Australasian Performing Right Association Limited v Riceboy Pty Limited

[2011] FMCA 942

FEDERAL MAGISTRATES COURT OF AUSTRALIA

AUSTRALASIAN PERFORMING RIGHT ASSOCIATION LIMITED v RICEBOY PTY LIMITED & ANOR [2011] FMCA 942

COPYRIGHT – Breach of copyright in musical works – public performance without a licence – assessment of compensatory and additional damages.

INTEREST – Assessment of pre-judgment interest in accordance with Federal Court Practice Note.

Copyright Act 1968 (Cth), ss.31, 32, 115, 126, 184
Copyright (International Protection) Regulations 1969 (Cth)
Federal Magistrates Act 1999 (Cth), ss.3, 42, 76
Federal Magistrates Court Rules 2001 (Cth)

Facton Ltd & Ors v Dash Industries [2010] FMCA 709
Fraserside Holdings v Venus Adult Shops [2005] FMCA 997
International Writing Institute v Rimila (1995) 31 IPR 356
Microsoft Corporation v Ezy Loans Pty Ltd (2004) 63 IPR 54
Microsoft Corporation v Glostar Pty Ltd (2003) 57 IPR 518
Microsoft Corporation v Goodview Electronics Pty Ltd (2000) 49 IPR 578
PPCA Limited & Ors v Jabouri Brothers & Ors [2011] FMCA 799
Prior v Sheldon (2000) 48 IPR 301
SBO Pictures Inc v KAOS Shop Pty Ltd [2006] FMCA 82
Sony Entertainment (Australia) Ltd v Smith [2005] FCA 228; (2005) 64 IPR 18
Sutherland Publishing v Caxton Publishing [1936] Ch 323
Zero Tolerance Entertainment Inc v Venus Adult Shops Pty Ltd [2007] FMCA 155

Applicant: AUSTRALASIAN PERFORMING RIGHT ASSOCIATION LIMITED

First Respondent: RICEBOY PTY LIMITED TRADING AS ELEMENT LOUNGE

Second Respondent: KIAN-FATT HEE

File Number: SYG 1475 of 2011

Judgment of: Driver FM

Hearing date: 28 November 2011

Delivered at: Sydney

Delivered on: 28 November 2011

REPRESENTATION

Counsel for the Applicant: Mr M Hall

Solicitors for the Applicant: Banki Haddock Fiora

No appearance by or on behalf of the Respondents

ORDERS

1. The Court declares that the first and second respondents have infringed the applicant’s copyright in the following musical and literary works (“Works”):

   (a)Lambada music;

   (b)Lambada lyrics;

   (c)Touch Me music;

   (d)Touch Me lyrics;

   (e)Every Breath You Take music; and

   (f)Every Breath You Take lyrics.

2. The Court orders that the first and second respondents be restrained from :

   (a)performing the Works in public;

   (b)performing in public the musical and literary works referred to in the Schedule below (APRA Repertoire); and

   (c)authorising the performance in public of the Works or any work contained in the APRA Repertoire.

3. Pursuant to s.115(2) of the Copyright Act 1968 (Cth), the respondents are to pay compensatory damages in the amount of $12,267.83

4. Pursuant to s.115(4) of the Copyright Act 1968 (Cth), the first respondent is to pay additional damages in the amount of $75,000.

5. Pursuant to s.115(4) of the Copyright Act 1968 (Cth), the second respondent is to pay additional damages in the amount of $60,000.

6. Pursuant to s.76(3) of the Federal Magistrates Act 1999 (Cth), the respondents are to pay interest up to judgment in the amount of $2,061.00.

7. The respondents are to pay the applicant’s costs and disbursements of and incidental to the application in accordance with the scale of costs in Schedule 1 to the Federal Magistrates Court Rules 2001 (Cth).

8. The Court directs that the applicant is to cause a sealed copy of these orders to be served on the respondents by ordinary pre-paid post at their last known address, together with a copy of rule 16.05 of the Federal Magistrates Court Rules 2001 (Cth).

SCHEDULE

APRA REPERTOIRE

The applicant:

(a)owns the copyright in respect of its application to the performance in public; and/or

(b)has the power to grant licences for the performance in public

of practically all musical and literary works performed throughout Australia.  The Repertoire comprises the works written by members of the applicant – who constitute more than 60,000 Australian composers, authors and publishers of music – and members of affiliated societies in countries throughout the world.

