APRA v Cougars Tavern
[2008] FMCA 369
•28 March 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| A.P.R.A. v COUGARS TAVERN & ORS | [2008] FMCA 369 |
| COPYRIGHT – Musical work – where respondents did not enter into licences for public performance of recorded music. DAMAGES – Assessment – whether injunctive relief appropriate – whether compensatory damages should be awarded – whether damages should be awarded under s.115(4) Copyright Act 1968 – whether conduct of respondents ‘flagrant’ – whether benefit accrued to respondents by reason of infringement – whether respondents engaged in deliberate pattern of conduct to conceal illegal enterprise. |
| Copyright Act 1968 (Cth), ss.115(2),(4), 126 Civil Procedure Act 2005 (NSW), s.100 Federal Court of Australia Act 1976 (Cth), s.51A Federal Magistrates Act 1999 (Cth), s.76 Federal Court Rules (Cth) Uniform Civil Procedure Rules 2005 (NSW), reg. 36.7 New Zealand Copyright Act 1962 (NZ), s.24(3) |
| Commonwealth of Australia v Evans [2004] FCA 654 Meskenas v ACP Publishing Pty Ltd [2006] FMCA 1136 Sutherland Publishing v Caxton Publishing [1936] Ch 323 International Writing Institute v Rimila (1995) 31 IPR 356 Namol Pty Ltd v AW Baulderstone Pty Ltd (1993) 119 ALR 187 GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 68 Aristocrat Technologies Australia Pty Ltd v Vidtech Gaming Services Pty Ltd Aristocrat Technologies Australia Pty Ltd & Anor v DAP Services (Kempsey) Pty Limited (In Liquidation) [2007] FCAFC 40 International Credit Control Limited v Axelson [1974] 1 NZLR 695 PPCA v Adelaide City Entertainment [2005] FMCA 923 SBO Pictures Inc v Kaos Shop Pty Ltd [2006] FMCA 82 Microsoft Corporation v Ezy Loans [2004] 63 IPR 54 Zero Tolerance Entertainment Inc v Venus Adult Shops Pty Limited [2007] FMCA 155 Microsoft Corporation v Goodview Electronics Pty Ltd (2000) 49 IPR 578 Microsoft Corporation v Glostar Pty Ltd (2003) 57 IPR 518 Microsoft Corporation v PC Club Australia Pty Ltd (2005) 148 FCR 262 Universal Music Australia Pt Ltd v Hendy Petroleum (2003) 59 IPR 204 Sony Entertainment (Australia) Ltd v Smith [2005] FCA 228; (2005) 64 IPR 18 Foxtel Management Pty Limited v The Mod Shop Pty Ltd [2007] FCA 463 | ||
| Applicant: | AUSTRALASIAN PERFORMING RIGHT ASSOCIATION LIMITED ACN 000 016 099 | |
| First Respondent: | COUGARS TAVERN PTY LIMITED T/AS OPTIONS TAVERN ACN 112 895 619 |
| Second Respondent: | BACKDRAFT (VIC) PTY LIMITED T/AS HEAT NIGHTCLUB ACN 104 340 221 |
| Third Respondent: | MR ROBERT BOTAZZI |
| Fourth Respondent: | MR SIMON BURTONCLAY |
| File Number: | SYG3574 of 2007 |
| Judgment of: | Raphael FM |
| Hearing date: | 13 March 2008 |
| Date of Last Submission: | 13 March 2008 |
| Delivered at: | Sydney |
| Delivered on: | 28 March 2008 |
REPRESENTATION
| Counsel for the Applicant: | Mr M Hall |
| Solicitors for the Applicant: | Banki Haddock Fiora |
| For the Respondent: | No appearance |
ORDERS
Applicant to bring in short minutes of proposed injunctions within seven days.
The first, third and fourth respondents pay the applicant $5,688.00 and $447.70 interest for breach of copyright pursuant to s.115(2) of the Copyright Act 1968 (Cth) (“the Act”) (the “Options Tavern breach”).
The second and third respondents pay the applicants the sum of $16,952.83 and $4,698.76 interest for breach of copyright pursuant to s.115(2) of the Act (the “Heat nightclub breach”).
The first respondent pay the applicant $40,000.00 by way of additional damages pursuant to s.115(4) of the Act (the “Options Tavern breach”).
The third respondent pay the applicant $100,000.00 by way of additional damages pursuant to s.115(4) of the Act (the “Options Tavern breach”).
The fourth respondent pay the applicant $40,000.00 by way of additional damages pursuant to s.115(4) of the Act (the “Options Tavern breach”).
