to recordings under the 1968 Act, not a separate and smaller class of recordings under the 1911 Act.
So there is nothing in the WEA decision which contradicts the conclusion that on the earlier material the caps were not likely or reasonably likely to bite in respect of any remuneration received by these earlier protected recordings. That analysis obviously does not take into account other benefits which accrued from the provisions of sections 109 and 152 to which I’ve already made reference and when one steps back from this, it is, in our submission, of its essence, a matter which called for the judgment of the Parliament. There is nothing in the material which provides a basis for saying that this machinery does not provide just terms. They are our submissions, your Honours.
FRENCH CJ: Thank you, Mr Meagher. Mr Cobden.
MR COBDEN: Thank you, your Honours. Might I fulfil a promise made a couple of times to supply a short note on the nature of transitional provisions and picking up some references to the Patents Act and the Trade Marks Act provisions and giving your Honours in writing the references that I gave yesterday morning to the Interlego Case in the Full Federal Court. I do not think I will need to take your Honours to those in any more detail now.
FRENCH CJ: Thank you.
MR COBDEN: I propose, if I may, your Honours, to cover seven topics in reply. The first of them is the question of the balancing of rights and interests which has permeated the submissions of all the defendants. The defendants generally but in particular the ABC have characterised sections 109 and 152 as being, as it were, inherently appropriate and historically justified in their redrawing of boundaries between, as the ABC put it, particularly a monopolist or even a super monopolist and the public. In our submission, the ABC’s position when put like that is apt to deprive a guarantee of content.
First the ABC elides a fear of super monopolies by which we – well, we know what it means because we were taken to the Spicer Report, or your Honours were taken to the Spicer Report, and that is a reference to collecting societies where a number of copyrights which might each themselves be described as a monopoly, inaccurately as was submitted yesterday, in relation to that particular work or subject matter, but where they are gathered together, for example, in the case of APRA – APRA was given as an example in the Spicer Report and described as a super monopoly.
So if the ABC first elides that fear of super monopolies, we would submit, with a basic characteristic of copyright as an exclusive right which has, in a sense, monopolistic characteristics, the fallacy is to say, on the one hand, that there has to be, for the purposes of the guarantee, a property right exhibited in the usual characteristics, exclusivity in particular, that is a characteristic of property in order to attract the guarantee but, on the other hand, that writes in the nature of monopoly inherently called for adjustment. Yet that is precisely the characteristic that would make a copyright right property. It is an exclusive right.
So it follows, on that position, that whatever attracts the guarantee, having the proprietary and therefore exclusive character, also repels it by being a monopoly. So we would respectfully suggest that an analysis on that monopoly basis does not assist. We respectfully discern, both the Commonwealth and the ABC, and conceivably the radio stations, as having moved somewhat towards our position in relation to certainly the question of competing rights, that that really is better seen as an aspect of a broader notion of incongruency.
The Commonwealth spoke of the following factors being relevant: the content of the constitutional power, the nature of the right and the degree of the adjustment. Put in terms of what your Honour Justice Gummow put to my learned friend Mr Meagher this morning, where does one look for a boundary line between what might be a permissible redrawing of those boundaries and what might fall on one side and what might fall on the other.
The factors that we have pointed to here and we point to again are that the boundary here was being drawn between copyright owners in sound recordings on the one side – that is, a group of copyright owners – and, on the other side, what we say is a narrowly defined group, and I will answer the submissions made by my learned friend Mr Meagher, who are receiving a full and unfettered right to use the whole of the relevant exclusive right – the broadcast right – that is to say, not constrained by the questions of fairness that are involved in a fair dealing defence and for the purposes, not private and domestic, such as was 135ZZM of the struck-down Part VC in Tape Manufacturers, but for the purposes of their enterprise. We respectfully submit that, looking for which side of the line it falls, it would not be incongruent for section 51(xxxi) to apply to that sort of production of exclusive rights.
Here, as to the power, we say the nature of the constitutional power, there is self-evidently no incompatibility between providing for intellectual property on the one hand and providing for just terms on the other because the very value of intellectual property is its ability to be economically exploited. There are other rewards, of course. Authors have their own reward of authorship but there is no question, in our respectful submission, that that constant theme of intellectual property protection has been to grant economic exploitation rights.
The ABC made a related point about the characteristic is the power, but we would say there is nothing characteristic in the power being taken away here. It is granting value to the rights which are relied upon. As to the nature of the right, as we have put before, it is valuable, transferable and, we would submit, stable. As to the nature and degree of the adjustment, section 109 takes away that ability of control. The caps impose a clog on the core economic value of the right and these things are significant and not, as it were, mere adjustments.
The Commonwealth also said that copyright inherently strikes a balance between competing interests, that striking balances between competing interests, we have submitted before, is the stuff of everyday politics. That notion, per se, does not diminish property rights thereby created. There are many other important varieties of property that are created but that involve competition between competing interests. Aboriginal land rights legislation may strike balances between the rights of indigenous people and the rights, for example, of competing users such as mining companies. Future tradeable carbon rights, I dare to mention them, may well have to strike similar balances. The fact of controversy and compromise does not make the rights created any less susceptible of the property rights falling within the protection of the guarantee.
Nor, with respect does technological change. Innovation is one of the very things that intellectual property laws are designed to protect and some of those protections are in fact based in innovation. No technological change here is relevant to justifying the caps. They were in fact imposed in 1968, decades after the radio industry had arisen in the 30s and records had been invented in the late 19th century, early 20th century and decades after Cawardine, so they were not, with respect, imposed by reason of technological change but really by reason of powerful interests saying they were not prepared to pay for the rights, and I will come back to that.