The applicant has carried on business as an association of composers, authors and publishers of music for the purpose of licensing the public performance of musical and literary works since 1926.

The applicant maintains a catalogue of its repertoire.  The catalogue lists the works in which the applicant owns the copyright in respect of their applications to the performance of the works in public.  At present there are about 10 million works listed in the catalogue.  The items in the catalogue may be inspected by arrangement with the applicant.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT SYDNEY

SYG 1475 of 2011

AUSTRALASIAN PERFORMING RIGHT ASSOCIATION LIMITED

Applicant

And

RICEBOY PTY LIMITED TRADING AS ELEMENT LOUNGE

First Respondent

KIAN-FATT HEE

Second Respondent

REASONS FOR JUDGMENT

1. This is an action for copyright infringement based upon the public performance of musical works at a nightclub or dance club in central Melbourne.  The respondents have not participated in the proceedings and failed to appear at today’s final hearing.  I decided to proceed in their absence.

Evidence

1. APRA (“the applicant”) relies upon the following affidavits, and the annexures and exhibits to each of them, which I received as evidence:

   ·Sally Elizabeth Howland, affirmed 24 June 2011 (“Howland”);

   ·Jennifer Ann Gome, affirmed 23 June 2011 (“Gome”);

   ·Phil Lambert, affirmed 28 June 2011 (“Lambert”);

   ·Katherine Amy Haddock, affirmed 19 July 2011 (“first Haddock affidavit”);

   ·Adam William Beggs, sworn 30 August 2010 (“Beggs”);

   ·Katherine Amy Haddock affirmed 2 August 2011 (“second Haddock affidavit”).

2. An updated printout of the respondents’ website (updating KAH-1 tab M) was tendered.

Consideration

Subsistence and ownership of copyright

1. APRA owns copyright, to the extent of the exclusive right to perform the work in public, in three songs, “Lambada”, “Touch Me” and “Every Breath you Take”.  It also claims copyright in the APRA Repertoire, defined in the schedule to the application, which I adopted in the orders I have made.

2. Section 126 of the Copyright Act 1968 (Cth) (“the Copyright Act”) provides:

   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.

3. The respondents have not put subsistence in issue; neither have they disputed APRA’s ownership of copyright. Both presumptions in s.126 therefore apply to each of the works and to the APRA Repertoire.

   
   

   I accept that copyright subsists in each of the works, and that APRA is the owner of that copyright for the purposes of authorising public performance of those works in Australia.

4. As well as relying upon the presumptions, APRA filed and relied upon direct evidence of the authorship of each of the works, as follows:

Work	Author	Assignment	Reciprocal Arrangement	Evidence
Lambada[1]	Ulises Hermoza	30 January 1986	GEMA	Howland  23-26 and exhibit SHE-3, tabs 1, 2 and 3.
G. Hermosa Gonzales	15 September 1986
Touch Me	Rui Jorge da Silva	7 December 1999	PRS	Howland 27-31 and exhibit SHE-3 tabs 4, 5 and 6.
Cassandra Fox	3 January 2001
Gary James Kemp	26 February 1981
Every Breath You Take	Gordon Sumner (Sting)	14 September 1978	PRS	Howland 32-34 and exhibit SHE-3, tabs 6, 7 and 8.

[1] Lambada has a third author, Chico De Oliveira.  Each joint author or owner of copyright has a full right to enforce the copyright:  Prior v Sheldon (2000) 48 IPR 301 at [79]

1. In each case, the assignment made between the author and the performing right society in that author’s country of residence provides evidence that the author was a qualified person within the meaning of s.32(1)(a) of the Copyright Act, or a person to whom the protection of that Act extends by virtue of s.184 and the Copyright (International Protection) Regulations1969 (Cth).

2. I find that in addition to benefiting from the s.126 presumptions, APRA has demonstrated that copyright subsists in each of the works, and that APRA is the owner of copyright in each of those works as it applies to authorising their public performance in Australia.

Infringement

1. APRA alleges infringement by public performances of the works at “Element Lounge” at 85 Queen Street, Melbourne, Victoria. 

2. The right to authorise the public performance of a musical work is one of the exclusive rights enjoyed by the owner of copyright under s.31(1)(a)(iii) of the Copyright Act.