The second respondent pay the applicant $50,000.00 by way of additional damages pursuant to s.115(4) of the Act (the “Heat nightclub breach”).
The third respondent pay the applicant $125,000.00 by way of additional damages pursuant to s.115(4) of the Act (the “Heat nightclub breach”).
Respondents to pay the applicant’s costs of the proceedings, to be 80% of the costs as taxed, if not agreed, pursuant to the Federal Court of Australia Act 1976 and Federal Court Rules.
Orders 2 – 9 be stayed for 14 days.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG3574 of 2007
| AUSTRALASIAN PERFORMING RIGHT ASSOCIATION LIMITED ACN 000 016 099 |
Applicant
And
| COUGARS TAVERN PTY LIMITED T/AS OPTIONS TAVERN ACN 112 895 619 |
First Respondent
BACKDRAFT (VIC) PTY LIMITED T/AS HEAT NIGHTCLUB
ACN 104 340 221
Second Respondent
MR ROBERT BOTAZZI
Third Respondent
MR SIMON BURTONCLAY
Fourth Respondent
REASONS FOR JUDGMENT
Introduction
On 19 November 2007 the applicant commenced proceedings against the four respondents in respect of alleged infringements of copyright in recorded music being played at two different venues known as “Options Tavern” in the Westfield Shopping Centre at Helensvale Queensland and at a nightclub known as “Heat” at the Crown Casino Melbourne. Although the principal operators of each of the two premises were different companies, they had a common director and controlling mind in Mr Botazzi, the third respondent. The fourth respondent was a director of the first respondent, which was the entity responsible for running the Queensland premises.
None of the respondents has ever appeared at any of the mentions or hearings in relation to this proceeding. Orders for substituted service have been made. The respondents were advised of the hearing date on 13 March 2008 and have been provided with copies of all the applicant’s evidence. The hearing was conducted in their absence.
For the reasons given below the court has determined that all the respondents are liable for the breaches of copyright alleged and shall be the subject of the orders for damages and for injunctions. The orders for damages shall include substantial damages under s.115(4) of the Copyright Act 1968 (Cth) (“the Act”) and interest.
History
On 11 March 2005 Phillip Lambert, a casual employee of the applicant, Australian Performing Right Association Ltd (“APRA”) went to the premises known as “Heat” Nightclub located in the Crown Casino Melbourne. He took with him a handheld mini disc recorder. There he found two DJs playing music in different rooms. The first room had a large projector screen on the front wall and speakers placed around the room. The second room had two large speakers placed on either side of the dance floor. Mr Lambert listened to a number of pieces of recorded music being played, including two that he refers to in paragraph 5 of his affidavit sworn on 14 November 2007. He observed approximately 250 to 280 people present in the main room and about 60 people present in the second room during the performances. Mr Lambert visited the premises again on 17 June 2005. The set up of the premises was the same as he had found in March. He recorded two pieces of recorded music that had been played on that visit and once again observed about 250 to 300 people in the first room and about 60 people in the second room. Mr Lambert made a third visit to the premises on 5 August 2005. Once again he found that there were two DJs playing music in two rooms as previously described. He recorded the playing of five individual musical works which he names in paragraph 21 of his affidavit. This time, during the course of his visit there were between 100 and 300 people in the main room and approximately 80 people in the second room. On each occasion that he attended the premises he stayed for periods in excess of one hour. Mr Lambert prepared evidence reports of his visits to the premises which are exhibited to his affidavit.
On 11 May 2007 Mark Crathern, a casual employee of APRA, went to the premises known as “Options Tavern” located in the Westfield Shopping Centre at Helensvale in Queensland. He carried a micro cassette recorder. He found that musical work was being performed at the premises through a background music system and television screens. On his first visit he recorded onto tape two musical works being performed which are referred to in paragraph 5 of his affidavit sworn on 25 October 2007. He observed about 80 to 110 people on the premises on that occasion and stayed for approximately two hours.
On 31 March 2007 Mark O’Neill, a permanent employee of APRA, attended the Options Tavern bringing with him a hand held micro cassette recorder. In his affidavit sworn on 25 October 2007 he deposes to the fact that musical and literary works were being performed at the premises by means of a background music system and televisions through numerous speakers and LCD or Plasma screens. He deposes to the fact that there were three LCD televisions in the men’s bathroom. During his visit he recorded onto a tape the performance of the three musical numbers referred to in paragraph 6 of his affidavit. He remained on the premises for almost two hours and observed approximately twenty to thirty people in the premises at that time.