To say that the possibility of technological change may justify an adjustment of competing rights even though that change is not directly relevant, simply, really amounts to saying that section 51(xviii) and the relationship of intellectual property rights, the inherent relationship to technology is entirely outside the reach of a guarantee.
Just to say there on the question of, as it were, an inherent capacity of intellectual property rights to be shrunk, my learned friend, Mr Meagher, took your Honours to the 1911 Act this morning and to section 26 which conferred upon the dominion legislatures the power at any time to repeal any or any of the enactments relating to copyright passed by Parliament including this Act but, of course, he did not go on to read the proviso, which was a proviso to say that no such appeal shall prejudicially affect any legal rights existing at the time of the repeal.
So that inherent in that very recognition my learned friend took your Honours to was also a recognition that in such adjustment there may be a need to compensate or adjust the legal rights.
While in the area of competing rights, we would submit again in answer to what is being said – this is perhaps a special if so in the case of the commercial broadcasters but, with respect, we submit it applies to the ABC. When they characterise the competing rights and their rights, as it were, being the public rights or the rights of public interest, we would respectfully repeat that it is the sort of characterisation that I took your Honours to – referred to by your Honour Justice Gummow in the passage from Airservices I took your Honours to. I do not need to go there again, but just to remind your Honours, it was at 202 CLR 133 at paragraphs 498 to 500.
The American remarks about businesses or enterprises tending to dress up their interests as being in the public interest, one might ask this – although one worries of rhetorical questions – but if the position of caps in response to copyright owners seeking to charge for their works was really an inherent natural function of legislating under the copyright power, one might ask, why are there no caps for anything which APRA licences, even though APRA was identified in the Spicer Report as being a super monopoly of the kind my learned friend, Mr Sheahan, referred to – why is there no cap, for example, on the activities of a sound recording owner, as it pressed through PPCA, on what they can charge small businesses like clothing stores, nightclubs, hairdressing salons and cafes?
Really, it is because when one looks through the reality of these caps and how that came about, it shows that it, with respect, was not part of a balancing of a common interest against a copyright interest. As can be seen from the documents in the special case, and there is a long run of them, your Honours have been taken to some, but they are in volume 3, tabs 42 to 59, I will not go to them, but what can be seen is that the caps came about as the result of very powerful interests, the radio or the ABC which was able to speak through its own Minister directly into Cabinet, as we saw, saying, “We are simply not prepared to pay more than X for this right, no matter how much we use it.” We would respectfully submit that is not an exercise of the genuine public interest.
Contrary, really, to the suggestion that this was the striking of a copyright balance, we would say that it is clear from the very documents my learned friend, Mr Sheahan, took your Honours to was that the broadcasters really wished to maintain – and they do so with the support of the Commonwealth up to a point to this day – that they want it frozen in time a particular strong bargaining position that they were in, in May 1969, no matter what other factors may occur.
Indeed, in the initial Bill – and your Honours saw the Cabinet minute where this was withdrawn – there was, indeed, an effort recognised certainly by the Attorney-General of putting in a clause that was 149B which said if circumstances change we might have to abuse it. There is a very strong echo putting forward a clause of that kind of the sort of considerations your Honour Justice Hayne referred to very early in the piece on Tuesday which is how are we going to take account of foreseen and unforeseen circumstances? Particularly in an area where here, rather than fixing a price or striking a price as at a particular moment for the whole of future time, which is an exercise that has to be engaged in – we agree with my learned friend, Mr Sheahan – in striking damages, it just has to be done practically for practical purposes once and for all at one time.
The legislature has recognised here in many places, including 109 and 152, subject to other than the caps, we would say, that these rights are going to be exercised, which have been reduced in our hands, over a great deal of time, over five decades; in the case of authorial works from the very beginning could be life plus 50 years. In the case of Irving Berlin, it is not in the facts, but that was 150 years. He lived to 101. If these rights are going to be exercised over a long time, what is the best way of finding a fair or just value for them over that time, especially where, as 152 provides, you might be able to come back every year to have a look at the value again. The best way is to provide, of course, for changed circumstances to be taken into account by a notion such as equitable remuneration being looked at by a Copyright Tribunal.
Indeed, just on the topic of the Copyright Tribunal and the question of super monopolies, the reference, if your Honours are looking at it later, when my learned friend Mr Sheahan referred to that, is at line 7005 of the transcript. We know that the Copyright Tribunal was, in fact, created for the purpose of tempering collecting societies abusing their monopoly, if that is what they might be going to do, because of the Copyright Tribunal’s ability to determine equitable remuneration.
On the question that your Honour Justice Crennan mentioned again this morning and the discussion with your Honour Justice Gummow of what are the benefits of collecting societies, Mr Meagher, of course, referred to the benefits to the copyright owners, that is to say, they are able to get one rate. They are able to have the division of the rate amongst them sorted out, whether by agreement amongst them by the Tribunal, these days in a number of the other parts of the Act by sampling methods, but there is also a very great countervailing benefit on users of copyright because they get the one-stop shop and the access to the entire repertoire of the relevant copyright owner.
Without taking your Honours to it, indeed, the legislature in the more recent compulsory licences photocopying for educational purposes, audiovisual copying for educational purposes, Crown copying which your Honours looked at in CAL v NSW have created compulsory single collecting societies emphasising, really, the very real benefits of the one-stop shop for users.
There are doubtless many mechanisms to try to fix just terms. The one that is prevalent throughout the Copyright Act is the one that adopts equitable remuneration or its analogues, reasonable rates, an amount of royalty interpreted in that way, as it were. It is particularly apt, as I have just submitted, to fix remuneration and just terms where the opportunities for use and revisiting the valuation may take place over decades. We submit that a cap robs the rate setting exercise and the ability to take into account changed circumstances, in other words, those that would tend to press the rate up above what the cap would be.