3. The affidavit of Lambert demonstrates, and I find, that each of the works was performed in public at Element Lounge by means of a disc jockey (DJ) playing music from records.  The performances occurred between about 10.30pm and 1.00am on 29-30 January 2010.  The performances were in public and were heard by about 80-100 people[2].  Mr Lambert also heard and recorded other works being played. 

   
   

   He exhibits the sound recording.

   [2] Lambert at [9]

4. The performances were done without the licence of APRA[3].

   [3] Gome at [11]

5. At the time of the performances the business of Element Lounge was conducted by the first respondent (Riceboy Pty Limited)[4].  This is demonstrated by the liquor licence, which gives the name and address of Element Lounge, and is held in the name of Riceboy Pty Limited, the business name registration which again is in the name of the company, and the company search which gives the principal place of business as “Basement, 85 Queen St, Melbourne”.

   [4] first Haddock affidavit [5]–[8] and exhibit KAH-1 tabs A to C

6. At the time of the performances the second respondent (Mr Hee) was the sole director of Riceboy Pty Limited[5].  He is also the beneficial owner of half of the issued shares.  When APRA’s process servers attend the premises they are told that he is “the owner of Element Lounge”[6] and that he is either in attendance[7] or does attend the premises[8].  He gives his home address to ASIC as 32 Normanby Drive, Greenvale, and that is the address for service given by the company in its liquor licence, was previously its registered office, and is the registered address for the business name.  Plainly, he and the company are closely connected, and he is the moving force behind the company and the business.

   [5] first Haddock affidavit at [7] and KAH-1 tab B

   [6] Beggs at [3]

   [7] Beggs

   [8] second Haddock affidavit, page 5 (letter of 28 July 2011)

7. I find that each of respondents has infringed the copyright in each of the works.

8. APRA is entitled to a declaration that the respondents have infringed the copyright in the works “Lambada”, “Touch Me” and “Every Breath You Take”, and a permanent injunction restraining each of them from further performance of those works. 

Performance and threatened performance of other works in the APRA Repertoire

1. There is evidence from Lambert that other musical works were performed, and that the respondents’ premises are or were equipped for the continuous performance of musical works by means including DJs and wall-mounted loud speakers playing music to accompany dancing.  On their website at the respondents say that they are “playing the latest and greatest sexy RnB/ Old Skool Anthems/ House Mash-ups”.  They employ at least nine named DJs, “plus more”[9].  A large area of the club is devoted to a dance floor[10].  When the DJs are not working, music is played through large screen TVs as shown on the website pages.  I infer that other works in the APRA Repertoire have been and, unless restrained, will be performed in public without the licence of the copyright owner.

   [9] The web pages are reproduced at KAH-1, tab M and more recent printouts were tendered

   [10] Lambert

2. I will make an order in terms restraining the respondents from infringing any work in the APRA Repertoire.

Damages

1. APRA elects to seek damages rather than an account of profits against each respondent.

Compensatory damages

1. Compensatory damages should be awarded against each respondent under s.115(2) of the Copyright Act.

2. The measure of damage under s.115(2) is the diminution in value of the copyright as a chose in action: Sutherland Publishing v Caxton Publishing [1936] Ch 323, approved and applied by the Federal Court in, for example, International Writing Institute v Rimila (1995) 31 IPR 356. Copyright damages are said to be “at large”, or “a jury question”. By this is meant that they are not to be the subject of exhaustive analysis, but that the judge must do his or her best to settle upon an appropriate figure in light of all of the available evidence. That approach is still clearer in the Federal Magistrates Court, a jurisdiction which is expected to operate as informally as possible: Federal Magistrates Act 1999 (Cth) ss.3(2)(a) and 42.

3. In the present case the appropriate measure of damage under s.115(2) is the licence fee which would have been charged by APRA had the respondents taken the available licence. A licence would have been granted if sought. One was offered right up to and even after the commencement of proceedings[11].  APRA’s licence fees are subject to supervision by the Copyright Tribunal (see Part VI of the Act) and are offered to all, and accepted by most, operators of nightclubs and dance venues[12].  The respondents have had notice of the amount of compensatory damages to which they would be liable on this approach[13].