APRA
APRA is a licensing organisation through which the public performance of musical and literary works which are the subject of copyright in Australia is organised. APRA, unlike some other licensing organisations around the world, does not act as the agent of copyright owners, but is for the purposes of the Act the owner of the copyright in respect of almost all musical and literary works performed throughout Australia. This body of work is known as the APRA Repertoire. There are approximately four million works listed in the APRA Repertoire catalogue. The works which were recorded by Messrs Lambert, Crathern and O’Neill were all works contained within in the APRA Repertoire. There are a number of categories of licence granted by APRA for the public performance of works within its Repertoire. The licence fees charged by APRA are subject to supervision by the Copyright Tribunal pursuant to Part 6 of the Act. Licences are freely offered to organisations performing musical works in public. Most operators of nightclubs and taverns apply for and are granted licences by APRA. In her affidavit sworn on 1 November 2007 Jennifer Ann Gome, the director of general licensing of APRA, has calculated the licence fees which the respondent companies would have been required to pay for the performance of musical works in the periods during which they were found to have been playing work without a licence.
Following the investigations into Heat Nightclub and Options Tavern APRA instructed its solicitors, Banki Haddock Fiora, to communicate with the respondents with the intention of requiring them to enter into licences for the past and future public performance of recorded music. The correspondence which that firm had with the respondents is annexed to an affidavit of Catherine Amy Haddock sworn on 31 October 2007. That affidavit also exhibits ASIC searches which reveal the association between the corporate respondents and the premises and that the individual respondents are directors of the corporate respondents.
Copyright
Section 126 of the Act is in the following form:
“Presumptions as to subsistence and ownership of copyright
In an action brought by virtue of this Part:
(a) copyright shall be presumed to subsist in the work or other subject‑matter to which the action relates if the defendant does not put in issue the question whether copyright subsists in the work or other subject‑matter; and
(b) where the subsistence of the copyright is established--the plaintiff shall be presumed to be the owner of the copyright if he or she claims to be the owner of the copyright and the defendant does not put in issue the question of his or her ownership.”
Paragraph 1 of the grounds of application is in the following form:
“The applicant is the owner of the copyright in each of the Works in respect of its application to the performance of each of those Works and the APRA Repertoire in public.”
The respondents have not filed a response to the application. The subsistence of copyright is therefore not in issue and the ownership of copyright has not been disputed. In those circumstances the presumption of s.126 applies to each of the works played in the two premises (known as the “Options Works” and the “Heat Works”) and in the APRA Repertoire. APRA have also produced an affidavit by Sally Elizabeth Howland sworn on 26 October 2007. Ms Howland is the director of Member Services for APRA. In her affidavit she describes APRA and its membership including the following:
“A condition of membership is that the member assign to APRA the public performance and communication rights in the copyright in their works. This is done by a standard form of assignment.”
In paragraph 11 of her affidavit Ms Howland describes arrangements which APRA has with fifty-seven affiliated bodies carrying on public performance licensing in the USA, the UK, Republic of Ireland and other countries. At paragraph 20 she states that APRA has been issuing licences to music users within Australia and New Zealand since 1926 and that there are approximately 60,000 current licences. From paragraph 22 onwards Ms Howland provides details of the chain of copyright ownership for each of the musical works which are the subject matter of these proceedings, being the works described in the affidavits of the investigators which I have previously referred to. I am satisfied from the provisions of s.126 and from the information given in Ms Howland’s affidavit that APRA is the copyright owner in respect of those works and of the APRA Repertoire and that the copyright subsisted at the relevant times and continues to subsist. I am also satisfied that copyright in each of the works referred has been breached by their performance in public by the corporate respondents. I am satisfied that the Options Works were performed in public by means of a background music system and the Heat Works were performed by DJs in a manner that would bring the premises into the class known as “featured recorded music venues”. This class has a different licence fee structure from that of the background music class.
I am satisfied from the ASIC searches that Mr Botazzi and Mr Burtonclay were at the relevant time, and remained, directors of the first and second respondents. I accept the evidence contained in the affidavit of Ms Haddock that there was correspondence with both Mr Botazzi and Mr Burtonclay concerning the public performance of music at the Options Tavern, that both parties were clearly advised of the steps which APRA could take to enforce its copyright, that the correspondence sent by Banki Haddock Fiora to Mr Botazzi and Mr Burtonclay was not responded to, and that the solicitors offered the corporate respondents the opportunity to take out the required licences but that such offer was not taken up even though licence applications were sent to them partially completed in order to assist them. I accept the contents of paragraph 16 of Ms Haddock’s affidavit which states:
“A file note indicates that on 14 September 2005, Troy Gurnett dialled the telephone number (03) 9629 9309 and left a message for the Third Respondent (and other directors of the Second Respondent) to return his call. At 11.50a.m. the Third Respondent returned the call, claiming he was aware of the matter but remains unwilling to enter into any agreements because the premises were closing. The Third Respondent was then warned that APRA had instructed that proceedings be commenced for copyright infringement, to which he replied: “Go for it – join the queue!” and promptly hung up.”