The second matter that I wanted to address of the seven topics is the question of the character of section 109 and refer back to the exchange between your Honours and Mr Sheahan on the proposition that on the character of the section that perhaps rather than offering a conditional immunity, the content of the exclusive right might be contracted by section 109. That debate certainly begins at lines 7085 to 7125 of yesterday’s transcript.
While on the one hand all things are a two-edged sword perhaps in this area, that might have some attractions to us, bearing in mind the language, for example, of Chaffey. We submit that would not be the correct characterisation for these reasons. Under sections 109 and 152 the record companies, when 109 is exercised by the undertaking or the order, have, in effect, a right to be paid a royalty for the exercise of the right. Also, we would submit that that right would continue to subsist in such a way that it could be assigned under section 196 as a subset of the sound recording copyright. Each of those observations, ie, that we are being paid a royalty for a right and that we have got to sign that right, in our submission, is a strong pointer to the fact that the right still exists as opposed to having been contracted away and it is, in fact, subjected to a conditional immunity.
The words which your Honours paid attention to and Mr Sheahan paid attention to yesterday, “unless the contrary intention appears”, may have directed one’s attention to the possibility that there would somewhere be a reduction in the rights. Let us say this to your Honours, I have searched the Act again and searched my memory, I cannot find anywhere in the Act where there is the sort of expression that says copyright in a particular subject matter does not include a right. All of those immunities, which might be seen as reductions in rights, are expressed as “it is not an infringement of the copyright”, just as it is in section 109, just as it is in the fair dealing provisions, and even just as it is in section 105 which is the clearest section that does in fact reduce exclusive rights, and that is the one that says you do not get the public performance and broadcasting right in respect of recordings where you are just relying on their place of publication.
If we are looking for some work to do and perhaps your Honours would be looking for some work to do for the expression “unless the contrary intention appears”, it may be via the avenue of section 184 that your Honours were taken to where the international protection regulations can be made, and some are made where all the exclusive rights are not given, so the contrary intention does appear in that way via the ability to make regulations. There is a particular reference, section 184(2) - I need not take your Honours there - that says when international protection has been conferred, it can be for less than the whole of the copyright.
Again, while on the characteristics of section 109, can I just answer a submission made by the ABC and repeated by my learned friend, Mr Meagher, this morning, which is to characterise section 109 as applying or granting the conditional immunity to a large group of people as opposed to a small enclosed group of people. We would respectfully submit that the very words my learned friend, Mr Meagher, took your Honours to indicate that it is a small enclosed group of people. The only people who can give the undertaking and thus engage section 109 were those classes of people my learned friend, Mr Meagher, referred to. They are the people who are listed effectively in section 91 as having a broadcast copyright conferred upon them:
(i) the Australian Broadcasting Commission;
(ii) the holder of the license for a television station –
and not just anybody who makes a broadcast but –
(iii) any prescribed person . . . who is . . . the holder of a wireless telegraphy licence –
and moreover, such a person in order effectively to be able to engage section 152 would have to be a person who, having given such an undertaking, could then establish to the satisfaction of the Tribunal what its gross earnings were, and those gross outsets under subsection (10), and what those gross earnings were in respect of the broadcasting by him of advertisements or other matter, et cetera. So there is a very close relationship, not to people - the general public possibly exercising a wireless telegraphy right, which other legislation very heavily hemmed in, but to a group of people who were making gross earnings primarily from the selling of advertisements.
So, for those reasons we say it was the closed group. It is the closed group that Mr Meagher, we would say, with respect, incorrectly acknowledged could be identified as obtaining the countervailing advantage or benefit in, as it were, terms that can be expressed by reference to money and value.
The third point I wanted to make of the seven was the effect of section 87, the rights given to broadcasters and the rights that it bestows on broadcasters. This is really a subject that addresses the countervailing advantage given to broadcasters by reason of their ability to have a copyright that is enhanced by reason of the ability to use the sound recording copyrights. The topic was raised by my learned friend, Mr Sheahan, about line 7 on 95 on yesterday’s transcript.
If what my learned friend was saying was somehow a broadcaster wanting to
enforce the section 87 broadcast copyright would not be
able to enforce it
in respect of that part of it that embodied a sound recording because those are
our rights, with respect, we would
submit that is not correct. There is a whole
layer of broadcast copyright that is laid over all the underlying rights and
that is
clear from this Court’s decision in PPCA v
FACTS [1999] HCA 17; 195 CLR 158. I need not take your Honours to it,
but read with this Court’s decision in The Panel Case,
to which I will get a reference found for me now.
Thus, if one takes
an example of a film - and the film in PPCA v FACTS was called
The Big Steal, so to just take that one for example - which is
broadcast by ATN7 as the report reveals, on a particular day, if that is
broadcast
in full by ATN7 and somebody copies it off air and then goes down to
the marketplace and sells the pirated copies, Channel 7, or
the
broadcaster, has an absolute right to go down there and, relying solely on its
broadcast copyright, no matter what the underlying
rights are, restrain
the
making of that copy, the selling of it under section 116 – they
have a conversion right - and the rebroadcasting of it.
Equally, the film
copyright owner is able to go and do that. Equally, if there is a substantial
part of a sound recording in it,
sound recording copyright owner, equally
probably the copyright owner and in the script, it does not detract at all from
the power
of the broadcast copyright.
So that is what we wish to say about that topic. We rely upon that and sections 91 and 87 to say, if it is necessary, it gives a distinctly proprietary character to the thing that has been gained by the broadcaster and bearing in mind, of course, that the thing that is gained can be very slight or insubstantial. Even if one wants to say that the role of sound recordings in the making of broadcasts is slight or insubstantial, that would be very unlikely in the case of the Triple-M example that my learned friend, Mr Meagher, took your Honours to this morning. It is not so slight and insubstantial as to escape that phrase. Can I just give your Honours a reference to the Panel Case – it is [2004] HCA 14; 218 CLR 273.