   [11] first Haddock affidavit and its annexures, Gome

   [12] Howland 22 and exhibit SHE-2

   [13] Gome [13]

4. In her first affidavit Ms Gome calculates the amount of licence fees payable by the respondents in respect of performances at Element Lounge as $12,267.83[14].  The assumptions made by Ms Gome in annexure F as to the presence of a sound system, featured music and music to accompany dancing are supported by the evidence of Lambert and the respondents’ website.  Her assumption of attendance (80 patrons per night for Friday and Saturday nights only) may be conservative, as Mr Lambert estimated that there were more people present when he was there, and the website says the club will open for private functions on other nights of the week.  The respondents have had notice of the basis of Ms Gome’s calculations and have not chosen to appear to challenge them.

   [14] [13] and annexure D

5. I accept Ms Gome’s calculation and award compensatory damages against the respondents in the sum of $12,267.83.  For the purpose of calculating interest, I find that of that those damages were suffered on or prior to the dates given in Ms Gome’s table at annexure D to her affidavit. The respondents will be jointly and severally liable.

Additional damages

1. Additional damages should be awarded against each respondent pursuant to s.115(4) of the Copyright Act. Section 115(4) provides:

   (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.

2. Each element of s.115(4)(b) is enlivened here, except sub-para (ii). Specifically:

   a)the club operates from a prominent location on a busy street in the Melbourne CBD;

   b)its website advertising features and emphasises the music to be performed at the nightclub;

   c)performances were to audiences of up to at least 100, and the club is licensed for 260 patrons;

   d)music is central to the respondents’ businesses.  It is what they sell and profit from, yet they do not pay those who create it;

   e)the prominent role of musical performances in the conduct of the club, and the prominence of the club itself, amounts to flagrancy (para 115(4)(b)(i)) and is evidence from which the Court would infer that each respondent derived a benefit from the infringement (para (iii));

   f)the respondents knew that they were exploiting the property of copyright owners, but ignored all requests to take a licence.  Ms Gome and her colleagues wrote six times, and telephoned and left messages five times[15].  Ms Haddock details nine letters and emails from her firm.  All were ignored.  This is evidence of flagrancy (i) and of contempt for the rights of the copyright owner continuing after each respondent was informed of the infringement (ib);

   g)the respondents were offered an alternative to infringement at a relatively low cost, including an offer to “backdate” licences to cover past infringements.  The respondents ignored the offer (flagrancy, (i), and conduct when on notice (ib));

   h)the attitude of the respondents to these proceedings is evidence of their contemptuous disregard for the rights of the copyright owners.  Mr Hee has avoided personal service when the process server attended although his door staff had confirmed that he was in the building[16].  Neither respondent has taken any step in the proceedings or made any attempt to explain its conduct to the Court.  In SBO Pictures Inc v KAOS Shop Pty Ltd [2006] FMCA 82 Lloyd-Jones FM held at [41] that evidence of evasion of service was a relevant factor in assessing aggravated damages;

   i)the respondents have derived substantial benefits from the performance of musical works.  In the past they have charged $10, $15 or $20 for entry[17] and I infer that they derived further benefit from, for example, drink and food sales to customers attracted by the performance of musical works. They would not have played music were it not so;

   j)the respondents’ silence in the proceedings complicates the applicant’s task in proving the quantum of compensatory damages, and in proving the amount of the benefit derived by the respondents. The Court is entitled to take account of the risk that the applicant is underestimating the level of attendance at Element Lounge, and therefore being inadequately compensated by damages under s.115(2), and is underestimating the benefit derived by the respondents. In Zero Tolerance Entertainment Inc v Venus Adult Shops Pty Ltd [2007] FMCA 155 I said (at [167(g)]) that the respondents’ failure to keep or disclose records of its activities was a relevant factor in assessing additional damages. See also the passage from Stone J’s judgment in Microsoft Corporation v Ezy Loans Pty Ltd (2000) 49 IPR 578 set out below; and

   k)80,000 users of music have accepted licences from APRA[18].  The respondents have derived a benefit from avoiding a business cost which those competitors bear.

   [15] Gome annexure E, page 11

   [16] Beggs

   [17] KAH-1 tab M

   [18] Howland

3. The amount of additional damages is uniquely a matter for the Court.  There is no mathematical relation between the compensatory award and the additional award.  The Court will have regard to past awards, particularly in awards of this Court.  Relevant examples include:

   ·    In Microsoft Corporation v Goodview Electronics Pty Ltd (2000) 49 IPR 578, the Court awarded $500,000 in additional damages.