and that the Heat Nightclub business has now been transferred to another company not associated with Mr Botazzi. I am satisfied from the evidence that the third and fourth respondents, as directors of the first and second respondents (the fourth respondent being only a director of the first respondent), authorised the breaches of copyright for which I propose to grant relief.
I am also prepared to infer from the evidence as a whole that the corporate respondents did, and the first respondent will continue, to play recorded music from the APRA Repertoire without a licence and in breach of the APRA copyright. I make this inference from the fact that the APRA Repertoire is so extensive that it would cover most, if not all, of the recorded music performed at these venues, that music is consistently performed at the venues and that the respondents who are responsible for the music performed at the venues have declined to take out licences from APRA.
Relief
The applicant seeks three forms of relief. First it seeks declarations of breaches of copyright. Second it seeks permanent injunctions against the first, third and fourth respondents and third, it seeks damages, both compensatory and additional, against all of the respondents.
The applicant accepts the current authorities are to the effect that there is no necessity to grant declarations where the decision and orders of the court grant relief against the infringements in respect of which a declaration is sought: Commonwealth of Australia v Evans [2004] FCA 654 at [59] and [87]-[88] per Branson J; Meskenas v ACP Publishing Pty Ltd [2006] FMCA 1136 at 42 per Raphael FM.
Injunctions
APRA seeks the following injunctive orders:
“3. An order that the First, Third and Fourth respondents be restrained from:
(a) performing in public the Options Works; and
(b) authorising the performance in public of the Options Works.
4. An order that the Third Respondent be restrained from:
(a) performing in public the Heat Works; and
(b) authorising the performance in public of the Heat works.
5. An order that the First, Third and Fourth Respondents and each of them be restrained from:
(a) performing in public the musical works referred to in the schedule to this Application (APRA Repertoire) and:
(b) authorising the performance in public of any work contained in the APRA Repertoire.”
The first order sought relates to the performance of works in the Queensland Hotel. That hotel is still under the control of the first respondent, a company of which the third and fourth respondents are directors. I would draw an inference from the conduct of the first, third and fourth respondents as evidenced in the affidavits filed in these proceedings that the music and literary works (lyrics) which were being performed on the nights when the premises were visited, have continued and will continue to be performed unless restrained. I would be prepared to grant the injunction sought in order 3 subject only to the addition of the words “whilst the performance is in breach of the applicant’s copyright”. In this way there will be no need to interfere further with the orders should the respondents come to an accommodation with the applicants.
As to the injunction sought in Order 4, the third respondent is Mr Botazzi. There is no evidence that he personally performed the Heat Works in public and although it can be inferred from the evidence and from his position as a director of the nightclub company that he would have authorised the performance of the Heat Works, those works are included in the Repertoire, and the third respondent is not a director of the company which now operates the Heat Nightclub. I believe that the situation with regard to the Heat Works is, in the circumstances, amply covered by the injunction I propose to grant in respect of the APRA Repertoire.
I have already found by inference that the corporate respondents have and the first, third and fourth respondents will continue, to perform or authorise the performance of works within the APRA Repertoire. Having made that finding it is appropriate that this conduct be injuncted whilst it remains in breach of the applicant’s copyright. The schedule referred to in paragraph 5 of the application is, with respect, not the happiest of descriptions of the APRA Repertoire because it contains some information which is strictly irrelevant to a description. I have no doubt that a clear, concise and enforceable description of the Repertoire can be provided by those acting for APRA and I will therefore order that in regard to the injunctions the applicant brings in short minutes of proposed injunctions [for me to settle] within seven days.
Compensatory damages
In his helpful written submissions which I will retain with the papers Mr Hall, counsel for the applicant, sets out the manner in which he believes compensatory damages should be calculated in this case. After stating that the measure of damages is the diminution in value of the copyright as a chose in action: Sutherland Publishing v Caxton Publishing [1936] Ch 323 approved in International Writing Institute v Rimila (1995) 31 IPR 356 he submits that the correct approach to the calculation of such damages, which are “at large” should be the licence fee that APRA would have received had the corporate respondents taken out the licences they were offered. As Mr Hall submits, the licences would have been granted if requested and were offered right up until the commencement of proceedings. The licence fees themselves are the subject of supervision by a statutory authority, the Copyright Tribunal, and are in common use in nightclubs and taverns. The calculation of proposed damages in this way has been made known to the respondents and they could expect that this method of calculation would be put forward as appropriate to the court.