Can I turn to the fourth topic, which is the question of acquisition of property in the present case. The first topic that I would like to touch on, but very, very briefly, is the question of Cawardine’s Case. We accept, of course, that Cawardine’s Case has to be correct, or the principle in it has to be correct, for us to have the relevant property as at 1 May 1969.
Two short points, and the first one – and I am not going to Cawardine’s Case itself; I am going to, first of all, just the 1911 statute and then very briefly to the Owen Royal Commission and section 13A. There is just one point I wanted to make about the text of the 1911 statute that was relied upon by my learned friend, Mr Lloyd. First of all, we submit that proper weight is not given to the phrase “in like manner” by the submissions of the Commonwealth.
Secondly – we have not taken your Honours to this – your Honours were taken to section 35 of the 1911 Act and the definition of the word “perform”. My learned friends submitted that when one read that definition, which one does for the purpose of understanding the exclusive right conferred by section 2 of the Act, your Honours will recall that section 19 uses the phrase “records, perforated rolls, and other contrivances” to identify the thing in which copyright will now inhere, and then the question is how can one perform a record? The definition of “performance” says:
any acoustic representation of a work –
which, of course, reads in like manner by contrivance –
including such a representation made by means of any mechanical instrument –
It is a different word to contrivance and, of course, a mechanical instrument that could perform a contrivance is very clearly identifiable; it is a gramophone. So the text of the definition of perform did not advance the Commonwealth’s position. Just so your Honours can locate that argument that is at line 6010 of the transcript.
FRENCH CJ: While we are on the 1912 Act, does the copyright created by section 19 of the imperial Act get picked up or subsumed in the term “musical works” in relation to the remedial provisions of the covering Commonwealth Act? They do not expressly refer, I do not think, to section 19 copyright.
MR COBDEN: No, but it is picking up the whole – except as expressly modified, it is picking up the whole of the 1911 Copyright Act.
FRENCH CJ: Yes, I appreciate that. I am just talking about the express provisions relating to remedies and so forth in the - - -
MR COBDEN: They may have - - -
GUMMOW J: They talk about works, you see.
MR COBDEN: Yes, your Honour.
GUMMOW J: Section 14 and so on.
MR COBDEN: Thank you, your Honour. Yes, your Honour. I would say yes. I would submit, yes, looking at them, an infringing copy of a work. After all, it is common ground that the reproduction right was conferred on a record. So if somebody made an infringing copy of a record, perhaps one may have to explore the technology and one might do that, but these things were physical objects. Selling an infringing copy – well, everyone agrees it was an anti-piracy right at the very least, so they must apply. Distribute an infringing copy, language we still see, and of course the notion of saying in like manner as if they were musical works must allow you to read a reference to musical works or to works generally as also - - -
FRENCH CJ: Well, that is the only real pathway by which you get into the remedial provisions of the covering legislation, is it not?
MR COBDEN: Precisely. One is asked to take something, that is what was said yesterday, I think, that is not something and assume it to be something else and protect it in like manner. So, yes, we would submit quite firmly that remedial provisions such as those would apply to records or contrivances.
There is only one other very brief textual point made about Cawardine. I will see if I can make it without taking your Honours to the documents, but I will just record them. The introduction of section 13A was in a very limited response to the Owen Royal Commission. Your Honours were taken by Mr Lloyd to the Owen Royal Commission recommendations and Mr Latham said he was only implementing one. It is quite clear it was the first one, and it is the one where the Owen Royal Commission said there should be an establishment of a tribunal to determine disputes arising out of the performance in public of musical works and/or the use of records in public.
So when, then in 13A(6), my learned friend said that the text of that which referred to, on the one hand, performance of works, on the other hand the use of records, that seems to be the – rather than driving away from the suggestion that records had a performance right, that is precisely the language that seemed to be in use at the time, ie “use of records” was an expression that referred to the performance of records.
Can I address now the important topic of whether these could be characterised - the 1968 Act could be characterised – as providing new rights or an entirely new statutory regime thus removing all need to refer to the 1911 Act and matters we have been ventilating. That debate began at around line 6820 of the transcript yesterday. It is, perhaps, a fine question as to whether or not there are, in a strict legal sense, entirely new rights. The word “substitution” was used by your Honour Justice Gummow in Interlego or a continuation of old ones.
GUMMOW J: It is used by Professor Lahore in his book, I think?
MR COBDEN: Yes, I am sorry, your Honour. Substitution may well beg a question. If you substitute something with something that is entirely equivalent in the same – it may be a legal substitution but, of course, in substance, the same thing continues. It may be a fine question. We would respectfully submit that the issue arose in Smith v ANL and different views were expressed. I will just give your Honours the references. Your Honour Justice Gummow with Justice Gaudron said new rights were created by section 13 there at paragraph 45. Your Honour Justice Hayne said at paragraphs 124 to 125, new rights were not created. It may be a question of fine analysis as to whether legally new rights are created but whichever view is taken - - -
GUMMOW J: It might be refined analysis but it may be necessary analysis. The mere fact that it is difficult does not mean it can be ignored.
MR COBDEN: No, no, quite so, your Honour. But we would submit the following whichever is said. First of all, no party here has submitted that the Commonwealth could simply abolish all copyright and start again within providing just terms. So if new rights were created, then the question - - -
GUMMOW J: Then the question would be whether the 1968 Act is looked at as a whole.
MR COBDEN: Yes.
GUMMOW J: In effect of any acquisition on other than just terms.
