In synch with IP rights

Pocketful of Tunes Pty Ltd v The Commonwealth of Australia [2015] ACopyT 1

It is likely that most Australians have heard and sung the words to the iconic ballad “I Am Australian” (Song), which was written by Bruce Woodley when he was a member of The Seekers in the 1980s.  Therefore, when the Commonwealth Department of Immigration and Citizenship (Commonwealth) was producing a new video montage in 2008 to be played at citizenship ceremonies (Montage), the Song was an obvious candidate to be used as backing music. 

By and large the Commonwealth complied with the requirements incumbent on it to lawfully reproduce the Song.  Unfortunately it failed to obtain one crucial licence from the owners of the copyright in the song – the licence to use the synchronisation right.

The resulting decision of President Bennett, sitting in the Australian Copyright Tribunal (Tribunal), provides an interesting demonstration of the rarely-used section 183(5) of the Copyright Act 1968 (Act), and a useful analysis of the synchronisation right.

The background

The owner of the copyright in musical works can derive revenue by licencing it to users who exploit it.  There are three main types of licences used to do this:

  • mechanical licences for the sale of recorded music;

  • licences for public performances and broadcasted musical works; and

  • licences for synchronisation of musical works with visual images.

Mr Woodley and his co-writer assigned the copyright in the Song to Pocketful of Tunes Pty Ltd (together with Mr Woodley, the Applicants) in 2013.  Since its creation, the Song had become incredibly popular.  Indeed, research was conducted indicating that 97% of the general public in Victoria and New South Wales recognised its tune and lyrics. 

When the Commonwealth decided to use the Song as the backing music to the Montage, they arranged to pay licencing fees for public performance and communication to the public to the Australian Performing Right Association (APRA) and the Australian Mechanical Copyright Owners Society (AMCOS).  It evidently did not occur to the Commonwealth that a licence fee was payable in respect of the synchronisation right.  Neither APRA nor AMCOS were authorised to collect that licence fee.

In August 2012, Mr Woodley complained to the Commonwealth that it had been using the Montage at citizenship ceremonies for several years without paying the licence fees for the synchronisation right.  The relevant department consequently issued a directive to all local government councils across Australia that they cease using the Montage at citizenship ceremonies from December 2012 onwards.

The Montage was withdrawn from use by the councils, however an application was made for compensation pursuant to section 183(5) of the Act, which provides that:

(1)  The copyright in a literary, dramatic, musical or artistic work or a published edition of such a work, or in a sound recording, cinematograph film, television broadcast or sound broadcast, is not infringed by the Commonwealth or a State, or by a person authorized in writing by the Commonwealth or a State, doing any acts comprised in the copyright if the acts are done for the services of the Commonwealth or State.

                …

(5)  Where an act comprised in a copyright has been done under subsection (1), the terms for the doing of the act are such terms as are, whether before or after the act is done, agreed between the Commonwealth or the State and the owner of the copyright or, in default of agreement, as are fixed by the Copyright Tribunal.

It fell to the Tribunal to determine the appropriate terms to compensate the Applicants for the use of the synchronisation right in the Song by the Commonwealth.  

The decision

Firstly, it needs to be borne in mind that section 183(5) of the Act has received minimal judicial treatment in the past.

President Bennett held that the determination to be made was of the value of the right exercised by the Commonwealth, for which the copyright owner must be compensated, rather than of any loss suffered by the Applicants. 

The parties had already agreed that the relevant principles for making such a determination could be found in Re Application by Seven Dimensions Pty Ltd (1996) 35 IPR 1 (Seven Dimensions), in which Sheppard P held that:

  • the intention underlying section 183(5) of the Act is that the Tribunal will act fairly between the parties to compensate the copyright owner;

  • the Tribunal would ordinarily have regard to the market rate for use of the material;

  • the Tribunal should assume that the parties were negotiating at arm’s length;

  • the Tribunal should also assume that the parties would have done business, even if that assumption was artificial and unreal;

  • no party could be heard to say that he, she or it would not have done business on any terms, or that business would only have been done for a sum which was grossly excessive or grossly inadequate; and

  • the parties were to be deemed to have acted reasonably and treated as willing but not anxious parties to the bargain to be constructed.

Both sides made submissions as to what the licence fee for the synchronisation fee ought to have been.  The Applicants, drawing on a previous licence which had been issued to the Brisbane City Council in respect of the synchronisation right to the Song, argued that the total licence fee payable was either $156,000 per year (the lower rate) or $250,825 per year (the higher rate).  Each of those figures would need to be multiplied by 3.67 (the total number of years which the Montage was used for).

The Commonwealth made an alternative submission whereby the licence fee was $35,802 per year (and therefore the total licence fee would be $131,274).

President Bennett ultimately held that the Commonwealth’s submissions were more persuasive than the Applicants’, but that its proposed figure was still inadequate, and that the final figure for the synchronisation right should be $149,743.34 (excluding GST) for the 3.67 year period.  

Lavan Legal comment

The formulae proposed by the parties in this case (and that ultimately applied by President Bennett), while complicated, provide a novel illustration of the Tribunal determining a commercially realistic solution to a legal problem.

While it is unsurprising that section 183(5) of the Act has not been heavily used before (given the narrow categories of situations in which it will apply), this case serves as a reminder of its ultimate utility. 

The flexibility with which the Tribunal could act here in compensating the Applicants, by applying the Seven Dimensions test, was clearly very beneficial.

This decision should also be a very important reminder to all parties engaged in the publishing of musical works that they must be mindful to avoid infringing the intellectual property rights of other parties.  Had the Commonwealth been alive to the necessity to pay the Applicants a licence fee for the synchronisation right in the Song, a clearly complex piece of litigation could have been avoided. 

Disclaimer – the information contained in this publication does not constitute legal advice and should not be relied upon as such. You should seek legal advice in relation to any particular matter you may have before relying or acting on this information. The Lavan team are here to assist.