In her affidavit of 1 November 2007 Ms Jennifer Ann Gome has prepared a calculation based upon the appropriate licence fees which are known as GFR (featured recorded music) licence fees and BH licence (background music – hospitality) fees. The former calculation would be used in respect of the Heat Nightclub and the latter in respect of the Options Tavern. The figures which Ms Gome has come up with in respect of the infringements by the first respondent – the tavern operator, are $2,634.00 on or prior to 30 November 2006 and $3,054.00 prior to 30 November 2007. The figure that she has calculated for the Heat Nightclub is $16,952.83 being the licence fee in respect of the period prior to 30 April 2005. In regard to the nightclub the figure has been calculated on the basis of the number of attendees at the nightclub contained in the affidavits of Mr Crathern and Mr O’Neill and the calculation is set out in Exhibit E to that affidavit. That document was served upon the respondent at the commencement of the proceedings. I am satisfied that it constitutes the best estimate of the applicant’s loss and as there has been no objection to it from the respondents I propose to use the figures contained in that affidavit in my award of compensatory damages.
Interest
The applicant also claims interest on the compensatory damages. Interest can be awarded under s.76 of the Federal Magistrates Act 1999. The calculation of interest in the Federal Magistrates Court is usually done by reference to the rate of interest in the Federal Court pursuant to s.51A of the Federal Court of Australia Act 1976. The usual practice adopted by that court is to adopt the rate of interest applied by the Supreme Court of the state in which the Federal Court is sitting: Namol Pty Ltd v AW Baulderstone Pty Ltd (1993) 119 ALR 187; GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 688. Interest in the Supreme Court of New South Wales is now dealt with by s.100 of the Civil Procedure Act 2005 (NSW) for interest up to judgment. In reg 36.7 of the Uniform Civil Procedure Rules 2005 rates of interest are prescribed in Schedule 5 of the Civil Procedure Act. I propose to calculate interest in accordance with that Schedule. These calculations are as follows:
1. Interest against respondents 1, 3 and 4 (the Options Taverns parties) of $424.41 calculated thus:
Interest on $2,634.00 from 30 November 2006 to 31 December 2006 (32 days) at 9.0% = $20.78
Interest on $2,634.00 from 1 January 2007 to 28 March 2008 (453 days) at 10.0% = $326.73
Interest will accrue until judgment at 0.72c per day.
Interest on $3,054.00 from 30 November 2007 to 28 March 2008 (120 days) at 10.0% = $100.20
Interest will accrue until judgment at 0.84c per day.
2. Interest against respondents 2 and 3 (the Heat parties) of $4,587.48 calculated thus:
Interest on $16,952.83 from 20 April 2005 to 31 December 2006 (621 days) at 9.0% = $2,595.87
Interest on $16,952.83 from 1 January 2007 to 28 March 2008 (453 days) at 10.0% = $2,102.89
Interest will accrue until judgment at $4.64 per day.
Additional damages
Additional damages can be awarded for infringement of copyright pursuant to s.115(4) of the Act. That section provides:
“Actions for infringement
(4) Where, in an action under this section:
(a) an infringement of copyright is established; and
(b) the court is satisfied that it is proper to do so, having regard to:
(i) the flagrancy of the infringement; and
(ia) the need to deter similar infringements of copyright; and
(ib) the conduct of the defendant after the act constituting the infringement or, if relevant, after the defendant was informed that the defendant had allegedly infringed the plaintiff's copyright; and
(ii) whether the infringement involved the conversion of a work or other subject‑matter from hardcopy or analog form into a digital or other electronic machine‑readable form; and
(iii) any benefit shown to have accrued to the defendant by reason of the infringement; and
(iv) all other relevant matters;
the court may, in assessing damages for the infringement, award such additional damages as it considers appropriate in the circumstances.”