MR COBDEN: Yes, your Honour. I do propose to grapple with the problems that your Honour has raised.
GUMMOW J: Not just the cap in 152.
MR COBDEN: Yes. If new rights were created, the question would be, as your Honour has just put it, whether just terms were being provided or if old rights are being replaced. It really depends upon the terms of the 1968 Act which brings us back to all the questions that have been raised. I will just say this about the question of basic principle about the replacement of an entirely statutory regime and again, of course, all analogies are problematic but as a matter of legislative approach, the Australian Capital Territory or the Northern Territory could repeal and re-enact their Torrens title laws.
This Court itself has emphasised that, in the native title area, those rights are governed by the Native Title Act and not the common law, albeit, to some extent the Act gives effect to the common law. That is Western Australia v Ward [2002] HCA 28; (2002) 213 CLR 1 at paragraph 16. But, in no other case could one simply justify significant change to a property right by saying this is a new statutory scheme with different balances drawn, we would respectfully submit.
Perhaps, an even clearer example is the question of shares in companies, their property – their property that arises under statute. Those statutes have been repealed and re-enacted from time to time, but in re-enacting the Corporations Act, so the Corporations Act 1912, I think could come up. The Commonwealth could not, we respectfully submit, say that some percentage of pre-existing shares in private banks are now deemed to be held by itself or other persons.
So I think I am saying no more than one has to look at the nature of the substitution, look at the nature of the pre-existing right if it existed, and then look closely at what the imposition on the pre-existing right is by reason of the new statutory regime.
CRENNAN J: I think Professor Lahore would describe section 220(1) as a re-enactment in respect of the qualifying provisions of the 1911 Act.
MR COBDEN: Yes, and I would respectfully submit to your Honours, re-enactment, substitution, replacement, still the real questions of substance do arise, in our respectful submission, including in the examples I have given where, for example, corporate company law or corporations law has in fact been entirely repealed and re-enacted, but one has to look at what happens to pre-existing property if one has identified pre-existing property as shares plainly would be, and what has there been, or we are back to the question, has there been an acquisition of property other than on just terms, and because the original property was here, on our submission, property under the 1911 Act, one considers the nature of that property as it was, how has it been dealt with under the 1968 Act - - -
GUMMOW J: Not property created by an Australian Act actually.
MR COBDEN: I am sorry, your Honour?
GUMMOW J: The source of a property right would be the imperial Act.
MR COBDEN: Yes, it was, your Honour, yes, quite so. I have something very briefly to say about that in relation to the 1956 Act - - -
FRENCH CJ: Can we just understand the way in which you are putting this aspect of the case. I think you said very early on that the rights that you had were imperial rights when we were discussing the operation of the 1911 Act, so is it right to say you say have imperial rights, the combination of an extinguishment of those rights coupled with their recreation or replacement or substitution, whichever characterisation one likes, and the statutory licence and cap arrangements constitutes an acquisition other than on just terms of those imperial rights?
MR COBDEN: Yes. Those imperial rights – I think I am correct in saying – nevertheless were rights located in Australia. That is the nature of an intellectual property right; it can only be enforced in Australia. You cannot pursue an Australian copyright patent or trademark outside Australia. While they are created by an imperial statute, of course, applied -directly enforced by the 1912 Act, they are Australian rights located - - -
FRENCH CJ: The imperial statute itself was the product of a drive for uniformity, was it not?
MR COBDEN: Yes, the 1910 conference. I am sorry – two things, your Honour. The investigation into the European events - - -
GUMMOW J: I know, but 51(xxxi) talks about the acquisition of property. The question is does that have any notion of situs?
MR COBDEN: I am sorry, any notion of?
GUMMOW J: Situation. I think they are saying it does, but you have it because the 1912 Act somehow put it into Australia relevantly.
MR COBDEN: Yes. I think if your Honour is asking me does it - - -
GUMMOW J: Section 51(xxxi) is at large. It does not talk about the situation at all on its face.
MR COBDEN: No, your Honour, quite so. But it must apply to property in Australia. When a copyright is, of course, a bundle of exclusive rights and its value is in the enforceability of those exclusive rights for an infringement action - I hope I am answering your Honour’s question by saying that all of that was located in Australia, possibly recognised overseas and the imperial system - - -
GUMMOW J: Well, that was the whole idea, as the Chief Justice put to you.
MR COBDEN: Yes. I would respectfully submit that such a characterisation would not diminish the constitutional application. With respect to the constitutional terms, it is a law passed by the Commonwealth with respect to the acquisition of property. We characterise 109 and 152 in that way. Can I say something very brief about Tape Manufacturers?
GUMMOW J: Well, it is a law passed by the Commonwealth - - -
MR COBDEN: It is the 1968 Act, of course, on our - - -
GUMMOW J: - - - under section 51.
MR COBDEN: Under section 51(xviii).
GUMMOW J: You have to attach yourself either to the external affairs power or the copyright power, do you not, to get rid of the imperial Act?
MR COBDEN: Yes, your Honour. Very brief on Tape Manufacturers, the Commonwealth sought at transcript 5,740 to impose Hohfeldian constraints on section 51(xxxi). We would say that is inconsistent with Bank Nationalisation and anomalous interests, and the principle of:
Section 51(xxxi) . . . is not to be given a pedantic or narrow construction.
That is Theophanous [2006] HCA 18; 225 CLR 101 at paragraph 60. The precise reference in Bank Nationalisation, I think very long, is (1948) 76 CLR - - -
GUMMOW J: Just going back to what you were being asked, you do not attach section 5 of the 1968 Act to section 26 of the imperial Act, do you?
MR COBDEN: Do not attach it, your Honour?