   ·    In Microsoft Corporation v Glostar Pty Ltd (2003) 57 IPR 518, the Court awarded $291,625 in additional damages. The compensatory damages were $4,375.

   ·    In 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. Her Honour said that the respondents’ conduct was:

   a deliberate pattern of conduct… 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.

   ·    In 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.

   ·    In 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. His Honour also ordered an amount of $50,000 in additional damages against an individual respondent to show the Court’s disapproval for his conduct and deter similar infringements of copyright.

   ·    In PPCA v Adelaide City Entertainment [2005] FMCA 923 this Court awarded additional damages of $85,000.

   ·    In Microsoft Corporation v PC Club Australia Pty Ltd (2005) 148 FCR 262, Conti J awarded additional damages of: $350,000 against the corporate respondent; $350,000 against its director with control of the day to day operations of the business; and amounts of $30,000 and $50,000 against the other directors.

   ·    In 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.

   ·    In 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.

   ·    In Aristocrat Technologies Australia Pty Limited  v D.A.P. Services (Kempsey) Pty Limited (in liquidation) [2007] FCAFC 90, the Full Court awarded additional damages of $200,000 with nominal compensatory damages of $1.

   ·    In APRA v Cougar’s Tavern Pty Limited [2008] FMCA 369 this Court awarded additional damages of $225,000 against a nightclub director with a long history of unlicensed use of music, and of $40,000 each against directors sued for the first time.

   ·    In Elwood Clothing Pty Ltd v Cotton on Clothing Pty Ltd (2009) 81 IPR 378 [2009] FCA 633 Gordon J awarded $150,000 for additional damages, on the basis that the defendant had deliberately copied the plaintiff’s work and continued to infringe when on notice.

   ·    In PPCA Limited & Ors v Jabouri Brothers & Ors Pty Ltd [2011] FMCA 799 this Court awarded $1,844.48 in compensatory damages and $30,000 in additional damages.

   ·    This Court has decided a series of claims by Facton Ltd (which trades as G Star Raw) against counterfeiters of clothing.  The awards made and reasons for them are listed by Riley FM in Facton Ltd & Ors v Dash Industries [2010] FMCA 709. They range between $15,000 and $50,000, with Riley FM awarding $30,000 in Dash Industries.  In each of those cases ‘reputational damages’ were also awarded.  There is some overlap between additional damages and reputational damages, so that the real level of the award of additional damages in those cases was higher than the nominal level.

1. Here the conduct was flagrant and sustained over four years.  The venue is prominent and attracts large crowds.  The respondents could have taken a licence at any time, but chose not to and they have ignored APRA, its members and the processes of this Court.  They have benefitted from the use of music while seeking to avoid paying.  APRA submits that additional damages in the range of $60,000 to $75,000 against each of the company and its director would be proportionate to the scale of the infringements when keeping in mind the awards made in other cases. 

2. I have concluded that the first respondent should pay $75,000 in additional damages and that the second respondent should pay $60,000.

3. The award against each respondent should be separate, so as to mark the Court’s disapproval of his or its individual conduct.

Interest

1. APRA seeks interest on compensatory damages pursuant to s.76 of the Federal Magistrates Act 1999 (Cth). Under s.76(3) the rate of interest is at the Court’s discretion. APRA submits, and I accept, that the Court should be guided by the rate of 4% above the base cash rate established by the “Discount and Interest Rate Harmonisation Committee” established by the Council of Chief Justices of Australia and New Zealand. By Federal Court Practice Note CM14 issued on 1 August 2011, Keane CJ indicated that Federal Court judges would “have regard to” those rates for pre-judgment interest in the Federal Court. On that basis APRA claims interest of $2,061 calculated thus:

   15/10/07 - 28/11/11 (date of hearing): $1,184.38= $437

   15/10/08 - 28/11/11: $1,223.11 = $319

   15/10/09 - 28/11/11: $4,379.92 = $770

   15/10/10 - 28/11/11: $5,480.43 = $535

2. APRA acknowledges that pursuant to s.76(5), pre-judgment interest will not usually be awarded on additional damages, and I will not make such an award in this case.

Costs

1. APRA seeks its costs.  I will award costs in accordance with the Federal Magistrates Court scale.

I certify that the preceding thirty-four (34) paragraphs are a true copy of the reasons for judgment of Driver FM

Date:  30 November 2011