‘Flagrant’ is defined in the Macquarie Dictionary as “glaring; notorious; scandalous”. In Aristocrat Technologies Australia Pty Ltd v Vidtech Gaming Services Pty Ltd Wilcox J considered that the copying of a gaming machine’s artwork and computer programs which were clearly intended to trade on the popularity of the applicant’s machines constituted flagrancy and was described in the appeal Aristocrat Technologies Australia Pty Ltd & Anor v DAP Services (Kempsey) Pty Ltd (2007) 239 ALR 702 (“the Aristocrat appeal”) by Rares J as a “cynical and flagrant exploitation of Aristocrat’s copyright” (Black CJ and Jacobson J agreeing). But there is no definition of flagrancy in the cases. The applicants in the instant case seek to establish flagrancy from the fact that the performances in the nightclub were to large audiences at a popular and notorious venue, that the nightclub was heavily advertised and that the advertisements placed a heavy emphasis on the music. APRA argue that music is central to the respondents’ business and is what they sell and profit from. Thus non-payment to those who create the music constitutes a flagrant breach of copyright. There is no doubt from the evidence, in particular the evidence of the second affidavit of Jennifer Ann Gome sworn 7 March 2008, that Mr Botazzi was perfectly aware of the necessity to obtain an APRA licence for the performance and music in his venues. He had been so aware since at least 1995. He was the controlling mind of both companies. Neither company made any effort whatsoever to obtain a licence. In considering the term in connection with the New Zealand Copyright Act 1962 s.24(3) Mahon J opined that:
“What can rightfully be described as “flagrant” … covers wilful or deliberate copyright infringements of varying kinds.”
International Credit Control Limited v Axelson [1974] 1 NZLR 695 at 705.
I am satisfied that the actions of the first, second and third respondents in regard to both of these premises was flagrant in that it was a glaring breach of APRA’s copyright. In regard to Mr Burtonclay there is no evidence of his reaction to the letters or communications from APRA nor of his managerial responsibilities within the first respondent. On the other hand, he is a director of the company. He has not denied that he knew the company had infringed APRA’s copyright. He appears to have done nothing about it. In the Aristocrat appeal the Chief Justice said at [41]:
“Flagrancy is not an essential prerequisite for an award of additional damages. It is sufficient if the court is satisfied that any one or more of the circumstances set out in s.115(4)(b) is established; Raben Footwear v Polygram Records Inc (1997) 75 FCR 88 at 93; 145 ALR at 6; 37 IPR 417 at 422 (Raben) per Burchett J, at FCR 103; ALR 16; IPR 431 per Tamberlin J, at FCR 104; ALR 17; IPR 4320 per Lehane J; see also Polygram Pty Ltd, Island Records Ltd & A & M Records Inc v Golden Editions Pty Ltd (1997) 76 FCR 565 at 575; 148 ALR 4 at 14: 38 IPR 451 at 461 (Polygram) per Lockhart J; Sony Entertainment (Australia) Ltd v Smith (2005) 215 ALR 788; 64 IPR 18; [2005] FCA 228 at [158].”
I am satisfied of the other elements of s.115(4). I would not allow the possible lack of flagrancy in the case of Mr Burtonclay to prevent my making an award of additional damages against him.
I hardly think it is necessary today to labour too long in the vineyard of necessity for the deterrence of similar infringements of copyright. I am satisfied from the evidence in this case that infringement by operators of taverns or nightclubs is a matter of serious concern. It is also not uncommon: PPCA v Adelaide City Entertainment [2005] FMCA 923. The conduct of the respondents after being advised of the acts constituting the infringement was, to say the least, reprehensible. The respondents did not acknowledge correspondence, were only contactable at the telephone with difficulty, evaded service: SBO Pictures Inc v Kaos Shop Pty Ltd [2006] FMCA 82 at [41], ignored all requests to take a licence including an offer to backdate the licences so that prior infringements were covered and have taken no steps in the proceedings. This behaviour indicates a contempt for the provisions of the Copyright Act and for this court and does not go unnoticed.
The conversion of a work from hardcopy or analogue into digital is not relevant in this case but the applicant has shown that a substantial benefit has accrued to the defendants by reason of the infringement in that they have avoided payment of a fair and reasonable licence fee. This licence fee can be assumed to have been paid by other operators and would constitute a profit in the hands of the infringers. Both of these venues sell alcohol and other refreshments, the income from which was obtained by an inducement (provision of music) for which no fee was paid to the owners. I accept the submission of the applicant that the respondents’ silence in the proceedings complicated the applicant’s task in proving the quantum of compensatory damages and in proving the amount of benefit derived by the respondents. Mr Hall submits that the calculations made by the applicant could be an underestimate, particularly in the case of Heat Nightclub where the licence fee is based upon the number of persons attending. No financial records of the respondents were produced. The applicant relies on the views expressed by Stone J in Microsoft Corporation v Easy Loans [2004] 63 IPR 54 where in awarding $300,000.00 by way of additional damages her Honour said the respondent’s conduct was:
“A deliberate pattern of conduct by the respondents in which they recognised the illegality of the enterprise they were engaged in and actively sought to conceal it… In particular I refer to the total failure of the respondents to observe orders for discovery (including discovery of business records evidencing their dealings in Microsoft software) which, as the applicants submitted, means the applicants can never know the full extent of the infringements. It is important to more than the applicants that copyright infringers are not encouraged to think that by ignoring court proceedings they can escape the consequences of calculated infringement of the rights of others in the pursuit of profits.”