GUMMOW J: You rely on section 26 of the imperial Act as supporting section 5 of the 1968 Australian Act.
MR COBDEN: I see what your Honour is saying. We would refer to section 26 more as illustrating that there was not an absolutely - a free-for-all balancing act available. Your Honour, I think I would have to say that the operation of section 26 would not constrain – the proviso would not of itself constrain – the Commonwealth Parliament in 1968 from doing what it did in 1968.
GUMMOW J: Did it support what it did in 1968? Was it utilised?
MR COBDEN: Yes, it may have been one basis on which it was supported, your Honour, including its own power under the Constitution, which of course, must be its primary source of power. Can I just say something very briefly about Tape Manufacturers – I am sorry, I have said that.
GUMMOW J: The point being that 51(xxxi) is treated as a restraint on the other powers in 51, not as a restraint on powers that the Commonwealth Parliament would receive from time to time from the Imperial Parliament, some of which existed as late as 1937 in this legislation, as late as 1937 conferring power on the Australian Parliament.
MR COBDEN: Yes, your Honour, might I return to that in just a moment?
FRENCH CJ: The power from 51 derived originally, of course, from an imperial statute - the Commonwealth of Australia Constitution Act.
MR COBDEN: Yes. What we would say, your Honour, is that the Commonwealth itself is a creature of the Constitution and always subject to it. This is the exercise of that power under section 51(xxxi) - sorry, 51(xxxi) is a constitutional guarantee constrained to the Commonwealth whether after 1901 or after any other date. Can I turn now, your Honours, to the question of just terms and just quickly on the question of the benefit of the collectivity that your Honour Justice Gummow referred to this morning? To some extent that collectivity, when one looks at sections 109 and 152, is created by the broadcaster, not by the copyright owners because under section 109 the broadcaster, in giving the undertaking, for example, one looks at that avenue that the broadcaster takes, it gives an undertaking to the person who is the owner of the copyright in a recording to pay such amounts as may be specified, et cetera.
Now, in practice, as we saw in the Stereo FM Case, the broadcaster gave an undertaking in writing to a whole range of copyright owners, or I think major record companies, and possibly to PPCA, but it is thereby that the collectivity, as it were, is imposed on the record companies by the broadcaster giving the undertaking, and then the orders are made in respect of all those people, and if the broadcaster wants the order to extend to other sound recording makers then there is a provision for that to happen. That is not to say for a moment that there is not some benefit of collectivity conferred on the record companies, but the starting point is with the broadcaster.
The defendants have invoked Justice Dixon’s statement in Grace Brothers [1946] HCA 11; 72 CLR 269 at 290, and it is just a short one and your Honours were taken to it yesterday, but read clearly it says:
The inquiry rather must be whether the law amounts to a true attempt to provide fair and just standards of compensating or rehabilitating the individual considered as an owner of property, fair and just as between him and the Government of the country -
or the third party, and his Honour said the following things in the same case at page 290:
the question for the Court when validity is in issue is whether the legislation answers the description of a law with respect to acquisition upon just terms . . .
In deciding whether any given law is within the power the Court must, of course, examine the justice of the terms provided.
We embrace those statements, particularly the notion that it must be a true attempt to provide fair and just - - -
GUMMOW J: What is the force of the word “true” in the phrase “true attempt”?
MR COBDEN: Some reference to a genuine attempt, an actual attempt to say what might be the boundaries of the value of this particular property. The focus is on the characterisation of the law together with the practical operation and its overall character. The fact that careful attention must be paid to the terms of the law is something that is illustrated by Australian Apple and Pear Marketing Board. We gave a reference to that in the passage we relied on as paragraph 137 of our primary submissions. We submit it is not necessary to run a factual case rating individual values. It can be a question of looking at the terms of the law. This is not an abstract question, it is a case about the terms of the law and what this just terms is has to be assessed against the terms of fair and just standards. Again, the passage we have referred to a couple of times that:
Unless it be shown that what is gained its full compensation for what is lost, the terms cannot be found to be just.
We respectfully submit that if your Honour gives meaning I have just described to the notion of “true attempt”, this law cannot be characterised as having made a true attempt to provide fair and just standards because the two caps are imposed on what would otherwise be equitable remuneration and they must be presumed to have meaning and effect. They are intended to, as it were, cut in and they can be presumed to cut in. Referred to the question of the account of future possibilities and there seems to be some disagreement with the proposition perhaps that future possibilities should be taken into account. We say that they should and we note the following.
We are not relying on far fetched possibilities given the nature of copyright and the long-term nature of the exercise both in relation to use and valuation. There would be different circumstances from time to time for different broadcasters and different copyright holders. Bargaining power, one would expect in the normal circumstance to ebb and flow. The broadcasters foresaw that and tried to shut off, as it were, preserve, freeze them, bargaining power, as it was in 1969. There are many instances where over time the tribunals determined for different types of copyright rates that are quite different to those that have previously been found. We have given a number of instances in our primary submissions, footnote 103 to paragraph 156.
Where the type of acquisition provides for and affects a range of different persons at different times in the statutory scheme really must provide for those circumstances. That was the point made in Johnston Fear (1943) 67 CLR with the question in respect to compensation based upon price. I beat a rapid retreat when we are relying on the concession, but Johnston Fear does stand for other propositions. One of them is that providing that price would be the answer to just terms is not correct because price did not equal value. That was not done by means to any empirical material, but just because one can take from the statute itself on its base price is not equivalent to value and price may well exceed value. Chief Justice Latham said in Johnston Fear at page 322 at about point 8:
The just compensation to be paid to a person for compulsory taking of goods depends upon these circumstances, but also possibly upon particular circumstances which may vary in different cases.