See also Zero Tolerance Entertainment Inc v Venus Adult Shops Pty Limited [2007] FMCA 155 per Driver FM at [167].
The remarks made above apply to all of the respondents. However, the applicant sought to put before the court some additional information in relation to the third respondent Mr Botazzi. This is contained in the second affidavit of Ms Gome. The affidavit establishes that Mr Botazzi is no stranger to actions of this nature brought by APRA. She sets out over five pages a series of actions by companies running nightclubs and bars which had as their director Mr Botazzi and which were found not to be paying licence fees due to APRA. In date order these commence with a nightclub known as “The Hot Gossip” whose association with APRA required the intervention of Ms Gome, an employee of APRA from 1992 until late 1994. The company involved was wound up without payment to APRA in October 1995. The second property was known as “Abbey Road/Studio 54”. Unpaid licence fees between 1994 and 1996 were eventually collected. The third premises were “Hot Gossip Dance Club/Sports Bar” which went into voluntary liquidation in August 1996 owing APRA approximately $10,000.00 by way of licence fees. The next property was “Showgirls Bar 20”. Concerns that the premises were being operated without an APRA licence arose in 1996 and continued through to August 2000 when a Deed of Settlement was entered into. At paragraph 50 of her affidavit Ms Gome deposes that:
“My dealings with Mr Botazzi have been repeatedly difficult and as a result APRA has expended a considerable amount of time and expense during the last seventeen years. In my experience Mr Botazzi has been one of the most elusive people APRA has encountered.”
It is submitted by the applicant that the information contained in this affidavit should be taken into account by me in assessing the amount of any additional damages that I should award against Mr Botazzi. The applicant has conceded that if I am minded to take these matters into account then I should make any award of additional damages against Mr Botazzi separate from any such award against his companies or Mr Burtonclay. Having considered the affidavits and having considered Mr Botazzi’s conduct I believe that I should take into account the matters referred to and that any award of additional damages against Mr Botazzi should reflect his long history of disregard of the provisions of the Copyright Act.
I am satisfied that the conduct of all the respondents is such as to bring them within the provisions of s.115(4) and that an award of additional damages should be made. It is best that I should deal with each of the respondents in turn. In his submissions Mr Hall reminded the court that there is no mathematical relation between the compensatory award and the additional award. The additional award is intended to be both punitive and a deterrent. The Chief Justice discusses the nature of these awards in Aristocrat at [41-45] and refers to a number of authorities. The awards which I make in this case take into account the factors referred to by his Honour and are informed by a number of decisions of this court and the Federal Court:
“Microsoft Corporation v Goodview Electronics Pty Ltd (2000) 49 IPR 578, the Court awarded $500,000 in additional damages.
Microsoft Corporation v Glostar Pty Ltd (2003) 57 IPR 518, the Court awarded $291,625 in additional damages. The compensatory damages were $4,375.
Microsoft Corporation v Ezy Loans Pty Ltd (2004) 63 IPR 54, Stone J awarded $50,000 in additional damages against each respondent company and $300,000 in additional damages against their sole director.
Microsoft Corporation v PC Club Australia Pty Ltd (2005) 148 FCR 262, Conti J awarded additional damages of $350,000.
Universal Music Australia Pt Ltd v Hendy Petroleum (2003) 59 IPR 204, this Court made an award of additional damages of $17,500 while awarding $299.00 in compensatory damages.
Fraserside Holdings v Venus Adult Shops [2005] FMCA 997 this court assessed additional damages at $100,000, reducing that award to $85,000 because of possible acquiescence by the applicants in some of the infringing sales.
Sony Entertainment (Australia) Ltd v Smith [2005] FCA 228; (2005) 64 IPR 18, Jacobson J awarded an amount of $150,000 against a corporate respondent and $300,000 against its director for additional damages.
PPCA v Adelaide City Entertainment [2005] FMCA 923 this court awarded additional damages of $85,000.00.