Justice William said at 322:
It is a fundamental principle of law that claimants should have a fair opportunity of putting their case before their claims are determined –
Similarly, not entirely on point, but in Smith v ANL 204 CLR 493 where the fixed time was six months and it was held that the period was simply too short and its operation from one employee – I am quoting from your Honours Justice Gummow and Justice Gaudron’s judgment at paragraph 50.
its operation from one employee to the next too capricious to meet the constitutional requirement of just terms.
Given all the possibilities of broadcasters that they may choose to broadcast 100 per cent music with very little intervening commentary right down to the other end of the spectrum, people who might just do talk and use very, very little music, the one per cent limit, we say, is looked at within the structure of the Act where all other uses are subject to full assessment of equitable remuneration is capricious because it does not allow real account to be taken of the different circumstances of broadcasters and, indeed, of copyright owners.
We can see in Mr John Latham’s second reading speech in that 1933 Copyright Bill that your Honours were taken to for other reasons, but I think this passage your Honours were taken to, where the ebb and flow of the way in which the musical work right generated revenue while specifically referred to by the Attorney-General – I think your Honours have that extract of that second reading speech, it was just handed up – but about halfway down the column on Hansard page 5837 for 6, 7 and 8 December 1933 the Attorney-General says there:
Composers and authors of songs and other music relied on the sales of sheet music for their reward. With the development of the gramophone, conditions changed largely. Much less sheet music was sold, and that position was still further affected prejudicially when broadcasting and wireless listening became widespread. The result is that composers of musical works say they now have to look almost entirely to the profits derived from the sale of performing rights from either broadcasting or gramophone records to obtain any proper reward for their work.
So it tells one that had one, for example, looked at how musical owners should be remunerated, say, at 1911 and said, well, provided they are remunerated by reference to the amount of sheet music sold, that could have been a very capricious imposition because it would not have taken into account something that very rapidly, a matter of 20 years, had changed in that way just shown by that speech.
The defendants seek to explain away the caps by suggesting they are a reaction to fears about the US position. It was an overt concern about the change in bargaining power, cap an economic right because of a possible change in bargaining power seems to direct attention to the thought that it may well be a direct reduction of the content of that right. The Commonwealth draws inferences in its extrinsic materials which are well removed from what was said in Parliament.
In the second reading speech that your Honours were taken to – it is at volume 3, tab 56, page 1403 – for the 1968 Bill, which is the passage about the special circumstances now existing, there is no reference at all to the US royalties. The real concern that is expressed there is that the broadcasters have said this could impose a substantial financial burden on them. In other words, there is an ongoing war, broadcasters have won the latest round in the battle, but that position should not be frozen for all time. The vehemence and nature of that battle is illustrated by a file note which is available at volume 3, tab 58, page 1451, the second paragraph, where someone from commercial radio had rung up the Attorney-General’s Department and said unless the provision for review of the caps is withdrawn, we will commence a campaign against the clause that very afternoon. It speaks of different things, as I have said before, than drawing public interest and copyright interests into balance.
The ABC referred to some other benefits conferred by the Copyright Act in 1968. I will not repeat our primary submissions. They say they are either minor or incommensurable. They were not conferred as any part of quid pro quo for the taking of the right to control or an ability to make claims for payment.
Next the Commonwealth asserted the cap they have never applied since it commenced operation. Of course, in relation to the ABC, the special case, paragraph 247, it has been capped, albeit by agreement, we accept that. Commercial radio, it is true, it has not exceeded 0.4 per cent. We submit that that has, since 1983, reflected the Tribunal decision in WEA, in other words, it lives under the shadow of that. As we put in-chief, the Tribunal’s decision in WEA appears to have taken a one per cent cap of setting the limits of the universe, although it is not clear.
My learned friend, Mr Meagher, took your Honours this morning to the WEA Case and to that 54 per cent figure. Can I just explain that in this way. At that point of the judgment, 127, the Tribunal is recording the submissions and analysis undertaken by PPCA and Mr Silver as reaching 52 to 59 per cent. The analysis goes on. There was some evidence from Mr Baker, who is a musical expert, about what might be protected and unprotected, but the analysis continues on and it is, in our respectful submission, the finding at page 130 that I took your Honours to on Tuesday of 44 to 45 per cent that was in fact the finding which correlates then to the 0.45 per cent.
The Commonwealth says we could have gone to the Tribunal to prove what we would have got but for the caps, but we would respectfully submit the Tribunal is not there to make abstract determinations useful for other purposes. It is there to apply the legislation which includes the caps. Ultimately, the defendant’s argument seems to say that the caps were directed to fears about the US, they are otiose, they have no work to do. We would submit that is not open. It is a term, it is in legislation, not contingent upon any change in that legislation by reason of the addition of regulation. Plainly, it could have the effect and presume to have the practical effect unless it is shown otherwise, which it has not.
Very briefly, in relation to the discussion of the ever-decreasing universe, sections 109 and 152 do not focus on what the universe of recordings that is available is. That might be relevant because they are the body of recordings from which the broadcasters can draw. What the focus is in section 152 particularly, is what recordings are used because one looks at the use and the type of use of the broadcaster and one looks at the extent of use of the relevant copyright owner’s recordings. It does not follow at all that newer and fresher recordings tumbling out at a great rate every single day are preferable by broadcasters to older recordings. Indeed, one really has to only notice, which my learned friend, Mr Sheahan, says, we take notice of the large number of attractive new fashionable recordings but if we can do that, we can take notice of the very large number of golden oldies that have remained very popular.