SBO Pictures Inc v Kaos Shop Pty Ltd [2006] FMCA 82, the court awarded compensatory damages of $3,500 and additional damages of $46,500.
Foxtel Management Pty Limited v The Mod Shop Pty Ltd [2007] FCA 463, the Court awarded additional damages of $300,000 against one director and $60,000 against another.
Aristocrat Technologies Australia Pty Limited v D.A.P. Services (Kempsey) Pty Limited (In Liquidation) [2007] FCAFC 40, the Full Court awarded additional damages of $200,000 with nominal compensatory damages of $1.”
Heat Nightclub
The applicant submits that the conduct of the second and third respondents in relation to the nightclub is at the very top of the scale of flagrancy. Certainly Mr Botazzi and through him the company showed a contumelious disregard for the rights of APRA as evidenced by the failure to respond to letters or return telephone calls and the remark made to Mr Gurnett extracted from the affidavit of Ms Haddock in these reasons at [11]. The applicant points out that its calculations of the takings of the nightclub during the period in which it was operating without a licence was approximately $904,000.00. It submits that figure should be taken into account when considering additional damages. I am of the view that in order to ensure there is an effective deterrent to this type of conduct, regard should be had of the fact that a private company of this nature is no more than the creature of its directors and shareholders. The latest return of this company reveals that Mr Botazzi is both the sole director and secretary and owns 100 of the 100 issued shares. Given Mr Botazzi’s history of placing companies in liquidation owing money to APRA I am of the view that the objects of s.115(4) will be best achieved by making an award of additional damages in the sum of $50,000.00 against the second respondent and an award in the sum of $125,000.00 against Mr Botazzi, the third respondent. This figure is higher than the award I propose to make in respect of the Options Tavern breach. This is both because of Mr Botazzi’s flagrancy and because I regard the infringement itself more serious being an infringement in premises where the playing of copyright music and lyrics was the main reason for customers’ attendance.
Options Tavern
The applicant is of the view that the infringement in this case is less serious than that in respect of the nightclub. Certainly the type of music being played was background music as opposed to the premises being a music venue and this is reflected in the licence fee that was unpaid. The number of attendees at the premises was less. In regard to Mr Botazzi the applicant submits:
“Against respondent 3, there should be a further award of additional damages specifically referable to conduct of the Options Tavern premises. It should be at or above the top of that range because of the evidence that he set up and operated that business while fully aware of APRA’s rights and of its complaint regarding Heat Nightclub.”
The difficulty I have with this submission is that Mr Botazzi set up the company, and the company infringed. Why would the company not be as knowledgeable of Mr Botazzi’s prior problems with APRA as Mr Botazzi himself? My reasons for making a lesser order against the company in this case are that the infringement took place in less public premises (a tavern on the Gold Coast as opposed to a nightclub in the largest casino in Australia), the fact that music being played was as background music, as opposed to being the sole reason for visiting the premises, and the number of persons who attended the premises during the observation period. I would make an award of additional damages against the first respondent in the sum of $40,000.00. I would make an award of additional damages against Mr Burtonclay against whom there is no evidence of previous history in the sum of $40,000.00 and I make an award against Mr Botazzi, taking into account his previous history, in the sum of $100,000.00. For the avoidance of doubt I should make it clear that these are individual awards of damages against individual companies and persons. They are “several” awards.
Costs
It is appropriate that the respondents should pay the applicant’s costs of these proceedings. I am mindful that the event based scale proposed in Schedule 1 of the Federal Magistrates Court Rules 2001 is not appropriate for this type of action where a considerable amount of work has had to be done in the absence of any response or any evidence from the respondents. I would propose that the applicant’s costs be taxed if not agreed pursuant to the Federal Court Act and Rules. In order to reflect the fact that proceedings in the Federal Magistrates Court should be less expensive than those conducted in the Federal Court I would order that the amount of taxed costs to be paid shall be 80% of those costs payable under the Federal Court scale.
The orders which I propose are being made in the absence of all of the respondents. Since this judgment was reserved I have been advised in a letter from the applicant’s solicitors that both of the corporate respondents have been placed in creditor’s voluntary liquidation. I will therefore stay the orders (other than Order 1) for a period of 14 days and give the liquidators and the individuals one final opportunity to approach the court. Any application they might wish to make must be filed within that time and be accompanied by an affidavit clearly explaining the reason for non-attendance as well as containing any submission that the respondents (or any of them) wish to make. I will make a decision as to whether I should reconsider any of these orders upon that information and the applicant’s submission in response.
I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of Raphael FM
Associate:
Date: 28 March 2008
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