Finally, and this is the last point I wanted to make but one. Just on the question of competing rights, I failed to mention the 1967 second reading speech. Your Honour Justice Gummow drew attention to it yesterday and, in particular, to the remarks by the Attorney-General, Mr Bowen, about the transitional provisions and referring to the pattern established by the 1911 Act and the 1956 Act. Yes, that is so, but of course it is notable that Mr Bowen went on to say these provisions do not in substance involve any diminution of rights in respect of existing works. By works, we would respectfully submit, he also must mean those things that are protected, including the sound recordings.
GUMMOW J: Section 36 of the imperial Act, is it, and section 24? Section 24 talked about substituted right, in the second column of the schedule, and the word “repeal” was used.
MR COBDEN: Section 24 your Honours just drew my attention to I think is the regime in the 1911 Act that was bringing across such existing copyrights as they were from - - -
GUMMOW J: You use these metaphors all the time, Mr Cobden. “Bringing across” is another one.
MR COBDEN: Sorry, your Honour. That was dealing with – I hope that is sufficiently neutral, your Honour – dealing with rights that had arisen under almost the miscellany of Acts that I drew your Honours’ attention to referred to in the Gorell Committee Report. That is presumably the reference that Mr Bowen was saying about there was a transitional regime under 1911 as there would be under 1968 and as there was in England under 1956. The word, of course, there is – clearly used the word “substituted right”.
Can I turn to the seventh of my original seven topics and then finally seek to draw together some answers to the points raised by your Honour Justice Gummow about the imperial Act in section 26, in particular. There is just four brief points to make about the question of severance, which is the seventh point. In response to our suggestion that the practical operation of the caps would alter if they were read down, which the Commonwealth accepted, the Commonwealth suggested there was a difference between the legal operation of a law remaining unchanged and a practical operation remaining unchanged and the latter was acceptable. That is at line 4850 of the transcript. We respectfully submit that that distinction has no foundation, in principle. I would refer to the comments of Chief Justice Latham in Pidoto v Victoria [1943] HCA 37; (1943) 68 CLR 87 at 108 it was necessary “that the operation of the remaining parts of the law remains unchanged”, but not qualified as to the legal operation.
Secondly, the ABC sought to invoke, at line 7430, an analogy with Smith v ANL where a new statutory scheme was, in effect, read down so as not to apply to existing causes of action, but there, we would submit, a clean break was possible. The new scheme did not apply to existing rights and it did apply to new ones and you cannot make a clean break here. Further, this perhaps does invoke some of the questions your Honour Justice Gummow has been raising about the ABC’s proposed reading down and the continued force of the 1911 Act in Australia after 1956. Your Honours have looked at clause 41 of Schedule 7 to the 1956 Act which provides that they effectively preserved the 1911 Act:
In so far as [it] forms part of the law of any country other than the United Kingdom . . . shall, so long as it forms part of the law of that country, be construed and have effect as if that Act had not been so repealed.
That was fully dealt with, of course, in that EMI Case 100 CLR . We would submit that in answer to the ABC’s suggestion that, for example, the imperial Act could spring back up again if there were reading down of the relevant provisions and caps, the language of “so long as” was apt to preserve the 1911 Act but only for the limited time until it was disposed of and once the law of the other country excluded the 1911 Act, which we did in the 1968 Act, that clause 41 of Schedule 7 to the extent that it was necessary prolonging the life of, as it were, the home Act, for the purpose of being applied here by the 1912 Act was spent and that that clause would not, as it were, reanimate the 1911 Act for the purposes of reading down the 1968 Act. More importantly, in terms of section 15A, the Commonwealth Parliament would not have intended that the 1911 Act be revived if there was some problem with the compulsory licensing scheme.
Next, the ABC suggested, with reference to the text of section 152, that the Copyright Tribunal can make an order that the impact of the cap fell entirely on post-1968 recordings. That was a debate between us about whether it just could be one order and if it needed only be one order, whether it be made in such a way just, we respectfully draw your Honours’ attention, to the terms as passed and as now of section 152 where in the absence of agreement the respective shares of the 152(6), where the Tribunal is given power – and this was referred to this morning as one of
the benefits of the collective system – the Tribunal may have to be called upon specify the respective shares of the amount that is decided in relation to the broadcaster which are to be divided among the particular people, but that must be on an equitable basis.
We would respectfully submit that it could not be equitable, for example, for 1911 Act sound recordings to get full equitable remuneration within the one per cent and whatever is left to be divided among everybody else. They would not be equitable shares and, indeed, it may well be that – secondly, “In so making an order”, subsection (7), there needs to be taken into account by the Tribunal “all relevant matters, including the extent to which the broadcaster uses” the records, and if the order, the result had been made, including the division order did not take account of that use, then there would probably be error by the Tribunal.
More broadly, that submission by the ABC elides the Parliament’s powers and those of the Copyright Tribunal. Parliament could have chosen not to grant any future broadcasting rights, but it did not. It legislated for copyrights in broadcasting rights and expected people to receive remuneration as for their inequitable shares. One could not get the whole one per cent, which is a logical consequence of the ABC’s point to the 1911 Act sound recordings, while later ones would get nothing.
I will see if I can answer the questions about the 1911 Act. First of all, the Commonwealth must rely on its powers under the Constitution, in our submission. Secondly, if section 26 of the 1911 Act was an independent head of power, it would still be subject to the proviso, which is contained in section 26 itself. In any event, imperial Acts themselves must be read together, and section 26 would not be seen as impliedly repealing section 51(xxxi). Legislation is subject to its own constitutional limits, and most importantly, it certainly has not been put by any of the defendants in this case that section 51(xxxi) simply does not apply here. Those are our submissions in reply, may it please the Court.
FRENCH CJ: Thank you, Mr Cobden. The Court will reserve its decision. The Court adjourns to 9.15 tomorrow morning in Canberra, and 9.30 tomorrow morning in Sydney.
AT 11.56 AM THE MATTER WAS ADJOURNED
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